Airports are very much back in fashion as investment material, as the air transport industry goes beyond its most recent recuperative phase (airlines are expected to make USD36.3 billion in net profit in 2016, up from USD33 billion in 2015 and many airports reported record passenger numbers in 2015), interest rates remain low and other sectors nowadays have less appeal.
Brazil’s airlines must feel they are weathering almost the perfect storm in 2016. A tottering economy, political disarray, the prospect of a slowdown during the Aug-2016 Olympics – and now the Zika virus is frightening travellers. Yet the market is undergoing a flurry of investment which is likely to reshape Brazil’s industry in the medium term.
India is currently one of the fastest growing aviation markets in the world. A combination of strong GDP growth of around 7.5% and the decline in oil prices, which has supported lower fares, is driving year on year domestic traffic growth of around 20%.
A quarter of a century after the demise of the Soviet Union, the Russian state retains a central role in all areas of economic activity. Its actions continue to be catalytic agents of change in the country’s aviation sector.
China, along with instability in the Middle East and the latest health concern, have become catch-all excuses for those looking to describe the challenges faced by aviation. Concerns elsewhere may be legitimate and, in the case of Brazilian economic weakness, showing serious impacts.
Latin America’s third largest aviation market, Colombia, faces a mixed outlook in 2016. Its GDP growth of roughly 4% in 2015 was one of the strongest performances in the region, and its forecast expansion of 3% in 2016 sets it on a course of relative economic stability.
Indonesia has undergone remarkably rapid domestic growth this century, emerging as the world’s fifth largest domestic market. However, growth has slowed significantly over the past two years as market conditions became more challenging.
Mexico’s prospects for 2016 are among the brightest of Central and Latin American countries. Its GDP expanded by approximately 2.5% in 2015 and early forecasts for 2016 project growth of 2.6%. The country’s inflation rate was roughly 2.1% in 2015, but is expected to rise in 2016 after Mexico’s government raised interest rates in Dec-2015 to combat the depreciation of the MXN against the USD.
After the administration of US President Barack Obama and Cuba reached a tentative deal to relax some restrictions on air travel between the two countries in late 2015, many US airlines eagerly expressed their plans to add commercial flights to a country they believe holds enormous potential.
Iran has ambitious plans to rejoin the aviation community; being just another player is not the goal
The longstanding economic sanctions are being removed, the market is open and deals are already being announced. The reopening of Iran presents a compelling proposition: a country of 80 million people, for decades excluded from the global market now not only inviting the West back in, but actively seeking engagement with it.
The word disruption, while not a new concept, seems to have become the business word of the past couple of years.
by Nawal Taneja