Airbus: Market segmentation is in the eye of the beholder
Dateline: Wednesday June 09, 2004
The theory that future international traffic development increasingly will be given over to nonhub, point-to-point flying dominated by aircraft such as Boeing's newly launched 217/289-seat 7E7 is not supported by recent history, and particularly not by trends in Asia, where ultra-large aircraft like the 550-seat A380 will be in heavy demand for many years to come, according to Airbus VP-Market Forecasts and Research Laurent Rouaud.
Speaking last week at the Airbus Technical Press Briefing in Toulouse, Rouaud claimed that in the years 1998-2003, only one new route was launched between Tokyo Narita and a secondary city in the US or Canada (Houston) while four were suspended (Narita to Calgary, Portland, Las Vegas and Toronto).
Furthermore, 50% of US-Narita passengers stay in Tokyo while 60% of US-Seoul passengers likewise remain in the South Korean capital, according to Rouaud, who cited data from BACK Aviation. Taking a position often made by US hub-and-spoke carriers, he argued that even relatively large cities cannot support nonstop point-to-point service. Dallas and Guangzhou, two cities of approximately 4 million people each, do not generate enough O&D traffic for one flight per week, he claimed, again citing BACK Aviation data.
And although passengers may prefer nonstops to connections, they vote with their pocketbooks. US Commerce Dept. surveys and CIC Research show that among economy-class passengers, ticket price is twice as important as the availability of a nonstop flight in airline selection criteria, while among business- and first-class passengers frequent-flier programs and price are each twice as important as the availability of a nonstop.
Asia is also different from Europe and the US in that the region's urban population is highly concentrated in 11 primary cities. According to Rouaud, 80% of Europe-Asia flights are operated on primary routes. Even on the transatlantic, "core routes continue to grow." Citing data from OAG, he said the top 20 transatlantic routes' seat capacity market share was 40% in 2003 while the remaining 60% was spread over 216 other routes--both figures unchanged from 1990.--Perry Flint