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The Future of Human Mobility and its Impacts on
Aviation 2020-2025, Embraer Corporation, Sao Jose dos
Campos, Brazil, May 13-15 2009
The Future of Transportation:
Driving Forces for the Airline
Industry (2020-25)
Jean-Paul RodrigueAssociate Professor
Dept. of Global Studies & Geography
Hofstra UniversityNew York, USA
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The Future of Mobility: The Views of a Transport
Geographer
Socioeconomic forces Aggregate demand. Preferences.
Technological forces Performance. Input costs.
Regulatory forces Competition.
Operations.
Infrastructures
Passengers
Freight Information
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An Accessible World With Limited Expected
Changes
Source: Nelson (2008)
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ECONOMIC AND BUSINESS CYCLES
Long term trends linked with paradigms shifts and incrementalchanges.
How the current phase of mal-investment could unfold.
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Paradigm Shifts and Incremental Changes
Revolutionary changes Completely new
technology. Create new markets and
growth opportunities. Often marks the
obsolescence of anexisting technology:
Modal shift.
Can paradigm shifts bepredicted?
Incremental changes Improvement of existing
technology andoperations.
Leads to increases inproductivity:
More capacity. Lower costs. Better performance.
Possible to extrapolate.
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Technology Hype Cycle
Visibility
Inflated expectations
Abandonment
Delusion
Introduction
Productivity peak
Learning curve
Utility
Hype Phase Realization Phase
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Growth of the US Transport System, 19th21st
Century
Canals
Rail
RoadsAir
Maglev
1836
1800 1850 1900 1950 2000 20500%
1%
2%
3%
4%
1891 1946 2001
t= 30 years
t= 55 years t= 65 years t= 70 years
1825
1869
1913 1969
1836
1825 Paradigm shift
Peak year
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Blowing Bubbles: From Technology to Commodities
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
NASDAQ (Jan 1998=100)
TOL (Jan 2003=100)
BDI (Jan 2006=100)
Tech / Stock Bubble Housing BubbleCommodities / Trade
Bubble
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FORECASTING: A LESSON IN
HUMILITY AND FUTILITY
Failure and potential misallocations.
Linear thinking versus economic, social and technological forces.
We have two classes of forecasters:
Those who don't know . . . and those who
don't know they don't know.
John Kenneth Galbraith
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Flying Car Concept, 1951
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Flying Car (Spinner) in Science Fiction (Blade
Runner, 1982)
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World Air Travel and World Air Freight Carried, 1950-
2007; Are We at an Inflexion Point?
0
50
100
150
200
250
300
0
1000
2000
3000
4000
5000
6000
7000
8000
Billionsoftons-
km
Billionsofpassengers-km
Passengers
Freight
Monkey Curve
Recession and
regionalization
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PEAK OIL OR PEAK MOBILITY?
Are energy issues an overstatement?Secular inflationary cycle in the price of energy and commodities
Potential for demand destruction
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The Peak Oil Debate: A Normal Assumption
World Annual Oil Production (1900-2007) and Peak Oil (2010)
0
5
10
15
20
25
30
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Billionsofbarrels
2010 Peak
Actual
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West Texas Intermediate, Monthly Nominal Spot Oil
Price (1970-2009)
0
20
40
60
80
100
120
140
Jan-70
Jan-71
Jan-72
Jan-73
Jan-74
Jan-75
Jan-76
Jan-77
Jan-78
Jan-79
Jan-80
Jan-81
Jan-82
Jan-83
Jan-84
Jan-85
Jan-86
Jan-87
Jan-88
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
First Oil Shock
Second Oil Shock
Third Oil Shock
A B C
21
D
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Major Oil Price Fluctuations
Price Change Event Price Change Time Frame Cause Nominal Price Change
First Oil Shock October 1973 to March 1974Yom Kippur War / OPEC oilembargo
From $4.31 to $10.11(+134.5%)
Second Oil Shock April 1979 to July 1980Iranian revolution (1978) / Iran-Iraq war (1980)
From $15.85 to $39.50(+149.2%)
Oil counter shock (A) November 1985 to July 1986OPEC oversupply / Lowerdemand
From $30.81 to $11.57 (-62.4%)
First Gulf War (1) July 1990 to November 1990 Iraqi invasion of KuwaitFrom $18.63 to $32.30(+73.4%)
Asian Financial Crisis (B) January 1997 to August 1998Debt defaults / Non-USDcurrency devaluations /Reduced demand
From $25.17 to $14.08 (-44.1%)
"Asian DemandContagion" (2)
January 1999 to September2000
Rising demand / OPEC outputcutbacks
From $11.28 to $33.88(+200.3%)
"September 11 Effect"(C)
August 2001 to December2001
Oversupply / Americanrecession
From $27.47 to $19.33 (-29.6%)
Third Oil ShockDecember 2003 to June2008
Peak oil / Rising demand /Monetary debasement /Speculation
From $32.15 to $133.95(+316.6%)
Financial Crisis of 2008
(D)
July to December 2008Collapse of asset bubbles /Demand destruction / Global
recession
From $133.95 to $41.02 (-
69.4%; Dec 2008)
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Air Transportation Has Some Room for Substitution
Trend in Aircraft Fuel Efficiency (Fuel burned per Seat)
20
30
40
50
60
70
80
90
100
1955 1965 1975 1985 1995 2005
Year of Introduction
%ofBase(Comet4)
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Strategies Used by Airlines to Save Fuel
Dimension Strategy
Fleet Retiring less fuel efficient aircrafts (e.g. DC-9, DC10, MD-80).Switching to more fuel efficient aircrafts (e.g. A330, A319).
