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The growth of incomes, often proxied by GDP, has beenfound to be the fundamental driver of the demand forair travel. During the past twenty years global passengertraffic has expanded at an average annual growth rate of5.1%, while global GDP grew by an average annual rate of 3.7% over the same period. That implies an average income elasticity of 1.4, similar to the average estimatedabove for developed economies. The implication is thateconomic growth can explain most of the expansionin air travel seen in the past twenty years. The fall inreal air travel prices has played a part, but mostly indiverting travel between airlines and markets rather thansignificantly boosting overall travel volumes. In addition,economic growth is now increasingly being driven bydeveloping economies, where income elasticities arehigher. Therefore, the underlying drivers for overallair travel growth are likely to remain strong for theforeseeable future.
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