The bubble question debate continues

Barcelona
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The crucial question of whether the aircraft industry is in a bubble continued today at the International Society of Transport Aircraft Trading (ISTAT) conference in Barcelona.

Avitas senior vice president Adam Pilarski persisted in saying that we have a bubble situation and “we are just making it bigger.”

For the first nine months of this year, the industry has recorded 1,736 orders while there will be 1,250 deliveries in 2013.

He points out the slowdown in traffic from the emerging markets notably from China that is forecasted to grow at 7.5% this year.

Brazil is growing at 2%, Russia at 2.2% and India at 5.5%, according to him.

China is more driven by exports than domestic consumption, he says.

There are some interesting politics developments in China. New politics are slowing down consumption. “While the other countries are in the high 60s, China consumption is 36%.

Airbus’ chief operating officer – customers John Leahy says there is no bubble.

“The industry has doubled in size every 15 years,” he says.

“Today there are 42 mega cities in the world. By 2022 we will have 89 mega cities covering about 99% of long-haul travel.”

According to him, one in five of the world population took a trip in 2012.

“In China one in four made a trip last year, one in 20 in India as growth is going forward we predict two-thirds of the world’s population will make a trip in 2022.”

Leahy says the industry is increasing the size of the middle class category. According to him 2.2 billion middle class people flew last year. By 2022, 5.2 billion of them will make a trip.

This is why Airbus sees a requirement for more than 29,000 aircraft in 20 years’ time.

“The industry is not in a bubble,” he adds.