For decades, the World Bank Group (WBG) and its affiliated institutions have supported the development of the transportation industry with a focus on emerging and developing countries. However, unlike earlier projects, bankers are now placing a clearer focus on applications that are in line with the Paris climate goals. This is documented in the 18th edition of WBG’s Air Transport Annual Report, published last week.
According to the bank, a total of USD 1.02 billion was provided in 2022 to finance transportation and infrastructure in less developed countries; an increase of 9% over the previous year.
In his foreword to the 91-page annual report, Charles E. Schlumberger, Lead Air Transport Specialist at the WBG and responsible for the study, applauds the global air transport’s recent performance. The air traffic’s recovery from the COVID-19-related slump continued strongly in FY22, he notes. Air traffic grew at a record rate in most regions, although still from a low base in some regions. Air passenger traffic gained momentum globally in 2022, recovering significantly from 41.7% of revenue passenger kilometers (RPKs) in 2021, to 68.5% in 2022.
Air cargo traffic, which performed exceptionally well in 2021 with a 7.2% increase in annual cargo ton kilometers (CTKs) compared to 2019, declined 8.3% in 2022, falling slightly short of pre-pandemic levels.
Broad range of foci
When the voluminous annual report is placed under the microscope, it shows that not only the financial resources made available have reached new heights, but also the number of projects that made it onto WBG's shortlist. Roughly speaking, these focus on four priorities: a) strengthening airport and air transport infrastructure, including safety and security, b) enhancing the industry’s planning capacity and capabilities, c) providing advisory services by experts, and d) offering targeted support for new, forward-driving aviation projects.
As far as the latter aspect is concerned, the promotion of a study on Remotely Piloted Aircraft (drones) in the Caribbean and parts of Latin America illustrates this WBG approach. The analysis evaluates the potential of drones for aerial services in Haiti, Guatemala, and Brazil. The objective of the study is to identify key drivers and market fundamentals for commercial operations as well as market opportunities of unmanned aerial vehicles (UAV), examining and updating national regulatory frameworks for drone ops, and developing UAV applications in the Latin American context including proposals for overcoming redundant regulatory barriers.
Green aspects gain in importance
In addition to technical and infrastructural issues, the projects approved by the WBG have recently also been focusing more on ecological aspects. This is illustrated by the example of Almaty Airport, Kazakhstan. ALA (IATA code) handled 6.4 million passengers and reported a pre pandemic cargo throughput of 69,000+ tons in 2019, making it by far the busiest airport in the Central Asian region. In 2022, the International Finance Corporation (IFC), a subsidiary of the WBG, approved a USD 450 million financing package provided by several lenders in support of ALA. Thanks to the funding, a new international terminal will be built at ALA. The project is expected to strengthen Kazakhstan's links with the world, creating thousands of jobs in the Kazakh economy.
ALA's future facility will also set a new standard for environmentally friendly airport construction in Kazakhstan. It will be the first in the wider region to be certified under IFC's Excellence in Design for Greater Efficiencies (EDGE) program, which recognizes environmentally friendly buildings. The IFC project managers emphasize that the modernized airport, which is operated by the Turkish company TAV Airports, will be more energy efficient, produce less waste, and emit fewer greenhouse gases once the terminal project is implemented.
Curbing global warming is part of the banker’s program
The WBG’s focal points in air transportation, Advisory Services, Research, and Transfer of Knowledge, have also increased in importance measured on earlier times. This is evidenced on page 8 of the report. There, reference is made to a study initiated by the WBG on SAF as an effective tool for decarbonizing aviation. “The study highlights SAF as the primary mitigation strategy that can most quickly achieve significant CO2 emission reductions for cargo and passenger flights in the medium future, and it evaluates and quantifies global aviation decarbonization options through 2050,” the report reads. The above-mentioned drone project is also part of the Knowledge, Analysis and Research field set up by the World Bank.
In addition, WBG affiliate, IFC, provides Public Private Partnership Advisory Services to several governments, including Indonesia, Kyrgyzstan or East Timor. It finances major projects at Sofia Airport in Bulgaria, Zagreb Airport in Croatia, airports in Madagascar, Lima Airport in Peru, the Agila-Pacific project in the Philippines, Belgrade Airport in Serbia, and the Enfidha Airport construction in Tunisia.
Final words from Charles Schlumberger: “We look forward to continuing supporting our clients in 2023 in addressing their current development challenges in air transportation.”
The outcome will be documented in the World Bank’s 19th consecutive edition of its 2023 Air Transport Annual Report, out in June 2024.
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