As more people fly globally, China remains the backbone of local growth

    International airline passenger traffic was up strongly again in 2016, according to international airline representative body IATA’s 2016 traffic report.

    Global passenger demand rose 6.3% compared to 2015 with the number of seats available for sale growing roughly the same at 6.2%. Dec-2016 was a particularly good result with passenger demand rising 8.8% internationally. Growth in demand for that month outstripped supply 4:3 meaning that planes were fuller.

    Identifying this growth, Alexandre de Juniac, IATA’s Director General and CEO stated:

    “Air travel was a good news story in 2016. Connectivity increased with the establishment of more than 700 new routes”.

    Passengers were the winners, with IATA announcing that average return fares decreased by USD44.00 globally, making air travel more accessible for more people.

    Infrastructure and regulatory challenges remain on the agenda though with de Juniac stating:

    “Demand for air travel is still expanding. The challenge for governments is to work with the industry to meet demand with infrastructure that can accommodate the growth, regulation that facilitates growth and taxes that don’t choke growth”.

    It’s all about infrastructure, stupid

    Here in Australia/New Zealand we’ve seen infrastructure’s profile in the national political agenda. But it’s far from smooth sailing with Australia’s Federal and State governments continuing to playing cat and mouse as Badgery’s Creek tries to get off the ground as voters wait to see who will pay for it, and who won’t.

    Sydney Airport continues to keep everyone in suspense regarding its possible investment in Sydney’s new airport. But for now, it’s sitting pretty content, with international traffic rising 8.9% fuelled mainly by the continued influx of Chinese passengers. But with the curfew placing a natural limit on Sydney Airport’s growth prospects, Australia’s largest city needs a new facility fast. And one that’s also easily accessible.

    New Zealand’s airports are also growing. With 2016 total traffic up a whopping 12% (and international up 13.3%), Auckland announced a NZD180 million project in 2016 that will see the size of its international departure area double, accommodating 40 million passengers a year by 2040, up from 16 million in 2016.

    Asia Pacific again a strong performer with China fuelling that growth

    The Asia Pacific region was one of the strongest performing globally, second only to the Middle East in annual passenger traffic growth. The IATA results show airlines in Asia Pacific recorded a demand increase of 8.3% on 2015, ahead of the five year growth average for the region of 6.9%.

    China annual – Passenger numbers 2013 – 2016 (Jan-Nov)

    iata-growth1

    Source: CAPA- Centre for Aviation and OAG

    China continues to be the backbone of this growth. Fuelled by an airline industry that keeps growing and growing, passenger numbers in China reached 447.4 million from Jan-Nov 2016, 12 million more than the full year 2015 figure.

    International passenger traffic out of China expanded 22% in 2016, an estimated increase of 9.3 million passengers over 2015.

    China’s international air market (excluding Hong Kong, Macau and Taiwan) has grown from approximately 20 million passengers in 2010 to over 50 million expected in 2017.  10.5 million passengers were added between 2011 and 2014. That same number was added in just one year alone between 2014 and 2015.

    Australia and New Zealand has benefitted from much of this growth. The number of available seats between Australia – China during Chinese New Year peaked at 48,225 available seats for the week of 30-Jan-2017, up from 39,507 seats for the same week in 2016 –  an increase of 22% year-on-year.

    The entry of new airlines is behind much of this growth. 2016 saw Virgin Australia’s new partner Hainan Airlines entering the market with incumbents such as Air China and China Southern adding capacity. Qantas also resumed services to Beijing using its own aircraft in Jan-2017 adding to that growth.

    China to Australia (seats per week, one way): 3-Feb-2014 to 10-Jul-2017

    iata-growth2

    Source: CAPA- Centre for Aviation and OAG

    New Zealand – China has also experienced year-on-year growth. Available seats between 6-Feb to 12-Feb 2017 peaked at 14,015 compared to 11,100 for the same period in 2016, an increase of 26% with new entrants Tianjin Airlines and Hainan Airlines behind much of that growth.

    2017 has been declared   Chinese – Australia Year of Tourism so traffic from China into this region is expected to remain healthy.

    China to New Zealand (seats per week, one way): 3-Feb-2014 to 10-Jul-2017

    iata-growth3

    Source: CAPA – Centre for Aviation and OAG

    With the effect of Trump and Brexit still largely unknown, the outlook for 2017 remains cautious but quietly positive. The IATA figures show global airline traffic continued to grow in 2016 despite ongoing geopolitical instability. That resilience will likely continue and locally, the airline industry will be buoyed by Australia and New Zealand’s solid economies coupled with heathy ongoing demand from China and beyond.  Now if only they could get their act together on Badgery’s Creek…