Operations Less engine idle at gates (electrical systems).Lower flying speed (-5%).
More frequent plane and engine washing.On board Lighter seats.
Removal of seat-pocket documents (e.g. magazines).Less water in bathrooms.Lighter service carts.
Passengers Weight restrictions for luggage.Surcharges for first or second check-in luggage.Passengers weight surcharges (?)
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Principle of Demand Destruction
Price
Quantity
P1
P
P2
Q1
Q
Q2
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Annual Vehicle-Miles Traveled in the United States
and Year-over-Year Changes, 1971-2009
1,000
1,500
2,000
2,500
3,000
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Jan-
71
Jan-
72
Jan-
73
Jan-
74
Jan-
75
Jan-
76
Jan-
77
Jan-
78
Jan-
79
Jan-
80
Jan-
81
Jan-
82
Jan-
83
Jan-
84
Jan-
85
Jan-
86
Jan-
87
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
YOY Change in Vehicle-Miles Traveled
Annual Vehicle-Distance Traveled (BillionMiles)
Recession
End of the motorization cycleSlow down of suburbanization
Aging of the population
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Population 60+, 1950-2005, With Projections to 2050
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NETWORK STRUCTURE
Regionalism or globalism?Modal shift
Thinking outside the aircraft
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Worlds Major Gateway Systems, 2006
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World Cities, Hubs of Regionalization
C f
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Characteristics of Major Air Travel Markets:
Expected Changes
United States Europe Pacific Asia
Deregulation started in 1978 Deregulation started in 1997 Regulated markets withgovernment ownership
Low population density anddispersed urban centers
High population density andconcentrated urban centers
Dispersion of urban centers buthigh regional concentrations
Relatively open air spaces andairports
Congested air spaces andairports
Congested gateway airportsunderutilized regional airports
Rail minor competitor; Carcompete for short distances
High speed rail is a directcompetitor; Cars compete forshort distances
Less competition from othertransportation modes (exceptJapan, Korea and Taiwan)
Intense competition betweencarriers (No loyalty; pricing andfrequent flyers)
Emerging competitionbetween carriers
Competition between carriersin its infancy
Limited income growth andlimited leisure time
Limited income growth andmore leisure time
Growing income levels
D l ti F d R i li ti R
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Deregulation Favored Regionalization: Reemergence
of more Point-to-Point Services
Before Deregulation
After Deregulation
Hub
Hub
T l Ti b f d ft th I t d ti f
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Travel Times before and after the Introduction of a
High Speed Train Service (hours)
0 1 2 3 4 5 6 7
Firenze - Rome
Hannover - Wurzburg
Berlin - Hannover
Paris - Bruxelles
London - Paris
Madrid - Seville
Paris - Marseille
Tokyo - Osaka
Seoul - Busan
Taipei - Kaohsiung
After
Before
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Low-Cost Carriers are a Wild Card
On-boardoperations
Optimum use of seating space.Minimal crew.Limited and paying cabin service.
Aircraft
operations
Few (often one) types of aircraft used to minimize maintenance costs.Stair boarding instead of air bridges.Maximal usage of runway length (take-off thrust and braking on landing).Fast turn around to maximize aircraft use.No freight being carried.
Service
network
Point-to-point services.Destinations commonly of less than two hours apart.Usage of secondary airports (lower gate rates).
Booking Online booking to minimize transaction costs.No travel agent commissions.
Thi ki t id th i ft Ai T l
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Thinking outside the aircraft: Air Travel as an
Intermodal Transport Chain
Terminal / Plane Interactions Airport / City InteractionsChecking in Access to public transit systems (the
location paradox)
Security Access to surface freight systems
Gate access Parking facilities
Boarding Aeotropolis
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McNamara Terminal, Detroit
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Maglev Exiting Pudong Airport, Shanghai
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Aeotropolis Developments
Dubai
SeoulDenver Beijing
Bangkok
Detroit
MemphisOntarioShanghai
Hong KongGuangzhou
Singapore
Amsterdam
Kuala Lumpur
Belo Horizonte
Dallas-Ft. Worth
Rudimentary (3)
Planned (3)
In development (8)
Existing (2)
Diff sion of a Pandemic Thro gh a Global
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Diffusion of a Pandemic Through a Global
Transportation Network
A - Emergence B - Translocation
C - Diffusion D - Pandemic