Global Market Forecast

Transcription

1 Global Market Forecast July

2 The Airbus Global Market Forecast can also be found on the Internet at Blagnac Cedex France Telephone +33/(0) Airbus Industrie 2000 All rights reserved AI/CP /00 The statements made herein do not constitute an offer. They are based on the assumptions shown and are expressed in good faith. Where the supporting grounds for these statements are not shown the Company will be pleased to explain the basis thereof. Printed in France

3 Contents 1. Forecast highlights 4 2. Key forecast parameters 8 3. Introducing the GMF 9 4. Demand for air travel Air transport operational evolution Fleet renewal World passenger fleet development Demand for passenger aircraft deliveries: 27 - Regional jets 31 - Mainline single-aisles /250-seaters 33 - Mid-sized & large twin-aisles 35 - Very large aircraft Air cargo forecast 41 Appendices A.Geographical regions & airlines analysed 58 B. Route network development 61 C. Passenger market segmentation 62 D.Seat supply analysis 64 E. Passenger traffic forecast methodology 66 & results F. Aircraft replacement methodology 70 G.Detailed passenger fleet results: - Ten years: 2000 to Twenty years: 2000 to H.Cargo forecast methodology 76 I. Cargo forecast results 83 3

4 2000 Global Market Forecast 1. Forecast highlights During the last year since the issue of Airbus Industrie's previous Global Market Forecast (GMF), economic forecasters have become somewhat more cautious regarding the prospects for long-term economic growth. Nevertheless the results of the latest GMF confirm Airbus' confidence in the continued strength of the civil aircraft market over the next twenty years, provided ways and means can be found to ease the problems caused by congestion. A significant role in the development of the world fleet will be played by a new generation of aircraft larger and more economical than anything flying today, and designed to be compatible with existing airport infrastructure. Airbus' latest GMF covers the evolution year by year during the period of the fleets of passenger and combi aircraft with at least 70 seats, as well as dedicated freighters, operated by the world's largest 228 airlines and 49 subsidiaries, together with 187 additional cargo operators. In response to widespread demand, this summary document presents the results for the ten-year period to 2009 as well as for the full twenty years covered by the forecast. The major predictions are that: Driven mainly by continuing economic (GDP) growth and reduced fares, passenger traffic (revenue passenger-kilometres) will grow at an average annual rate of 5.2 per cent during the next ten years. Growth will slow as markets mature, to average 4.6 per cent through the following decade, resulting in twenty-year average annual RPK growth of 4.9 per cent through 2019, when the airlines will be generating 160 per cent more RPKs than today. Cargo traffic will be stimulated by the development of global e-commerce and manufacturing trends, and freight tonne-kilometres will grow more rapidly than passenger traffic. FTKs will increase at an average annual rate of 6.1 per cent through 2009, slowing to 5.3 per cent annually during the following ten years. Twenty-year annual FTK growth will average 5.7 per cent through Modest increases in speed, load factor and utilisation will result in improvements in productivity. The number of annual RPKs produced by each seat installed in passenger aircraft will increase from about 1.66 million in 1999 to 1.8 million in 2009 and more than 1.9 million in Similarly, the number of annual FTKs produced by each tonne of capacity in freighters will increase from just under 1 million in 1999 to 1.14 million in 2009 and 1.27 million in Consequently, to accommodate growing demand, the number of seats in passenger service will increase from 1.85 million today to 4

5 Forecast highlights 2.8 million in 2009 and nearly 4.2 million in At the same time the capacity of the dedicated freighter fleet will grow from nearly 69,000 tonnes to 113,000 tonnes in 2009 and 184,000 in As passenger airlines increase frequencies on existing routes and operate additional routes, the number of departures will increase more rapidly than in the past. Annual departures will increase at an average 3.8 per cent per year through Limited infrastructure capacity will constrain further growth in departures to just 2.7 per cent per year through the next decade, resulting in a twenty-year average annual growth in departures of 3.3 per cent through 2019, when the airlines will be making 90 per cent more daily departures than today. Since the number of departures will be unable to keep pace with the growth of traffic, the airlines will have to offer more seats per departure. From the current average of 158, seats per departure will reach 168 in 2009 and 190 in 2019; an overall increase of 32. Smaller aircraft tend to make more flights than larger ones, so the average number of seats per aircraft will need to grow more rapidly than seats per departure. From the current 179 seats, average aircraft size will increase at an accelerating rate to 191 in 2009 and 217 in 2019; an increase of 38. Thus, over the next twenty years, seats per aircraft will increase by 19 per cent more than seats per departure. As a result, to provide the required increase in capacity, the number of passenger aircraft in service will increase from some 10,350 in 1999 to 14,820 in 2009 and 19,170 in The world jetliner fleet will grow by nearly 11,000 aircraft World fleet change ( in brackets) 14,661 (7,337) New 15,364 (7,608) 703 (271) Recycled 3,174 (1,644) Passenger Fleet 3,448 (1,705) Converted 2,389 (1,166) Retired 4,601 (2,408) Freighter Fleet 1,153 (703) By 2009, some 4,520 of the passenger aircraft currently in service will have been replaced by their current operators as they seek to 5

