Size of UK aviation industry in 2027

[jabird]

As we gear up to the official consultation on London airport capacity, the first question to ask must surely be just how big the industry is likely to be by the time any new infrastructure is actually built.

I've picked 2027 as that is 15 years away, I don't see us designing and building anything sooner, although runway should be easier than railway!

So given the current challenges and opportunities, where will be by then, as a percentage of current throughput?

Challenges

* High fuel prices - likely to keep rising as oil is running out.
* Airlines dropping like flies.
* Even if economy picks up, debt mountain still remains.
* Increasing environmental awareness + used as excuse for APD.
* Most of recent growth has come from LCCs, who focus on ptp, not connecting traffic.

Opportunities

* People are still living longer with more leisure time.
* Emerging markets in former Eastern Bloc where propensity to fly is still a fraction of UK levels. Open borders have created business links and a huge growth in VFR.
* Suggestions that air freight might grow 7fold by 2050, according to "Sustainable Aviation".
* Continued growth in China, and likely rises in GDP in India to follow. Due to distance from the UK, these are often over-hyped relative to Eastern Europe, but recent growth of routes to LGW shows the demand is there.

[LGS6753]

Jabird -

Prior even to your questions being asked, in my view an important consideration is to take a view on the likely prevailing economic conditions over the next 15 years.

A 'positive' scenario would see:

• A return to growth in the UK economy this year
• Continuing growth at or above the long-term trend (2.4% or more)
• No significant economic reversals
• Britain remaining a major open economy
• Solution of the Eurozone problems in 2012/3
• Stable political environment
• Stable fuel prices (growing but not exponentially)

A negative view would include:

• Double-dip recession, or further slow growth over a protracted period
• The collapse of the Eurozone
• EU breakup, leading to protectionism
• Major or prolonged terrorist action or threats in Europe/UK
• Large-scale or significant military action involving UK, US or NATO forces
• Major political upheaval in UK
• Sudden or major spike in oil prices

The actual picture is likely to be somewhere between the two, but it is the overall demand for air travel that will form the basis of the analysis.

FWIW I think UK will enjoy a period of sustained growth from 2013, assuming no change in Government. This will create a benevolent scenario for growth in aviation, which I believe will continue to grow faster than the underlying economy.

If the economy grows at trend, and aviation growth is 1.5 times overall economic growth, in 2027, air transport will be 70% bigger than today.

[Dannyboy39]

What I do believe is that the forecasts are way off. At today's LTN consulation I think it said by 2050, total throughput in the UK's airports would hit between 400m (small estimate) and 720m (big estimate) with the central forecast (520m).

Exponential forecasts don't work.

[jabird]

FWIW I think UK will enjoy a period of sustained growth from 2013, assuming no change in Government. This will create a benevolent scenario for growth in aviation, which I believe will continue to grow faster than the underlying economy.

Why do you think aviation will out-strip the rest of the economy. It faces particular challenges which other sectors don't, and if moves to a "greener" economy continue, we still have a lot of catching up to do before we can claim to be in that sector.

I agree that if the economy grows, the aviation sector should grow too, but I think we've lost the link between GDP and miles travelled. It is the quality of the experience that people value, not just the quantity.

I also didn't mention the role of IT - some say teleconferencing will replace the need for business travel, but I think it will just mean a cooling off in some premium demand. The web also creates new opportunities for people to reach new market - so do these two cancel each other out, or is there a net decline?

Exponential forecasts don't work.

Agreed. Where on earth do they get the 720m fig from?

<edit - sorry, was about to ask if this is about LTN's expansion - every airport and the fantasy island have their own thread, I wanted to keep this just to the market itself!>

[befree]

in 2027 the industry will be about the same size. Expansion is limited by the publics spending power and amount of annual leave. For business travel the rise of video technology and high speed rail must offset other factors increasing travel.

I suspect we will see far more inbound traffic from china and a lot less of the "low cost" weekend break traffic that will be killed of by very high fuel costs. in 2027 jet fuel will be many thousands per tonne

We may even see a move away from jet engines for the likes of easyjet and ryanair as they buy advanced turbo-props.