Predicting the growth of commercial passenger air travel is a tale of two skies: one over the developing world, the other over the developed.
Developing World: Strong Growth
In the developing world, air travel is taking off , literally and figuratively, as airlines offer low-cost travel to encourage a growing middle class to consider planes over trains and cars. The further the price falls, the further air travel will trickle down the economic pyramid, and the airlines will have to balance the growth of passenger numbers with profitable ticket prices. In any case, growth is likely to strong.
Developed World: Weak Growth
In the more developed areas, the number of passengers using air travels grows more slowly, and the airlines must compete as they try to earn more dollars from a less dynamic set of customers. They offer incentives such as loyalty programs, and their balancing act is between finding additional sources of revenue (bag fees, in-flight concessions) and attracting choosy consumers. Travelers are considering not just where and when to fly, but how to fly. Growth is likely to be slower.
That said, the air travel volume in the developed world will remain well ahead that of the developing world for some time to come.
Competition from Outside the Industry
What all airlines must compete with is new forms of communication technology. High-end videoconferencing and smartphone-to-smartphone apps create opportunities for people to come face to face without leaving their home or office. Many companies learned in the recent recession that they could get by without sending people to far flung places as frequently as they used to. Alternatives were found, and many are hesitating to resume previous travel habits.
Technology is not necessarily the enemy of air travel, however. Our visual online world makes the world a smaller, more approachable place. We can glimpse various corners of the world we might not have imagined before. Some of those places we will be inspired to visit. Because no matter what sky you are flying in, there is still nothing like being there in person, and air travel remains a very efficient way to get you there.
If you’d like to hear more, and also see some cool shots of aircraft, see my WillisTV video.