Airline Globalization
Module 7.3 : Airline Globalization
Of the six worldwide regions displayed, which one do you think has the greatest potential for airline growth, and why?
There are many factors that play into which region of our world will have the greatest airline growth in the coming years. Much of the research points to China. It has been reported that the Asia-Pacific region with China at the helm will steer some massive growth in the next 20 years due to adding new passengers to the market (IATA Forecast Predicts, 2018). China will take first place over the United States in 2022 due to their airlines expanding at a prompt rate for their international destinations. The Asia -Pacific region is expected to add an additional 2.35 billion passengers by 2037 and its compound annual growth rate (CAGR) will be at 4.8% (IATA Forecast Predicts, 2018). This will give China a significant advantage.
However, China only allows so many national carriers to fly to the United States through their international policy. This means that more outbound traffic from China is happening to the U.S. then inbound. The imbalance may hurt China’s aviation market. The United States carriers are losing attraction in the Chinese market. “Without US airlines pushing the government here to renegotiate its bilateral treaty with China to allow for more flights, it’s unlikely that China will be able to secure the right to add flights from its side of the Pacific” (Garcia, 2018). The U.S. is dropping routes with China, and with the trade dispute is still up in the air, China is missing out on part of a USD 626 billion in GDP (Aviation Benefits, 2018).
Even with politics in the way, I believe that China and the Asian Pacific Region as a result will soon become the world’s largest economic hub for aviation. Boeing anticipates China will need more than 7,200 new airplanes worth more than $1 trillion dollars, and while the American company will reap the profits from such a tall order, the benefit goes to China in the long run (Ostrowe, 2017). With a population into the billions, they truly are a worldwide contender.
References
Aviation benefits: a better future. (2018, July 11). Retrieved May 9, 2020, from
https://www.unitingaviation.com/news/economic-development/aviation-benefits-for-a-better-
future/
Garcia, M. (2018, September 17). Air China Exec Warns Of 'Dark Clouds' As U.S. Carriers Drop
China Routes. Retrieved on May 9, 2020 from https://www.forbes.com/sites/marisagarcia/2018/09/17/head-of-air-china-north-america- warns-of-dark-clouds-as-u-s-carriers-drop-routes/#4eac9ec162aa
IATA Forecast Predicts 8.2 billion Air Travelers in 2037. (2018, October 24). Retrieved on May 9, 2020
from https://www.iata.org/pressroom/pr/Pages/2018-10-24-02.aspx
Ostrowe, J. (2017, October 27). China will be the largest market for flying a lot sooner than people
thought.
air-travel-market-iata-forecast/index.html
