In May 2020, Bain & Company began making regular forecasts of how aviation demand will recover from the effects of Covid-19. For the time being, despite the reduced effects of the pandemic on air transport, the fight against carbon dioxide emissions, inflation and low disposable income is an impediment to the future growth of the sector.
In fact, according to the consultant, The impact of measures to reduce carbon dioxide emissions from the aviation sector is already beginning to have an effect In demand in the medium and long term.
Specifically, the forecast at the end of the second quarter of 2023 for the aviation sector provided by Bain & Company indicates that Air travel demand is still on track to surpass 2019 levels next year, With a long-term trajectory depends on carbon dioxide costs, specific market competitive pressures and macroeconomic growth.
Bain’s forecast of lower macroeconomic growth now includes an impact possible mild recession in 2028-2029, That would dampen the growth in travel demand in the past two years.
but also, The cost to airlines of reducing carbon emissions is expected to significantly increase ticket prices from 2026. By 2030, Bain & Company expects these costs to reduce demand by an average of 4.7% across all regions compared to the zero-cost carbon emissions scenario.
“This result is more significant than our model predicted last quarter, a 3.5% drop in demand. vs. no-cost carbon emissions scenario. This is due to the changing expectations of the regulatory environment and rising prices for sustainable aviation fuels,” Payne notes.
Demand is expected to vary significantly between geographic regions. In 2030, travel between Europe and North America could increase by about 17% compared to the volume of demand in 2019, while intra-regional travel in Asia could rise by 61%.
European airlines have less room to cut prices to stimulate demand, Due to cost inflation, competition among low-cost airlines and tightening regulations on carbon emissions. This regulatory framework is expected to reduce demand for long-haul flights to and from Europe. On the other hand, traffic within the projected region in Europe increased by 3 percentage points in Bain & Company’s latest study, thanks to more favorable projections of disposable income growth.
2030 North American Short-haul Flight Forecasts, Despite its strong rebound, it fell five percentage points due to changes in the macroeconomic outlook. Finally, Payne notes that Asia has much stronger prospects for long-term disposable income growth, with low-cost carriers also continuing to accelerate their growth. He adds that there is still a lot of uncertainty in Asia about how regulation of carbon emissions will evolve in each country.
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