Strong growth in short-haul market
The combination of a high level of economic development and market liberalization is driving remarkable growth in air travel demand in Southwest Asia. Air traffic within Southwest Asia is expected to grow at an astonishing 8.7 percent annually over the next 20 years, a higher rate of internal growth than in any other region, including China. A crucial need for intercity travel within the region will drive robust demand for modern, efficient short- and medium-haul airplanes. More than 900 deliveries of a new single-aisle airplane are projected over 20 years.
Travel and tourism contribute to the economy
Economic development spurs demand for air travel. Travel and tourism, in turn, directly contribute to economic output within the region. A recent study by the World Travel & Tourism Council projects that by 2019 about 6 percent of India's total GDP will come from travel and tourism. This equates to nearly US $100 million in economic value (in year 2000 dollars). Travel and tourism will account for more than 7 percent of total employment in India by 2019, equating to about 40 million jobs. The numerous economic benefits of air travel are manifest, both in terms of the life-enriching experience of travelers and the financial benefits for those employed by the travel industry.
Young, expanding middle class drives growth
India's vibrant middle class is expected to grow, not only in numbers but in spending power over the coming years. McKinsey Global Institute estimates that India's middle class will be 600 million strong by 2025, with a four-fold increase in spending power. With half of India's population currently under the age of 25, there will be an abundant supply of new customers for airlines to tap over the next 20 years. Strong price competition among the region's airlines will serve to stimulate new demand, drawing millions of passengers away from the extensive rail network to much faster air services.
Infrastructure investment critical
Wide-scale investment in airport and airspace infrastructure is imperative to Southwest Asia's projected air travel market growth. Fortunately both governmental and private entities have recognized the need for modernization and have begun a massive infrastructure overhaul. Key projects include the recently completed airports at Hyderabad and Bangalore, with critical future airports in Mumbai and 35 other "greenfield" sites in the early planning stages.
