PGIC2017: 100m new passengers per year for APAC, says Boeing

The Asia Pacific region will add 100 million new airline passengers every year for the next 20 years, according to Boeing.

John Schubert

The aircraft maker’s managing director of marketing for Asia Pacific and India, John Schubert, told an audience at the PATA Global Insights Conference 2017 in Auckland last week that longterm passenger traffic is expected to grow at 5% per year.

The emerging markets of India, China and South East Asia would drive the growth.

“The largest airport in the world is in Atlanta Georgia and it has about 100 million passengers go through it each year,” said Schubert.

“In order to meet the growth in Asia Pacific, is the region ready to build a new 100 million passenger terminal every year for the next 20 years? Because that is the kind of growth that we have already seen and that we continue to predict for the next 20 years.”

Such growth would require more than 41,000 new passenger aircraft valued at over US$6 trillion over the next 20 years. Boeing currently builds about 700 planes a year and Airbus around 600. Today’s global fleet of around 26,000 planes will double to around 46,000 in 20 years.

However, generating profit growth from the increased passenger traffic for airlines would not be easy.

“Prior to 2010, if you had added all the cumulative profits in the airline industry since the beginning of commercial airplane travel, it would amount to zero,” said Schubert.

“Now, in the past eight years, we have seen about US$130bn dollars worth of profits go to the airline industry and this year we predict about US$31bn. It sounds like a big number but with 4 billion passengers globally and only US$31bn profit that’s only about US$8 per passenger so there is still a lot of room for profit growth.”

Passenger load factors were on the rise to over 80% globally with many airlines in South East Asia over 90%, said Schubert.

“I remember the days when 60%- 65% was pretty darn good. That was break even and time to buy a bigger airplane when you were at those load factors. Remember when it was nice to have a middle seat empty all the time? Those days are gone.”

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