Outlook
The COVID-19 pandemic has created unprecedented disruption in the global aviation industry.
The closure of international and domestic borders in March 2020 has resulted in a significant ongoing reduction in international and domestic air traffic, plunging the aviation industry into a period of ongoing volatility and uncertainty.
These events had a significant impact on our own financial performance. Despite starting the 2019-20 financial year in a position of strength, by the March quarter fee-paying customer traffic was down by 5.5 per cent compared to the same period in 2018-19. In the final quarter of the year, traffic was down by 58.5 per cent. As a result, revenue was 24 per cent below budget for 2019-20.
While we expect domestic flights will steadily return to the skies over the course of 2021, international flights may take many years to return to something approaching pre-pandemic traffic levels. Our current forecast is that 2024-25 traffic levels will be up to 30 per cent below previous expectations. Global uptake of a vaccine will be the key determinant of the shape of the industry’s recovery.
The pandemic has made everyone more aware of the vital role aviation has to play in supporting our economy and the social fabric of our communities. The commercial airline industry’s return to health is at the top of the national agenda, with the federal government making substantial financial commitments to support the industry as the challenging conditions continue for the foreseeable future.
Meanwhile, we are also expecting new customers to emerge as demand for the services they can provide increases over time. It is essential that we adapt our service offerings to cater to these new and very different players in the aviation ecosystem.
Airspace users and aerodromes across Australia are also evolving, with a range of new manned and unmanned aircraft, the opening of a significant new international and domestic airport in Western Sydney, and new runways in Melbourne and Perth nearing completion, alongside Brisbane’s recently commissioned parallel runway.
As the aviation industry takes the first tentative steps towards a ‘new normal’, we are steadfast in our commitment to ensure the safety, efficiency and regularity of all those that use our skies in a volatile and uncertain operating environment.
There are 6 key trends affecting the aviation industry that we will navigate over the life of this plan.
While we expect domestic flights will steadily return to the skies over the course of 2021, international flights may take many years to return to something approaching pre-pandemic traffic levels.
Long Term-Trends
Intelligent Systems
Intelligent systems have the potential to increase situational awareness (insights) and to use these insights to deliver optimal outcomes for customers. Cloud technologies can be harnessed to bring together inputs from a range of different systems and assets, process large scale data sets and simulate millions of ‘what if’ scenarios.
Meanwhile the impact of digital twins is expanding beyond the optimisation of individual assets and systems to driving improvements at the organisational level.
With a focus on how decisions are made, data visualisation is also critical. Organisations will need data-and the business insights it provides-to create hyperpersonalised services for customers. Applications must be designed to present the right information, at the right time and to the right people.
Increasing Airspace Complexity
The COVID-19 pandemic is likely to amplify demand for the services that could be provided by autonomous vehicles, including drone deliveries and unmanned aerial taxis, as people adjust to stay-at-home and social distancing measures.
Meanwhile, while COVID-19 has accelerated the retirement of long-range passenger aircraft such as the Airbus A380, once international demand rises again more fuel-efficient aircraft, like the A350 and Boeing 787, will drive the recovery of ultra-long haul international travel.
Over the next 15-20 years, traditional and emerging aircraft will operate alongside each other, increasing the congestion and complexity of airspace. The emergence of unmanned aerial vehicles (UAVs) in lower altitude airspace is one example of this; new users are also edging into higher altitude airspace.
We must work to integrate and facilitate operations in all parts of our airspace to ensure safe and efficient air traffic operations. Government, regulators, air navigation service providers and industry need to collaborate and innovate to support the recovery, maintain safety, and ensure resilience and security.
Long-Term Growth with Short-Term Volatility
While the short-term outlook is negative for commercial aviation, long-term industry growth is still expected.
While domestic air traffic is likely to recover before international, there will be challenges for both markets. Demand for domestic business travel will remain low for some time, as organisations face economic constraints and more people work from home. Once international borders open, confidence and uptake of a vaccine will be a key factor for driving industry recovery.
Australia has been reliant on the use of gateway airports such as Sydney and Melbourne to connect international travellers to the rest of our nation. With more ‘point to point’ travel, direct international flights into ‘non-traditional’ Australian gateway cities may emerge as a growth market for our customers, also further driving complexity in our airspace.
Environmental and Community Consequences of Aviation Operations
As commercial aviation recovers, communities near airports may be more sensitive to aircraft noise as planes begin to fill our skies again. Moreover, those working from home are likely to experience daytime aircraft noise for the first time.
Changes to flight paths to support new airport infrastructure may impact the noise distribution experienced by communities surrounding airports and beyond.
In addition, the ever increasing uptake of services provided by UAVs may further impact the community. More than ever Airservices will have an important role in minimising the impact of aviation operations on the environment and community, and in demonstrating its commitment to the enviroment via a sustainability plan.
Demand for Personalised Service
In all industries, including aviation, there is a shift away from a one-size-fits-all approach. Every customer has a unique set of needs and objectives, and service providers need to adapt or risk losing relevance. COVID-19 has highlighted the need to be responsive to customer and industry requirements.
This will become increasingly important as the industry evolves and new technologies and innovations challenge the status quo, including a completely new set of customers in non-traditional areas.
The Evolving Transportation Ecosystem and Value Chain
The current transport value chain has been disrupted by COVID-19. The old ecosystem, based on historically stable demand and supply profiles, no longer exists. Instead, we are now grappling with a landscape where localised outbreaks can suddenly and dramatically change the profile of demand for transport services and passengers will need to become used to a fluctuating supply. More than ever, decision-making up and down the value chain will be reliant on real-time data.
While incumbents are racing to provide end-to-end customer experiences through vertical integration of travel, new entrants will also face obstacles as disease transmission concerns continue to drive passenger choices.