ROUTE TRAFFIC FORECASTING DATA, TOOLS AND TECHNIQUES

Transcription

1 ROUTE TRAFFIC FORECASTING DATA, TOOLS AND TECHNIQUES Introduction and Background

2 COURSE OBJECTIVES Understanding how economic factors impact demand for air travel. Understanding of how changes in airline business models, strategy and regulation can impact air travel demand. Understanding data: types of data, sources, pros and cons of each, and manipulating data to build forecasts. Understanding the different types of forecasts and forecasting techniques and when to use each. Ultimate goal is to use forecasts to better identify and quantify route opportunities, build stronger business cases, and produce reliable long-term traffic projections.

3 SETTING THE SCENE

4 SETTING THE SCENE - ECONOMY 2014 GDP, Billions real (2010) U.S. Dollars European Union United States China Japan 0.9 Other Asia 4.2 Latin America excl. Brazil CAGR (%) The world economy is expected to grow at or above historical average rates over the next several years. Middle East Brazil Russia and CIS India World Growth Other Europe Africa Canada Australia / NZ Source: IHS Economics

5 SETTING THE SCENE - ECONOMY ACTUAL FORECAST Emerging markets will continue to lead the way. Source: IHS Economics

6 SETTING THE SCENE - ECONOMY Emerging markets are driving the economic growth Source: IHS Economics January 2015

7 SETTING THE SCENE AIR TRAVEL DEMAND Air Traffic Growth consistently outperforms GDP growth Growth Ratio 1970s 3.1% 1980s 1.9% 1990s 1.8% 2000s 1.4% 2010s 2.1% Source: ICAO, IHS Economics

8 SETTING THE SCENE AIR TRAVEL DEMAND Air traffic is resilient Oil Crisis Oil Crisis Gulf Crisis Asian Crisis 9/11 SARS Financial Crisis Measured in passengers world air traffic grew 73% over the period In the six years following the financial crisis of 2008, average annual growth was 6.6%. Source: World Bank

9 SETTING THE SCENE AIR TRAVEL DEMAND ICAO Total Traffic % % % Airbus GMF 2015 Air Traffic will double in the next 15 years Air traffic will double over the next 15 years. Source: ICAO, Airbus

10 SETTING THE SCENE AIR TRAVEL DEMAND Domestic PRC will be the largest market in 2033 Source: Airbus GMF

11 SETTING THE SCENE AIR CARGO DEMAND Air cargo traf has also bee historically strong. Source: Boeing Current Market Outlook

12 SETTING THE SCENE LIBERALISATION Liberalisation and globalisation have driven world traffic growth. The China-ASEAN Air Transport Agreement resulted in doubling the number of city-pairs served.

13 SETTING THE SCENE AIRLINE STRATEGIES & BUSINESS MODELS The LCC model has grown tremendously over the past two decades. LCCs reduce costs, which enables them to offer lower fares, which stimulates traffic Today LCCs driving an increase in point to point flying Source: 2014 Diio / Innovata Source: CAPA

14 SETTING THE SCENE - AIRLINE STRATEGIES & BUSINESS MODELS At the other end of the spectrum, hub carriers continue to use alliances to strengthen their networks and gain economies of scale. Alliances extend network reach and allow carriers to offer one-stop connections in markets around the globe. Source: OAG

15 SETTING THE SCENE - AIRLINE STRATEGIES & BUSINESS MODELS Some carriers use their geographical location advantage to funnel traffic through their hub In addition to the Gulf carriers, Copa has successfully implemented this model to funnel traffic between North America and South America through their hub in Panama. Source: IATA 80% of the world s population lives within an 8 hour flight from the Middle East hubs.

16 SETTING THE SCENE - AIRLINE STRATEGIES & BUSINESS MODELS Airline load factors and aircraft utilisation are at historically high levels. There are a number of reasons for this, for example: Airline productivity is rising Capacity discipline: The rise in fuel prices over the past years have made airlines more variable-cost driven, which has led to greater discipline in capacity deployment. LCCs: Low-cost carriers have resulted in lower fares, pushing up break-even load factors.

17 SETTING THE SCENE AIRLINE PROFITABILITY An improved economic outlook combined with lower oil prices is driving improvements in profitability. North American airlines are leading the way.

18 SETTING THE SCENE - AMERICAS Thanks to a strong US dollar, lower airfares, and better access to budget-friendly accommodations, travel for the North American market should be strong in A study by TripAdvisor estimates that 69% of US travellers are planning an international trip in 2016, up 32% from In 2015, Hopper (a mobile airline app) reported a 14.3% drop in airfare due to increased competition, cheaper fuel, and airlines moving into unbundled ticketing with lower base fares and optional ancillaries.

19 SETTING THE SCENE - SUMMARY Economic growth rates for the next several years are expected to be at or above historical averages. Air traffic growth has historically outperformed GDP growth and this trend is expected to continue. The LCC s share of the global aviation market will continue to expand, making travel more affordable and thus stimulating demand. Asian markets will lead the way in traffic growth over the next 20 years.