The regions in which growth demand is focused appear to be developing differently from the mature markets
Growth in the commercial aircraft fleet is likely to shift to new territories - Asia Pacific, China, the Middle East and Africa - and it will follow a different pattern from that which brought the North American and European markets to maturity. That is according to a new global Commercial Fleet Forecast produced by Flightglobal's Insight team in partnership with market expert Clive Lewis, of consultancy Achieving the Difference, and the UK's Bristol Business School.
The report, which spans the period 2011 to 2030, predicts removals from, additions to and migrations within the aircraft fleet, plus new-build deliveries. All Western-built commercial passenger aircraft of 20 seats or more are included in the same eight seating categories used in Flightglobal's ACAS database.
Predictions are broken down by model series in the near to medium term, and coverage split between seven world regions: Africa, Asia Pacific (excluding China), China, Europe, the Middle East, North America and South America. Where possible, statistical relationships between fleet development and economic growth are used to predict fleet size and structure. Otherwise, expert judgement is applied.
Drawing from 30 years of history and more than 650,000 observations taken from the ACAS database, models were constructed to forecast which aircraft will be kept in the fleet, parked, retired, converted, repurposed or moved to a new region. When the orderbook was added in, deliveries and allocations to the parked fleet could together ensure a match with the top-line forecast.
The forecast predicts low demand for aircraft to deliver capacity growth in the mature North American and European markets. With the North American low-cost fleet "stocked" and the European low-cost fleet approaching that point, demand from these regions is largely for replacement.
The regions in which growth demand is focused - Asia Pacific, China, the Middle East and Africa - appear to be "growing up" differently from the mature markets. For manufacturers of small turboprops and regional jets, the news is not good: high levels of growth in demand for such aircraft are unlikely to materialise in the emergent regions.
Nor can narrowbody manufacturers rest too easily. There is strong evidence that the delivery cycle for those aircraft is close to its peak, making a slowdown likely. As it stands, the buoyancy of narrowbody deliveries derives from fleet renewals in mature markets and growth in emerging markets. But the manufacturers are approaching a period in which they will have to be content with growth demand almost exclusively.
Airlines in mature markets have shown restraint in growing capacity, and record removals have accompanied record deliveries. There is now a large fleet of parked aircraft with plenty of life left in them. Many will re-enter the active fleet to meet some of the growth demand, according to the Flightglobal forecast.
The report's authors are not alone in this assessment. Indeed, airline trade body the International Air Transport Association has warned that 2010 will prove as good it gets. In an interview in the October issue of Flight International's sister title Airline Business, IATA director general Giovanni Bisignani said: "It will be the peak of this cycle; 2011 will be a much tougher year."
IATA projects that industry profitability will slip back to $5.3 billion in 2011. Bisignani has suggested that "airlines will want to restore utilisation rates, grounded aircraft are returning and new deliveries are on the way", and adds: "IATA expects capacity to outstrip demand growth in 2011, resulting in flat yields next year."
The Flightglobal Insight team takes a different view, predicting that narrowbody deliveries will increase until 2013. But detecting the approach of a delivery slowdown is much easier than predicting its depth. However, confidence in the likelihood of a slowdown is higher than that underpinning the delivery numbers predicted for the bottom of the cycle.
In previous downturns, manufacturers have matched production capacity to demand by parking and discounting. The potential to repeat this is considered in the narrowbody section of the Flightglobal forecast's market group analysis.
The narrowbody market has traditionally been the domain of Airbus and Boeing, with occasional intrusions from Russian types that have struggled to compete globally. Now, however, there are new entrants in the shape of the Bombardier CSeries, Comac's C919 and Irkut's MS-21 - all equipped with new-generation engines promising double-digit fuel-burn savings.
Unless Embraer is happy with its position in the ailing regional market and the military markets, it may also look to this territory. There is a big fight coming, and Boeing's contender, with current-generation engines, may not pack a big enough punch. The manufacturer has stated publicly that it may offer a re-engined aircraft in the 2020s and not before. Airbus has reacted to the new entrants with its A320neo.
Strong widebody fleet growth is forecast for Asia Pacific, China and the Middle East. Aircraft such as the Airbus A350 and Boeing 787 have been wanted by the market for some time, to judge from the types' order books. In the 251- to 350 and 351- to 450-seat categories, their effect on capacity is clear.
The latter category is forecast to be the stronger of the two, which is to Airbus's benefit because the European airframer has two A350 models in this category compared with Boeing's one. Boeing would need to revamp or replace its 777 type to maintain its market share.
In their ongoing survival, turboprops and regional jets have shown great resilience, and this is expected to continue. It is also forecast that many parked narrowbodies will return to active service, with 2016 bringing an upward turn in the "survivors curve", which depicts passenger aircraft that were active in 2009 and are still active later in the forecast period.
Seven in 10 widebody passenger aircraft in service today are expected to be out of service by 2030.
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