January 30, 2013
The Department for Transport has re-issued its forecast of air passenger demand, just a year and a half after its previous forecasts in August 2011. In this short time, the forecast demand at 2030 has been reduced by about 6%.
Unconstrained demand (which assumes no airport capacity constraints) at 2030 is down from 345 mppa (million passengers per annum) to 320 mppa. Constrained demand (assumes no new runway capacity anywhere in the UK) is down from 335 mppa to 315 mppa.
Commenting on the 2011 forecasts, AEF had said “Despite the major downgrading over the last few years, we consider that the 2011 forecasts up to 2030 are still high. Very optimistic assumptions are used on economic growth and oil prices and it is assumed that aviation will continue to benefit indefinitely from massive tax exemptions.” (see 1.4 of summary briefing.)
The forecasts of August 2011 were sufficient for AEF to demonstrate that there was no capacity crisis up till at least 2030 and no need for a new or larger hub airport. The new, lower, forecasts give even stronger support for AEF’s conclusions.
Government forecasts 2000 2013 (unconstrained, central)
Economic growth is the most significant factor in forecasting aviation demand. In our analysis of the 2011 forecasts we said the assumption made on economic growth “seems optimistic“. DfT now agrees – the new forecasts show (page 9) that about two-thirds of their reduction is due to lower economic growth projections.
We also said that the sensitivity tests (reducing and increasing the rate of economic growth by 0.25% pa) were far too modest: “such a small adjustment to the growth rate does not do justice to the uncertainties involved“. DfT now agrees – it has doubled the scale of the sensitivity tests (reducing and increasing the rate of economic growth by 0.5% pa – see page 94).