Resilience is key to our success as we look to the future.
Outlook
International and Domestic borders reopening
Travel projected to reach pre-COVID-19 levels domestically late 2022-23
New airspace entrants
Increased fuel prices
As the world transitions to living with COVID-19 and borders open both domestically and internationally, the industry’s operating environment and recovery have entered a new phase.
While our ‘new normal’ continues to be characterised by ongoing volatility across the industry, there are positive indicators underpinning industry recovery, including the relaxation of COVID-19 isolation requirements and improving traveller sentiment, partially offset by emerging geopolitical and economic factors.
In this environment, we are focused on supporting industry recovery and faster growth through the provision of safe, efficient and sustainable services, to deliver on our purpose to connect people with their world safely – linking family and friends, generating economic activity, creating jobs, and facilitating trade and tourism.
Looking ahead, we expect Australian domestic air traffic to recover to pre-pandemic levels during the second half 2022-23, however the international market is likely to take significantly longer to recover with inflation and fuel costs driving up travel prices, and cost of living pressures impacting consumer discretionary spending.
The international market accounted for 50% of our revenue pre-pandemic. We continue to deliver our safe and efficient services across the same proportion of airspace, however, with fewer carriers and limited routes, we continue to see cost outweigh revenue at a rate that the domestic market cannot offset.
Nevertheless, the global aviation market continues to change, bringing with it new technologies, long-term growth, complexity and opportunities. We are focused on embracing change and volatility with flexibility and resilience, as we harness these changes to diversify our service offering.
We continue to make progress on key initiatives that create value and align services to customer needs. Given the emergence of new airspace users, new aerodromes and a range of new crewed and uncrewed aircraft, we are working closely with our customers and the community, as we adapt our service offerings to cater to these new and diverse aviation ecosystem participants, ensuring we continue to keep our skies safe while balancing our environmental and social responsibilities.
Our purpose — connecting people with their world safely — is more important than ever, supporting 5 key macrotrends affecting the aviation industry that we will proactively navigate over the life of this Corporate Plan.
Long-Term Trends
Intelligent Systems
Intelligent systems have the potential to increase situational awareness and use these insights to deliver business acumen that help create hyper-personalised services 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 drive improvements at the organisational level. We will leverage these technologies to transform our customer journeys while reducing the cost to serve.
Long-Term Growth with Short-Term Volatility
While the short-term growth outlook remains volatile for commercial aviation, long-term industry growth is expected. We have seen a large uptick in domestic aviation as we exited from COVID-19 pandemic restrictions, coupled with strong competition in the domestic market; but new headwinds from rising fuel prices and interest rates, and potential economic slowdowns are set to put a brake on growth rates. International travel demand is rising slowly, however more fuel-efficient aircraft, like the Airbus A350, A220 and Boeing 787, will drive recovery of ultra-long haul international flights, opening new markets. The outlook however remains uncertain and we continue to build a future based on scalable, flexible, safe and efficient service provision.
Increasing Airspace Complexity
Traditional and emerging aircraft will operate alongside each other, increasing the congestion and complexity of airspace. Examples of this include the emergence of uncrewed aerial vehicles (UAVs) in lower-altitude airspace and new users edging into higher-altitude airspace. Demand for services that can be provided by autonomous vehicles will continue to grow. Drone deliveries and uncrewed aerial taxis will be increasingly valued as people move to online delivery shopping models and traffic congestion continues to worsen. We are working to integrate and facilitate operations in all parts of our airspace to ensure the continued safe and efficient operation of air traffic. Government, regulators, air navigation service providers and industry need to collaborate and innovate to support the recovery, maintain safety, and ensure resilience and security.
Environment and Community
Expectations in relation to environmental protection are evolving, with the impacts of aircraft emissions, aircraft noise and the industry’s reliance on natural resources, increasingly being called out at a global, national and community level. In response, the aviation industry is seeking to improve its sustainability, while also looking to address significant disruption.
We recognise the important role we have in minimising the impact of aviation operations on the environment and community. Our sustainability ambition centres on 2 distinct areas – the first is working with Airlines and Airports to help them become more efficient and environmentally sustainable. Secondly we manage community expectations in relation to noise. Our own organisation’s performance is to achieve net zero carbon emissions by 2050.
Evolving Transport Ecosystem and Value Chain
The transport value-chain ecosystem, based on historically stable demand and supply profiles, no longer exists. Instead, we are managing a ‘new normal’ landscape where volatility suddenly and dramatically changes the profile of demand for transport services. 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 the volatility drives passenger choices. Service providers will need to adapt or risk losing relevance. Responsiveness 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.