OAG, one of the market leaders in aviation intelligence, has announced the key findings of its ‘What is shaping air travel in 2015?’ trends report. This detailed analysis of the global aviation sector reveals that low jet fuel prices, the continued rise in demand for outbound travel from China, aviation reforms in India and the opportunities and challenges for air transport in Africa will be among the major industry issues in 2015.
Lower jet fuel prices
MarkClarkson, business development director ASPAC, OAG said, “While it is being reported that lower fuel prices are good news for airlines and their passengers, there is the possibility that these low prices reflect weaker demand in the global economy, in which case we could be at the top of the commercial aviation business cycle.” OAG’s 2015 Trends Report shows that the jet fuel price dropped by 20 per cent compared to a year earlier, resulting in a saving of US$ seven billion on the fuel bill for the global airline industry in 2014.
The prized Chinese tourist
Chinese outbound travel will remain a hot topic in 2015 as demand for air transport continues to rise. Since November 2013, 19 new Chinese airlines have commenced service or are in the planning stages. Even at six per cent passenger growth each year, the Chinese travel market would double every 12 years. Many of the largest markets for travel to and from China are within North East Asia, and the number one market is South Korea. The number of passengers flying between China and South Korea grew by 39 per cent in the year to September 2014. The combination of Malaysia Airlines’ two hull losses and civil unrest in Thailand prompted the much courted Chinese tourist to stay away from the Malaysia-Thailand-Singapore area, with visitor numbers down by 30 per cent. Zero growth in these markets comes at a time when total international passengers from China grew by 19 per cent in September 2014, according to OAG Traffic Analyser.
Regulatory developments in India
Changes are afoot in the Indian travel market. With a new government elected in 2014, there has been a change of sentiment around aviation, although policy changes are yet to follow. The air transport sector is being recognised as an economic catalyst and not simply a source of convenient tax revenues. Anticipated reforms include scrapping the rule that has allowed Indian airlines to operate international routes only if they have operated domestic routes for at least five years. AirAsia India started services in 2014 as the first foreign airline to set up a subsidiary in India, a move that should stimulate passenger growth, but operations by Vistara, a joint venture between Singapore Airlines and Tata, has been delayed and Spicejet has experienced financial troubles. In December 2014, India introduced e-visas for visitors from 43 countries in an attempt to increase inbound tourism arrivals.
Millennials and their mobiles
The Millennial generation will have a much greater influence on the aviation industry than previously realised. If we assume that people want to fly as much as they want to have mobile phone technology at their fingertips, we can see mobile phone use as a forward indicator of the future demand for air travel. China and India will likely contribute 28 per cent of the additional four billion air passengers between now and 2034. Today, 29 per cent of all mobile phone users live in China and India. Indonesia will account for 4.6 per cent of the growth in air traffic to 2014; today, Indonesia accounts for 4.1 per cent of global mobiles.
Ebola and the African aviation market
In 2015, we expect continued growth to and from Africa, and the China-Africa market will be one to watch. In the 12 months to September 2014, 28 out of 59 African countries experienced growth from China in excess of 60 per cent. By 2034, eight of the 10 fastest growing markets globally will be in Africa. In the countries where Ebola has been concentrated, the outlook is bleak, with January’s seat capacity to and from Sierra Leone down 75 per cent, Liberia down 81 per cent and Guinea down 39 per cent compared to January 2014. However, across Africa, strong growth was recorded in 2014 and 10 countries grew their international capacity by more than 10 per cent.