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Changes in Air Cargo and Passenger Transportation Industries

Introduction

Since the beginning of the 20th-century, air cargo and passenger transportation have become an integral part of the global economy. The alternative route for shipping, in some cases, has replaced sea and surface transportation. Nonetheless, the growth of the air freight business has experienced a decline in the 21st century (Kupfer et al., 2017). Air cargo transportation and passenger transportation services experienced a downward trend because of financial crises and decreased consumer demand. World GDP has been declining during the period of crisis between 2007 and 2009 and because of the global pandemic. The global economy has been increasing, in turn, because of international trade, which was exacerbated by trade agreements. Changes in the volume of air cargo and passenger transportation industries correlate with the global economy changes, which have also decreased in size due to financial crises during 2007-2009 and the COVID-19 pandemic.

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Changes in the Air Cargo Industry Over the Past 20 Years

Even though international trade and economic growth increased worldwide, the volume of air cargo has been decreasing. For the past three decades, the air cargo industry has grown and become a vital economic sector. Nevertheless, since 2008 the growth of the air cargo has slowed down (Kupfer et al., 2017). Firstly, the demand for cheaper transportation has increased. As a result, transport by sea and surface replaced air transportation. For example, during 2001 and 2021, maritime container traffic increased by 8.3% per year, while air cargo traffic increased by 3.7% per year (Kupfer et al., 2017). Moreover, the demand for products transported by air cargo, such as high tech and fashion, has decreased during 2000 and 2013 (Kupfer et al., 2017). The demand for raw materials that are shipped by the sea, in turn, has increased (Kupfer et al., 2017). Thus, the air cargo industry is underperforming because products transported by it are not in high demand.

Changes in the Passenger Transportation Industry Over the Past 20 Years

Similar to air cargo, although passenger transportation by air initially grew significantly during the 20th century, it has slowed down, as well. Several factors resulted in the passenger transportation industry’s decline. Firstly, economic crises and the increasing price of fuel negatively affected the growth of the sector. Moreover, natural disasters, such as volcanic eruptions and terrorist attacks, contributed to the downfall of the passenger transportation service. As a result, during 2000 and 2010 passenger transportation industry lost $30 billion (2020 Worst Year in History for Air Travel Demand, 2021). Lastly, the COVID-19 pandemic caused the demand for passenger transportation to plummet. For instance, global passenger demand fell by 75.6%, while capacity, which measured available seat kilometers, declined by 68.1% (2020 Worst Year in History for Air Travel Demand, 2021). Therefore, the passenger transportation industry has been experiencing a downfall because of crises, inflation, and outside factors, such as natural disasters, terrorist attacks, and a global pandemic.

Changes in the Size of the Global Economy Over the Past 20 Years

During the last 20 years, the global economy experienced both positive and negative growth. Between 2007 and 2009, the global economy entered the phase of economic crisis. World GDP decreased from $63931 trillion to $60575 trillion (Adjusted net national income, 2020). During the post-crisis period, World’s GDP grew to $79155 trillion by 2014 due to globalization and increasing trade rates (Adjusted net national income, 2020). Nonetheless, the global trade slowdown occurred due to several factors. For example, in 2017, the US administration decided to leave the Trans-Pacific Partnership and World Trade Organization. Moreover, the US applied tariffs on imported goods from China, Europe, and Canada. Consequently, decreased trade has led to a decline in the World GPA. Lastly, due to the global pandemic, the global economy has experienced the most significant financial crisis since the Great Depression. Thus, during 2019 and 2020, the World GDP decreased from $87354 trillion to $84537 trillion (Adjusted net national income, 2020). Since the 2000s, the global economy experienced a decline during 2008-2009 and 2019-2020 due to financial crises and increased size resulting from globalization and trade.

Correlations in Data on Air Tranporatiotion Industries and Global Economic Growth

Because of the financial crises, the air cargo and passenger transportation industries experienced a decline in their sizes. During the 2007-2009 financial crisis, the air freight business decreased because of the economic situation (Kupfer et al., 2017). Similarly, because of the financial crisis in 2019-2020 passenger transportation industry under-performed. Because of the global pandemic, passenger demand decreased by three quarters (2020 Worst Year in History for Air Travel Demand, 2021). Thus, air cargo and passenger transportation businesses’ growth is directly linked to the global economic growth and financial crises.

Conclusion

To sum up, the air cargo industry decreased in its volume because of economic crises and reducing demand for high-tech fashion products. Likewise, the passenger transportation business experienced a decline because of financial crises. Moreover, rising prices for fuel, natural disasters, terrorist attcks, and global pandemic negatively affected the passenger transportation industry. These declines are also present in measurements of the global economy, which has decreased from the financial crisis and increased from trade agreements. Consequently, when the global economy is declining due to economic crisis, both air cargo and passenger transportation spheres decrease in their volumes.

References

Adjusted net national income. (2020). The World Bank.

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Kupfer, F., Meersman, H., Onghena, E., & van de Voorde, E. (2017). The underlying drivers and future development of air cargo. Journal of Air Transport Management, 61, 6–14.

2020 Worst Year in History for Air Travel Demand. (2021). International Air Transport Association.

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