Market Trends of australia aviation Industry
The resurgence of domestic and international air travel contributing to the surge in air passenger traffic
- Air passenger traffic in Australia increased by 10% from 2017 to 2022. It surged by around 6% during 2019-2022, exceeding pre-COVID levels. Cairns Regional Airport in Australia experienced a record year-on-year increase in passenger numbers, with an estimated 3.68 million passengers journeying through the airport in the 12-month period ending December 2022. Hobart Regional Airport was the second busiest regional airport, with an estimated 2.29 million passengers arriving and departing in the same period. The increase in passenger numbers was more pronounced than in the year, likely due to a gradual relaxation of travel restrictions following the onset of the coronavirus pandemic.
- In 2021, with travel restrictions reducing within Australia, air passenger traffic improved by around 237% compared to 2020. The recovery in domestic as well as international aviation has aided in passenger growth. The recovery in travel demand of major airlines has resulted in airlines continuing their expected deliveries of aircraft and restructuring their existing fleet by the early retirement of a few aircraft models. For instance, in 2022, major Australian airline Qantas emphasized fleet replacement of its existing fleet. The airlines also plan initial orders for 20 A320neo and 20 Airbus A220 aircraft. It will replace the aging Boeing 737s and 717s used on domestic flights by Qantas and Qantas Links. Deliveries started in mid-2023 and will continue for the next ten years. Thus, the overall air passenger traffic is anticipated to surge during the forecast period.
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The increase in defense spending is anticipated to be propelled by a growing number of defense acquisition programs
- The Australian defense expenditure rose by 20% in 2022 compared to USD 27.3 billion in 2017. As a percentage of GDP, the share of defense expenditure in 2022 was 2%. To strengthen its defense cooperation with the US and the Indo-Pacific region, Australia has committed to significant defense technology cooperation with its US counterparts and diversifying its security alliances with other nations, such as Japan, India, and ASEAN countries.
- The surge in defense spending is expected to be driven by increasing acquisition programs. The acquisition budget is primarily likely to increase due to the procurement of aircraft, submarines, naval vessels, and missiles. Australia’s defense strategy is based on three strategic defense interests: protecting national security and sea lines of communication, protecting surrounding regions, including Southeast Asia and the South Pacific, and ensuring the security of the Indo-Pacific in a rules-based order. The Asia-Pacific region has become a focal point for Australia, and its military strategy has been developed to protect trade routes.
- The country is facing security challenges from China in the Indo-Pacific region. China's growing influence in the Pacific has forced Australia to increase its defense budget and focus on modernizing its military aircraft fleet. On that note, Australia's defense budget was USD 48.6 billion in 2022-2023 between the Department of Defence and the Australian Signals Directorate. To counter the security challenges, the country increased its defense expenditure over the last two years and invested heavily in fleet modernization and expansion. Australian defense expenditures are expected to surge from 2023 to 2030.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Air freight growth is fueled by the continuing growth of Australia’s economy and the increasing need for air freight from businesses and consumers.
- The Australian aviation sector witnessed a significant recovery after a decline in 2020 and 2021
- Australia has emphasized on the expansion of its aircraft fleet, with cooperative partnerships with allied countries
- Increasing domestic expenditure and improved growth in the manufacturing sector aid the growth of Australian GDP
- After a significant rise in inflation rates in 2022, it is expected to be in moderate levels during the forecast period.
- Real estate is a key sector contributing to the growth of HNWIs in Australia
