Buoyant backlogs of commercial jet orders have led manufacturers to ramp up production to levels that might prove unsustainable, Flightglobal's Ascend consultancy has warned.
Speaking during a webinar on 5 May, Ascend's head of market analysis Chris Seymour presented data showing that the backlog of commercial jet orders had reached a combined value of $952 billion.
The largest backlog is in single-aisle orders, valued at $524 billion or 55% of the total, followed by twin-aisle jets valued at $398 billion and with a 42% share. Regional jets make up 3% with a value of $31 billion.
Deliveries are averaging 680 aircraft a year, says Seymour.
He warns that the increase in production of single-aisle types risks exceeding demand. Boeing will be producing 57 aircraft a month by 2019, while for Airbus the figure will be 60 a month. Seymour says this exceeds the manufacturers' own 20-year growth predictions.
This ramp-up represents a "challenge" for the whole value chain and ultimately relies on "robust traffic growth – and no downturn", Seymour warns.
These levels of production will drive single-aisle fleet growth by 5.4% through to 2020. This rests on a number of assumptions – including that the number of single aisle-aircraft as a share of the total fleet will continue to increase and that there will be 2,000 retirements through 2020 – and makes no allowances for the impact of the Bombardier CSeries, Comac 919 or Irkut MC-21.
Ultimately, "only time will tell" whether demand can keep pace with supply, says Seymour.
He notes that both Airbus and Boeing are using "aggressive pricing" to increase their market share in an "extremely competitive" market. New aircraft pricing is likely to remain flat for 25 years or more, Seymour predicts.
Boeing 787 production will reach a rate of 14 a month by 2018, while Airbus will increase the A350 rate to 10 a month, and 777 output will fall "marginally" to seven per month. This will lead to a 5.3% increase in the global twin-aisle fleet per year by 2019 and drive a 6.7% increase in capacity.
Seymour observes that while twin-aisle aircraft have been losing market share to single-aisles, a 6.7% increase in capacity implies that this won't be the case in the next five years. Traffic growth, therefore, appears not to justify the capacity ramp-up.
The result of this overcapacity could be exhibited in a number of ways, including lower production rates for 777s and A380s, lower aircraft productivity, and more retirements, says Seymour.