Air industry sees biggest growth rate since Great Recession recovery

BACK ON FORM: 2009 saw the biggest slump since records began after World War Two

Preliminary statistics for 2017 have shown an increase of 6.4 per cent in passenger numbers around the world – the highest growth rate since the Great Recession recovery.

Airports Council International (ACI) reported last year was the third year in a row that showed an increase of more than 6 per cent. The growth of global freight was even more dramatic at 7.9 per cent.

According to ACI, these are the biggest growth rates since 2010 when the industry recovered from the biggest downturn in recorded history triggered by an economic recession. 

“Since the end of the Great Recession in 2009 to early 2010, global passenger traffic has been growing at an average rate of 5.5 per cent annually—a testament to air transport’s resilience,” said Angela Gittens, Director General, ACI World, “Air freight markets experienced one of the sharpest upward jumps in volumes in decades.

“At the same time, we must be cognisant of the impediments that could curtail the continued rise in demand, potentially hampering growth prospects over the short- and medium-term.

“Specifically, these are related to geopolitical unrest, terrorism and threats to security in certain parts of the world. Physical capacity considerations and potential bottlenecks in air transport infrastructure also pose challenges in accommodating future air transport demand. As well, protectionist policies that retreat from further economic integration and air transport liberalisation could contract air service demand.”

Europe and Asia-Pacific

European and Asia-Pacific markets have been driving the increases. Despite the uncertainty over the outcomes of the United Kingdom’s withdrawal from the European Union, Europe’s largest aviation markets continued to make large strides in passenger traffic reaching record-breaking growth of 8.5 per cent year-over-year for the region.

ACI said that strong overall business and consumer confidence coupled with the offer of competitive transportation options by carriers had continued to boost the propensity for air travel. After Europe’s large strides, the Asia-Pacific region experienced strong demand for air travel as well. Many Indian and Chinese airports continued to achieve double-digit growth in 2017. Preliminary figures point to growth of 7.8 per cent for the region in 2017.

Latin America-Caribbean and Africa

Both Latin America-Caribbean and Africa experienced a revival in passenger traffic following the recessions of the region’s major economies: Brazil and Nigeria. As a whole, Africa and Latin America-Caribbean grew by 5.9 per cent and 4.3 per cent respectively.

Middle East

Middle Eastern airports have observed moderate passenger traffic growth in 2017 as compared to previous years at 4.7 per cent year-over-year. ACI said this was due mainly to the Qatari diplomatic crisis that resulted in travel bans and trade blockades between Qatar and other Middle Eastern countries acting to pull down the region’s previously robust growth.

North America

North America, even with its mature market status, achieved gains of 3.5 per cent year-over-year in 2017. This is above its average 1.1 per cent per annum over the last two decades. The continued inroads made by companies such as Southwest Airlines, the world’s largest low-cost carrier, as well as expansive global growth in the burgeoning Pacific and Central American markets are among the catalysts of this growth.

Some of the region’s largest hubs attained a resurgence in growth over the last couple of years— Denver (DEN), San Francisco (SFO) and Los Angeles (LAX) grew by 5.3 per cent, 5.1 per cent and 4.5 per cent respectively in 2017.

Freight

Air freight markets experienced a strong revival after gaining momentum in the latter half of 2016. Airports handled almost 120 million metric tonnes of volumes in 2017 as a result of a record-breaking jump of 7.9 per cent from 2016. All regions posted robust growth in volumes. Spurred by strong gains in cross-border trade, the largest markets of Europe, Asia-Pacific and North America experienced overall increases in total freight volumes of 8.7 per cent, 8.5 per cent and 7.3 per cent respectively.

Despite the backdrop of economic uncertainty regarding trade policies in the United States and the United Kingdom, two of the world’s largest aviation markets, business confidence persevered into 2017 according to ACI.

Global trade and industrial production continued to make gains on the cyclical recovery in the global economy, which translated into growth in air freight volumes. Inventory build-ups, augmented export orders and a strengthening of consumer demand reflected in increased online purchases are important drivers in the near-term.

Lastly, ACI observed a temporary substitution effect away from ocean cargo, as a result of marine industry consolidations and bankruptcies, also boosted air cargo volumes over the short-term. The reliability factor associated with shipments by air as a swift mode of delivery remained a viable option especially where consumer demand for high value-added goods and perishables remain buoyant.

Similarly, express parcel deliveries that are generated from online purchases are also an important driver in the upward surge in volumes shipped by air. Online retail giants such as Alibaba and Amazon continue to grab hold of their logistical operations by setting up regional hubs. While Alibaba centres its logistical operations at airports in China and recently Malaysia, Amazon occupied strategic airports in North America such as Cincinnati/Northern Kentucky International Airport (CVG), located in the Midwest United States for its operations. Even though Amazon’s air cargo facilities will not be operational until 2020, the airport is among the fastest growing in the world in terms of freight traffic. CVG’s freight volumes grew by 28.7 per cent in 2017.