Aviation Fuels Growth: How International Flights and Tourism are Driving Emerging Market Economies

The future of aviation lies in emerging markets with these regions dominating the passenger flight market since 2022. Asia Pacific leads the pack by having the largest share of flights accounting for 31.7% of passenger traffic. It is followed by Europe (27.1%) and North America (24.7%.) Africa leads in terms of fastest growth in revenue passenger kilometres (16.2%), followed by Asia Pacific at 12.5% and the Middle East at 9.9%. Delphos supports clients in infrastructure through tailor-made financial advisory and capital raising services. Explore recent financial advisory and capital raising deals in the infrastructure sector in our heritage section.

Rapid economic growth, urbanisation and a growing middle class are key drivers of aviation growth in emerging markets. These factors and others will raise global and domestic passenger flight travel with passenger traffic expected to double by 2040. Global travel currently accounts for 58.1% of all flight travel while domestic is 41.9%.

Rising demand in air travel presents opportunities for airlines, aircraft manufacturers and aviation finance providers. Additionally there will be benefits for related sectors such as tourism and hospitality. Delphos is a trusted financial advisor with a wealth of expertise in hospitality projects around the globe. The raising of US$47MM in capital for ONOMO Hotels to expand middle-class hotels across Africa highlights our commitment to driving sustainable economic growth in private emerging markets.

Airports and the impact of aviation on GDP and tourism in emerging markets

Globally the aviation industry equates to US$3.5T of global GDP, employing 7.7 million people worldwide and enhancing trade. Additionally, over one third of all trade by value is by air, especially that of perishables and valuables. Air transport demand is expected to grow 3% annually until 2038, creating millions of jobs directly, indirectly, and through tourism. This growth will result in aviation and flights contributing more to GDP in emerging countries. For example, in India, revenue from flights as a percentage of GDP is 1.4% while it is 0.3% in Kenya.

Between 2024-2034, tourism is expected to create 101 million additional jobs, the majority in Asia Pacific (64.18 million). While in Africa, tourism will create 12.31 million jobs and 7.38 million in Europe. To tap into these opportunities, emerging economies must expand and modernize airport infrastructure. For example, the International Air Transport Association (IATA) predicts that over the next two decades, the need for air travel in Africa will triple. Despite the continent being home to 18% of the world’s population, it only accounts for 2.1% of global air transport activities. The bulk of the world’s airports are concentrated in developing countries. Emerging markets need more airports to tap into flight growth opportunities.

And while the pandemic dampened traffic, it is now rebounding to pre-pandemic levels. According to IATA, 2023 revenue passenger kilometers (or RPKs) rose 36.9% compared to 2022. This is 94.1% of pre-pandemic levels. International flight traffic in 2023 climbed 41.6% from  2022 reaching 88.6% of 2019 levels.

Delphos’ financial advisory services in airports and tourism

Delphos has decades of experience in raising funding for aviation projects and airports in emerging economies. Additionally, Delphos has served as a financial advisory firm in impactful sectors, that are related to aviation, such as infrastructure. This includes capital raising for airports or hotels in the hospitality sector as well as transaction advisory for infrastructure funds. Some of our key projects as a financial advisor in private emerging markets include:

Securing capital for a chain of business hotels across Cameroon, Djibouti, Mali, Senegal, and Côte d’Ivoire: In 2021, Delphos served as financial advisor to ONOMO Hotels to raise money for a series of new assets. ONOMO is an owner-operator of international-standard, mid-scale business hotels in Africa. It had a portfolio of 21 hotels with approximately 2,805 rooms as of the end of 2019. The project enhanced business hotels, created jobs, boosted local economies, suppliers, and tourism resilience across Africa.

Improved infrastructure is a driver of growth and a key reason why Delphos is a financial advisor in aviation and hospitality as well. Modern airports in emerging markets boost tourism thus strengthening economies. If you would like to learn more about our financial advisory services in infrastructure and other sectors, explore our heritage through our project portfolio.