Growth & Replacement Needs For More Eco-Efficient Aircraft

November 22, 2011 –According to the latest Airbus Global Market Forecast (GMF), Nordic airlines are predicted to require 424 new passenger aircraft between 2011 and 2030 with a value of US$ 38.6 billion.

These new aircraft deliveries will be dominated by single-aisles (365), such as Airbus’ modern A320 Family. Airbus also forecasts a trend toward larger aircraft sizes as airlines seek to grow capacity efficiently, reduce seat mile costs and simultaneously their impact on the environment. There are 59 twin-aisle new aircraft deliveries forecast over the next 20 years in the Nordics, which will include types such as the A330 and A350 XWB. Around half of the new aircraft requirement for the region will be for the replacement of older less eco-efficient aircraft, and half will be for new aircraft as air travel continues to grow to and from the Nordics.

The Airbus forecast for the Nordic region is based on an analysis of seven countries, where over 50 airlines operate some 302 passenger aircraft today.

Air traffic to, from and within the Nordics has increased by 67% since 2001 with an increase of 87% in international traffic. As well as connecting the region to the rest of Europe and the world, tourism is becoming increasingly important, with its share of GDP in Nordics, expected to reach 6.5% in 2020 compared to 5.6% today.

Driven by tourism, advanced economies with a high standard of living and further developments in the low cost market, Airbus forecasts that the Nordics will average an annual passenger traffic growth rate of 4.0%. This figure is above other developed aviation markets such as North America (2.5%, domestic) and in line with Western Europe (3.5%, inter regionally).
“The aircraft fleet serving the Nordic market will grow from ~300 aircraft today, to more than 500 over the next 20 years, an increase of aircraft in service of 70%”, says Christopher Emerson, Senior Vice President Product Strategy & Market Forecast, Airbus. “This translates into a large demand for more aircraft, which Airbus is well positioned to supply with its range of modern eco-efficient planes”.

With this long term growth, Airbus recognises the need to continually innovate to meet the demands of airlines, passengers and the environment. As part of this vision for a more connected and sustainable world, Airbus has established The ‘Future by Airbus’ – a unique project designed to lead the debate around the global issues impacting aviation in the future and search for solutions today.

Key areas which are addressed in the Future by Airbus vision and have been showcased in the Nordic region this week include: future energy sources; air traffic management and new aircraft models. Today, Airbus is working with partners in the industry to help find green solutions for tomorrow. Such projects include: VINGA – an assignment to reduce CO2 emissions through streamlined flight processes with NovAir in Sweden and various commercial biofuel flights with numerous airlines including Finnair.

Airbus is the world’s leading aircraft manufacturer offering the most modern and efficient passenger aircraft families from 100 to over 500 seats. Headquartered in Toulouse, France, Airbus is an EADS company.

Ongoing Trend For Larger Eco-Efficient Aircraft

September 19, 2011 – In the midst of troubled financial markets, Airbus foresees strong ongoing demand for commercial aircraft. According to its latest Global Market Forecast (GMF), by 2030 some 27,800 new aircraft will be required to satisfy future robust market demand. The combined value of the over 26,900 passenger aircraft (above 100 seats) and more than 900 new factory built freighters forecast by the GMF is US$3.5 trillion.

As a result, by 2030 the global passenger fleet will more than double from today’s 15,000 aircraft to 31,500. This will include some 27,800 new aircraft deliveries of which 10,500 will be needed for replacing older less fuel efficient aircraft. The trend towards larger aircraft will continue, in order for the aviation sector to keep pace with future growth in demand.

People need and want to fly more than ever before. Over the next 20 years the aviation sector is expected to remain resilient to cyclical economic conditions as in the past. Airbus forecasts that Revenue Passenger Kilometres (RPKs) will grow by an average 4.8 per cent per year, which is equivalent to traffic more than doubling in the next 20 years.

Factors driving demand for new aircraft include population growth with increasing wealth, dynamic growth in emerging economies, strong continued growth in North America and European markets, greater urbanization and a more than doubling in the number of mega cities by 2030. Drivers also include the ongoing expansion of low cost carriers, and the need to replace older less efficient aircraft with new eco-efficient models in established markets.

Geographically, over the next 20 years, Asia-Pacific will account for approximately 34 percent of demand, followed by Europe (22 per cent) and North America (22 per cent). By share of passenger traffic, Asia-Pacific will be the biggest market with 33 percent, followed by Europe (23 per cent) and North America (20 per cent).

In terms of passenger traffic on domestic markets, India (9.8 per cent) and China (7.2 per cent) will have the fastest growth rates over the next 20 years. Long established aviation markets will also continue to grow with the Domestic US (11.1 per cent) and Intra Western Europe (7.5 per cent) having the first and third largest shares of the total traffic in 2030.

“The aviation sector is an essential element for today’s global economy which is why more people than ever need and want to fly,” says John Leahy, Airbus Chief Operating Officer Customers. “Airbus is bringing to market the latest innovations and eco-efficient products to satisfy the needs of airlines and the expectations of passengers now and in the years to come.”

