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Crunch Time

Infrastructure development will play an important role in the future dynamics of aviation.

Growth and efficiency enhancements could accelerate the benefits of traffic increases; restrictions could start a downward spiral for local airlines and the economy.

Asia-Pacific is responding to high growth with significant capacity enhancements. China will invest more than $200 billion in airports through 2020. That equates to nearly 50 new airports, following on a similar number built in the previous decade. Air traffic management is also being developed. In addition to new air corridors across mainland China, the troublesome Pearl River Delta airspace has been improved, with 210 kilometers shaved off routes from China, Europe and Southeast Asia.

The Middle East is likewise preparing for the future. James Hogan, Chief Executive Officer, Etihad Airways, says new long-haul and ultra long-haul aircraft make non-stop travel to all four corners of the world possible via Middle East hubs. The region is quickly becoming a destination in its own right and is a popular transit point.

Abu Dhabi airport is expanding and there are new airports in Doha, Qatar, and Dubai. Traffic at Dubai virtually doubled from 2005-2010 as annual passenger numbers grew from 24.8 to 47.2 million. It will double again by 2020, while cargo will reach three million tonnes. The existing airport will be expanded to handle about 90 million passengers per annum (mppa) by 2018, but, far from becoming congested, Dubai will still have room to grow. A new airport, Dubai World Central-Al Maktoum International, has already come online. Total buildout is expected in about 2025, when the airport will offer capacity for 160 mppa and 12 million tonnes of cargo.

“Dubai’s aviation industry is thriving due to its liberal aviation policies and geo-centric location as well as its willingness to invest in top-flight infrastructure,” says Paul Griffiths, Dubai Airports CEO. “It is a formula that clearly works. The challenge is to ensure we have ample capacity in place—both on the ground and in the air—to accommodate traffic growth.”

India too has made progress. Improvements at the major hubs of Delhi and Mumbai follow on from new facilities at Hyderabad and Bangalore. The other force in the new aviation landscape, Brazil, has a little more work to do. Sao Paulo, the country’s main international hub, is saturated and major infrastructure improvements are needed.

Heavy investment in other regions can be contrasted with progress in the mature US and European markets. Although growth is lower than elsewhere, the high starting point means plenty of extra customers: more than 100 million more in Europe and some 80 million in North America. And yet the focus on big improvements remains hazy. The Single European Sky and NextGen are vital if bottleneck concerns are to be addressed. A third runway at the world’s busiest international airport, London Heathrow, has been cancelled, and there are flight time or expansion restrictions at many other gateways. At Chicago O’Hare and Los Angeles, for example, modernization plans were a long time coming and even now are more about alleviating congestion than preparing for the future.

When Chicago finally agreed on upgrading its major airport recently, Rita Athas, President of World Business Chicago, underlined the importance of infrastructure development. “The project is essential to our efforts to bring business, and jobs, to the city, and will have a great impact on our city’s vitality,” she says.

Black Swans

There was a time when Europeans thought all swans were white. This “fact” was blown out of the water in the late 17th century with the first reported sighting of a black swan in Australia.

All the white swans of Europe and the Americas could not account for that first sighting. Black swans have now become synonymous with unpredictability, unique paradigm-shifting events that no amount of data analysis could anticipate.

Aviation has known its fair share of black swans. The 1970s oil crisis and 9/11 are only two examples among many. Each has had a significant effect on airline growth and profitability—and none would have appeared in any forecast. The force of these events was matched only by the suddenness of their onset.


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