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  • Asia Pacific AviationIndustry PerspectiveIndustry Perspective

    Andrew HerdmanAndrew HerdmanDirector General

    Association of Asia Pacific Airlines

    International Aviation Fuel Conference5 April 2012

    Beijing ChinaBeijing, China

  • O er ieOverview Global Mobility Global Mobility Asia Pacific Aviation Business Outlook Future Growth Sustainable Aviation Sustainable Aviation

  • Aviation: moving the world

    Air travel delivers global mobility

    2,800 million passengers

    Outstanding safety record

    Carries 35% by value of global trade

    Wider social and economic benefits

    Source: ATAG www.aviationbenefitsbeyondborders.org

  • Asia Pacific

    Diverse geographic regionH t th 4 billi l Home to more than 4 billion people

    62% of the worlds population Generates 27% of global GDP Generates 27% of global GDP Wide range of income levels Dynamic economies delivering global growth Dynamic economies delivering global growth Aviation widely recognised as a key contributor

    to economic and social developmentp Political diversity remains challenging: need for

    multilateral cooperation

  • World output long term historical trends

    Source: Maddison (2010) & Conference Board

    Output measured on PPP basis

  • Asia Pacific Aviation

  • Asia Pacific Aviation

    US$163 billion revenue

    655 million passengers457 million domestic198 million international

    18 5 million tonnes of cargo18.5 million tonnes of cargo

    4,984 aircraft

    Asia Pacific carriers overall market share:24% of global passenger traffic

    Source: Combined AAPA + non-AAPA airlines GMT+7 to GMT+12

    38% of global cargo trafficData: 2011 Estimates

  • Global Regulatory Influences

    AsiaAsia Pacific

    Wider impact of US and EU regulations

    Asia Pacific has limited influence

  • Current Business Outlook

  • Global recovery moderatesWorld growth2010 +5.2%2011 +3 8%2011 +3.8%2012E +3.3%2013F +3.9%

    Pattern of two speed growth maintainedSource: IMF

    Pattern of two-speed growth maintained

  • Global passenger and cargo traffic

    Global international passenger and cargo traffic

    Passenger traffic continues to expand,Passenger traffic continues to expand, but air cargo markets remain weak

    Source: IATA

  • Premium and economy traffic

    Source: IATA

    Slower recovery in premium traffic

  • Oil price volatility

    Persistently high oil prices reflectPersistently high oil prices reflect political risk factors

  • Historic oil price volatility

    Macro economic impact of oil price spikes

    High oil price acts as brake on global economy

    Source: US EIA

    High oil price acts as brake on global economy

  • Fuel price impact on airlines

    34%36%

    200

    250

    l

    CFOH

    26%28%

    33%

    26%26%

    30%

    100

    150

    200

    on /

    US$

    per

    bar

    re

    14%

    17%

    22%

    0

    50US$

    billio

    Rising share of total costs

    2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012F 2012F

    Fuel expenditure Jet kerosene price CF: Central Forecast, OH: Oil Price Spike

    g

    Fuel hedging of limited value

    Impacts aircraft values Impacts aircraft values

    Influences fleet renewal decisions

  • Global airline industry profitability

    Margins squeezed by high oil prices Margins squeezed by high oil prices

    Intensely competitive industry

  • Future Growth

  • Growth: complementary business models

    2010 Traffic = 4.8 trillion RPK 2030 Traffic = 12.3 trillion RPK

    Global network carriers expected to thriveGlobal network carriers expected to thrive despite competition

  • Asia Pacific traffic will grow significantly

    Source: Airbus GMF2011-2030

  • Asia Pacific fleet expansion

    Source: Boeingg

    CMO 2011 - 2030

  • Sustainable AviationSustainable Aviation

  • Aviation sustainable growth?

    Aviation delivers continuous improvements in fuel efficiency through technology, operations and infrastructure

    Committed to challenging environmental targets Intensifying efforts to develop alternative fuels As a globally competitive, energy-intensive industry, we

    would prefer a globally harmonised, sector-specific approach to international aviation emissions under ICAOpp

    Travel and tourism industry faces real threat of proliferation of arbitrary taxes and charges

    EU ETS risks triggering a trade warGovernments set the climate change policy framework but there is a collective failure of political leadership on this issue

  • Aviation industry emissions targets

    Three Global Industry Targets

    Ambitious but achievable goals

    Aviation is already highly energy efficient Fuel represents 30%+ of total costsp Committed to further emissions reductions

  • Aviation emissions reduction roadmap

    Source: IATA

    Multi-pillar approach to achieve industry goals

  • Aviation: alternative fuels

    Evaluated multiple feedstocks Proven technical feasibility Drop-in fuel using existing

    infrastructureinfrastructure Certification achieved in 2011 Offers lifecycle CO2 reductionsy Challenge is to achieve commercial

    scale and competitive economicsN d l li f k d Need clear policy framework and support from governments

    In the shadows: embedded carbon credits

  • Closing Thoughts

    Aviation is at the heart of global economic development with bright growth prospects

    Asia Pacific aviation is already a major global force and set to become even stronger in commercial termsterms

    Asia Pacific needs stronger engagement on key international policy and regulatory issues

    Strong collaboration between airlines, fuel suppliers, and other industry partners needed to

    d t f t th t itirespond to future growth opportunities

    Shared confidence and optimism about the future

  • www aapairlines orgwww.aapairlines.orgAssociation of Asia Pacific Airlines9/F Kompleks AntarabangsagJalan Sultan IsmailKuala Lumpur 50250MALAYSIA

    Tel: +60 3 2145 5600Fax: +60 3 2145 2500

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