Airlines and their customers are forecast to generate $136bn in tax revenues next year, IATA said in a report presented at the Global Media Day here on Thursday.

That is the equivalent of 45% of the industry’s GVA (Gross Value Added, which is the firm-level equivalent to GDP). In addition, the industry continues to create high value added jobs.

As for visa requirements, IATA said these “discourage” inbound tourism and business travel.

“Encouragingly, visa openness levels are improving. But the number of individual ticket taxes has risen to 241, while the level of many existing taxes continues to ratchet upwards,” IATA said.

Air transport is vital for manufactures’ trade, particularly trade in components, which is a major part of cross-border trade today. IATA forecasts that the value of international trade shipped by air next year will be $7.1tn. Tourists traveling by air in 2020 are forecast to spend $968bn.

Another impact on the wider economy comes through the influence that increased airline activity has on jobs in the sector, in its supply chain, and the jobs generated as spending ripples through the economy.

These ‘supply chain’ jobs around the world are estimated to rise to 72mn in 2020, more than the population of the 20th most populous country in the world.

“But in many countries, the value that aviation generates is not well understood. The commercial activities of the industry remain highly constrained by bilateral and other regulations. Moreover, regulation is far from ‘smart’, leading to unnecessarily high costs,” IATA said.

Consumers will see a substantial increase in the value they derive from air transport in 2020 including stability in what they pay airlines, after allowing for inflation.

The average return fare (before surcharges and tax) of $293 in 2020 is forecast to be 64% lower than in 1998, after adjusting for inflation. The number of new destinations is forecast to rise further this year, with trip frequencies up too; both boosting consumer benefits.

“We expect 1% of world GDP to be spent on air transport in 2020, totalling $908bn. RPK growth is forecast to remain stable close to the average of this year in 2020 on the back of moderate global economic backdrop. On the other hand, world trade is expected to rebound in 2020 following a weak year. This should support a small rebound in air cargo volumes,” IATA noted.

International Passenger Markets

October international passenger demand rose 3.2% compared to October 2018, unchanged from September’s year-over-year performance. With the exception of Latin America, all regions recorded increases, led by Middle East airlines for the first time since June 2018. Capacity climbed 1.6%, and load factor rose 1.3 percentage points to 81.0%.

Asia-Pacific airlines’ October traffic increased 3.8% compared to the year-ago period, a bit below the 4.0% annual growth recorded in September and well down on 2018 growth largely owing to weaker business confidence in a number of key markets, the impact of the US-China trade war and the recent disruptions in Hong Kong. Capacity rose 2.7% and load factor edged up 0.9 percentage points to 79.6%.

European carriers saw October demand climb 2.1% year-to-year, down from 3.2% growth in September. On a seasonally adjusted basis, traffic is showing a moderate upward trend despite generally soft economic activity in some of the key markets.  Capacity rose 1.3%, and load factor climbed 0.7 percentage points to 85.7%, which was the highest among regions.

Middle Eastern airlines posted a 5.9% traffic increase in October, which was a sharp increase over the 1.8% growth seen in September and throughout the year. Capacity increased by 0.3%, and load factor surged by 3.9 percentage points to 73.5%. 

North American carriers had the second highest international demand in October, with traffic up 4.1% compared to October a year ago and largely in line with a 4.3% annual increase in September. Growth is underpinned by a solid US economy and robust consumer spending. Capacity rose 2.0%, and load factor grew by 1.6 percentage points to 82.1%.

Latin American airlines experienced a 0.6% demand drop in October compared to the same month last year. This was the weakest performance in nine years, compared to 0.9% positive growth in September. Deteriorating economic conditions and rising social and political unrest in some of the region’s key economies likely contributed to the results. Capacity fell 2.3%, and the load factor rose 1.4 percentage points to 81.4%.

African airlines’ traffic climbed 1.8% in October, the same as in September. The economic slowdown in South Africa may have weighed on the recent moderation in demand growth. Capacity rose 3.6%, however, and load factor dipped 1.3 percentage points to 69.0%.

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