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SOARING DEMAND

New aircraft market to top $4 trillion: Airbus

London, September 4, 2012

 

Airbus, the world's largest manufacturer of passenger jets, raised its 20-year industry forecast for aircraft deliveries by about 5 percent as its annual survey of global aviation demand pointed to healthy long-term growth.
 
The European company owned by aerospace group EADS said that global airlines will buy a total of $4 trillion of aircraft over the next 20 years as they seek efficient new models to counter high fuel costs and meet relentless demand for travel to and from emerging markets.
 
Airbus expects population growth and urbanisation to continue to promote strong demand and raised the 20-year forecast for the aircraft deliveries to 28,200. Of these, 27,350 are passenger jets and 850 are freighters.
 
Airlines and lessors have continued to order aircraft despite the economic downturn, replacing expensive gas guzzlers with more efficient models as they come available. Asia, meanwhile, is also drawing in new capacity.
 
"Emerging economic regions will represent more than half of all traffic growth in the next 20 years," Airbus sales chief John Leahy said.
 
"Increasing urbanisation and the doubling of the world's middle classes to five billion people is also driving growth. By 2031 mega cities will more than double to 92 and over 90 percent of the world's traffic will be between or through these points."
 
In its previous 20-year forecast, issued a year ago, Airbus had predicted total worldwide demand for 26,921 passenger jets worth $3.3 trillion between 2011 and 2030.
 
Leahy and other industry leaders have dismissed warnings issued by some aviation financiers of an asset bubble.
 
In July Airbus's US rival Boeing predicted demand for 34,000 passenger jets worth $4.5 trillion over the next two decades, based on average economic growth of 3.2 percent.
 
Unlike Airbus, the Chicago-based company includes some regional jets in its tally, accounting for the higher total. The industry's dominant players are both bullish on the long-term outlook even though they cannot agree where all of it will come from.
 
The European planemaker continues to predict greater demand for the largest jets, such as its 525-seat A380 superjumbo or the 467-seat Boeing 747-8.
 
It expects deliveries of 1,700 in this category in the next 20 years, up from the 1,331 forecast last year. Boeing says that most carriers will prefer slightly smaller, lighter jets, such as the 787, and pegs demand for the two mammoth planes much lower.
 
Both jetmakers also expect soaring demand for narrowbody or single-aisle jets, such as the Boeing 737 and Airbus A320, to provide the backbone of many airlines.
 
The pair have decided to refresh their best-selling models with new engines to cut fuel costs and see off newcomers such as Canada's Bombardier or builders in China and Russia.
 
Airbus raised its demand forecast for these 100 to 200-seat aircraft by 1.5 percent to 19,500 planes worth $1.6 trillion between 2012 and 2031. Boeing predicts a market worth $2 trillion, though its data includes aircraft from 90 seats upwards.
 
Industry lobby group IATA last month announced an unchanged forecast for 2012 airline profits of $3 billion but was cautious on the outlook for the industry because of doubts over European growth. Premium travel is where airlines make most of their cash and is viewed as a key guide to business confidence.
 
The switch towards more fuel-efficient aircraft is underpinning demand. Airlines are investing in new lightweight planes to lower fuel costs, though Airbus's Leahy points out that the industry's record of reducing fuel burn is already more impressive than many observers realise.
 
Airbus forecasts strong demand for 250-400 seat wide-bodied twinjets such as the Boeing 787 Dreamliner, which was recently delivered to its first Japanese customer after three years of delays, and smaller versions of its own A350. Airbus expects 6,970 of these aircraft, worth $1.7 trillion, to be delivered in the next two decades.
 
The European company is looking to narrow the gap in this year's orders compared with Boeing, which dominated the Farnborough Airshow in July with its 737 MAX.
 
Airbus booked orders for 1,419 planes worth 90 billion pounds ($143 billion) in 2011, compared with Boeing's 805. Airbus finished last year with a 64 percent market share.
 
The world's two largest planemakers believe that about two thirds of new aircraft will be sold in the Asia-Pacific region over the next 20 years.
 
"Asia Pacific will account for 35 percent of all new aircraft deliveries, followed by Europe and North America with 21 percent each," Leahy said. "In value terms, the single biggest market is China, followed by the US, the United Arab Emirates and India." - Reuters



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