Predicting Growth Rate Of Passengers Flying Domestic Routes In China

Question

Compounding is not restricted to money values – it can be applied to growth rates in many business and economic values. In business jargon, it is often called the compound annual growth rate or CAGR. This is the same as a compounding interest rate. The International Air Transport Association predicts that, in 2017, 487.9 million passengers will fly domestic routes in China, the second largest number in the world behind the U.S. This prediction represents a 10.2% CAGR on 2012 passenger numbers. (International Air Transport Association 2013, ‘Airlines expect 31% rise in passenger demand by 2017’, 10 December, available at www.iata.org/pressroom/pr/pages/2013-12-10-01.aspx, accessed 20 February 2015.)

• If this growth rate can be expected to continue beyond 2017, what is your prediction for the number of passengers flying domestic routes in China in 2020?
• What is the CAGR for a Chinese domestic airline that carried 20 million passengers in 2012 and 28 million passengers in 2014? If this CAGR is expected to continue, what market share do you predict for the airline in 2020?

Summary

The question belongs to Finance and it discusses about predicting growth rate for passengers flying domestic routes in China.

Total Word Count 546