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Asia at centre of air traffic growth

28 Sep 2015

Global demand for air travel has increased significantly over the last 25 years.

Since 1990 air travel has grown on average 4.7 per cent each year, despite falls following 1991’s global recession, the September 11 terrorist attacks in 2001 and more recently, the global financial crisis.

Over the last 20 years the Middle East and Asia-Pacific regions have seen the strongest growth in air travel. In the mature Americas market, air travel has grown by 2.7 per cent a year over this period, compared with 6.4 per cent in Asia and 9 per cent in the Middle East. 

The trend is set to continue, with world air traffic expected to double in the next 15 years and passenger aircraft numbers to increase by 106 per cent by 2034, according to the Airbus 2015 global market forecast.

By 2034, the volume of airline travel in the People’s Republic of China is forecast to have reached the same level as Europe today, and the Asia-Pacific region will lead the world in air traffic.

Contributing to the increase has been the growing middle class and gross domestic product (GDP) in a number of developing economies.

Airbus expects emerging economies more broadly- including Asia, Africa, the Middle East, Latin America and Eastern Europe- to grow revenue passenger kilometres by 5.8 per cent per annum in the next 20 years, in part due to the doubling of the middle class.

In Europe and the Americas, annual growth is forecast to be moderate but still positive with estimates of 4.5 per cent and 3.6 per cent respectively over the next two decades.

Over the next ten years, Asia is expected to lead the growth trajectory and by 2030, is likely to account for 40.6 per cent of all air travel globally, up from 27.6 per cent today.

By 2034, the volume of airline travel in the People’s Republic of China is forecast to have reached the same level as Europe today, and the Asia-Pacific region will lead the world in air traffic.

During the 1980s, following a surge in air travel in developed nations, an aircraft leasing market began to emerge to meet the ongoing capital needs of airlines. Leasing reduced airlines' requirements for large capital outlays while allowing them to maintain fleet and capacity flexibility.

Unlike the airline industry itself, aircraft financing and leasing are generally more profitable and less exposed to volatility.

Macquarie began advising airlines on financing solutions for aircraft acquisitions in the 1990s before entering the leasing market as a principal in 2005, purchasing a number of aircraft leased to Qantas.

Over the last 10 years  Macquarie AirFinance has grown significantly and has become a key business for the Macquarie Group.

Since 2001, Macquarie AirFinance has completed 118 acquisitions, 341 lease transactions and 155 sales. In the last two years alone the team has successfully completed 42 new transactions.

Earlier this year Macquarie AirFinance announced its largest transaction ever, an agreement to acquire a $US4 billion portfolio of 90 current generation commercial passenger aircraft leased to 40 airlines in 25 jurisdictions from AWAS Aviation Capital Limited.

Macquarie Group Chief Executive Officer Nicholas Moore said the transaction complemented Macquarie’s existing annuity businesses.

“This acquisition builds on the strong growth of our Corporate and Asset Finance business and the ongoing investment in our annuity-style businesses.”  

Learn more about Macquarie's AirFinance business.