Traffic forecast of Airline Fleet Planning

            The IATA projects that air transport will increase by the year 2035, with approximately 7.2 billion passengers using the airlines. This prediction is based on the Compound Average Growth Rate of 3.7 % annually [3]. The demand for air travel is becoming insatiable with many players in aviation industry adopting complex business strategies and carriers. With this increase in air travel, more opportunity is seen in creating airlines that will impact more value to the customers as this will increase competitiveness. However, there has been an increase in the campaign for sustainability in aviation industry more so concerning environmental protection. Regulatory authorities have stepped up campaigns to compel airlines to be cautious of this and enforced some protectionist’s measures. The establishment of Carbon Offset and Reduction Schemes for International Aviation (CORSIA) has put more pressure on players in the aviation industry to cap net carbon emission with carbon-neutral growth by the year 2020. Therefore, there will be additional costs of operation that airlines will have to bear so as to operate efficiently.

        It is in this regard that the traffic forecast of this airline will be done with the assumption that the traffic growth will increase by 10% for the first five years then reduce to 5% from year 6 to 10. This forecast also assumes that the operational costs will be static and that the economic variables will not affect significantly costs associated with the airline.  The forecast also assumes that the operating external environment will be stable such as policy change or travel restrictions. Henceforth, the cost analysis, revenue, and profitability of the airline in the next ten years will be analyzed in the below table with the above-stated assumptions

        It is evident from the table that the airline will experience an increasing number of passengers from 200,000 in the first year to 373,721 in year 10. The profitability of the airline will increase consequently from 94,118 to 2,347,382 in the ten year period enabling the airline to fund its current and long-term goals. Increase in travelers implies increasing flight frequency, which will increase the carbon footprint consequently. Therefore, I recommend to the COO that the airline will need to put up solid framework going forward to reduce carbon emission with increased traffic flow so as to attain sustainability.

    The graph presented below illustrates the global traffic forecast with varying economic attributes and policy frameworks up to the year 2035.

Global Projected Traffic growth (IATA)

References of Airline Fleet Planning