The global air transport industry has recovered from the losses in earlier years and is forecasting an esti-mated US$12.9 billion profit for 2013. The key drivers, according to IATA, were improvements to the industry’s structure and lower jet-fuel prices. However, the industry’s 1.8% net profit margin in 2013, and 2.6% expected for 2014, remain below the weighted cost of capital. As such, investments in airlines still remain risky and unprofitable for shareholders. Moreover, profits depend to a large extent on the cost of jet fuel, a factor which cannot be controlled by airline management.
On the other hand, never before has air transportation played such a crucial role for global economic development. Over 3 billion passengers have been transported globally last year by an industry that achieved a new safety record. Global trade and the integration of emerging markets depend more than ever on sustainable air services. The tourism sector, which contributes about US$2 trillion to global GDP, hinges on air transportation as 51% of international tourists now travel by air. These tourists generated US$1.3 trillion dollars in exports for the countries they visited, close to 6% of the world’s exports of goods and services or 30% of service exports alone.
Cargo demand, however, has remained stagnant, with airlines having transported 51.6 million tons in 2013. The industry sees the reasons in “on-shoring” of production, which is decreasing cargo business. This seems to be driven by the rise in protectionist measures by governments aiming to stimulate do-mestic economies, and the rise of labor costs in previously low labor-cost locations.
Emerging and developing countries have experienced strong growth in 2013. While air traffic in terms of available seat kilometers (ASK) grew modestly in the US and Europe, strong growth of over 12% was maintained in the Middle East and China, as well as 7.4% in Latin America, while traffic in Africa and the Asia-Pacific Region grew at 5.2%.
Continued growth is forecasted in emerging countries, which requires investments in airport and air traffic control infrastructure. However, the industry remains vulnerable, especially to rising fuel cost and sudden economic downturns. Airline fleet renewal, international alliances, and effective yield manage-ment are necessary to weather future downturns. Governments, finally, need to continue to liberalize and facilitate the sector, while ensuring safety and security through compliant regulatory oversight.
Against this backdrop, the World Bank Group (WBG) is supporting its client countries in the develop-ment of a sustainable air transport sector. The focus remains on safety, security, and affordability of air transport services, as well as on sustainability of the industry through green growth of aviation. The WBG continues to support the development of the sector through critical investments in public and pri-vate projects, investment guarantees, advisory services, technical assistance, and research projects.
For the full story of the World Bank Group Air Transport Fiscal Year 2013 Annual Report as well as previous issues of annual reports, please see the links below:
World Bank Group Air Transport Fiscal Year 2013 Annual Report (PDF file, 3,870kb in size)
World Bank Group Air Transport Fiscal Year 2012 Annual Report (PDF file, 3,760kb in size)
World Bank Group Air Transport Fiscal Year 2011 Annual Report (PDF file, 2,070kb in size)
World Bank Group Air Transport Fiscal Year 2010 Annual Report (PDF file, 1,743kb in size)
World Bank Group Air Transport Fiscal Year 2009 Annual Report (PDF file, 1,687kb in size)
World Bank Group Air Transport Fiscal Year 2008 Annual Report (PDF file, 924kb in size)
World Bank Group Air Transport Fiscal Year 2007 Annual Report (PDF file, 917kb in size)
World Bank Group Air Transport Fiscal Year 2006 Annual Report (PDF file, 509kb in size)
World Bank Group Air Transport Fiscal Year 2005 Annual Report (PDF file, 872kb in size)
To contact the air transport office at the World Bank, please click below to send an email to
Charles E. Schlumberger
Lead Air Transport Specialist
Air Transport Specialist