Fasten Your Seat Belts

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When we wanted to do an article on the state of the global airline industry we decided the best place to start was with the IATA, as the International Air Transport Association is the trade association that represents most of the world’s airlines. Currently their 250 members make up 84% of total air traffic so we think they know a thing or two about the industry. Fortunately they’re feeling upbeat and that’s good news for all of us who love to fly.

The IATA expects that 1% of world GDP will be spent on air transport this year, that’s a whopping $820 billion. As an industry, air travel is accelerating with anticipated growth of 7% for 2015, which will be the best growth since 2010 and well above the average 5.5% growth trend of the past 20 years. And thanks to falling fuel costs they predict that the average return airfare will drop 5.1% from 2014’s average to $458 (before surcharges and tax). As well the cost of air shipping freight should also fall by 5.8%.

Air travel has much more importance in the global community than I think most people realize. Not only do airlines help the flow of business and leisure travel as well as cargo, but there are also many other knockoff social, economic and cultural benefits as well. So needless to say, we’re all for more air links. Not that there aren’t already a lot. In fact right now there are over 16,000 unique city-pair connections. A city-pair is any two cities linked by an air connection, so the departure and arrival cities on your itinerary. By the way the number of city pairs has basically doubled in the last 20 years, which shows how much the industry has grown and how well we are all now connected.

Airline Facts 3
The IATA also says the real cost of a return ticket has also fallen quite considerably in the last 20 years. We know this to be true, but with surcharges still being added to many tickets, we think they’re overstating this a bit.

Now back to the numbers because all of these connections pay big dividends. The IATA estimates that $7.3 trillion dollars of goods will be shipped by air this year and that travelers will spend about $644 billion dollars on plane tickets. That will represent a lot of frequent flyer miles. The net sum of all this air travel is the related services industries that support airlines (think food, maintenance, etc) was responsible for 518 million jobs in 2012. We suspect that in 2015 the total number of ‘supply chain’ jobs will be even larger.

So what does this all mean to us, the traveling public? Well we can hopefully expect slightly better air fares this year, most airlines should be profitable and stop cutting routes and shedding capacity and we also expect there will be even more city-pairs and new destinations to access. Fasten your seat belts because it should be a heck of a ride.

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