Over the next two decades, passenger demand for air travel is expected to grow significantly, driven by a range of complex factors. But what exactly goes into forecasting this growth? Demand forecasting goes beyond projecting numbers—it’s about understanding the key forces that shape passenger behavior and market trends. By examining economic conditions, demographic changes, technological advancements, and policy shifts, forecasting provides a clearer picture of the future of aviation.
Let’s explore what drives these forecasts and how they help us understand the evolving dynamics of air travel.
One of the primary drivers of air travel demand is economic growth, particularly in emerging markets. The link between GDP per capita and air travel is well-established, as incomes rise so too does the propensity to travel. For nations with GDP per capita below $20,000, even modest income increases can lead to disproportionately large jumps in air travel.
This phenomenon, often referred to as "catch-up growth," is expected to play a pivotal role in markets such as India and China, where millions are entering the middle class each year. These regions are projected to contribute a significant share of the additional passenger numbers forecast by 2044.
Smaller economies, including those in Africa and Southeast Asia, are also expected to see strong growth as rising incomes make air travel accessible to broader populations.
Urbanization is another critical driver in long-term air travel demand forecasting. As cities grow, particularly in Asia and Africa, they create new hubs of demand for air travel. Urbanization not only increases the number of potential passengers but also shifts travel patterns, encouraging the development of new travel corridors.
For example, megacities and secondary urban centers are driving investments in regional airports and low-cost carrier networks, creating direct connections between previously underserved areas, reducing travel times, improving convenience, and boosting economic activity in connected regions.
Technological advancements that enable airlines to operate more efficiently in these emerging markets are also a key driver of demand. Innovations in aircraft design allow for longer, more cost-effective flights, making it possible to serve thinner markets profitably. These drivers are central to the forecast’s emphasis on growing connectivity through expanded city-pair networks.
The declining cost of air travel is another fundamental driver integrated into the forecast. Over the past several decades, improvements in technology, operational efficiencies, and competition among carriers have significantly reduced the real cost of flying. This trend has made air travel accessible to a larger share of the global population.
When forecasting air travel costs, this is broken down into both monetary and non-monetary costs. While ticket prices have steadily fallen, reductions in non-monetary costs—such as time—have been equally important. In addition to this, the doubling of unique city-pair connections over the last 20 years has decreased travel times for passengers and made direct flights between secondary cities a viable option.
Policy changes, particularly the liberalization of air markets, can act as a significant driver in shaping travel demand. Liberalized markets, where airlines can operate with fewer restrictions, typically see lower fares and improved connectivity, both of which drive increased demand.
In Africa, for example, liberalizing air markets could reduce fares by up to 30%, opening up new opportunities for both passengers and airlines. There exists similar potential in South America and parts of Asia, where restrictive air service agreements currently limit growth.
Long-term passenger demand forecasting incorporates scenarios that model the potential impact of market liberalization, highlighting how policy changes could unlock new growth opportunities. By anticipating these regulatory shifts, stakeholders in the aviation industry can better plan for the future.
Sustainability is an integral and critical driver of air travel demand. Growing environmental awareness and regulatory pressure to reduce carbon emissions are reshaping the industry.
The adoption of Sustainable Aviation Fuels (SAFs), investments in next-generation aircraft, and operational efficiency improvements are all vital strategies for aligning growth with sustainability goals.
IATA’s 20-Year Passenger Forecast provides a multifaceted view of the future of air travel. By analyzing key drivers—such as economic growth, urbanization, travel costs, policy shifts, sustainability, and market liberalization—the forecast offers a comprehensive roadmap for navigating the opportunities and challenges of the next two decades.
As living standards rise, populations grow, and air travel becomes more accessible, the aviation industry will undergo a transformative period of expansion. However, this growth will vary across regions, influenced by unique economic, demographic, and regulatory factors.
For airlines, airports, and freight forwarders, understanding these drivers is essential to making informed decisions that align with evolving passenger demand.
Take the next step in understanding the future of air passenger demand, to learn more visit IATA 20-Year Passenger Forecast and how it can guide your strategic planning.
