State of the Industry...Economics Increasing accessibility of air travel 5 Source: IATA Economics using data from IATA Statistics, UN, IATA forecasts 15 20 25 30 35 40 45 50 1,000

EconomicsEconomics

State of the Industry:Charts from the monthly reports

& related sources

IATA Economics

September 2019Economics

Economics

More cities connected at lower real cost

Source: IATA Economics using data from ICAO, IATA Statistics, SRS Analyzer and our own forecasts2

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2.5

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

1995 1999 2003 2007 2011 2015 2019

US

$/R

TK

in 2

01

4U

S$

Nu

mb

er

of

un

iqu

e c

ity

-pa

irs

Unique city-pairs and real transport costs

Unique city-pairs

Real transport costs

Economics

Flows of trade and tourism boosted

Source: IATA Economcis using data from UNWTO, Oxford Economics, IATA Economics forecast3

Economics

More than 2.9 million airline jobs in 2019

Source: IATA Economics using data from ICAO, ATAG, IATA forecasts4

Economics

Increasing accessibility of air travel

Source: IATA Economics using data from IATA Statistics, UN, IATA forecasts5

15

20

25

30

35

40

45

50

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Av

era

ge

nu

mb

er

of

mo

nth

s b

efo

re n

ex

t tr

ip

Mill

ion

Passenger numbers and months before next trip for world population

Airline passengers

Average number of months before average member of world population takes a flight

Economics

But airline industry profit margins under pressure

Source: The Airline Analyst, IATA Economics6

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2011 2012 2013 2014 2015 2016 2017 2018 2019

% o

f o

pe

rati

ng

re

ve

nu

es

Airline industry operating margin

Seasonally adjusted

Actual

Economics

As unit costs rise and cost recovery falters

Source: IATA Economics using data from Airline Analyst7

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2011 2012 2013 2014 2015 2016 2017 2018 2019

% c

ha

ng

e y

ea

r-o

n-y

ea

r

Unit cost and unit revenue growth

Unit cost growth

Unit revenue growth

Economics

…and cost pressures are broader than just fuel

Source: The Airline Analyst

Economics

Breakeven rises, narrowing gap with load factor

Source: The Airline Analyst, IATA9

58

60

62

64

66

68

70

72

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

% A

TK

s

Breakeven and achieved load factor

Achieved

Breakeven

Economics

Net profits fall to $28 billion, but still better than before 2015

Source: IATA Economics, Economic Performance of the Airline Industry, Mid-Year 201910

-40

-30

-20

-10

0

10

20

30

40

-10

-8

-6

-4

-2

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

US

$ b

illio

n

% r

ev

en

ue

s

Global commercial airline profitability

Net post-tax profit

EBIT margin

Economics

Regional profitability remains very uneven

Source: IATA Economics using data from ICAO, The Airline Analyst, IATA forecasts11

-4%

-2%

0%

2%

4%

6%

8%

10%

N America Europe Asia Pacific Middle East L America Africa

Net post-tax profit margins

2016 2017 2018 2019F

Economics

Driven largely by N.America, Europe & Asia

Source: ICAO, IATA12

-5

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F

N America Europe Asia Pacific

Midle East L America Africa

Net profit (US$ billion)

Economics

Per passenger (net) profit shows wide regional variation

Source: IATA Economics13

18.9

1.7

8.37.1

-2.3

0.5

9.2

14.7

-1.7

8.2

4.7

-1.1

-4.5

6.9

14.8

0.5

6.7

3.5

-1.5

-5.0

6.1

-10

-5

0

5

10

15

20

25

Nth America Latin America Europe Asia Pacific Africa Middle East Industry

Profit per passenger (US$)

2017 2018 2019F

Economics

…but expected growth varies widely across regions

Source: IMF – April 201914

1.4

2.5

6.2

2.4 2.6

3.8

5.9

7.6

1.8

0

1

2

3

4

5

6

7

8

Euro area Emerg.

Europe

Emerg. Asia Latin

America

ME & Nth.Afr S-Saharan

Africa

China India US

GDP Growth (% per year)

Economics

Passenger and freight load factors continue to diverge in the long run

Source: IATA Monthly Statistics15

41%

43%

45%

47%

49%

51%

53%

77%

78%

79%

80%

81%

82%

83%

84%

2012 2013 2014 2015 2016 2017 2018 2019

Passenger load factor, seasonally adjusted Freight load factor, seasonally adjusted

% of ASKs % of AFTKs

Source: IATA Monthly Statistics

Economics

The global air transport industry:

Source: IATA16

Economics

Every day in 2018…

12 MILLION PASSENGERS

104,400 FLIGHTS

$18.2 BILLION WORTHOF GOODS CARRIED

Source: IATA17

Economics

Average price of air travel (real terms)

