The aviation industry is maintaining a positive long-term outlook, with the Asia-Pacific region projected to lead global growth through 2025, according to a new report by Alton Aviation Consultancy. While the sector faces near-term challenges, such as supply chain issues and cost inflation, industry experts believe air travel demand will rebound after a period of adjustment.
Asia-Pacific Driving Global Expansion
The Aviation Outlook 2025 report forecasts that the Asia-Pacific region will remain the largest market for air travel, with an anticipated annual growth rate of 5.1%. This expansion will be primarily driven by increasing long-term demand from China and India. Globally, the aviation industry is projected to serve over 5 billion passengers by 2025, with total revenues breaking the $1 trillion mark for the first time.
Navigating Near-Term Headwinds
While the long-term outlook is positive, Alton’s researchers highlighted four key conditions that could impact the industry’s performance in the near term:
- Ongoing supply chain issues disrupting aircraft production and delivery
- Normalizing airline yields due to increased capacity and shifts in leisure demand
- Persistent cost inflation, particularly in labor and maintenance, as well as geopolitical tensions
- The growing risk of a global trade war, which could reduce air cargo demand
However, Mabel Kwan, Alton Aviation Consultancy’s managing director in Singapore, noted that air travel demand has historically rebounded after periods of adjustment. “Unless there’s a fundamental shift that permanently dampens the desire to travel, I believe that you will see a slow adjustment back to the longer term demand curve,” she stated.
Kwan pointed to continued airline confidence, as evidenced by recent major aircraft orders from carriers like Vietjet and Qatar Airways. Airlines view the current challenges as “short-term disruptions” that will be resolved before aircraft deliveries.
Prioritizing Technology, Sustainability, and Resilience
As the aviation industry navigates the road ahead, Kwan emphasized the importance of focusing on three key areas:
- Technology: Investments in technology will help address intensifying manpower constraints and drive greater efficiency and productivity across the ecosystem.
- Sustainability: A sustainability mindset is essential as the industry aims to achieve net-zero emissions by 2050, but remains far from meeting its targets.
- Resilience: Given the industry’s history of shocks and volatility, a strategic approach to improved resilience is necessary to withstand future disruptions.
By addressing these priorities, the aviation industry can strengthen its foundations and capitalize on the long-term growth opportunities, particularly in the dynamic Asia-Pacific region.
