Aviation in the Asian century

Aviation is a core platform for economic development around the world, supporting some 63 million jobs and around $2.7 trillion in economic development[i].  This is largely dependent on the 10 million passengers who embark on aircraft every day, a number that could increase to 21 million in around 15 years’ time[ii].

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Not only does this growth necessitate new infrastructure, it compels a new mindset since the future ‘destination’ is continuously evolving. For example, from close to 4 billion today, almost 6 billion annual international air passengers are expected by 2030[iii], some 7.2 billion in 2035[iv] and 7.8 billion by 2036[v]. This carries implications for infrastructure (including technology), sustainability, design, capacity, and even pricing.

Each of these issues will have regional expressions. Indeed, given the relative aviation infrastructure gaps in say Africa and Latin America, to say nothing of Asia, we would expect exciting new development concepts to appear there unencumbered by legacy systems and driven by strong middle class growth.

While the growth of the middle class is not the sole driver of passenger growth, earning between $4,000 and $40,000 has been proven as a key driver of international mobility. Certainly, in many emerging markets the coincidence of rising middle class and passenger growth is evident. Regions with strong middle class growth to 2037 also see strong passenger growth.

Despite the significant growth in Asia-Pacific, both in terms of middle class numbers and passenger growth, it is plausible that forecast Asia-Pacific passenger numbers are overly conservative in the long term.

This is because, while the ratio of passengers to middle class numbers in Asia is set to rise from 1:1 in 2017 to 1.25:1 in 2036/7, this remains far below ratios seen in Europe and North America. Respectively, these ratios are forecast to grow from 2.09:1 to 3.13:1 and from 2.87:1 to 4.54:1, while the highest growth is set to occur in the Middle East which almost doubles from 1.04:1 to 1.99:1. If anything the growth of extra passengers in Asia Pacific appears relatively ‘weak,’ given its strong middle class growth and when in comparison to Latin America and the Middle East, where each new middle class consumer correlates with around a doubling in demand for international movement. This is not the case in Asia. This relative ‘weakness,’ can also be seen in overall ratios.

Indeed, were Asian ratios to approach forecast North American or European levels, travels per middle class resident would almost triple. With lead times approaching 20 years for some forms of airport infrastructure, there is a need for planners to assess technologies that enable for more flexible construction as well as create new financing models quickly able to scale.

These figures do not account for domestic travel, which will naturally skew high in large countries such as India and China, and do not account for travel by High-Net-Worth-Individuals. They do however, suggest that even higher growth than is currently predicted is possible, with longer term growth in Asia, and indeed Africa, plausible beyond the forecast range.

[i] Source: International Organization for Standardization, 2017

https://www.iso.org/news/2017/01/Ref2154.html

[ii] Source: CNBC, 2018 https://www.cnbc.com/2018/05/03/worlds-airports-need-investment-to-cope-with-massive-growth-in-the-future-ceo-says.html

[iii] Source: ICAO, 2017 https://www.icao.int/SAM/Documents/2018-USAPCMA/Global_Aviation_Security_Plan_November_2017_en.pdf

[iv] Source: ABC News, 2018 http://www.abc.net.au/news/2018-02-01/flight-of-the-future/9380290

[v] Source: IATA, 2017 https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx

[vi] Source: Airbus, 2018 https://www.airbus.com/aircraft/market/global-market-forecast.html

[vii] Source: IATA, 2017 https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx

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