Key insights
- IATA projects air travel demand to more than double by 2050, with Asia Pacific and Africa leading growth. While positive for the global economy, slower growth in North America (2.8%) suggests a potentially weaker outlook for US-based airlines compared to their Asian counterparts. This long-term trend may lead to shifts in market share and investment flows, but the impact on US equities is limited in the short term.
Investing.com -- The International Air Transport Association released its Long Term Demand Projections for air travel on Tuesday, forecasting that global air passenger demand is expected to more than double by 2050.
Under the mid-range scenario, demand is forecast to reach 20.8 trillion revenue passenger kilometers, based on a compound annual growth rate of 3.1% from 2024 to 2050, up from the 9 trillion revenue passenger kilometers seen in 2024.
A higher growth scenario would see a 3.3% compound annual growth rate with passenger demand reaching 21.9 trillion revenue passenger kilometers in 2050. A lower growth scenario would see 2.9% compound annual growth rate with passenger demand reaching 19.5 trillion revenue passenger kilometers by 2050.
The different scenarios are driven by alternative modeling of long-term economic growth, populations, aviation fuel price trends, the global energy transition, and air transport supply-side capacity development.
Willie Walsh, IATA’s Director General, said the outlook for air travel is positive and that people want to travel. He added that under all modeled scenarios, the demand to fly is expected to more than double by mid-century. Walsh said this is good news for global economic and social development because aviation growth will catalyze opportunities, including jobs, around the world.
The pace of growth will be uneven across regions, reflecting differences in demographics, market maturity, economic development, and connectivity potential. Under the mid-range scenario, Asia Pacific and Africa are expected to be the fastest growing regions over 2024 to 2050, with compound annual growth rates of 3.8% and 3.6% respectively. Europe and North America are projected to grow more slowly, at 2.5% and 2.8%.
The projections identify the fastest growing markets as intra-Africa at 4.9%, Africa to Asia Pacific at 4.5%, Asia Pacific to Middle East at 3.9%, intra-Asia Pacific at 3.9%, and Africa to North America at 3.8%.
The report confirms that the COVID-19 pandemic caused a permanent structural shift in global aviation demand. The collapse in revenue passenger kilometers has created a persistent gap that is not expected to converge back to the pre-pandemic GDP-aligned trend by 2050, even under the high growth scenario.
While long-term demand remains robust, the growth rate is moderating gradually. Historical analysis shows that average annual growth slowed from 6.1% compound annual growth rate between 1972 and 1998, to 4.5% compound annual growth rate between 1998 and 2024. The central scenario for 2024 to 2050 projects a further slowing to 3.1% compound annual growth rate.
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