A new forecast shows capacity growth in the air transport sector may start to outpace market demand this year if current trends continue.
“We believe we are starting to see a gap developing between the supply of seats … and the demand for seats,” says Ian Gurekian, VP, product evaluation and strategy, General Electric Commercial Aviation Services (GECAS).
Speaking at the SpeedNews Commercial Aviation Industry Suppliers Conference, Gurekian presented a cautious forecast of market trends even as Boeing and Airbus continue to amass new aircraft orders at record levels.
Global capacity growth is expected to range from 5.1% to 6.8% over the next five years, averaging 5.8% average annual growth, he says.
Traffic growth must continue to grow at a pace of 6% to 7% in order to justify the current rate of demand for new airline orders.
But new economic trends show a potential downward trend in the near future, especially in the US market. Even a 1% drop in air traffic demand in the US would wipe out double-digit growth in the world’s developing markets, such as India, Gurekian adds.