DUBAI — The next 10 years will see the aviation industry dominated by growth in the Middle East and Asia with consolidation in traditional markets creating a new era of streamlined operations and the introduction of a new mega-carrier business model, Ernst & Young said in an industry report released on Thursday.



The report, authored by Sunil Malhotra, Director of Aviation Sector, Middle East & North Africa for Ernst & Young and presented Thursday at an industry-focus seminar session  “Looking to the  Skies: Global Aviation Trends 2013-2033” at the closing of the Arabian Travel Market,  examined the industry and looked ahead to opportunities and challenges facing airlines, airports and governments seeking to capture increased passenger traffic while managing the soaring aviation fuel costs and new government-levied fees and taxes.



“An industry with a history of resilience, the growth of the aviation business is directly linked to that of global GDP and emerging markets are the ones driving economic growth and fueling air traffic development. The industry has grown by 53 percent since 2000 and will continue to grow airline traffic at 5-percent Revenue Passenger Kilometer (RPK) until 2023,” Malhotra said.



The report noted that Asia-Pacific will lead world traffic by 2031, with a 32-percent share and with global airline passenger numbers projected to grow at 4 percent per annum, based on ICAO forecasts, and Middle East carriers to see market share rise to 11 percent in 2031 from the current figure of 7 percent.



Year-on-year RPK growth by Middle East-based carriers is also being factored into the equation, rising from 11.4 percent to 15.6 percent, driven by long-range aircraft capability and the region’s newly developed airport hubs.



“Translating this into financial results, in the near term we will see a moderate improvement in net profits. However, looking on longer term, the rising middle class in Asia-Pacific and the Middle East offers a large pool of opportunity in emerging markets, complemented by higher economic growth,” said Malhotra, with Ernst & Young noting that this sector will grow from 1.8 billion to 4.9 billion by 2030, creating $56 trillion in consumer spending.



“While the opportunities are clearly there, airlines must remain focused on innovation in order to maintain competitive edge, with four key areas of focus to develop, including customer insight, a realistic understanding and appreciation of people and culture, investment into comprehensive R&D, and operations and business model alignment,” he explained.



Wrapping up the session, Malhotra summarized the reports’ key findings, listing three clear trends and three strategy directives that Ernst & Young says are crucial to future success.



“The new global aviation landscape will have seven to 10 mega-carriers occupying prime position in the market, while aggressive Middle East sector growth and low-cost carrier expansion will be a major driver for passenger traffic in the region,” he said



“With consolidation front of mind in North America and Europe to take advantage of these opportunities, airlines everywhere must develop meaningful alliances and partnerships, with past rivals becoming new allies, and also work on their customer loyalty programs and the social customer agenda,” he said.



A number of Gulf carriers are joining global alliances, with others entering into strategic code shares to promote traffic flows between continents, the report noted.



Held under the patronage of Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, ruler of Dubai and in its 20th year, ATM has grown to become the largest showcase of its kind in the region.



The Arabian Travel Market 2013 was organized by Reed Travel Exhibitions (RTE), the world’s leading provider of exhibitions in the travel and tourism industry. — SG