By 2030, 60 per cent of the world’s population or some five billion people will be urbanised and the number of mega cities will have more than doubled to 87 from today’s 39. It is also forecast that over 90 per cent of long haul travellers will fly between these mega city points.

Demand for Very Large Aircraft (VLA) seating more than 400 passengers, like the A380, has risen over 2010 forecasts (1,738) to 1,781 aircraft valued at US$600 billion. This represents a 17 per cent share by value or six per cent share by aircraft units. Of these, nearly 1,330 are passenger aircraft needed to cater for the concentrated traffic volumes linking the world’s mega cities. Regionally, some 45 per cent of the world’s VLA’s will be delivered to Asia, 19 per cent to Europe and 23 per cent to the Middle East.

In the twin-aisle aircraft segment (seating from 250 to 400 passengers), some 6,900 new passenger and freighter aircraft will be delivered in the next 20 years doubling the fleet of today by 2030. These deliveries are valued at some US$1,500 billion, representing 43 per cent share by value, or 25 per cent share by units. Of these, some 4,800 aircraft will be small twin-aisle (250 to 300 seater) and about 2,100 intermediate twin aisles (350 to 400 seater). These segments are covered by the A330 and the A350 XWB family.

In the single-aisle segment, nearly 19,200 aircraft worth some US$1,400 billion or 40 per cent share by value, 69 per cent share by units, will be delivered in the next 20 years. This is an increase over previous forecasts due to increased growth and acceleration in the replacement of older less efficient aircraft. Of the new deliveries, some 40 per cent will be required to replacement needs. In addition some 50 per cent of single aisle aircraft deliveries will go to the well established aviation markets of North America and European.

The Boeing Current Market Outlook (CMO) is simply the next 20 year demand for air travel and airplanes. For as long as we can remember, marketing types have based many forecasts; In-Flight Entertainment and others, utilizing this informative tool. IFE has two commercial aircraft component markets (line-fit and retrofit) and the CMO and it’s Airbus cousin, Global Market Forecast, are usually the basis for most new aircraft installation market size estimates. We should note that the CMO has been a conservative voice in demand forecasting but GDP or economic-based predictions are tricky. On a bad day, the CMO has been as much as 10+ per cent off the mark; however, their predictions regarding aircraft markets (size – units) have been remarkably accurate. From Boeing’s own observations: “But the remarkable resilience of air travel is amply documented in more than 45 years of published editions of the Boeing Current Market Outlook.”

With respect to the forthcoming 20 years, Boeing further explains: “Commercial aviation has weathered many downturns in the past. Yet recovery has followed quickly as the industry reliably returned to its long-term growth rate of approximately 5 percent per year. We see that same resilience in the first half of 2010 as the industry rebounds from the recent severe downturn. Passenger traffic is projected to rise 6 percent for the year, with similar annual growth rates for 2011 through 2014.”

“Boeing notes that the commercial airplane market over the next 20 years will grow from 18,890 airplanes today to a whopping 36,390 in 2029. If you do the math, you get a net addition required of 19,410, but they note a requirement of new deliveries over the 20 years of 30,900 aircraft….huh? The difference is comprised of the 15,240 planes that are retired, the 1750 that are converted to freighters,…and so on.”

With this introduction, here is a synopsis, given you might not have enough time to check it out yourself.

Air Travel
World RPK growth has been outpacing World GDP growth, some 5 to 2 percent. Five trillion RPK’s…market growth has been approx 3% per year as a running average (think fuel) over the last 20 years?.After being in the toilet for the last couple years, pax traffic is expected to grow 5% in 2010, probably as a result of lowering fuel costs and quiet volcanos. Boeing is looking at near term pax growth to be in the 5% area. In fact, Boeing sees that number over the next 20 years.

On the other hand, airline yields (pax and cargo) have been declining for at least 10 years now. Operating costs, fuel, and lowering GDP have combined to squeeze airlines, yet capacity still outpaces utilization. This certainly explains reduced service offerings, load factor increase pushes, and increased fees. Bottom line: airlines are trying to regain profitability.

Airplane
As we noted, the CMO talks about air travel and airplanes. We note that Boeing see’s new aircraft delivery highlights based value in the following order: America (North and South), China, and UAE. We note that North and South American airlines must find the financing, China will try to get into the aircraft business, probably sing-aisle…and as for the UAE , it must be based on oil money and service driven quality, certainly not population. Over the next 20 years, Boeing see’s the breakdown of all new aircraft deliveries, from all aircraft manufacturers of planes over 30 seats as follows:

Single-Aisle
21,160 aircraft 30 – 199 seats
69% of units and 47%of dollars – Market Value – $1.7 Trillion

Twin-Aisle
7100 aircraft 200 – 399 seats
23% of units and45% of dollars – Market Value – $1.6 Trillion

Large
720 aircraft 400+ seats
2% of units and 6% of dollars – Market Value – $220 Billion

Total 30,900 – Market Value – $3.6 Trillion

You can look up your favorite segment or product category at the following links: Boeing and for Airbus. All Good stuff!