Air passenger numbers will grow at 5%-6% a year worldwide for the next 20 years, outpacing attempts to cut greenhouse gas emissions through technology.
But the industry will struggle to make money, despite growth during the past two decades, according to analyst Jonathan Wober, co-head of transport research at HSBC.
Airlines in the world’s biggest aviation market, the US, have not made a profit since 9/11, Weber said.
He revealed aviation has expanded at 1.6x the rate of economic growth since the mid-1970s, yet the rate of return on investment in the industry has been falling since the late 1960s.
“Airlines will continue to struggle and will therefore focus on capacity and cost efficiencies,” he said.
Reversing the trend would require major carriers to go bust. “Governments must remove the barriers to exiting markets,” said Weber.
Many airlines around the world are state-owned and the reason the struggling US sector has survived is thanks to bankruptcy protection laws and government help.
However, Weber warned that economic recession, war, terror and security concerns, or bird flu could all hinder growth and even risk a contraction.