Global air transport: developments and issues

Transcription

1 Global air transport: developments and issues Brian Pearce, Chief Economist, IATA 5 th July 2017, Antwerp

2 Number of unique city-pairs US$/RTK in 2014US$ Airlines continue to connect more cities at ever lower real cost to users Unique city-pairs and real transport costs Unique city pairs Real cost of air transport (inc. ancillaries) for users Source: ICAO, SRS Analyser, IATA

3 Tourist spend, US$ billion Traded goods, US$ billion Facilitating economic flows: goods, people (capital, competition, ideas) 800 Value of trade carried by air and the spending of tourists Value of traded goods carried by air Spending by tourists carried by air Source: UNWTO, Oxford Economics, IATA

4 But the research on the micro-economic benefits is mostly missing No literature (except trade economics) Borrowed from surface transport literature Assumed 10% of direct welfare benefit Source: UK Airports Commission, July 2015, Economy: wider economic impacts assessment

5 Globalization has moved into reverse now we have localization Source: Global Trade Alert

6 Causing structural change to world trade and Global Value Chains Index (Oct 2008=100) World trade/ip ratio vs. measure of global supply chains Ratio of foreign value added to domestic value added in world gross exports World trade/ip ratio Share (%) Source: UNCTAD, Netherlands CPB

7 There are increasing barriers to free movement of people as well Source: Various online media

8 Air travel is resilient but some shocks have slowed trend growth Int'l RPKs flown by European airlines (natural logs, seasonally adjusted) 19.5 Actual 19.0 Trend (early 1990s-early 2000s) Trend (early 2000s - mid-2008) 18.5 Trend (early 2009-pre-Paris) /11 SARS GFC Icelandic ash cloud Paris and Brussels terrorist attacks Source: IATA Statistics

9 Air travel has powerful economic drivers in emerging economies Source: IATA/Tourism Economics Air Passenger Forecasts, April 2017

10 Large further expansion highly likely infrastructure challenges ahead Global passengers (O-D basis, billion) Policy stimulus and market liberalization Constant policies scenario A Pick-up in Protectionism Source: IATA/Tourism Economics Air Passenger Forecasts, April 2017

11 Cost/ATK indexed to equal 100 in 2000 Is the economic regulation of infrastructure working? 170 Unit cost of infrastructure & airline non-fuel expenses Unit cost of airport and ATC infrastructure use Airline non-fuel unit cost Source: ACI, IACO, FAA, IATA

12 Airport competition looks weak if you dig deeper into the data Isochrones? not reflective of actual consumer choice Footloose passengers? Transactions data show strong local airport preference Source: Wiltshire, J, November 2013 Airport Competition, SEO Economics, Frontier Economics Footloose airlines? (Slowing) route churn reflects airline not airport competition. Major switching costs

13 % of invested capital Airlines have seen above cost-of-capital returns but mostly in the US 12.0 Return on capital invested in airlines 10.0 Cost of capital (WACC) Return on capital (ROIC) Source: McKinsey and IATA

14 US$ billion The bigger puzzle is how decades of capital destruction persisted 20 Difference between investing in airlines and investing in similar assets elsewhere Source: McKinsey and IATA

15 Climate change is a potential constraint limited abatement options USD/tCO 2 1,200 1,000 Jet fuel price 135 US$/barrel 2030 Marginal Abatement Cost Curve Carbon price 40 US$/tCO MtCO European ATM Improvements Gulf region Next Gen PRD Cabin weight reductions Biofuels Wingtips Airspace China redesign RVSM Russia Drag reduction Flexible tracks North Pacific Pilot Technique Use of ground power Flexible Usage of Military airspace Takeoff and Landing Procedures Optimizing cost index Fuel Management Taxiing with some engines shut down Early retirement Re-engining Engine retrofit/upgrades Reduced speed operation with current fleet No tankering Source: McKinsey for IATA

16 We need policy instruments to deliver low carbon aviation fuels 2500 CO 2 emissions from worldwide commercial airlines, million tonnes 2000 Airlines' CO 2 without additional abatement from technology, operations, infrastructure Offsets CORSIA cap from industry target Source: IATA Carbon Model

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