The 85th anniversary issue of Bloomberg Businessweek in December featured 85 disruptive ideas that changed history – it had a pretty gripping countdown, with the #1 spot taken by a solid owner – the Jet Engine. In my opinion, it is definitely a smart winner – since its invention over 60 years ago, the world has truly changed in terms of global access, business, and international integration. However, its worth asking, has much changed within air travel since then? Marginally, sure, with greater cost-saving on fuel, airline alliances leading to increased connectivity, passenger comfort (maybe not even that!), and more industry competition. However, its not as if the time between New York and Mumbai has reduced from 16 hours by more than some minutes over the decades – the Concorde came close to the next major step ahead but sadly didn’t last. Now, check out SpaceX, Virgin Galactica, and other private space travel companies’ visions. In the times of Elon Musk, Mark Zuckerberg, Richard Branson, Google, and yourself, seeing the progress of technology over the past 10 years, isn’t it worth betting that the next 10 years will produce this major breakthrough? Possible vertical take off/landing locations inside cities, easier access to space leading to faster speeds between destinations on earth, maybe fully renewable fuel-usage leading to lighter planes and quicker flights, and increased private sector competition producing innovation could redefine the travel scene.
So, looking ahead with a 10 year time horizon, assuming the next breakthroughs occur in our generation, here’s what might look different:
Immigration patterns – ease of access to different countries and shorter flying times would lead to more immigration, greater culture-meshing, and physical movement of people (currently, international migrants remain steady at 3% of the world’s population).
Consumption – consequently, the access to luxury brands, foreign goods, and the ability to convert ‘wants’ into ‘needs’ would increase (McKinsey states annual consumption will go from $12 trillion to $30 trillion by 2025).
Competitive advantages – countries would have a greater ability to utilize their competitive advantages through increasing international trade agreements (we don’t expect the world to go backward, after all)– with population growth in (current) frontier markets and emerging markets far exceeding the developed world.
Education – through technology, more people would have access to education (over 5 billion online in 5+ years compared to 2.5 billion today, according to Entrepreneur), and consequently, eyes into the global world – and therefore travel and work where their personal skill sets are rewarded the best.
Healthcare – biotechnology, medical research and transportation’s progress would be able to move vaccines, medication, research and doctors across the world quicker and more effectively, consequently increasing life expectancy – projected to increase to 73 years by 2025 compared to 65 years in 1995, according to WHO. This, in turn, circles back to each other point above.
What it means for you: So, consumer discretionary funds, transportation, biotechnology, infrastructure, technology, among others, would provide nice returns if you want to park some money for several years and not look at it. Or, you could take the easy way and just buy a global equity fund like VHGEX, ACWI, or VT. In the long term, being exposed to the world is a nice idea.
