Dublin: The average return airfares, which IATA forecasts to be $366 this year, will be 62% lower than in 1995, the global association of airlines said in its semi-annual report released here on Thursday.

According to IATA’s chief economist Brian Pearce, consumers will see a substantial increase in the value they derive from air transport this year, including a reduction in what they pay - though the 2015 total was distorted downwards by the sharp rise of the dollar.
New destinations are forecast to rise by more than 2% this year, with frequencies up too.
“We expect 1% of world GDP to be spent on air transport in 2016, totalling $740bn. The revenue passenger kilometer (RPK), an industry matrix that has been growing well above trend despite a sluggish world economy, are forecast to slow this year but remain above-trend at 6.2%.
“Falling travel costs have been adding several % points to RPK growth over the past year,” he said.
“Airline CFOs and heads of cargo reported in April that they had become more positive about future growth in air travel, but were less positive about cargo. There may be some more price stimulus to travel, but underlying economic activity is fragile, as recent weakness in business confidence in both advanced and emerging economies has shown – we have further lowered our economic growth forecast for 2016. This year will see slower growth, as weaker confidence induces consumers and business to save lower energy costs rather than to increase spending,” the IATA report noted.
Pearce pointed out that economic development worldwide was getting a significant boost from air transport. This wider economic benefit is being generated by increasing connections between cities - enabling the flow of goods, people, capital, technology and ideas - and falling air transport costs.
The number of unique city-pair connections is expected to reach more than 18,000 in 2016, double the connectivity by air some 20 years ago. The price of air transport for users continues to fall, after adjusting for inflation. Compared to 20 years ago, real transport costs have more than halved.
Governments to earn $118bn in tax revenues this year: Pearce noted in the IATA report governments have also gained substantially from the good performance of the airline industry.
Airlines and their customers are forecast to generate $118bn in tax revenues this year. That’s the equivalent of 45% of the industry’s GVA (Gross Value Added, which is the firm-level equivalent to GDP), paid to governments in payroll, social security, corporate and product taxes. In addition the industry continues to create high value added jobs.
Air transport is vital for manufactures trade, particularly trade in components, which is a major part of cross border trade today.
IATA forecasts that the value of international trade shipped by air this year will be $5.5tn (down from 2014 only because of the stronger dollar). Tourists travelling by air in 2016 are forecast to spend $657bn. Another impact on the wider economy comes through the influence increased airline activity has on jobs in the sector, in its supply chain, and the jobs generated as spending ripples through the economy.
These “supply chain” jobs around the world are estimated to have been 62.7mn in 2014, IATA said.