UAE airlines to lead Middle East passenger growth

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UAE airlines to lead Middle East passenger growth
Emirates is expected to lead the surge in passenger demand for the Middle East.

dubai - 7.2 billion passengers are expected to travel in 2035, predicts Iata

By Abdul Basit

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Published: Tue 18 Oct 2016, 7:16 PM

Last updated: Wed 19 Oct 2016, 4:32 PM

Airlines in the UAE will lead the Middle East with the strongest growth of 6.3 per cent per annum in the next 20 years, the International Air Transport Association (Iata) said in its latest forecast on Tuesday.

The Middle East will be the second strongest market after Africa with five per cent growth and the region will see an extra 258 million passengers a year on routes to, from and within the region by 2035.

The UAE, Qatar and Saudi Arabia will all enjoy strong growth of 6.3 per cent, 4.7 per cent and 4.1 per cent respectively. The total market size of the region will be 414 million passengers.

In its prediction for the global market, the apex body of the airline industry said it expects 7.2 billion passengers to travel in 2035, a near doubling of the 3.8 billion air travellers in 2016. The forecast is based on a 3.7 per cent annual compound average growth rate (CAGR).

"People want to fly. Demand for air travel over the next two decades is set to double. Enabling people and nations to trade, explore and share the benefits of innovation and economic prosperity makes our world a better place," Iata director-general and CEO Alexandre de Juniac said.

Biggest driver of demand
The latest forecast for passenger growth confirms that the biggest driver of demand will be the Asia-Pacific region. It is expected to be the source of more than half the new passengers over the next 20 years.

China will displace the US as the world's largest aviation market around 2029. India will displace the UK for third place in 2026, while Indonesia enters the top 10 at the expense of Italy. Growth will also increasingly be driven within developing markets. Over the past decade, the developing world's share of total passenger traffic has risen from 24 per cent to nearly 40 per cent, and this trend is set to continue.

The forecast puts forward three scenarios. The central scenario foresees a doubling of passengers with a 3.7 per cent annual CAGR. If trade liberalisation gathers pace, demand could triple the 2015 level. Conversely, if the current trend towards trade protectionism gathers strength, growth could cool to 2.5 per cent annual CAGR which would see passenger numbers reach 5.8 billion by 2035.

"Economic growth is the only durable solution for the world's current economic woes. Yet, we see governments raising barriers to trade rather than making it easier. If this continues in the long term, it will mean slower growth and the world will be poorer for it. For aviation, the protectionist scenario could see growth slowing to as low as 2.5 per cent annually. Not only will that mean fewer new aviation jobs, it will mean that instead of 7.2 billion travellers in 2035, we will have 5.8 billion. The economic impact of that will be broad and hard-felt," said de Juniac.

Whatever scenario is eventually realised, growth will put pressure on infrastructure that is already struggling to cope with demand. "Runways, terminals, security and baggage systems, air traffic control and a whole raft of other elements need to be expanded to be ready for the growing number of flyers. It cannot be done by the industry alone. Planning for change requires governments, communities and the industry working together in partnership," said de Juniac.

Capping emissions
The industry will also need to be able to grow sustainably. Earlier this month, airlines supported the establishment of a Carbon Offset and Reduction Scheme for International Aviation (Corsia). This landmark agreement - the first among governments to manage the emissions growth of an entire global industrial sector - aims to cap net emissions with carbon-neutral growth from 2020.

"Aviation is at the forefront of industries in managing its carbon footprint. Along with offsetting emissions through Corsia, airlines are working with partners in industry and government to advance technology, improve operations and generate more efficiencies in infrastructure," said de Juniac.

The top 10 fastest-growing markets in percentage terms will be in Africa: Sierra Leone, Guinea, Central African Republic, Benin, Mali, Rwanda, Togo, Uganda, Zambia and Madagascar. Each of these markets is expected to grow by more than eight per cent each year on average over the next 20 years, doubling in size each decade.

Region-wise growth
The forecast says Asia-Pacific will see an extra 1.8 billion annual passengers by 2035, for an overall market size of 3.1 billion. Its annual average growth rate of 4.7 per cent will be the third-highest, behind Africa and the Middle East.

The North American region is expected to grow by 2.8 per cent annually and in 2035, the region will carry a total of 1.3 billion passengers, an additional 536 million passengers per year.

Europe will have the slowest growth rate, 2.5 per cent, but will still add an additional 570 million passengers a year. The total market will be 1.5 billion passengers.

Latin American markets will grow by 3.8 per cent, serving a total of 658 million passengers, an additional 345 million passengers annually compared to today.

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