6 2000 Global Market Forecast maintain a youthful fleet. Of these, 1,640 will be recycled back into the world fleet, leaving a need for delivery through 2009 of a total of about 7,340 new passenger aircraft. During the following ten years another 4,500 aircraft will be replaced, of which 1,530 will be recycled, leaving a need for another 7,320 new aircraft for growth and fleet renewal. So over the twenty years through 2019 the airlines will take delivery of a total of about 14,660 new passenger aircraft. And of the 9,000 aircraft replaced during this period, almost 2,400 will be converted to freighters and enter dedicated cargo operations. Nearly 15,400 new aircraft will be delivered & 85-seater regional jets 437* 692* Mainline single-aisle types like the Airbus A318, A319, A320 and A /250-seaters like the Airbus A300, A310 and smaller model A330s 4,330 7,570 1,127 3,046 Larger twin-aisles like the Airbus A and A340 1,083 2,118 Very large and economical aircraft like the Airbus A3XX 360 1,235 Total passenger aircraft 7,337 14,661 Freighters Passenger + freighter aircraft 7,608 15,364 * many more of these aircraft will be needed by smaller airlines and current turboprop operators not covered by the GMF The average delivery rate of 733 new passenger aircraft per year projected through the first ten years of the forecast will be sustained through the second decade in terms of units. However the progressive trend towards larger aircraft means that the dollar value of deliveries in the second decade will be greater. The biggest share (35 per cent) of deliveries of passenger aircraft will go to airlines in North America. European airlines will take 30 per cent, and Asia-Pacific airlines 24 per cent, leaving just 11 per cent for airlines in Latin America, the Middle East and Africa. Higher growth in air travel markets outside the USA means that the percentage of the world passenger fleet operated by airlines based in North America will decline from its current 43 per cent to 36 per cent in 2019, while the share of airlines in Europe and Asia- Pacific rises. In terms of capacity, the most spectacular gain will be made by the Asia-Pacific airlines, whose share of world seats will grow from 24 to 29 per cent. 6

7 Forecast highlights The world freighter fleet will grow from 1,510 aircraft with an average capacity of 45.5 tonnes in 1999 to 2,240 aircraft with an average capacity of 50.5 tonnes in During this period some 700 freighters, having reached the end of their economic lives, will be retired, creating the need for acquisition of a total of 1,440 aircraft, including 1,170 passenger-to-freighter conversions and 270 new aircraft. From 2009 to 2019 the freighter fleet will grow to 3,450 aircraft with an average capacity of 53.3 tonnes, while another 450 old aircraft will be retired. Of the 1,650 aircraft delivered, 1,220 will be conversions and 430 new freighters. Thus a total of some 700 new dedicated freighters will be delivered during the next twenty years. The new 7,610 passenger and cargo aircraft delivered during the next ten years will be worth approximately $560 billion (2000 catalogue prices) and the 7,750 aircraft delivered during the following decade will be worth another $750 billion, giving a total twenty-year business volume of $1.31 trillion. a business worth $1.3 trillion 2000 $ (billion) & to & , 350 & % 25% 21% 24% 22% 1% 32% 19% 29% 14% > 400 freighter 7% 6% 7

8 2000 Global Market Forecast 2. Key forecast parameters The numbers of aircraft and seats needed at any point in time to generate the forecast number of revenue passenger-kilometres at the projected levels of service frequency will flow directly from the assumptions made regarding the evolution of such concrete operational parameters as speed, aircraft utilisation, load factor and average flight distance. To facilitate understanding of the GMF results and comparison with other forecasts, the table below presents the actual and forecast values at the beginning, middle and end of the twenty-year forecast period of eight key parameters, from which the corresponding values of a range of other operational parameters (such as speed) can be easily derived. These values, and the relationships between them, also provide a useful test of reasonableness of the forecast's results. Key forecast parameters Passenger aircraft only End 1999 End 2009 End 2019 World RPKs (billion) 3, ,100.2 World ASKs (billion) 4, ,076.9 Number of aircraft 10,349 14,815 Number of installed seats 1,852,641 2,834,332 Number of departures (000) 16, ,464.6 Seats per departure Average flight distance (km) 1,370 1,414 Block hours per aircraft per year 3,502 3,636 7, , ,173 4,168,701 30, ,444 3,736 Each of these numbers is a result, not an input! 8

