Business World

Sunday 18 March 2018

Aviation spreads its wings to a new globalmarket

John Mulligan

John Mulligan

THE first powered aircraft flight – 109 years ago this month – heralded a transport revolution.

Once a luxury reserved for the well-to-do, air travel is now as cheap as chips. Its impact has been vast, on both economies and societies. And an even bigger chunk of the world's population – from China to India and Africa – is poised to be counted among the world's frequent fliers.

In Tanzania, low-cost carrier Fastjet –established by Easyjet founder Stelios Haji-Ioannou – has just completed its first week of scheduled services. It is the first low-cost carrier in Africa and is betting that it can carve out a lucrative share of the continent's air-travel market.

Its first service, a domestic route in Tanzania, carried nearly 7,000 passengers in its first week, representing a load factor (the amount of available seats sold) of 85.4pc.

It has sold just over 18,000 tickets. Fastjet has also just entered negotiations with Dubai-based behemoth Emirates to develop a partnership.

China, home to an expanding middle class keen to spread its wings, is even trying to make its mark on the aircraft-manufacturing sector.

Comac, a state-owned company established in 2008, is working on plans to develop its first medium-range commercial passenger jet.

It has already piqued the interest of Ryanair and British Airways, both of which have indicated that they might eventually buy Comac aircraft.

And despite forecasts yesterday from the International Air Transport Association (IATA) that predict the US will remain the world's biggest domestic air-passenger market by 2016, it's only a matter of time before China catches up. IATA reckons the US will record 710 million such passengers in 2016, compared to China's 415 million.

During the summer, China's government said that 82 new airports will be built in the country by 2015, bringing the total to 230.

A further 100 will be expanded. It's estimated that by 2015, 80pc of China's population will be living within 100km of an airport.

Whether or not all those airports will sustain any sizeable throughput in the medium term is unknown.

The head of India's airports authority said last month that the country will require 200 airports for "general aviation" purposes by 2020.

The country's commercial aircraft fleet is expected to rise to 2,000 by then, from 680 this year.

Domestic air-passenger growth in India has grown at a compounded annual rate of 14pc in the past few years, while international traffic has been growing at 22pc, according to the authority.

And as airline passenger growth in the Asia-Pacific region continues to outpace that in more mature markets including the US and Europe, it's little wonder that aircraft leasing firms – many of them headquartered in Dublin – focus their energy developing their business in the region.

Tony Tyler, the director general and chief executive of IATA, says the continuing demand for air travel bodes well for the global economy.

"Growing air transport links generate jobs and underpin economic growth in all economies," he said.

However, he warned that governments had to "recognise aviation's value" with polices that don't stifle innovation, tax regimes that don't punish success and investments to enable infrastructure to keep up with growth.

Irish Independent

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