Long-Term Market
A thriving market
With roughly 40 million people--only 0.5 percent of the world's population--Oceania still accounts for 14 percent of the world's air traffic today. Total Oceania air traffic is forecast to maintain 5 percent annual growth over the next 20 years as connections with the Asia Pacific region and the rest of the world continue to strengthen. Traffic to and from Oceania will grow faster than internal traffic, which will grow 4 percent per year. Capacity between Oceania and Southeast Asia is forecast to increase 5 percent per year as this flow continues to be the primary gateway to the rest of the world. In addition, new flights and markets will open as trade and tourism with North America, the Middle East, and China expand. Annual traffic growth between the Middle East and Oceania is forecast to grow most quickly at 7 percent per year, primarily as a result of Middle East carriers operating sixth freedom flights connecting Oceania and Europe, Africa, and the Middle East.
Oceana's airlines continue to adapt
The market in Oceania changed dramatically during the past decade as airlines redefined themselves during economic uncertainty. Qantas successfully countered the rise of the low-cost carrier business model by introducing its own LCC, Jetstar. Virgin Blue sought to compete against Qantas by creating a spinoff airline, V Australia. In 2012, however, Virgin Blue unified its product by rebranding all its airlines as Virgin Australia. Air New Zealand has continued to differentiate its product with the introduction of the Boeing 777-300ER and its unique custom-designed Economy Skycouch seats. In addition, market liberalization is boosting international competition from foreign airlines carrying passengers to and from Oceania.
New airplane requirement
As traffic increases and airlines evolve and expand, there will be a continued need for new airplanes in Oceania. Over the next 20 years, it is expected that Oceania will need 870 new airplanes. Of those, 600 will be single-aisle airplanes needed to transport people within Oceania or to nearby Southeast Asia. In addition, 240 twin-aisle and 30 large airplanes will be needed for long-range travel across the globe. This new generation of airplanes will enable airlines to open long, thin routes that would not be economical to serve using the previous generation of airplanes. The increasingly interconnected world will create a strong demand in Oceania for small- to medium-size twin-aisle airplanes, such as the 787.
