Chart of the week #11: Estimating the proportion of transit passengers

As regular readers of Analytic Flying will know we’re obsessed with network effects. Contemporary international air travel is dominated by a model where airlines drive a large proportion of their long haul capacity into hubs where it is distributed to a wider range of destinations. This has been led by a technological evolution that has supported the development of codesharing, electronic ticketing and joint ventures that allows airlines to integrate networks efficiently and effectively.

To highlight this evolution we can look back to 1980 when Australia was connected to 13 destinations in Europe and the Middle East (Amsterdam, Athens, Bahrain, Belgrade, Damascus, Dubai, Frankfurt, London, Muscat, Paris, Rome, Tel Aviv and Vienna) on 7 airlines (Alitalia, British Airways, KLM, JAT, Lufthansa, Qantas, and UTA). Great, right?

Flights operated at low frequency and with multiple stops. For example, Amsterdam was flown 2x weekly on Qantas routing SYD-MEL-SIN-BAH-FRA-AMS and 2x weekly on KLM routing 1x weekly MEL-SYD-SIN-DXB-FRA-AMS and 1x weekly MEL-SYD-SIN-CMB-DXB-AMS. Belgrade was 1x weekly on Qantas routing SYD-MEL-BKK-ATH-BEG and 1x weekly on JAT routing SYD-MEL-SIN-BGW-BEG.

Today, only 3 airlines serve Europe directly from Australia (BA, Qantas and Turkish Airlines), and only Istanbul, London, Paris and Rome maintain direct connections, albeit at higher frequency and with fewer stops. Interestingly, Dubai is still served, but now by Emirates. Back in 1980 it was served by BA and KLM as one of the myriad of intermediate points.

How important are connecting hubs?

It’s challenging to quantify since different destinations are affected by geography and the organic evolution of global networks. For example, travel between Australia and the United States is less dependent on connections options than travel to Europe. Yet the fragmentation of the US market means connecting via a US hub to a domestic destination is common.

One way to quantify this is to estimate the proportion of net transit passengers between Australia and typical connecting countries. Let’s take Hong Kong as an example:

People traveling between Australia and HK can take several direct flights on Cathay Pacific (BNE, MEL, PER, SYD) or Qantas (MEL, SYD), or they could connect via a range of intermediate points (e.g. BKK, CGK, KUL, SIN, etc). Passengers flying on the direct flights could also be connecting onwards. Cathay provide connecting flights to Asia, Europe and South Africa, while Qantas have several codeshare partnerships for onwards connections. We estimate that 56% of passengers on direct Cathay and Qantas flights from HK in 2024 were net transit passengers, having declined from 62% in 2019, and from 67% in 2009.

How do we estimate this and what do we mean by net transit passengers?

This is best explained by how we estimate this. Firstly, we take the number of arrivals in Australia from HK in each year. This is sourced from ABS data by combining the arrival of visitors from HK (entering on HK passport) and Australian residents returning from HK (entering on Australian passport, permanent residency or long term visa). These passengers could be arriving on Cathay, Qantas or via a connecting option. In 2024 so far, there were 193,960 arrivals from HK.

BITRE data tells us that during the same period, Cathay and Qantas flights from HK to Australia carried 442,577 passengers. Taking the difference gives us 248,617 passengers on these flights that were net transit passengers. It’s net since not all of the 193,960 traveled to/from HK on direct flights but via an intermediate point. We can’t estimate this number, so the estimate of the proportion of transit passengers is the net number.

This is more evident when looking at Thailand. Thailand is a popular transit point for travel between Australia and Europe, but it’s also a big local market. In addition to direct flights by AirAsia, Jetstar, Qantas, and Thai Airways, there are a myriad of connection options.

In 2024, ABS data shows 329,420 arrivals from Thailand but BITRE data shows fewer passengers with just 306,709. More people arrived from Thailand than the direct flights carried, hence a negative net transit proportion of -7%, having declined from 32% in 2009.

While HK and Thailand have fallen by the wayside as connecting hubs, others have thrived. Malaysia has seen the share of net transit passengers increase from 39% to 53% between 2009 and 2023. One may speculate this has been supported by strong growth between Australia and India where Malaysian Airlines have a strong presence.

Saving the juggernauts for last!

Net transit passengers from the UAE have remained consistently above 90% throughout the period. So you can now tell your mate with some authority that 90% of Emirates and Etihad passengers are connecting! Although let’s be real, this is Emirates.

Singapore is fascinating since this isn’t Singapore Airlines, but also BA, Emirates, Jetstar, Qantas, Scoot and Turkish! 76% of total passengers on flights from Singapore are net transit. Given that few people likely connect via intermediate points between Australia and Singapore, we would be comfortable removing the net here!

While 76% in 2024 is the same as 2009, two shorter trends are obscured. The proportion declined consistently from 76% in 2009 to 70% in 2019, before recovering to 76% post-COVID. Speculatively, we hypothesise the pre-COVID decline to be a result of growth in travel between the countries. For example, between 2009 and 2019, arrivals from in Australia from Singapore increased by 89% while capacity increased by only 51%. Demand growth outstripped growth in supply resulting in fewer seats available for transit passengers.

Post-COVID, SQ and Qantas, and Jetstar and Scoot have increased capacity between Australia and Singapore very quickly. To some extent, SQ exploited their quick recovery to divert market share from carriers struggling to return capacity (e.g. Cathay), while Qantas have refocused their Asian network, shifting more capacity through Singapore!

But what about Qatar? This is an inevitable question. We can’t estimate the proportion from Qatar since there are so few arrivals in Australia from Qatar than ABS doesn’t list the country individually. It’s grouped along with “Other North Africa and the Middle East”. Safe to assume it’s probably higher than the UAE’s 90%!

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In case you missed it, our last “chart of the week” used some US data to highlight the relative fuel efficient of the A321neo and B737 MAX.