Aviation Performance in NSW 2014-15

Aviation Performance in NSW 2014-15 This report by Tourism Futures International for Destination New South Wales reviews the operating environment and aviation performance of Sydney and NSW over 2014 and 2015. Key findings International Traffic Performance: Sydney Airport is Australia’s major gateway for international visitors, securing 41% of total international arrivals to Australia in 2014. During 2014, 2.8 million international visitors arrived in Australia via Sydney Airport, up 5.2% on the previous year. Sydney’s top five source markets combined (NZ, China, USA, UK/Ireland and South Korea) accounted for 54% of all visitors; the next five (Japan, Singapore, HK, Canada and Germany) accounted for 17%. China is the major growth market for Sydney Airport with a compound annual growth rate (CAGR) of 17.4% over the five-year period 2009 to 2014. During 2014, China contributed almost half (43%) of the increase in visitor arrivals to Sydney. At 13%, USA is the second greatest contributor to visitor growth, with India and Malaysia each contributing 7%. Of the 44.1 million seats operated to/from Australia on scheduled international passenger services during 2014, Sydney Airport accounted for 39.5% or 17.4 million seats. Seat utilisation at Sydney Airport was 80.2% (including transit passengers). Domestic Traffic Performance: The fourteen major Sydney interstate competitive routes accounted for 40.2% of the total Australian domestic passenger traffic in 2014. In terms of passenger numbers, the fastest growing Sydney interstate routes in 2014 were the lower volume routes where passenger growth is over a low base: Sydney to/from Ayers Rock, Launceston and Hamilton Island. Of the higher passenger volume routes, growth was strongest on the Sydney/Adelaide and Sydney/Gold Coast routes, while passenger numbers on the Sydney/Perth route declined slightly. Overall passenger numbers on the 14 major Sydney interstate routes increased by just 0.8%. The top six Sydney intrastate routes accounted for 69% of all Sydney to/from Regional NSW routes in 2014. The average annual passenger growth over the past five years has been strongest to Tamworth, Armidale, Ballina and Coffs Harbour. By the March quarter 2015 the number of routes connecting Regional NSW to Sydney had fallen to 22. Of the twelve deregulated routes, growth over the past five years has been strongest to Tamworth, Armidale, Ballina and Coffs Harbour. Of the 14 regulated routes, growth over the past five years has been strongest to Moree; eight of these routes have seen declining passenger numbers while three of these routes were not served at all during 2014. Sydney International Inbound and Outbound Performance Figure 1 shows the international visitor arrivals at Sydney Airport over the period from January 1997 to May 2015. It also shows some of the key aviation and non-aviation events that have had an impact on worldwide and Australian air traffic. Figure 1: Sydney Airport Visitor Arrivals, January 1997 to May 2015 Source: ABS visitor arrivals data Significant developments over 2014 and into 2015 include: Fiji Airways re-commenced a twice weekly service from Suva to Sydney in May 2014. The international low cost carrier Cebu Pacific commenced services between Manila and Sydney in September 2014. China Airlines operated a three weekly service from Taipei to Christchurch via Sydney from December 2014 to February 2015. This service resumed in November 2015 and will be available until March 2016. Air India ended its daily triangular service from Delhi to Sydney and Melbourne from May 2015, and introduced nonstop services to each port in both directions. Sydney B787-8 services increased from three weekly to four weekly in June 2015. Indonesia AirAsia X commenced a five-weekly non-stop A330-300 Sydney to Bali service on 17 October 2015. Malaysian Airlines reduced its A330-300 Kuala Lumpur to Sydney services from triple-daily to double-daily from 4 August 2015. August reductions in Malaysian Airlines services to Australia also applied to Melbourne, Perth and Adelaide, along with the cancellation of Brisbane services. Two airlines exited Australia in 2014: Aerolineas Argentinas ended Buenos Aires to Sydney service in April 2014; and Virgin Atlantic ended its daily Hong Kong to Sydney service in May 2014. AirAsia X cut its Kuala Lumpur to Sydney services from double daily to daily following July- September 2014 financial losses. 