World Routes 2021: Projecting a CAGR of 39% Between 2021 and 2024 (Part 1 of 2)

Kevin Rozario


October 13, 2021

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The catastrophic damage caused by the pandemic can’t be fully undone but at least the bounce-back looks like it will be robust, even if it doesn’t get back to the strong trajectory predicted before the Covid-19 pandemic hit.

Routes logoAt one of the first big aviation industry in-person gatherings in about 18 months there was a mood of cautious optimism that both airports and airlines are at a crucial turning point. After total industry passenger revenues fell by 69% to $189 billion in 2020, and net losses topped $126 billion, better news is on the horizon.

At the VIP Airport Leadership Programme in Milan on 9 October – which led up to the 26th World Route Development Forum – some data on the recovery, pulled together by ASM World Route Development Consultants, offered comfort to the high-level aviation audience.

Key among the stats was that the global aviation market would grow by 39% CAGR between 2021 and 2024 according to IATA calculations. This is underpinned by robust economic recovery, though the International Monetary Fund has revised it down to 6% in 2021 due to debt burdens and inflation. For 2022 the IMF has put growth at 4.9%.

ASM’s Nigel Mayes, senior vice president at ASM World Route Development Consultants said that aviation would be “one of the fastest growing industries on the planet” in the period to 2024. In line with what has already been seen during the pandemic, domestic traffic would drive the revival at 50% CAGR while international would expand at the slower pace of 29%.

Two Years of Growth Wiped Out

This, of course, comes off the very low base to which traffic has fallen in 2020 and 2021. And while the growth in the coming years will be very strong, it will not get back to projected pre-pandemic rates as far out as 2030. The end result? “We estimate a COVID19 long-term loss of two years growth,” said IATA’s Chief Economist Brian Pearce at the end of May.

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The recovery will be strong but the market will not reach pre-pandemic forecasts.

The market has also changed. Cargo has become a much more prominent segment and now accounts for one third of all airline revenue, with air freight growth this year to August up 8%. “About 1,000 jets have been moved from passenger service to dedicated freighter,” commented Mayes.

Passenger recovery is also very varied by region: in August the Americas led by the US was at 62% of 2019 levels, significantly ahead of Europe’s and Middle East/Africa’s respective 49% and 42%, with Asia trailing badly at 32% due to some very tight restrictions on international travel in some major markets such as China. This regional situation could quickly change as more markets have begun to open up. Equally the onset of winter in the northern hemisphere and rising COVID cases could possibly lead to some further travel restrictions.

In a panel discussion at the event it was unanimously agreed that liberalization would be one way to fast-forward the aviation business. More on that next week.