The world in 2029

The following article originally appeared in TravelWeekly Australia

If you want to know where demand for travel is going over the next two decades, ask Airbus and Boeing. Both manufacturers' forecasts place Australia in a fast growing part of the world, as Justin Wastnage found out recently

In tough times, you like to be able to see a way out. There is now a wealth of economic data showing that Australia has dodged the global slump bullet, but a little less data when it comes specifically to travel. But Airbus and Boeing, manufacturers of the bulk of the world's aircraft, have teams of econometrics experts crunching the numbers on air transport trends. And because planes fly for at least 20 years, their forecasts are pretty far reaching.
They are also remarkably reliable. Boeing has been surveying since 1961 and Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes says the almost 50 years of data provide some very clear examples of how air travel always digs itself out of recession. The charts also provide some long-term growth trends that are hard to mistake. His Airbus counterpart, John Leahy, the airframer's chief operating officer for customers, concurs, saying that growth in air transport always tracks growth in the real economy, but grows twice as quickly. Average growth in air travel has been 5.2% per year in the past 30 years, despite the economy growing by only 3% on average over the same period. Passenger ticket sales have doubled every 15 years, Airbus data shows, says Leahy.
When the economy will pick up is the big question on everyone's lips. Leahy neatly sums up the analysis by saying that while "history never repeats itself, history does tend to rhyme." Airbus sees a recovery in air transport by the middle of next year, with 6% to 10% growth again by 2011. Boeing, meanwhile says that next year will see a global economic recovery, but that it will take another year for airlines to become profitable and thus start buying aircraft again.
This augers well for anyone who sells travel for the next 20 years, both manufacturers agree. Boeing suggests demand for airline tickets will increase by 4.1% every year until 2029. However, both forecasts show flights to and from Australia growing at a much quicker rate than other parts of the world. Tinseth points to figures showing that only New Zealanders, Singaporeans and Hong Kongers take more airline trips than Aussies every year.
Currently around a third of the aircraft sold in the world (and thus airline tickets) are from the US or Canada. Europe has a quarter of the world's air traffic, while Asia provides another quarter. This ratio will be flipped on its head over the next 20 years, says Leahy. Asia will be the big growth area, with China and India <[stk -1]>unsurprisingly supplying the most growth. This will be good for Australia, he says, because we enjoy cultural links with both countries. India has Commonwealth links and enjoys beating us at cricket, while China sends so many students here, that word has gotten back about what a great place Australia is, he reckons.
The flights they arrive on will have seats heading in the opposite direction; pushing total capacity out of Australia up, adds Laurent Rouard, Airbus senior vice president for market and product strategy.
Regarding the doubling of flights, Boeing pointed to the US since Delta Air Lines and V Australia started competing on the Los Angeles route as proof of the wisdom of its earlier forecasts. Looking forward, Rouard suggests the Middle East will be the single largest growth area over the next decade, since the location is perfect for efficient hubbing, a prediction borne out by carriers such as Qatar Airways starting services in December. The number of seats available to the Gulf region will grow 8.2% on average each year. Other growth areas agents should expect in the next 10 years are Latin America, set to grow 7%, China 7% and Africa 5.9% (see graphic, right).
<[stk -1]>But while they agree on the general figures, Airbus and Boeing differ when it comes to where they see this growth occurring. Airbus points to the growth of "megacities" as proof of the need for more of its double-decker A380 superjumbos. Leahy says that today 92% of all traffic originates or ends in one of 37 cities (of which Sydney is the sole Australian representative). Los Angeles, London, Paris, Frankfurt, Tokyo and Beijing are all members of this club, membership of which is defined by having 10,000 passengers or more departing daily. In twenty years 82 cities will fall into this camp, so thinking anything but a super large aircraft is going to be used is "absurd" as Leahy puts it. "Our competitor seems to think people will be flying in lots of little aircraft, but look at environmental concerns, look at congested airports and look at the sheer logistics of moving so many people," he says. Airbus predicts 1300 passenger versions of the A380 or Boeing's new jumbojet, the 747-8 Intercontinental will be needed over the next 20 years, while Boeing thinks the figure will be closer to 600.
Boeing, meanwhile, is pinning its hopes on people wanting to avoid switching planes wherever they can. So Queenslanders will opt for more direct flights from Brisbane and Cairns than having to fly through Sydney as more services come online. Tinseth says that over the years growth in air travel has always led to more routes opening up, not fewer. "As people get fed up with airports, they will want to avoid hubs," he says. Boeing estimates that airlines will buy 6700 aircraft with between 200 and 400 seats over the next 20 years, while Airbus puts the figure at 4100. Significantly, Boeing has the 777 and the delayed 787 Dreamliner in this category.
Drill down to our region and the picture becomes more complex. For Boeing, Australia is the twelfth biggest market in the world. There are currently 400 aircraft based here, which will more than double to 850 by 2029, of which 670 will be new aircraft, Tinseth says. Boeing expects our gross domestic product to rise by 2.9% on average over the next 20 years, but airline traffic to rise by 5.1%. Of this, traffic to Asia will be the fastest growing destination.
Airbus only has a 26% share here, but Leahy says he was meeting Qantas chief executive Alan Joyce while in Sydney to exploit the national carrier's annoyance at 787 delays. But Airbus signed a new order for its smaller A320 aircraft with Air New Zealand this month, skewing its favouritism towards our Trans Tasman cousins. Together with New Zealand and the Pacific Islands Airbus estimates carriers in Australia will need a further 630 aircraft over the next 20 years. Passenger growth will average 5% over the period, higher than the global average of 4.7%, Leahy says. The region's fleet will more than double from 338 today to 698 by 2029, with 271 replacement aircraft and 360 additional aircraft coming in.
Significantly, Airbus sees a need for 60 very large aircraft such as the A380 or 747, against Boeing's prediction of just five. Rouard is adamant that Australia's proximity to so many of the emerging megacities will make anything less than this figure too small.
So while the big boys bicker about just how we will fly in years to come, at least their message is consistent: there will be richer pickings for many years to come.