AVIATION ARTICLES

Here are some perspectives regarding the aviation industry development

Long-haul low-cost

So far yet to deliver a consistently profitable concept, long-haul low cost carriers will certainly feature strongly as a business model in the short-to-medium term. What’s new to the business model in the future is that the routes can now be flown by narrowbody aircraft such as the A320neo LR which has a range of 7,400km, and a long-haul variant of the B737 MAX. These aircraft allow long-haul LCCS to avoid head-to-head competition with the full service carriers operating widebody aircraft on routes with high levels of demand and develop new markets that do not have direct services today.

One by-product of this is the impact on hub airports. Hubs which connect short-haul markets have been impacted by the rise of LCCs and their concentration in opening up new point-to-point routes which by-pass hubs. If the long-haul low cost model gains hold, then passengers living in the regional cities will no longer have to rely on reaching their final destination via a hub airport.

Technology

The crystal ball is most obscure when foreseeing where technological developments will impact the aviation industry. One hope is that the development of the biometric technologies including facial recognition might be integrated with smartphones and electronic ticketing to improve the check-in experience.

Improvements in security will also hopefully improve the passenger experience. Molecular scanners are expected to replace X-ray machines and will be able to tell the chemical composition of luggage and be able to recognise dangerous items 10 million times faster than now. In the near future, luggage will come with digital tags already built into the suitcase. If this comes to pass there are implications for airport planners and perhaps a reconfiguration of the split of space between landside and airside.

Perhaps not in the next 10 years, but certainly an area where investment will be made is on the possibility of pilotless aircraft. Analysts at UBS say this innovation could provide a material profit opportunity of more than US$35 billion per year for the aerospace and aviation industry.

Airports

The next decade will see the opening of several major new airports around the world which will impact travel patterns and shape the future of the airlines that serve them. There is the prospect of a new six runway airport, Beijing Daxing International Airport, to serve the Chinese capital. Next year, 2018, will see the opening of Istanbul New Airport with an initial two runways and a terminal capacity of 90 million passengers, with the scope to build a further four runways. The new airport serving Mexico City will open with three runways with the potential to expand to six runways.

Countries that actively promote aviation will continue to provide the infrastructure to support forecast levels of passenger and cargo growth. Airports under private ownership now seem a well-accepted model, it is after all 30 years since BAA was privatised. The institutional appetite for airports seems as strong as ever, and perhaps the next decade will see airports in the US and Canada join countries such as Saudi Arabia and Japan in embracing airport privatisation.

Hold on, what’s this, my crystal ball has gone all misty. Just for a moment I thought I might have seen work taking place on a third runway at Heathrow.

FULL ARTICLE