China to be aviation’s next “big disruptor”

TD Guest Writer

Guest Writers are not employed, compensated or governed by TD, opinions and statements are from the specific writer directly

China will be one of the next “big disruptors” of the aviation industry in the coming years, a major industry event has heard.

Addressing the CAPA Airline Leader Summit in Dublin this week, Peter Harbison, executive chairman of the Centre for Aviation, told delegates that China’s influence on aviation – especially on regulatory issues – will increase in the next decade as the country “expands into its new global role”.

Harbison identified the first three stages of disruption already experienced by the aviation industry: sixth freedom rights (the ability of airlines to fly passengers from markets other than their home countries), the emergence of Gulf carriers, and the proliferation of low-cost carriers.

Considering the fourth phase of disruption, he asserted that it is likely to involve three possible factors: China, airline partnerships and big data.

“China is becoming a much more powerful voice,” Harbison said. “The next phase will involve a lot of influence from Asia, on the regulatory side.”

This power is being driven by the sheer volumes of traffic that Chinese airlines can deliver. For destination countries, welcoming millions of Chinese visitors is incredibly appealing, and this will in turn strengthen the China’s voice and negotiation stance in the global regulatory environment.

In terms of partnerships, Harbison highlighted the current trend of airlines forming cross-border joint ventures and commercial relationships with (often multiple) other airlines, as well as taking equity stakes in foreign carriers. Etihad’s network of equity partnerships, AirAsia’s collection of Asian carriers, and multi-airline joint ventures such as trans-Atlantic cooperation between United, Air Canada and Lufthansa were all cited as examples of how the goalposts are moving with regards to airline ownership rules and regulations.

Arguably the biggest shift however, could be seen in the area of big data. Citing the examples of Amazon, Facebook and Google, Harbison predicted that the business of selling tickets will “change dramatically” in the coming years, as these huge non-aviation companies continue to invest in data analytics and consumer technology.

In reality, all three of these factors are already having a major impact on the aviation industry, and will to continue to do so in future. And the next big disruptor could even come from an as-yet-unforeseen source. What is certain is that the aviation landscape will change dramatically in the coming years, driven by a combination of different “disrupting” factors.

Supported by Travelport, the CAPA Airline Leader Summit is taking place in Dublin from 10-11 May 2017.
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