DELIVERING STRATEGIC EXPERTISE GLOBALLY

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Focus: Effects of a Changing Global Economy on Airline Service

In recent years, uncertainty and vigilance have been central to airport planning. Although the need for caution remains, continuing changes in the global economy provide an opportunity to step back from daily operational challenges and consider alternative models for managing airline transportation throughout the world. The timing of an economic recovery remains uncertain, but the need to adapt to a changing global economy is on the horizon, as discussed in this first focus piece in a series.

The ongoing shift in the world’s economies will continue to have implications for global travel patterns and airline service.

Global linkages in world markets facilitate economic growth and drive airline capacity development and connectivity. Between 2000 and 2011, economic growth in six of eight world regions increased at rates above the world average of 2.5% per year (as measured by Gross Domestic Product [GDP] converted to 2005 U.S. dollars. The mature economies of Europe and North America have experienced below average economic growth since 2000, reflecting the global economic recession and financial credit crisis. Growth in airline capacity (i.e., available aircraft seats) has generally followed the trends in economic growth. The emerging economies of Western Asia reported the fastest growth in GDP and airline capacity (averaging 7.3% and 10.0% per year, respectively). In the Middle East, Southeast Asia, and Europe, airline capacity grew at approximately twice GDP growth. Strong growth in airline capacity in Europe reflects the development of low cost carrier service since 2000 despite economic growth below the world average. Since 2007, airline capacity has decreased in North America, with much of the decrease related to domestic capacity reductions.

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