2 ANA plans to commence daily B787-9 services from Tokyo (Haneda) from 11 December 2015. American Airlines plans to commence a daily B777 Los Angeles service from 19 December 2015; Qantas will reduce its services on the route from 14 to 10 times weekly. Qantas plans to reduce its Los Angeles services from double daily to ten times weekly from 19 December 2015 (A380 services will remain at daily, while B747 services are reduced). At the same time the airline will commence six times weekly B747 services to San Francisco (last served this route in 2011). Figure 2 provides a rolling 12-month sum of international short term visitor arrivals and resident departures1 at Sydney Airport from January 1997 to May 2015. Figure 2: Sydney Airport Visitor Arrivals and Resident Departures, January 1997 to May 2015 Source: ABS Overseas arrivals and departure data The strong growth in resident outbound travel over the period from 2003 has been built upon the strong growth in the Australian economy and incomes, the high value of the Australian dollar, and the entry and increased penetration of the low cost carriers into the Australian international market. In May 2013, the Australian dollar dropped below parity against the US dollar and has continued its decline. The Australian dollar has fallen 22 per cent against the US dollar, from US $0.994 in May 2013 to US$0.77 in June 2015. The Australian dollar has also dropped significantly against many currencies including the Chinese Yuan and Hong Kong dollar, Taiwan dollar and Indian rupee in June 2015 as compared to June 2014. A low Australian dollar increases the cost of overseas travel by Australians and decreases the cost for overseas visitors for travel to and within Australia. These developments are likely to lead to a new growth phase in domestic and international tourism for Australia. 1International Short Term Visitor Arrivals and Resident Departures: overseas visitors whose intended stay in Australia is less than 12 months, residents who intend travelling overseas for less than 12 months. 3 With the fall in the Australian dollar, outbound travel by Australian residents slowed down from 2013 while visitor arrivals to Australia grew at a faster rate over the same period. Sydney airport resident departure’s compound annual growth rate (CAGR) from 2005 to 2013 was 5.9% vs 1.3% from 2013 to 2014. In contrast, Sydney airport visitor arrivals’ CAGR from 2005 to 2013 was 1.7% vs 5.2% from 2013 to 2014. On a national level, resident departures’ CAGR from 2005 to 2013 was 8.0% vs 3.9% from 2013 to 2014, while Australian visitor arrivals’ CAGR from 2005 to 2013 was 2.0% vs 7.6% from 2013 to 2014. The share of visitor arrivals to total passengers of Sydney Airport has grown from 43% in 2012 to 48% in May 2015, a level last seen in 2009. In contrast, the share of resident departures to total passengers of Sydney Airport has fallen from 57% in 2012 to 52% in May 2015. Figure 3 shows the major country-contributors to visitor arrivals in Sydney Airport during 2014. Figure 3: Sydney Airport International Visitor Arrivals by Country of Residence, 2014 Arrival Numbers and Share of Sydney Total 1 NZ 15.2% 2 China 13.6% 3 USA 10.9% 4 UK & Ireland 9.9% 5 South Korea 4.9% 6 Japan 4.4% 7 Singapore 3.7% 8 Hong Kong 3.0% 9 Canada 2.9% 10 Germany 2.8% 11 India 2.6% 12 Malaysia 2.6% 13 Indonesia 2.1% 14 Taiwan 1.6% 15 Mid East 1.4% 16 Thailand 1.2% 17 Other Europe 8.5% 18 Other Asia 3.0% 19 Oceania ex NZ 2.2% 20 Other Americas 1.8% 21 Other & not stated 1.7% 0K 50K 100K 150K 200K 250K 300K 350K 400K 450K Visitor Arrivals Source: ABS visitor arrival data. Note: France and Italy are included in ‘Other Europe’ and the Philippines is included in ‘Other Asia’. The top four source markets for visitors to Sydney combined (NZ, China, USA and UK/Ireland) account for almost half of all visitors with the Top 10 accounting for 71%. China is a key market in terms of achieving visitor growth into the future. However other Asian markets, including South Korea and Japan remain important prospects for growth. 4 Table 1 summarises Sydney Airport’s share of all international visitor arrivals to Australia by its top source markets over the past five and ten year periods. Table 1: International Visitor Arrivals to Sydney Airport, 2014 compared with 2009 and 2004 Rank Market Share of Five-year Comparison 2014-2009 Ten-year Comparison 2014-2004 Australia 2014 CAGR Share '09 Chg (ppt) CAGR Share '04 Chg (ppt) 5Yr 10Yr 1 New Zealand 34.3% 1.9% 35.4% -1.1 1.1% 37.0% -2.7 2 China 45.4% 17.4% 47.9% -2.5 13.3% 43.7% 1.7 3 USA 55.2% 0.4% 63.3% -8.1 1.1% 63.5% -8.3 4 UKI 38.6% -3.1% 43.6% -5.0 -1.8% 45.0% -6.4 5 South Korea 66.8% 3.0% 62.9% 3.9 -1.8% 76.8% -10.0 6 Japan 38.1% 3.9% 29.5% 8.7 -3.3% 24.5% 13.6 7 Singapore 28.0% 10.7% 25.0% 3.0 5.6% 24.7% 3.3 8 Hong Kong 42.2% 2.7% 51.6% -9.4 3.9% 43.0% -0.8 9 Canada 58.7% -1.3% 65.6% -6.9 2.1% 65.4% -6.7 10 Germany 41.7% -1.9% 51.9% -10.2 1.4% 47.6% -5.9 11 India 36.8% 9.3% 40.1% -3.2 11.2% 45.9% -9.0 12 Malaysia 22.1% 19.5% 14.6% 7.5 6.3% 23.6% -1.5 13 Indonesia 39.5% 6.3% 41.9% -2.4 6.3% 38.5% 1.1 14 France 46.8% 0.4% 55.5% -8.7 5.5% 55.4% -8.6 15 Taiwan 38.1% 0.8% 43.6% -5.5 -0.5% 48.4% -10.3 16 Middle East 37.7% 0.5% 43.1% -5.4 3.1% 46.2% -8.5 17 Philippines 46.6% 9.4% 47.0% -0.4 7.1% 56.3% -9.7 18 Thailand 42.9% -0.5% 46.1% -3.2 -1.4% 47.9% -5.0 Other 42.3% 1.3% 47.8% -5.5 3.5% 47.8% -5.5 Total 40.8% 3.2% 43.5% -2.7 2.3% 42.7% -1.9 Notes: CAGR Compound Annual Growth Rate; ppt Percentage Point Change.

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