Highlights - Aviation Outlook - 2004
Issued December 2003
Sino-Centricity- The Emerging Trend In Global Commerce - And Air Service
We'd better tumble to it now.
The dominant factor in global trade over the next ten years will be Asia in general and China in particular. And that means air service and industrial-development planning needs to focus on improving access to the Pac Rim. This is not a minor or abstract issue. The regions of the nation that have the best access to Asia and China are those postured for economic growth.
A couple of points to consider:
General Motors predicts that sometime after 2020, if not before, the largest domestic market for automobiles - bigger than the US, bigger than Europe - will be China. That means increasing trade between the Midwest and Deep South on one hand, and the Middle Kingdom on the other. Big bucks, and big potential. Despite our traditional view, China isn't a place where water buffalo is the main mode of transportation.
China's demand for oil is growing in double-digit jumps, putting pressure on global supply. They are now vying for the same petroleum supply that we are.
Industrially, China is emerging as a major competitor. It has all the earmarks of the path taken by Japan, only geometrically bigger. In the 1950s, Japanese products were generally a joke - considered as inferior to US products. China is following the same path. In ten years, there is no reason not to assume that Chinese products will be at a level with those of the rest of the world.
The Yuan, or Ren Min Bi, could well join the Euro and Dollar as a key global currency in the next 20 years, with or without a banking collapse in China, which could be possible in the near term.
Today, not only are most of our small appliances made in China, but even larger "white goods" - refrigerators, washers, dryers, and air conditioners - are making inroads. Now mainly made for and marketed under the names of US companies, we're going to increasingly see these goods sold independently by Chinese companies under Chinese names. Haier could become as common as Hitachi in the coming decade. Oh, and by the way, there are already Chinese-owned factories in the US, following the 1980s trend seen in Korean and Japanese investment in US facilities.
And all this
brings us to our air transportation system. The flow of business and bucks (or yuan, as
the case may be) will increasingly be toward Asia. Which means that air service access to
this region will become increasingly critical. In air service development presentations,
we often have made the comment that the goal is global access - i.e., to make it easy for
"Mr. Nakamura" to do a site visit to build a transmission factory. Now, change
that to "Mr. Chiang."
Airlines To Watch. For communities of all sizes, if economic growth is the goal, access to Asia now, and China in the near future, will be very important. That points to some key trends over the next five years::
Northwest is in the cat-bird's seat, with its fifth-freedom Japanese hub and fleet of A-320s serving points on the Pacific Rim from Tokyo.
United, also with fifth-freedom rights at Tokyo, could eventually evolve into a situation similar to that of Northwest, assuming they don't sell off their Tokyo operations to raise cash.
American - watch for "super long haul" service from DFW to key points first on the Pac Rim, and later key points in China itself. It has the advantage of flowing revenues from South America to Asia over DFW. (Example - the largest Japanese population base outside of Japan in in Brazil.)
Continental - Ditto the above, from IAH. Add a strong Pacific position with Continental Air Micronesia as an advantage.
Regions To Watch. Air service planning efforts should increasingly keep this in mind: economic development may well be determined by who has the easiest access to Asia and China.
Given the Northwest hub at DTW, think Michigan, Ohio, Indiana and Ontario as having a leg up for the near term.
The emergence of the Deep South as the nation's automotive region points to it having a near-term advantage to gain more Asian investment and service access.
Going forward, plan on this becoming more and more obvious. So much so that even Washington consulting firms will notice it eventually. Communities and regions that plan their air service development in this direction will be ahead of the economic development curve.
© 2003-2004 The Boyd Group/ASRC, Inc. All Rights Reserved.
Get Used To It:
Sino-Centric Is The Trend