The Evolving Air Transport Industry

CHAPTER 1· THE EVOLVING AIR TRANSPORT INDUSTRY
Table 1.13 The economic impact of selected airports
Airport Year of Report Total Jobs Total Jobs per Commercial Departure
CincinnatilNorthem Kentucky 2000 78,573 0.6510
Memphis 2004 165,901 1.0096
Greenville-Spartanburg 2003 5,787 0.2461
Minneapolis-St. Paul 2004 153,376 0.6299
Seattle - Tacoma 2003 160,174 0.9639
Wichita 2002 41,634 3.1835
Source: See chapter references for all six source documents.
However, direct correlations between GDP and air transport growth are never exact,
due to a variety of issues. For example, structural barriers in the air transport industry can
cause drastic differences between economic growth and the growth of the air transport
industry. A good example of this was the effect of deregulation in the United States;
deregulation was a major structural change that caused a rapid increase in the air transport
industry's growth compared to overall economic growth.
Airport capacity and, in the US, antiquated air traffic control are also potential
structural barriers. Major international airports in the United States and Europe have
severe capacity issues with relation to the number of aircraft that they are capable of
handling. As these capacity limits are reached, delays at these airports tend to increase
exponentially. These delays, especially if they are on an ongoing basis, discourage
demand and constrain growth. 6 Similar capacity issues could plague airports in the Asia­
Pacific region, especially Indian, Chinese, and Japanese airports. This capacity barrier to
air transport growth is a prime reason why Airbus embarked on the creation of its new
super-jumbo A380 aircraft.
The two major sources for the long-term air transport outlook are Boeing and Airbus.
Each aerospace giant has published its forecasts for the future of the aviation industry.
They have similar growth estimates for world air traffic growth, with Boeing forecasting
that world revenue passenger kilometers (RPKs) will grow at 4.9 per cent per annum for
the next 20 years and Airbus forecasting a 4.8 per cent per annum growth rate (Boeing,
2006a; Airbus, 2006). Airbus (2006) forecasts a greater annual growth rate (5.3 per cent) for
the first half of the period than the second half (4.4 per cent). These global RPK forecasts
mimic the historical global growth rate of 4.8 per cent from 1985 to 2005. However, the key
to understanding the global air transport industry is on a regional basis (Boeing, 2006a).
Table 1.14 summarizes the regional growth rate forecasts for Boeing and Airbus.
Both Airbus and Boeing also forecast worldwide demand for new aircraft for the next
20 years. Not surprisingly, each company's forecasts vary slightly, highlighting each
company's strategic plan and product offerings. Boeing (2006a) estimates that there will
be a demand for 23,760 aircraft seating over 90 passengers in the next 20 years, while
Airbus (2006) forecasts a worldwide demand for 21,860 similar-sized aircraft over the
same period. Although both companies agree that roughly 70 per cent of the demand for
6 See Chapter 5 for an analytical discussion of this issue.
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