Aviation is one of the world’s fastest-moving sectors, combining technology, innovation, entrepreneurialism, economic development, infrastructure support, demographic growth, contribution to globalisation and a touch of glamour. Progress in this sector is impressive in its speed and diversified in its nature.
Economic and traffic growth are two of the key indicators of growth in commercial aviation globally. Economic growth in a region generally has a strong impact on the increase in demand for air service. While in aggregate this is true, the degree to which air service grows in relation to gross domestic product (GDP) is not consistent throughout the world. Typically, in developing countries, air service grows at a much higher rate than GDP. Historic experience in Western Europe and North America shows that air traffic growth in a developed country with a mature air service market is less responsive to GDP than in a developing country. By way of illustration, Boeing’s worldwide forecast for the ratio of air traffic demand growth to GDP growth over the next 20 years is approximately 1:5, albeit with regional variation. At any time and in any place, few airlines have the internal cash available to self-finance acquisitions of new or used commercial aircraft, and most airlines seek financing from a variety of sources, including traditional bank debt, export credit guarantees, tax leases, capital markets and operating leases.
There has been much commentary in recent years relating to the enormous aviation potential of the economies of Brazil, Russia, India and China. Recently, Africa and the Asia-Pacific region have been regularly added to this list, and we may add Latin America and the Middle East to the regions already mentioned. In other words, heady growth (more than 6 per cent) is predicted in almost every region of the world with the exception of Western Europe, which may be considered to have reached saturation point.
Editor: Mark Bisset
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