Air Transport Forecast & Scenarios Key drivers for Scenario building. EFONET Workshop The Hague November 21st 2008

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Abner Welch
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1 Air Transport Forecast & Scenarios Key drivers for Scenario building EFONET Workshop The Hague November 21st 2008

2 4 building blocks of Airbus forecast Market research Passenger Demand Forecast Aircraft demand forecast Airbus delivery forecast

3 From market research to passenger demand Market research Market segmentation Econometrics Network development Deregulation/liberalization Emerging markets Modal competition Low cost penetration Consumer/travel surveys Regional/LCC/charter Economics Start-up/Network Tourism Integrators Fuel price Traffic flows Yields Domestic/Int l Trade/Value of goods Traffic forecast process Aircraft economics Airline operation economics Origin-destination demand Demographics Geopolitics US South America air traffic 15.0 Traffic demand

4 From passenger demand to aircraft demand forecast Passenger demand Forecast Airline and aircraft productivity Development constraints Aircraft demand forecast by Regional Flow Load factors Infrastructure by airline by airline segmentation Airline market share Congestion country, region airline competiton Aircraft utilization Modal competition by flow, by route emerging market network development Frequency/capacity by aircraft market segment Aircraft Demand Forecast 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Aircraft demand 15,330 Single-aisle & Small jet freighters 3,868 Small twin-aisle & Regional Freighters 1,800 1,665 Intermediate twin-aisle & Long-range freighters Large aircraft & Large freighters

5 from aircraft demand to delivery forecast Aircraft demand forecast scenario Market capture Airbus delivery forecast by region by airline segmentation by aircraft generic type Airbus product scenarios EIS timing Competitive scenarios Engine sourcing New entrant Industrial cooperation by scenario by airline by aircraft type probabilistic win/lose Airbus market capture Business case input dev. selection Aircraft Delivery Forecast (supply) Deliveries product A 75% 50% 25% market share A B %

6 Main drivers of Airbus forecast Air travel demand driver Economics - GDP, inflation - trade - fuel price - urbanization - household income - household consumption Geo-politic: - degree of country openness - deregulation of domestic market - liberalization of international market -security Industry structure driver Airline drivers: - competition - air fare - aircraft retirement policy - route network development Manufacturer: - technology breakthrough - New aircraft EIS - New entrant Regulation/infrastructure: - Environmental regulations/taxes - transport mode competition - airport congestion

Cascaded Scenario Method Scenarios are structured in three dependent levels: Macro Environment (socio-economic world) Meso Environment (air transport related) Micro Environment (aircraft related)

7 Cascaded Scenario Method Scenarios are structured in three dependent levels: Macro Environment (socio-economic world) Meso Environment (air transport related) Micro Environment (aircraft related) Micro Environment (aircraft specific) Delivery forecast Per family Per region Meso Environment (air transport related) Air Traffic Infrastructure Competition Airlines Noise & Emissions Macro Environment (socio economic world) Society Economy Politics Technology Ecology Cross-Impact Matrix macro meso micro

8 Metrics oriented scenario description Each describing parameter is expressed in a representative, well defined and quantified unit. To simplify the workshops, descriptors and their definition can be prepared for selection For each projection of a descriptor, a defined range will be agreed in the workshops Factor No. 104 Macro Environment Wage costs [Average percentage change of real (after-inflation) wage costs in the industry in comparison with the precedent year] Projection A: strong growth (ø > 4% p.a.) 20 % Projection B: moderate growth (ø 2-4% p.a.) 50 % Projection C: stagnation (ø 0-2% p.a.) 30 %

9 2015+ Scenario Review and Overview highlights of scenarios Scenario GLOBAL ENVIRONMENT The Trend Protectionism & Stagnation Green Power Economic development Ø 3,0% p.a. Ø 1,5% p.a. Ø 2,0% p.a. Regional focus U.S. & China U.S. vs. Europe vs. China Europe Political stability ~ ~ Kerosene spot market price (excl. tax) Ø~1 US$/gal Ø~3 US$/gal Ø~1 US$/gal Political support for aerospace business ~ Emission restrictions ~

10 2015+ Scenario Review and Overview highlights of scenarios Scenario MARKET ENVIRONMENT The Trend Protectionism & Stagnation Green Power Passenger traffic growth Ø 4,9% p.a. Ø 2,5% p.a. Ø 3,9% p.a. Business passenger share ~ Air traffic fees & taxation Share of delayed flights due to infrastructure constraints Predominant network development Airline business models diversification consolidation uniformation

11 Steps leading to the Delivery forecasts Note Invest Note Invest Mission Note Investment Mission Mission Commonality. Commonality Commonality.... Scenario A Scenario B Scenario C GDP 3,2% GDP 1,5% GDP 2,5% 6% ASK 4% 2% 0% 4% 2% 0% 4,6% 6% ASK 4% 2% 0% 2,2% 6% ASK 3,6% Translation into Macro-eco inputs (with Global Insight) Market Demand Forecasts Time Time Airline Preferences Acft Time Acft Acft Translation into Forecast parameters (New routes ) A Deliveries B C Competitive Game Competition Scenarios Aircraft Merits 0 DELIVERY FORECASTS Note Invest Note Invest Mission Note Investment Mission Mission Commonality. Commonality Commonality....

Scenarios and Design Generate alternative,

12 Scenarios and Design Generate alternative, consistent, well understood and commonly shared projections of the future to drive alternative design solutions and to identify robust designs. Design Objectives Design Objectives Global Market Forecast Design Objectives today tomorrow

13 AIRBUS S.A.S. All rights reserved. Confidential and proprietary document. This document and all information contained herein is the sole property of AIRBUS S.A.S.. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without the express written consent of AIRBUS S.A.S. This document and its content shall not be used for any purpose other than that for which it is supplied. The statements made herein do not constitute an offer. They are based on the mentioned assumptions and are expressed in good faith. Where the supporting grounds for these statements are not shown, AIRBUS S.A.S. will be pleased to explain the basis thereof. AIRBUS, its logo, A300, A310, A318, A319, A320, A321, A330, A340, A350, A380, A400M are registered trademarks.

Africa, Airbus; A vision of the future

Africa, Airbus; A vision of the future Addis Ababa March 13 th, 2013 Image: DSK Source: Global Insight, United Nations, Airbus GMF Africa Real GDP Urban population Intra-regional & domestic Inter-regional