Global Perspective: Rapid expansion of the global industry propels investment efforts

17 Jul 2018

Oliver Cornock, OBG Middle East Managing Editor

Oliver Cornock
Middle East Managing Editor
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The aviation sector is experiencing rapid growth worldwide, propelled by booming tourism industries, lower air fares and the push for greater connectivity in an increasingly globalised economy. Middle-class expansion has also spurred growth in air travel, as more people are able to afford flights for holidays or business-related travel. According to Boeing, commercial airlines experienced annual average passenger growth of 6.2% between 2012 and 2017. The manufacturer also estimated that by 2036 an additional 41,000 plane deliveries will need to be fulfilled in order to meet service needs for both passengers and cargo. To accommodate these developments, civil aviation authorities and airlines are investing in airport infrastructure, route expansion and fleet capacity, among other efforts. However, the speed at which the industry is growing poses challenges, particularly in regard to human resource needs, safety and congestion, leading to reasonable concern that the industry is expanding too rapidly. Significant investment will be needed in all areas of aviation to ensure it will be ready to meet long-term demands.

Full Throttle

The International Air Transport Association (IATA) estimates that the global commercial airline industry will see profits increase from $34.5bn in 2017 to $38.4bn in 2018. Growth in emerging markets will likely continue to be driven by the low-cost carrier (LCC) segment, which in recent years has transformed air travel from a luxury to an affordable means of transportation. Since 2008 fares have decreased by an approximate average of 0.9% per year, in large part due to the impact of LCCs on market competition. This has enabled a greater number of people to choose air travel, particularly those in growing middle-class economies where disposable income is on the rise.

The tourism and aviation industries continue to enjoy a symbiotic relationship. With record numbers of tourists travelling by air, the IATA projects that international flyers will spend $776bn on travel in 2018. Successful tourism promotion campaigns, growth in e-commerce and the development of niche markets have triggered greater demand for airline services, leading to improved connectivity for emerging destinations.

Read the full Global Perspective in The Report: Mexico 2018

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Transport

Oliver Cornock, OBG Middle East Managing Editor

Oliver Cornock
Middle East Managing Editor
Follow Oliver on Twitter LinkedIn