Freitag, 6. März 2009

Air traffic - follow-up

I received an offline comment regarding the last question I posed in my previous post. It went something like this:

Sure they need to start building another runway. It takes a few years, and they need it to be ready by the time demand comes back.

I strongly disagree. I believe it is highly likely that German air traffic volumes will never rise beyond 2008 volumes. It's not inconceivable that they will grow another 5-10 % if there is a strong economic recovery in the mid-term, but anything beyond that is totally unrealistic.

In fact, I am willing to bet a significant amount of money that total passenenger throughput of all German airports will not exceed 2008 volumes by more than 10 % in any year from now until 2020 (and beyond, but there needs to be a cut-off point somewhere; in any case, that's far more pessimistic than official 2020 passenger projections for both Munich and Frankfurt airport). Any takers?

Why do I think so?

1. Demographics: German population is decreasing, and will continue to decrease going forward. Working-age population will decrease even faster than overall population.

2. Saturation: There is a natural limit as to how many plane trips per year one person wants to undertake, and we're quite close to that.

3. Resource constraints: If kerosene stays cheap, it's possible that saturation has not quite been reached. However, once the world economy rebounds, demand from China/India/etc. will make sure that oil prices skyrocket. Demand from emerging markets will inevitably crowd out Geman demand.

Worldwide air travel might still have a growth potential of 20-40 % before resource constraints choke off further growth. But all the growth will be elsewhere.

So, if anyone wants to take my bet, let me know.

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