Air Transportation Growth and Economic Growth, 1950-2020

Air Transportation Growth Passengers and Freight and Economic Growth 1950 2020

Source: Air Transport Association and World Bank.

Between 1950 and 2020, air passenger and freight traffic grew systematically faster than gross world product (or GDP) as the unique ability of air transportation to collapse space and time drew more traffic. Correlation analysis reveals strong associations between air transport activity and GDP; with an R square of 0.96 for passengers-km and 0.98 for freight. Thus, each unit of economic growth is directly associated with a corresponding level of growth in passenger and cargo air transportation.

Air transportation endured a strong period of growth during the 1960s, with passenger and freight growth systematically in the 10%-20% range. Airports were being increasingly congested, and airline companies were looking for jet planes with higher capacities. The surge of passengers-km in 1970 (+31.1%) is mainly attributed to the introduction of the 747, a large capacity airplane that revolutionized air transportation by offering lower fares, high capacity, and a longer range of operation (thus more passengers-km). A setback for air transportation came in 1973 with the Arab oil embargo and the subsequent recession (1974-1975). The 1981-1984 recession, the Gulf War (1991), and the Asian Financial Crisis (1997) were also economic setbacks that impacted air transportation.

The events of September 11, 2001, linked with a recession had considerable impacts on air transportation which experienced a global loss of 35 million passengers between 2000 and 2001. This was the second time in history that passenger air transport experienced a year of negative growth. The third occurrence of negative growth took place in 2009 as the outcome of a major financial crisis and an issuing recession. The industry experienced a drop of 9 million passengers between 2008 and 2009.

The Covid-19 pandemic represents the fourth time the industry experienced a decline with a strong divergence between passengers and freight activity, which was not apparent in previous phases. While the number of passenger-km declined by 65.6% between 2019 and 2020 (a loss of 57 million passengers), the number of tons-km only declined by 0.1%.