Global Air Travel Continues to Grow

(WSJ) Air travel has soared in the past decade, despite global economic turbulence, and there's still plenty of room for growth, particularly in China and the other emerging Asian powerhouses.

That is according to the International Air Transport Association, a trade body for the world's airlines. From 2005 to 2015, air travel grew more than in any 10-year period since 1975 to 1985, says Brian Pearce, IATA's chief economist.

Air travel typically responds to the health of the global economy, but the past few years have been something of an exception, Mr. Pearce says. While there was a dip during the 2008-09 recession, growth in air travel has been strong ever since, despite a relatively lackluster economy.

Mr. Pearce attributes this to a number of factors. The fall in oil prices has been a stimulus, pushing down the cost of travel. There also has been a rise in connections, and there have been "a lot of new entrant airlines in Asia, which have also helped push fares down."

Asia, most notably China, has been the key to the decade's growth, says Mr. Pearce. In terms of revenue passenger kilometers, or RPK—a performance metric that multiplies paying passengers by distance traveled—Asia-Pacific has grown by annual rates ranging from 1.3% to 11.8% for the past 10 years.

While the Middle East often saw higher growth, it's starting from a much smaller base. The Mideast represented only 9.4% of the total RPK pie as of June this year, compared with 31.5% for Asia-Pacific.

Still, there are concerns. Globally, RPKs are on course to grow just over 6% this year, says Mr. Pearce, behind the 7.4% recorded in 2015. He points to a number of factors, such as a softening global economy, the uncertainty caused by political events such as the U.K.'s vote to leave the European Union, and a wave of terrorist attacks in Europe.

But that's still a strong number, he says; the trend typically is between 4.5% and 5%.

While air travel has been affected by terrorism and other unpredictable events, Mr. Pearce sees lots of room for growth in Asia, particularly China, India and Indonesia, where air journeys per capita each year are still far behind those of North America and Europe. For example, while the U.S. stood at two air journeys per capita for 2015, China recorded 0.35, and India 0.09.

"I think long-term prospects are really still very strong in some regions, which are still very poorly served compared to other regions," Mr. Pearce says.

Source: Wall Street Journal by Gerrard Cowan

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