IATA predicts Asia Pacific will be the world’s fastest growing market in 2017
Asia Pacific today represented some 1.3 billion passengers last year – 33% of all air passengers in the world. And this number could reach 50% within 20 years according to the latest forecasts by the International Air Transport Association.
The International Air Transport Association (IATA) continues to see Asia Pacific as a major engine to passenger growth. The association forecasts 7.2 billion passengers by 2035, compared to an expected 4.1 billion air travellers this year. This is based on a 3.7% annual Compound Average Growth Rate (CAGR) noted in the release of the latest update to the association’s 20-Year air passenger forecast.
The passenger growth forecast thus confirms that the biggest driver of demand will be the Asia-Pacific region. Asia Pacific is already the largest world market representing close to 33% of all passengers (18.2% of all international passengers traffic in second position after Europe). The continent is expected to be the source of more than half the new passengers over the next 20 years.
China will displace the US as the world’s largest aviation market (defined by traffic to, from and within the country) around 2029. India will displace the UK for third place in 2026, while Indonesia enters the top ten at the expense of Italy.
Routes to, from and within Asia-Pacific will see an extra 1.8 billion annual passengers by 2035, for an overall market size of 3.1 billion. Its annual average growth rate of 4.7% will be the second- highest, behind the Middle East. For 2017, passenger traffic in Asia Pacific is likely to be primarily driven by booming passengers demand on domestic routes from China and India.
REVENUE PASSENGER/KM FOR ASIA PACIFIC
|% change to previous year||2016||Feb-17||Mar-17||Apr-17|
|SouthWest Pacific- North/South America||15.5||10.4||14.2||12.3|
(Source: IATA Statistics) Note: historical data may be subject to revision
Both countries have been seeing double-digit growth in RPK (revenue/passengers/km) since the beginning of the year. India’s domestic traffic grew last year by over 20% and this is expected to grow again by 15% this year. China will see its domestic traffic growing between 12% and 15%.
Since the beginning of the year, the fastest growing segment out of Asia has been routes to Europe with Revenue/passengers/km up by 11.7% on average between February and April 2017. Asia-Middle East was second with a growth of 6.75% and Asia-North America with 6%. In the Pacific, the fastest growing market is the segment Pacific to North and South America up by 12.3% since the start of the year. The average occupancy is expected to rise. Last year, it reached 79.6% and rose during the first months of the year to 80.9%, a new record in history.
Passenger demand in the region is stimulated by the growth of China’s and India’s middle classes, the world demand for Asian destinations such as Thailand, Vietnam or Japan and the fast development of low cost carriers in the region.
Airlines are expected to report a US$31.4 bn profit (up from the previously forecast $29.8 bn) on revenues of $743 bn (up from the previously forecast $736 bn). While North America will represent half of all the industry’s profits (US$15.4 bn), Asia Pacific airlines are forecast to post a $7.4 bn net profit (down from $8.1 bn in 2016), equal to $4.96/passenger. Asia/Pacific airlines’ profits should be on par with those of European air carriers.
Yields, however, are down by 3% to 5% due to increased competition; but there are signs that yields are possibly bottoming out.
Photo : Eric Silva