The forecasts were made in the study entitled Shaping the Future of Travel: Macro trends driving industry growth until 2023 - which was published today and written by Oxford Economics and commissioned by travel technology company Amadeus.
Drawing on detailed macro-economic modeling, and qualitative interviews with industry experts, forecasts have been on a wide range of future trends.
The report was compiled by speaking to 15 top travel industry firms, including Heathrow Airport, Iberia, Thai Airways, Turkish Airlines, and Amsterdam Schiphol Airport.
According to the study, global travel will see sustained growth of 5.4% per annum over the next 10 years, outpacing expected global GDP increase of 3.4% in the same period.
It predicts large emerging markets fuelled by rising wealth, employment and changing consumer habits, will drive the rise.
This will be led by rapidly developing China, who will surpass the US in becoming the world’s largest outbound travel market this year, and will be the biggest domestic market by 2014.
Travellers in Asia are set to fuel the increase.
It claims the number of households in China able to afford overseas travel, is set to more than double in the next 10 years.
Other emerging markets such as Russia, Turkey, Brazil, India, and Indonesia, will also drive growth until 2023 the report claims, with all registering rises of 5% per annum over the next 10 years.
Andrew Tessler, associate director, Oxford Economics and the report’s author, explains: “The global travel industry is gaining strength and changing as it emerges from the recent recession in developed countries.
“China’s development is an important driver, but there are actually many more subtle factors also at play.
“Shifting competitive dynamics and the persistence of new behaviours that emerged during the recession are both impacting key indicators in the sector.”
The reports also claims business travel, which has suffered in recent years, will bounce back, as links between East and West stimulate new demand.
But western short-haul business travel will not reach pre-2008 levels until 2018, while Asia will account for 55% of global business travel growth over the next 10 years.
Air travel growth will also be led by emerging economies such as India, Indonesia and Russia, as non-OECD air travel is set to overtake that of OECD members for the first time, to become the largest source of global air traffic by 2023.
Holger Taubmann, SVP Distribution, Amadeus, explains: “Forecasts predict a new golden era for travel, which will be welcome news for many segments of the industry that are only just beginning to emerge from recession.
“However, as the complexities in the business travel market clearly demonstrate, growth will be far from evenly distributed and there are likely to be both winners and losers.”
The study declares that ‘seamless travel’ is beginning to take shape globally, but the physical infrastructure, such as air rail is still not connected sufficiently, and the report pressed the need to it to be improved to meet and maximise growth.
Examples of efforts being made, included Amsterdam Schiphol airport connecting ticketing with high-speed rail, and Singapore Airlines linking up with the Heathrow Express.
Tessler, who wrote TFL's (Transport for London) submission to the Airports Commission on South East airport capacity, also explains airports have a ‘very important role’ to play in global travel growth, and they have endless opportunities.
“Hubs are important in the future for revenue in the industry and especially in seamless travel, as airports can make the experience more pleasant.
“Door-to-door passenger services can be done better by airports, and is an area for development and opportunity,” Tessler adds.
He says the world’s hub airports, which connect the long-haul routes, need to improve and increase the use of mobile technology for services.
The importance of the development of mobile technology services as a whole across the industry, was also highlighted in the study, as a key to tapping into expected growth and services.
It predicts that one in five travel bookings in Europe will be made by mobile phones by 2015, while in the US the number being made has tripled over the last two years.
Tessler, explains: “Mobile technology is not being efficiently harnessed by the travel industry, and needs to be, to make the travel experience more pleasant, and seamless for travellers.”
The report also highlighted the impact that LCC carriers are having on the airline industry, and predicted there will be further expansion of them over the next decade.
Europe was found to be the most active with 250 million passengers flying on LCC’s, followed by North America on 173 million, while Asia has grown 150% over the last five years and now averages 117 million.
LCC traffic in Latin America, Africa and the Middle East has almost doubled in the period, and will continue to surge, according to the report.
But Tessler, explains: “There is still though uncertainty about the LCC model in long-haul routes, and there may be a convergence with more traditional carriers, but there is a challenge for LCCs to operate a long-haul route as an LCC and we think there will be an element of mixing.
“LCC’s may also experiment with long-haul routes for accessing hub airports to pursue growth, but adding costs and complexity.”
As for the future of hub long-haul airlines, in his view, they will offer a mix of route destinations, Tessler adds: "Generating revenue between the fleet mix, is an important challenge for hub airlines (such as BA and Lufthansa) in the future."
The report concludes by recommending industry players must ‘prepare and invest to capatalise on projected growth levels’.
Industry players are urged to look into partnership opportunities, differentiate service levels, expand the use of technology especially on mobile devices, and to understand how to compete successfully in growth and emerging markets such as China, and Russia.