Professional Documents
Culture Documents
At An Inflexion Point?
© 2010 AeroStrategy 2
Un-
constrained Air Travel Demand Has Averaged 5.7% Growth
Growth? Since 1970
1970-2009 Air Transport Revenue Passenger Miles (Billions)
European
3,000 liberalization &
U.S. LCC
U.S. Deregulation growth
2,500 1970-1990 1990-2002
CAGR 6.9% CAGR 4.6%
2,000
1,500
Europe LCC
Asia
1,000
liberalization
2002-2009
500 CAGR 4.2%
7,000
6,000
CAGR
5,000
OEM1 4.7%
4,000
OEM2 4.9%
3,000
Expert 5.5%
2,000
Actual
1,000
© 2010 AeroStrategy
Sources: Boeing, Airbus, ESG Aviation 4
Un-
constrained Other Transportation Modes Went Through Long
Growth? Term Growth Periods Before Maturing…
1850-2010 UK Railway Traffic (Millions of Passenger Miles)
35,000
30,000
25,000
20,000
30-year
expansion
15,000
1890-1920
CAGR 4.3% •Great depression
10,000 •Suburbanization
•Build-out of road network
5,000 •Cars becoming inexpensive
•Low cost, reliable air travel
-
© 2010 AeroStrategy
Source: Association of Train Operating Companies 5
Un-
constrained ..And There Are Several Structural Factors That
Growth? Could Reduce Long-Term Air Travel Growth
Cost of Fuel
Socio-Cultural
Infrastructure
Substitutes
6
Agenda
© 2010 AeroStrategy 7
Two Factors Are Likely To Drive Higher Aviation Fuel
Costs, Which Are Approximately 30% Of Airline
Costs…
Oil Aggregate Supply & Demand Taxation
• The price
prices = revenue elasticity of
demand for air
travel is generally
elastic
• Leisure travel,
around 60 % of
demand, is very
susceptable to
price increases
• Price increases
have the least
impact on long
haul business
revenue 9
There Is A Negative Perception Of Aviation With A
Segment Of European (Green) Consumers…
• China accelerated
completion of a
massive HSR
network by several
years to stimulate
the economy
• The network will be
completed by 2012;
total investment will
reach $300B
• Recently opened line
from Guanzhou can
travel at 245 miles
per hour
• Paradoxically, videoconferencing
enables dispersed organizations,
which sometimes increases air
travel
© 2010 AeroStrategy 21
The Medium-Long Term Impact Of Air Travel
Constraints Vary By Region….
Implications
Low High
Impact Impact
Source: AeroStrategy analysis 22
…However, The Aviation Industry Has Overcome
Constraints And Crises Before….
Implications
23
…And Potential Solutions To Some Of The
Constraints Are On The Horizon
Implications
© 2010 AeroStrategy 25
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