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% in 2016 but accelerated throughout 2017, rebounding to 11.3%. The turnaround in performance was due to a range of factors:
- A broad-based pick-up in global economic conditions over the past 18 months or so. This was partly driven by stimulus efforts in EMs themselves, notably China;
- Recovery in global commodity prices over the period also supported incomes and passenger demand in commodity-dependent EMs countries, particularly Russia.
- Economic activity in EMs may also have been helped since the start of 2017 by the weaker USD;
- More stable political conditions were also a contributing factor to the turnaround, particularly in Turkey where 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 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]