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The changing world of aviation

Globally, there are four big trends reshaping the aviation industry, which aviation companies and the Irish government alike must plan for.

For half a century, the largest western airlines had the market for intercontinental air services to themselves. Now, competition for long-haul traffic is fierce, with the ‘Gulf Three’ diverting passengers who would previously have hubbed in Europe or south-east Asia through the Gulf mega-airports.

Some Gulf airlines are offering one-stop services from ‘secondary’ cities in Europe to ‘secondary’ cities in Asia, for example between Birmingham and Melbourne, bypassing London and Sydney. The CEO of Birmingham Airport recently commented that after decades of Dublin providing the largest single block of Birmingham’s passengers, the Dubai services now have more traffic.

In Dubai, the largest single group of disembarking Dublin passengers take flights to India. Similar competition will eventually be offered by China, where aviation development is growing at a dizzying pace. The Asia Pacific market will account for a huge percentage of global aviation growth in the forthcoming decades.

A second source of new competition for the established carriers is the new business model of ‘long haul, low cost’. This business may now be getting a foothold in the market, notably but not only in the form of Norwegian Air, which flies between the US and Ireland (Cork and Dublin airports). This service has already had an impact on transatlantic pricing of other airlines.

These changes are of course partly due to a third trend: constant improvement of aircraft technology that permit lighter aircraft, more fuel-efficient engines, and more seats. Even in the seemingly duller world of air cargo, there are exotic-looking new aircraft like Airbus’ recently unveiled whale-themed Beluga cargo aircraft.

Finally, in the background are the changes that decarbonisation will bring, although in the absence of a global carbon tax, and of an alternative fuel for air travel, it is difficult to foresee much progress in the short term.

Irish aviation trends
Locally, there are also observable changes underway in aviation infrastructure and airline business models. Some of these are the local manifestation of the international trends.

At Dublin airport, plans are being made to add a second runway, to serve airlines capable of connecting Dublin to cities at or beyond the range of the present runway, at least for aircraft with a full passenger load.

Amongst airlines, under IAG ownership, supported by feeder traffic from the east, in particular the UK, and Dublin airport’s ‘pre-clearance’ of US immigration for services to the west, Aer Lingus has greatly expanded its transatlantic services to the US coasts boosting passenger numbers at Dublin airport’s ‘mini hub’.

Also locally, Ryanair is transitioning its business model from ‘ultra’ to low-cost but higher quality than in the past. Ryanair already has well over 100m passengers a year, still only half the passenger-size of the largest US airlines. But it has a huge fleet increase on order to serve its ambition to add a second 100m passengers a year. Very likely, Ryanair judged that it had captured the ultra-low-cost market and needed to improve its service to make itself attractive to business travellers and families.

The ‘Always Getting Better’ campaign was clearly a part of this transition to a better quality service. But the airline has met uncharacteristic operational difficulties in pilot scheduling and staff disputes very recently that harm its reputation amongst customers.

Finally, there is the perplexing challenge of managing the impact of Brexit on aviation, on which informed opinions differ. The standard view is that if Britain leaves the EU without a new air services agreement with Brussels, UK flights will not be able to fly between UK and EU airports in either direction. Both the Irish Aviation Authority and European Commission have warned of such a scenario. But some optimists in the UK argue that the UK’s pre-1973 air service agreements will come back into force. Even if so, these 40-year-old agreements provided for air travel in a completely different world.

Notwithstanding the Brexit uncertainty, the future of aviation is buoyant and looks set to provide greater connectivity and choice for Irish passengers. Taking advantage of these global trends and planning for the future of aviation travel in this context will positively shape Ireland’s economic future.

Article Source: http://tinyurl.com/kbwqb42

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