Mapping Australia’s Tourism Aviation Priorities (Stage 2) Final Report For: Resources, Energy and Tourism Contract No: 001430 Date: as at 30 September 2011 Authors: Ian Thomas, Nicki Blackwell Managing Consultants, ci1 CAPA Consulting Final Draft Report [email protected] Bob Cain, Tourism Futures International CONFIDENTIALITY & DISCLAIMER STATEMENT This document is proprietary to Miller Aviation Partners trading as “CAPA Consulting” and the information contained herein is confidential and is provided solely for the purpose of responding to the Scope of Work, as defined by Resources, Energy and Tourism (RET). This project is subject to the terms of the Consulting Agreement between CAPA Consulting and RET. Information contained in this document is subject to contractual arrangements and written and verbal confidentiality agreements between CAPA Consulting and RET. While care and attention has been exercised in the preparation of this document, any comments on, or opinions stated in this document whether or not expressed as being those of CAPA Consulting, are based on the information provided to CAPA Consulting by RET or available from credible publically available sources of information. While CAPA Consulting does not have reason to believe that this information is in any way inaccurate or incomplete, responsibility for its accuracy and completeness does not rest with CAPA Consulting. Miller Aviation Partners Pty Ltd trades as “CAPA Consulting” ACN: 122 984 892 ci2 Final Draft Report Document Control Project Ref Project Title Mapping Australia’s Tourism Aviation Priorities (Stage 2) RET01 Code: Document Final Report Title Revision no. Date Revision Details Author Approved By Incorporation of Comments in response to 1 IT/BC/NB AM Draft Report Editing changes, updates IT/BC/NB AM Additional graphics IT/BC/NB AM FINAL REPORT – AS CIRCULATED TO TAWG 30.09.11 – DB. ci3 Final Draft Report Table of Contents EXECUTIVE SUMMARY .....................................................................................................................6 1. INTRODUCTION......................................................................................................................12 1.1 STUDY STRUCTURE.......................................................................................................................12 1.2 METHODOLOGY ............................................................................................................................14 PART I: KEY ISSUES IMPACTING ON AIR SERVICES DEVELOPMENT 2. REVIEW OF GOVERNMENT STRATEGY DOCUMENTS...................................................16 2.1 THE NATIONAL AVIATION STRATEGY ..........................................................................................16 2.2 NATIONAL TOURISM STRATEGY & THE JACKSON REPORT ...........................................................18 2.3 MAPPING AUSTRALIA’S TOURISM AVIATION PRIORITIES – STAGE 1 REPORT...............................19 3. ANALYSIS OF KEY MARKET, REGULATORY & AVIATION ISSUES ............................22 3.1 RECENT AVIATION CAPACITY TRENDS.........................................................................................23 3.1.1 IMPEDIMENTS TO AVIATION DEVELOPMENT ........................................................................23 3.2 AVIATION REGULATORY DEVELOPMENTS ....................................................................................24 3.2.1 ASEAN EMERGING AS KEY COMPONENT OF REGIONAL INITIATIVES .................................27 3.2.2 CHINA THE DOMINANT INFLUENCE......................................................................................28 3.2.3 FURTHER LIBERALISATION OF THE NEW ZEALAND MARKET...............................................31 3.2.4 OWNERSHIP REFORMS .........................................................................................................31 3.3 AIRLINE-FOCUSED ISSUES ............................................................................................................33 3.3.1 FURTHER EVOLUTION OF THE BUSINESS MODEL .................................................................33 3.3.2 EXPANSION OF LONG-HAUL LCCS ......................................................................................34 3.3.3 DEVELOPMENT OF HYBRID LCCS ........................................................................................35 3.3.4 IMPACT OF FLEET GROWTH AND NEW AIRCRAFT TYPES .....................................................36 3.4 FUEL PRICE VOLATILITY ..............................................................................................................42 3.5 MIGRATION TO ALLIANCE STRUCTURES; NEED FOR SERVICE CONNECTIVITY .............................45 3.6 INFRASTRUCTURE: THE ROLE OF AIRPORTS .................................................................................49 3.6.1 FUNCTION OF INTERNATIONAL HUBS...................................................................................49 3.6.2 KEY COMPONENTS OF A SUCCESSFUL HUB..........................................................................50 3.6.3 CURRENT GLOBAL HUBS .....................................................................................................52 3.6.4 FUTURE GLOBAL HUBS........................................................................................................53 3.6.5 AUSTRALIAN GATEWAYS.....................................................................................................54 3.6.6 CAPACITY CONSTRAINTS ON GROWTH ................................................................................57 4. TRAVEL MARKET FACTORS IMPACTING ON SERVICE DEVELOPMENT ................58 4.1 INBOUND/OUTBOUND TRAVEL MIX.............................................................................................58 4.2 TRAVEL PURPOSE .........................................................................................................................59 4.3 GROUP/NON-GROUP TRAVEL .......................................................................................................60 4.4 AVERAGE STAY FOR TOURISTS....................................................................................................61 4.5 ISSUES OF SEASONALITY..............................................................................................................62 PART II: MARKET DEVELOPMENT SCENARIOS & RECOMMENDATIONS 5. REVIEW OF CAPACITY AND TRAFFIC FORECASTS ...................................................66 5.1 INTERNATIONAL MARKETS DRIVING TFC 2020 FORECASTS .......................................................68 5.2 MARKETS CENTRAL TO DISTRIBUTION ACROSS AUSTRALIA ........................................................70 ci4 Final Draft Report 6. MARKET DEVELOPMENT SCENARIOS................................................................................72 6.1 THE TASMAN MARKET .................................................................................................................73 6.1.1 OVERVIEW OF CURRENT AIRLINE SERVICES........................................................................73 6.1.2 MEDIUM AND LONG TERM SCENARIOS ................................................................................75 6.1.3 ASSESSMENT........................................................................................................................79 6.2 MEDIUM-HAUL MARKETS ............................................................................................................80 6.2.1 NORTHEAST ASIA ................................................................................................................80 6.2.1.1 OVERVIEW OF CURRENT AIRLINE SERVICES .....................................................................80 6.2.1.2 MEDIUM AND LONG TERM SCENARIOS .............................................................................83 6.2.1.3 ASSESSMENT.....................................................................................................................88 6.2.2 SOUTH AND SOUTHEAST ASIA .............................................................................................88 6.2.2.1 OVERVIEW OF CURRENT AIRLINE SERVICES .....................................................................88 6.2.2.2 MEDIUM AND LONG TERM SCENARIOS .............................................................................92 6.2.2.3 ASSESSMENT.....................................................................................................................99 6.2.3 THE MIDDLE EAST .............................................................................................................100 6.2.3.1 OVERVIEW OF CURRENT AIRLINE SERVICES ...................................................................100 6.2.3.2 MEDIUM AND LONG TERM SCENARIOS ...........................................................................102 6.2.3.3 ASSESSMENT...................................................................................................................105 6.3 LONG-HAUL MARKETS...............................................................................................................106 6.3.1 AUSTRALIA-UK/EUROPE ...................................................................................................106 6.3.1.1 OVERVIEW OF CURRENT AIRLINE SERVICES ...................................................................106 6.3.1.2 MEDIUM AND LONG TERM SCENARIOS...........................................................................108 6.3.1.3 ASSESSMENT...................................................................................................................116