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Air travel demand projected to double in 20 years

The demand for air travel will likely double by 2035, according to PwC’s annual report on the state of the worldwide airline industry.

June 09, 2015

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​But as the ascent of emerging economies and their burgeoning middle classes fuels the desire to travel to distant places, the airline industry will need to boost infrastructure, hire pilots and temper the ups and downs of fuel costs.

"Prospects for the global airline industry are promising, as megatrends including shifts in global economic power and demographics ... increasing the demand for air travel," Jonathan Kletzel, PwC's U.S. Transportation and Logistics practice leader, said in a statement. "There is a need, however, for industry players to invest in infrastructure upgrades and effective fuel price volatility programs while also addressing aging talent and the growing trained labor shortage."

More than two thirds of airline CEOs are concerned that current infrastructure can't sufficiently handle the expected growth, according to the report. Those limitations are particularly noticeable in China, Latin America and India, where the increase in passengers is supposed to be most explosive. Without improving airports, air traffic control and other facilities, airlines could see revenue fall, the PwC study says.

But Kevin Mitchell, founder of the Business Travel Coalition, says that it is likely the U.S. that will be left behind.

"I do not believe that the U.S. has the political will to make decisions to invest sufficiently in aviation infrastructure . . As we slide closer to third-world airport status, domestic business travelers will experience declining mobility, convenience and customer service. International business travelers will likely fare much better as that's where the big investments in infrastructure are happening."

Airlines For America, the trade group for most major U.S. carriers, said in a statement that "airlines are making major investments in airports, including $70 billion in projects completed, approved, or underway at the 30 largest (U.S.) airports since 2008.'' The organization added that the "the best way to manage for significant traffic growth is to implement NextGen,'' a program of air traffic upgrades that promises to make air travel safer and more efficient. 

Airlines, meanwhile, have been on a roll when it comes to profits, in large part because of the plummeting price of fuel. The cheaper fuel prices mean that as an industry, airlines will spend $70 billion less on fuel in 2015 than they did last year.

At its annual general meeting in Miami on Monday, the International Air Transport Association (IATA) forecast that the industry would reap a $29.3 billion net profit this year, up from $16.4 billion in 2014. North American carriers are projected to be responsible for over half the profits produced worldwide.

Though crude oil prices remain relatively low at $64 per barrel, vs. $102 last April, airlines have to prepare for when those costs are high once again.

"Regardless of the mix of strategies carriers pursue, the most agile operators will find that planning for volatile fuel price environments can create opportunities in the coming quarters as well as the long term," Kletzel said.

All the savings airlines are currently enjoying and plowing back into their companies to buy new jets and enhance on-board amenities may not mitigate the costs of labor as airlines need to replace older pilots, and bolster overall staffing to meet the escalating travel demand.

"While fuel prices are contributing to profitability in the industry, it is unlikely that airlines will see relief from a labor cost perspective due to expected growth in the demand for pilots and maintenance technicians," Kletzel says.

PwC says that the industry must hire 2.7 million new aviation employees over the next decade.

Those findings echo an industry forecast by planemaker Boeing, released last summer, that predicted a global need for 533,000 new commercial airline pilots and 584,000 new maintenance technicians by 2033.