Source: IATA18

Economics

Demand for air travel to double over the next 20 years

Source: IATA/Tourism Economics19

3

4

5

6

7

8

9

10

11

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

Passengers (billion, O-D basis)

Current trends scenario

Protectionism deepens scenario

Return to globalization scenario8.1bn

3.8bn

Economics

Demand for air travel to double over the next 20yrs…

3.9%Average annual growth in global air passenger journeys over the next 20 years

2.1xThe number of air passenger journeys in 2038 compared with today

Source: IATA/Tourism Economics20

Economics

20-year air passenger growth is shifting East & South

Source: IATA/Tourism Economics21

Economics

Where’s the growth coming from?

Source: IATA/Tourism Economics22

Additional pax journeys per year in 2038 vs 2018 (million) & CAGR (% per year)

Economics

Top 10 air passenger markets 2018-38

Source: IATA/Tourism Economics23

1

2

3

4

5

6

7

8

9

10

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

United States

Spain

China

United Kingdom

Japan

India

Germany

Italy

France

Indonesia

China

United States

India

Indonesia

UnitedKingdom

Spain

Japan

Germany

Thailand

South Korea

Top 10 largest air passenger markets over time (ranked by passenger numbers, to/from and within each country)

Economics

Top 10 domestic air passenger markets 2018-38

Source: IATA/Tourism Economics24

1

2

3

4

5

6

7

8

9

10

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038

United States

Indonesia

China

India

Japan

Brazil

Australia

Russian Fed.

Mexico

Turkey

China

United States

India

Indonesia

Brazil

Japan

Mexico

Vietnam

Australia

Turkey

Top domestic passenger markets, ranked by passenger numbers

Economics

Changes in market share over time…

Source: IATA Statistics 25

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

Share of global passenger revenue…

Asia Pacific

North America

Europe

Middle East

Latin America

Africa

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

…and freight tonne kilometres*

Asia Pacific

North America

Europe

Middle East

Latin America Africa

*Region of registration basis

Economics

The Americas

26

Economics

In North America, air transport supports…

27

…7.3million jobs & $844billion of GDP

Source: ATAG 27

EconomicsSource: ATAG 28

Economics

Jet aircraft deliveries made & scheduled

Source: Ascend29

4878 91

301 287263

98

12

6253

56

0

50

100

150

200

250

300

350

400

2017 2018 2019 2017 2018 2019

Narrowbody Widebody

Lat.Am

NthAm

# deliveries made & due

Source: Ascend

Aircraft deliveries to the Americas (as of September 2019)

Economics

Europe

30

Economics

In Europe, air transport supports…

31

…12.2 million jobs & $823 billion of GDP

Source: ATAG31

EconomicsSource: ATAG32

Economics

Jet aircraft deliveries made & scheduled

Source: Ascend33

316365

286

50

55

92

0

50

100

150

200

250

300

350

400

450

2017 2018 2019

Narrowbody Widebody

# deliveries made & due

Source: Ascend

Aircraft deliveries to Europe (as of September 2019)

Economics

Asia Pacific

34

Economics

In the Asia Pacific, air transport supports…

35

…30.2 million jobs & $684 billion of GDP

Source: ATAG35

EconomicsSource: ATAG36

Economics

Freight volumes – FTK growth comparison

Source: IATA Statistics Note: Asia-Pacific includes North Asia37

-15%

-10%

-5%

0%

5%

10%

15%

20%

2013 2014 2015 2016 2017 2018 2019

Asia-Pacific Total Industry

Growth in air freight volumes

FTKs, % Growth year-on-year

Source: IATA Statistics

Economics

Jet aircraft deliveries made & scheduled

Source: Ascend38

520571

411

159

173

160

0

100

200

300

400

500

600

700

800

2017 2018 2019

Narrowbody Widebody

Aircraft deliveries to the Asia Pacific (as of September 2019)# deliveries made & due

Source: Ascend

Economics

North Asia

39

Economics

Business confidence

Source: Markit40

40

45

50

55

60

2013 2014 2015 2016 2017 2018 2019

China Hong Kong Chinese Taipei

Business confidence - manufacturing PMIs

50=no change, seasonally adjusted

Source: Markit

Economics

Jet aircraft deliveries made & scheduled

Source: Ascend41

331 338

218

520571

411

57 76

55

159

173

160

0

100

200

300

400

500

600

700

800

2017 2018 2019 2017 2018 2019

Narrowbody Widebody

People's Republic of China

Asia Pacific# deliveries made & due

Source: Ascend

Aircraft deliveries to China & the Asia Pacific (as of Sep 2019)

Economics42

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