Both Boeing and Airbus have released their long term forecasts of passenger and cargo traffic, amidst the Paris Air Show this week, as well as regional-jet manufacturers, Bombardier and Embraer.
In terms of aircraft demand, both Airbus and Boeing have predicted the future demand for the number of new aircraft worldwide, to shape product strategy and guide long-term business planning. Boeing has predicted a total of 38,050 new aircraft to be delivered between 2015 and 2034, while Airbus has forecasted a total of 32,600. With the global economy expected to continue improving, many manufacturers have forecast a greater number of aircraft deliveries compared to the previous year.
In the next 20 years according to Airbus, global passenger traffic will grow at an average of 4.6 percent a year, driving the need for 32,600 aircraft above 100 seats. According the Airbus’ Global Market Forecast, passengers and freighter fleets will more than double from today’s 19,000 aircraft to 38,500. Some 13,100 passenger and freighter aircraft will also be replaced with more fuel efficient types.
The Airbus A320neo, with a 15 percent cut in fuel consumption, has already racked up 3,800 pre-orders before the first one has even left the production line, while Boeing’s 737 MAX which offers 20 percent fuel savings has already gathered more than 2,700 orders even though it will not be unveiled until 2016.
Boeing has predicted passenger traffic to grow 4.9 percent year on year, therefore forecasting a larger number of aircraft (38,050), valued at more than $5.6 trillion. Single aisle airplanes will command the largest share of new deliveries, with airlines needing approximately 26,730, according to Boeing, with low-cost carriers requiring replacements for older and less-efficient airplanes.
“Large widebodies” will make up 1.4 percent of aircraft demand between 2015 and 2034, while medium and small widebodies will make up 9.3 percent and 12.5 percent of aircraft demand respectively, according to Boeing. Regional jets will make up 6.5 percent of aircraft demand throughout the same period.
Airbus has predicted a requirement for nearly 23,000 new single-aisle aircraft worth $2.2 trillion over the next 20 years, representing 70 percent of all new units. Twin-aisle aircraft will make up 25 percent of new deliveries over the next 20 years, while “very large aircraft” such as the A380 will make up 5 percent of new deliveries over the same period, according to Airbus.
“Asia-Pacific will lead in world traffic by 2034 and China will be the world’s biggest aviation market within 10 years, and clearly Asia and emerging markets are the catalyst for strong air traffic growth,” said John Leahy, Airbus Chief Operating Officer, Customers.
According to Boeing, the Asia-Pacific region will have the greatest demand for new aircraft, with a forecast for 14,330 new aircraft by 2034. North America will require a total of 7,890 aircraft, while Europe is forecast to require 7,310 new aircraft by 2034.
Long-haul traffic will increasingly be to, from or between aviation mega-cities, rising from 0.9 million passengers a day to 2.3 million passengers per day by 2034. Aviation mega-cities are centres of urbanisation and wealth creation and will increase from 47 to 91 cities by 2034, according to Airbus.
Asia-Pacific will lead world traffic by 2034 in terms of revenue passenger kilometres (RPK), and the chart above highlights the RPK traffic share within each region. It clearly shows that RPK in the Asia-Pacific region is forecast to increase by 6 percent, while in Europe is expected to decline by 4 percent. North America is also expected to witness a decline, whereas both the Middle East and Africa will see an increase, according to Airbus.
Smaller flag carriers and charter airlines will be challenged to compete in an environment where LCCs dominate short-haul, point-to-point service, and large network carries and their alliance partners exploit the cost advantages of mega-hubs for long-haul traffic, according to Boeing.
In terms of the regional jet market, Bombardier has forecast a total of 9,000 deliveries over the next ten years, with the majority of deliveries in North America. The aircraft manufacturer has predicted a total of 3,900 deliveries to North America, and 1,525 within Europe. China and Latin America will join North America and Europe as the largest markets for business aircraft over the next ten years, according to Bombardier, with a forecast 875 and 850 aircraft respectively.
North America will remain the largest market for business aircraft, while Europe will remain the second largest market for jet business deliveries over the next ten years. Greater China is forecasted to receive 875 deliveries valued at $33 billion, while the CIS region is forecasted to receive 510 deliveries valued at $16 billion.
The Middle East remains a promising market for business aviation according to Bombardier, and is forecasted to receive 400 deliveries before 2024. In Africa, fleet size has more than doubled in the past ten years, with 275 deliveries forecasted over the next ten years.
Embraer on the other hand has projected a total of 6,350 aircraft deliveries by 2034 – 2,250 units in the 70 – 90-seat segment, and 4,100 units in the 90 to 130-seat segment. North America is again expected to receive the greatest number of deliveries, with a 32 percent share, totalling 2,060 deliveries overall.
Europe, China and Latin America again populate the remainder of the top four, respectively with the replacement of ageing aircraft representing 39 percent of new deliveries overall.
“Right-sized aircraft can regularly generate higher revenue and profit per seat since they have fewer available seats allocated for low-fare passengers. High efficiency of assets is essential to sound financial performance. Those attributes — combined with hub-and-spoke efficiency, narrow-body aircraft complement and new market development — will generate significant demand for new aircraft in the segment”, explained Paulo Cesar Silva, President & CEO, Embraer Commercial Aviation.
The capacity discipline strategy followed by North American carriers has proven to be very effective in generating higher profits. As airlines become more attractive to investors, Embraer also sees a shift in the main business goals from unit cost and market share to unit profit and return on investment.
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