IATA reported (20-Apr-2018) the turnaround in passenger demand growth in nine large emerging markets (EM) has been a notable recent development in aviation. Growth in EMs slowed to 7.0% in 2016 but accelerated throughout 2017, rebounding to 11.3%. This turnaround in performance has owed to a range of factors:
- A broad-based pick-up in global economic conditions over the past 18 months or so. This has partly been driven by stimulus efforts in EMs themselves, notably China;
- Recovery in global commodity prices over the period has also supported incomes and passenger demand in commodity-dependent EMs countries, particularly Russia.
- Economic activity in EMs also looks to have been helped since start-2017 by the weaker USD;
- More stable political conditions have also been a contributing factor to the turnaround, particularly in Turkeywhere passenger demand was affected badly by the attempted coup and terrorist attacks in mid-2016;
- The addition of new air services has also played a role by saving time for passengers and ultimately having a similar stimulatory impact on demand as a cut in airfares.
New routes flown between the nine EMs in our group accounted for 40% of the worldwide increase in nonstop airport pairs flown between 2016 and 2017. IATA stated the future for EM passenger traffic remains bright. Potential trade disputes are a risk – most directly for China – but the IMF recently nudged up its economic forecasts for EMs over the next two years. Looking further ahead, IATA stated a combination of ongoing ‘catch-up’ growth in per capita incomes, as well as generally favourable population and demographic factors, are likely to continue to drive EM passenger demand over the long term. [more – original PR]