Jetrader - May/June 2011 - 24

Chart 2: Domestic capacity (seats, millions) to/ from Asia Paciﬁc countries: 2010 vs 2009

Source: Centre for Asia Paciﬁc Aviation & OAG FACTS Passenger throughput at 175 Chinese airports reached a record high of 564.3 million in 2010, as year-on-year growth soared to 16.1 percent, according to the CAAC. This included a 15.7 percent increase in domestic passenger numbers to 520 million and a 20.6 percent jump in international passenger numbers to 44.7 million, or roughly 7.9 percent of the total. China’s international travel market is still in its infancy, as this proportion of international to total trafﬁc attests. By contrast, the U.S. market is roughly an 89:11 split between domestic and international trafﬁc. If the U.S. proportion is applied to China’s trafﬁc forecast for 2020, there would be a total 77 million international passengers to/from China in 2020—or 32.3 million more than in 2010. If the U.S. proportion is applied to China’s 2030 trafﬁc forecast, the total international trafﬁc would rise to 165 million, or 3.6 times the 2010 ﬁgure. In fact, we expect these ﬁgures to be exceeded as China’s aviation links with neighboring Asian countries are liberalized and expand rapidly. Beijing Capital became the world’s second-busiest airport in 2010, when passenger growth surged 13 percent to 73.9 million passengers. Beijing is now closing the gap to Atlanta, which continues to be the world’s largest airport at 89.3 million passengers in 2010 (+1.5 percent). In reaching the No. 2 spot, Beijing Capital overtook London Heathrow, which has also dropped below Chicago O’Hare, according to Airports Council International (ACI). How does passenger demand play a key role in the development of this market, and how will airlines respond to this increasing pressure? There are three key pressures inﬂuencing trafﬁc growth in Asia: expanding liberalization of access and trade links; fastincreasing economic status and disposable income; and ever-lower fares stimulating more demand. This is an amazing cocktail. Frankly, our own forecasts frighten us. The real constraints are going to be skilled resources and infrastructure. Tell us about the forecasted air cargo trafﬁc growth in this region—will its growth mirror the passenger demand and require a large adjustment to an airline’s ﬂeet? Again, Asia (particularly North Asia) is the place to be. Cargo volume growth in China and Hong Kong alone is expected to

account for a third of global volume growth over the period to 2014. The consensus view for global air freight is that growth rates will stabilize at ﬁve percent compound annual increases over the medium term, after the exceptional post-recession rebound last year. This is below the forecast growth in world trade (six percent) suggesting, according to IATA, a still conservative outlook after the recession shock and possibly some loss of market share to sea shipping. The top ﬁve fastest growing international freight markets over 20092014 will be Hong Kong (12.3 percent), China (11.7 percent), Vietnam (11.4 percent), Chinese Taipei (11.3 percent), Russian Federation (11.0 percent), according to IATA forecasts. By 2014, the largest international freight markets will be the U.S. (8.8 million tonnes), Hong Kong (5.4 million tonnes), Germany (4.4 million tonnes), Japan (4.4 million tonnes) and China (3.8 million tonnes). The Asia Paciﬁc region will see the highest growth rate for international freight at 9.8 percent with Hong Kong, Japan, China, South Korea and Taiwan comprising the region’s top ﬁve markets. Do you think the growth of the emerging and developing markets, as well as demand from low-cost carriers will spur a need for single-aisle airplanes? Absolutely. Asia has traditionally been a widebody market, but narrowbody penetration is increasing, particularly as the Chinese and Indian domestic markets blossom and the LCC sector expands, especially in Southeast Asia. So we see a vibrant market for narrowbody equipment in Asia over the long term. We are currently working on a detailed analysis of narrowbody demand in this region. What are some of the improvements that are needed for this region in order to sustain continued growth? Sustaining Asia’s momentum will require vision and leadership, particularly in the provision of sufﬁcient infrastructure on the ground and in the air, as well as in the reform of structures that underpin aviation, namely the regulatory environment. Certain parts of Asia are dragging the chain on airport construction, liberalization of air services and the promotion of fair competition, which has the effect of slowing the whole region’s progress, especially in those countries. The ASEAN liberalization program is inﬂuencing this process and, fortunately, most states are recognizing that protectionism is actually self-destructive. But we’re also seeing some positive signs, with some important IPOs in the region of late, for example Garuda Indonesia, and progress on crucial infrastructure projects, such as a second airport for Beijing. But far and away the biggest problem we will face is the adequacy of skilled human resources. That doesn’t just mean pilots and engineers, but a whole array of different skills. For example, every new single-aisle aircraft needs 10 more pilots. Attempts to prepare for this shortfall simply don’t measure up. We are heading for a real skills crisis. In short, it’s a region with exceptional opportunities but with some unprecedented challenges. Governments in the region are generally taking a positive view about aviation and are taking their role seriously in the promotion of the industry. It’s an exciting place to be.

24 The ofﬁcial publication of the International Society of Transport Aircraft Trading

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