Airline executives argue that the record more than 11,500 aircraft on order globally does not represent an order bubble.
“I don’t think there will be an excess glut of capacity,” said Akbar Al Baker, chief executive of Qatar Airways, speaking during a grilling by CNN’s Richard Quest on the bottom line panel at the IATA AGM in Doha. “There is a huge requirement for fleet replacement.”
Qatar plans to use around half of the roughly 300 aircraft it has on order for replacement during the next 10 years, he says.
Other airline executives on the panel agreed that the majority of orders from mature markets will be used for replacement while many from emerging markets will likely be for growth.
The outstanding order book represents about 55% of the global in-service fleet, said Rob Morris, head of consultancy at Flightglobal’s Ascend, in May. At the same time, about 48% of new deliveries in the past five years have been used for replacement.
“We can see why there is talk of this order bubble emerging,” he says. “But with replacement demand strong and the current backlog being for a significantly longer delivery horizon than is historically the case, we think this is, potentially, misplaced idle chatter.”
Cargo aircraft deliveries are one area of concern, says Cathay Pacific Airways chief executive Ivan Chu. The market continues to see weak demand globally.
Outside cargo, Chu says that the key to the passenger aircraft order book is flexibility – growing when the economy is strong and replacing aircraft when the economy is weak.
JetBlue, for one, is planning to grow with its order book. “Do you have a problem with that?” Dave Barger, chief executive of the New York-based airline, asked Ques after he pointed to the growth orders from low-cost carriers. “Look at the United States, there are four carriers that control 90% of the market. To not grow, that’s insanity.”
Source: Cirium Dashboard