Aviation forecasting activities ICAO Strategic Objective: Economic Development of Air Transport Aviation forecasting activities Narjess Abdennebi Chief, Economic Analysis and Policy (EAP) Section AIR TRANSPORT BUREAU

Background Assembly Resolution A37-20 Appendix C : Forecasting, planning and economic analyses The Assembly: Requests the Council to prepare and maintain, as necessary, forecasts of future trends and developments in civil aviation of both a general and a specific kind, including, where possible, local and regional as well as global data, and to make these available to Contracting States and support data needs of safety, security, environment and efficiency Requests the Council to develop methodologies and procedures for the preparation of forecasts, the analyses of cost-benefit or cost-effectiveness, and the development of business cases to meet the needs of the Organization, the regional air navigation planning groups and, as required, other systems or environmental planning bodies of the Organization

Decisions must be supported by good analysis and information Why we need forecasts? Positive results in aviation are driven by sound decisions; Forecasts are essential for planning purposes Decisions must be supported by good analysis and information Good Analysis and Information must be based on good analytical models and data

Direct link to the facts & figures page Facts and figures on ICAO website Direct link to the facts & figures page

ICAO website: Medium-term forecasts Total (domestic and international) scheduled traffic

Long-term air traffic forecasts: “GATO” 12/6/2013 Past decade air transport trends Demand drivers analysis: Economic growth Liberalization Low Cost Carriers Improving technologies … Challenges for air traffic development Fuel prices Airport/ANSPs capacity constraints Competition and inter-modality Forecasts Structure and methodology Passenger and cargo Results and analysis by route group PASSENGERS AND CARGO TRAFFIC The new ICAO Global Air Transport Outlook to 2030 (GATO) summarizes the latest and most expansive passenger and freight traffic forecasts ever produced by ICAO. Designed to help regulators and the aviation industry respond to evolving passenger and shipper needs over the next 20 years, this unique document benefits from an expanded system of routes and more sophisticated econometrics techniques, the worldwide expertise of ICAO and the extensive data provided by ICAO’s Member States; in short, the most advanced techniques and the timeliest information. ICAO forecasts have considered many divergent and opposing viewpoints and, while they readily confirm the present optimism of airlines and aircraft manufacturers, they are, in every way, balanced, independent, comprehensive and objective. Although the forecasts themselves receive the major emphasis of this document, it further contains, various market trends and analyses, taking into account economic growth, technological change, market liberalization, the growth of low cost carriers, airport congestion and oil prices, amongst others. Finally, the GATO examines the major factors that promote or impede the growth of civil aviation and how they influence the resulting forecasts. Available at: http://www.icao.int/sustainability/Pages/GATO2030.aspx. 12 June 2013

Passenger traffic forecasts for the horizon 2030 12/6/2013 Source: Cir 333, Global Air Transport Outlook to 2030 - GATO 12 June 2013

RPK distribution in 2030 Domestic International 12/6/2013 Domestic International Source: Cir 333, Global Air Transport Outlook to 2030 - GATO 12 June 2013

Licensed personnel forecasts Available at: http://store1.icao.int

Future licensed personnel: Surplus or shortage Pilots needs and training capacity in 2030

Economic Analysis and Policy Section Studies on regional differences in international airline operating economics Scope of the studies   all international routes aggregated into 17 route groups. passenger, freight and mail yield data for scheduled services regional differences in the costs on a route group basis major causes of regional differences in costs Used by IATA for prorating airline passenger revenues from interline journeys SPans2007 Economic Analysis and Policy Section

E-learning courses on forecasting activities Forecasting Aviation activities address key demand and supply issues assess forecasting methodologies discuss future strategies e-Learning courses reference material

Support to Planning and Implementation Regional Groups (PIRGs) Regional Traffic Forecasting Groups (TFG): Specific forecasts of traffic and aircraft movements Meet the requirements of the PIRGs Used in the planning of air navigation systems in ICAO’s regions PIRG reports available on the ICAO website at: www.icao.int/sustainability/Pages/eap-fp-regional-traffic-forecasting-groups

TFGs meetings Regional Traffic Forecasting Groups (TFGs): 2011: 2012: Africa-Indian Ocean TFG (AFI TFG) Middle East Air Navigation PIRG (MIDANPIRG) Traffic Forecast Sub-Group 2012: Asia/Pacific Area TFG (APA TFG) Caribbean/South America Region TFG (CAR/SAM TFG) 2013:

Forecasting for Environmental protection SUPPORT TO CAEP: Participation in the Forecast and Economic Analysis Support Group (FESG) of the Committee on Aviation Environmental Protection (CAEP) provision of input in terms of aviation data toward the development of global long-term traffic and fleet forecasts for environmental analyses review of a global constrained forecasting model for potential use in support of environmental assessment of the potential impact of constraints.

Support through additional sensitivity analysis MBM potential surcharge Impact of change in yield resulting from ´´MBM surcharge´´ on long-term traffic growth for international scheduled traffic Yield: Passenger Operating Revenue per Revenue Passenger-Kilometre

Traffic forecast model Top down econometric model based on: Disposable Income represented by real GDP per capita Average fares represented by real international yield (International revenues / international RPKs) Ticket price increase reflecting the cost-pass through is treated in the same manner than the current treatment of the fuel surcharge and could be an “MBM surcharge” Fuel surcharge is showing a new trend as it is cost pass through to the passenger GDP : Gross Domestic Product RPK: Revenue Passenger-Kilometre

World international traffic Fares trends in real terms Between 1997 and 2011, yields decreased (in real terms) by around 0.6% p.a. for world international traffic World international traffic

Scenarios and assumptions Forecasts are for horizon 2036 with continuous and yearly MBM implementation Ticket price increase reflecting cost pass through is simulated by yield assumptions +0.1% annual change in yield corresponds to: US$ 3.9 increase by flight stage of 2200 Km in 2036 The positive assumptions in yield change should reflect the impact of MBM offsetting by simulating an increase in ticket price Scenario impact on yield Yield total variation Baseline No impact -0.5% p.a. Scenario 1 +0.1 pt. -0.4% p.a. Scenario 2 +0.2 pt. -0.3% p.a. Scenario 3 +0.3 pt. -0.2% p.a.

Impact of a yield change on world international scheduled traffic World international traffic In 2036: Modeling assumptions to the horizon 2036 GDP per capita: +3.0% annual growth Scenarios of change in real yields: from -0.5% to -0.2% annual growth The model shows that air travel demand is driven at 75%, by available income and at 25% by fares

Impact of MBM on world international air travel demand World international traffic Scenario Impact on yield growth on traffic in 2036 Baseline No 0.0% Scenario 1 +0.1 pt. per year -0.43% Scenario 2 +0.2 pt. per year -0.87% Scenario 3 +0.3 pt. per year -1.32% In 2036: 2036 international traffic 8.5 trillion RPKs -37 billion RPKs -74 billion RPKs -113 billion RPKs

Conclusions The results of both analyses show an impact of MBM leading to a decrease between 0.2 and 1.3% in international air travel demand for the year 2036 Impact of MBM on operating result and travel costs could be changed by cost of carbon, availability of alternative fuel, etc. Impact of MBM on traffic may vary according to the different price elasticity of air travel demand in international markets based on their maturity level

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