IATA sees more clouds than blue sky for air passenger demand growth

London (Quantum Commodity Intelligence) - The only way is up for the aviation market, but the International Air Transport Association (IATA) has set a wide range for demand growth over the next 20 years and warns the short-term still looks shaky in its latest forecast.

"Our scenario analysis indicates that global air passenger growth could plausibly be in the range of 1.5% and 3.6% over the next 20 years," the trade body, which represents 290 global airlines, stated Friday.

In November, IATA's baseline forecast anticipated 3.5% compound annual growth and a doubling of passenger numbers to 8.2 billion in 2037.

The difference between a 1.5% and 3.5% compound growth rate over 20 years is a 35% growth from current levels versus a near-doubling of passenger numbers, illustrating the amount of uncertainty still plaguing the sector long-term.

IATA also added there remains "considerably uncertainty surrounding the near-term impact of the (Covid) pandemic on air travel demand."

With demand improving 3.2% year on year, IATA sees worldwide passenger demand recovering to 2019 levels by 2023.

But there are regional variations.

North America, Latin America and Asia-Pacific recover to 2019 levels in 2023, but Europe, the Middle East and Africa recover in 2024.

Long-term, the aviation market's centre of gravity will continue to shift to Asia, particularly China.

In terms of individual routes, IATA predicts the fastest growth for journeys within Asia and the Middle East.

Passenger numbers between India and the United Arab Emirates will grow 6.9% a year, said IATA.

Between China and Thailand, passenger growth will be 5.6% a year, and between China and Japan, it will grow 4.6% a year.

Within domestic markets, China will see growth of 5% a year and India will see increases of 6.2% a year, while US air journeys will rise by only 1.4% a year, according to IATA.