Against a backdrop of slowing economic growth, the recovery in global air travel continues to support forecasts of a return to 2019 levels of traffic in 2024 at the aggregate level, IATA Chief Economist Marie Owens Thomsen told the World Financial Symposium.
Forward bookings continue to be strong, with international bookings accelerating despite lingering COVID-19 related travel restrictions in Asia, and especially in China.
Owens Thomsen noted that global GDP growth was expected to come in at around 3% this year, which is half the growth experienced in 2021. Emerging economies will bear the brunt of the challenges this creates. At the same time, “spectacular” job growth should help allay the impact of rising inflation and interest rates. Owens Thomsen also pointed out that high inflation translates into lower real interest rates even if nominal rates rise. High inflation also reduces the real value of debt.
Turning to the long-term industry outlook, the forecast is for 3.4% compound annual growth rate (CAGR) between 2019 and 2040. Such was the impact of COVID-19 and related travel restrictions, however, that she estimated the lost traffic between 2020 and 2022 as equivalent to 1.8x 2019 RPKs. And in 2040, if the current forecast is realized, traffic will still be 6% below the pre-pandemic forecast, she said.
Echoing a theme heard earlier in the day, Owens Thomsen, noted that aviation is a necessary ingredient for economic development. She pointed out that the importance of international aviation to global well-being and development was recognized more than 75 years ago by the drafters of the Chicago Convention of 1944. The State signatories to the Chicago Convention need to recognize their obligations in the treaty to continue to support the development of aviation. Without downplaying the critical importance of achieving aviation’s fly net zero target, she said that for the sake of continued economic development, “we need to fly more, not less.”