9 3. Introducing the GMF The millennial edition of Airbus Industrie's annual GMF predicts the numbers of passenger and combi aircraft with at least 70 seats, as well as dedicated freighters, that will be required during the twenty years from 2000 to 2019 to accommodate traffic growth and to allow fleet renewal by a total of 228 individual passenger airlines plus 49 subsidiaries, outside the Commonwealth of Independent States, which altogether account for 98 per cent of scheduled passenger operations, as well as 187 additional cargo carriers. The airlines studied, grouped into seven consolidated geographical regions, as well as the criteria for inclusion in the GMF, are listed in Appendix A. The GMF covers 228 passenger airlines... North America 29 airlines 4,418 aircraft Europe 78 airlines 2,789 aircraft Middle East 11 airlines 261 aircraft P.R. China 19 airlines 491 aircraft Latin America 36 airlines 687 aircraft Africa 23 airlines 273 aircraft Asia-Pacific 32 airlines 1,430 aircraft and 187 freighter operators North America 47 operators 1,055 freighters Europe 37 operators 168 freighters Middle East 15 operators 37 freighters P.R. China 4 operators 15 freighters Latin America 31 operators 75 freighters Africa 34 operators 63 freighters Asia-Pacific 19 operators 97 freighters 9

10 2000 Global Market Forecast Airbus recognises the great potential that exists for growth in passenger and cargo traffic carried by airlines based in the Commonwealth of Independent States. Currently, however, the lack of a consistent statistical base and reliable economic projections does not allow the application to these airlines of the forecasting techniques used in the GMF. Consequently Airbus makes a separate forecast of the evolution of the fleets of the airlines in the CIS, based on plausible assumptions, which is contained in a separate document. The GMF is a bottom-up forecast, projecting the year-by-year evolution of passenger traffic, flight frequencies and aircraft capacity on a total of 10,013 individual airport-pair route sectors linking 1,896 airports in 82 distinct domestic and international submarkets. This avoids the errors inherent in top-down forecasts derived from aggregations of averages. The route-by-route projections are then consolidated so as to forecast the evolution of the individual fleets of each of the airlines, and then further consolidated into the regional fleet forecasts shown in this summary document. Appendix B explains how the GMF simulates the impact of new route development. Demand is forecast in 19 categories Passenger aircraft Cargo aircraft 70 & 85-seaters * 100,125,150 & 175-seaters 210 & 250-seaters 300, 350 & 400-seaters 500, 600, 800 & 1000-seaters < 30 tonnes capacity 30 to 50 tonnes capacity 50 to 80 tonnes capacity > 80 tonnes capacity * the GMF does not predict total demand for aircraft in this category, because many more will be needed by smaller airlines and current non-jet operators Unlike many forecasts, the GMF uses a very rigorous method of product segmentation into 15 neutral seating categories. Depending on its particular seating layout, any individual passenger aircraft will fall between two categories and contribute seats to each. This ensures that at any time the number of aircraft (and hence flight frequencies) and seats in each individual airline fleet match exactly the forecast demand. Appendix C describes this 10

11 Introducing the GMF approach in more detail, while Appendix D illustrates the application of the GMF methodology to a typical route. Cargo aircraft are segmented into four capacity categories. The passenger traffic forecast methodology and results are described in Appendix E. The GMF is a pure demand forecast. The extent to which any available aircraft type will satisfy the predicted future demand for seats (or - for freighters - tonnes of lift) at projected levels of frequency will depend largely on its competitiveness, and a versatile passenger aircraft type, in service in a wide variety of seating layouts, will contribute seats to a number of different neutral seat categories. Moreover, the GMF recognises that many airlines replace passenger aircraft in their fleets long before the aircraft are converted to freighters or definitively withdrawn from airline service. A proportion of these aircraft are then recycled back into the fleets of other airlines through the used aircraft or operating lease markets. At the level of individual airline fleets, the GMF identifies the corresponding opportunities to introduce new aircraft before the existing aircraft reach the end of their economic lives. This summary shows the extent to which overall forecast demand for aircraft deliveries will be satisfied by used aircraft, as described in Appendix F. The detailed results of the GMF passenger fleet forecast through 2009 and 2019 are presented in Appendix G. A significant proportion of airfreight continues to be transported by dedicated freighters on a non-scheduled basis, rendering the available flight schedule databases non-comprehensive. Until a comprehensive database becomes available, the GMF freighter analysis will continue to deduce pertinent information about the nature of the markets served and the type of service offered from available aircraft-by-aircraft operational data. The freighter and passenger aircraft forecasts are presented separately due to the inevitable differences between the methodologies. However the two forecasts are to some extent interdependent because passenger aircraft operations play a crucial role in global airfreight by making available significant freight capacity in the belly-holds of passenger and combi aircraft, and by providing significant dedicated freighter lift capacity through passenger-to-freighter conversions. The freighter forecast methodology and results are shown in Appendices H and I. 11

12 2000 Global Market Forecast 4. Demand for air travel Demand for air travel will continue to be driven primarily by economic (GDP) growth, though as markets mature demand tends to become more sensitive to changes in real fares. Initially, when air travel can be afforded by only a tiny percentage of the population, the fare level is largely irrelevant and the convenience of the journey paramount. But as air travel becomes generally affordable, more and more passengers - paying for their own tickets - will, if necessary, go to considerable inconvenience if this enables them to obtain a cheaper fare. To maintain the growth in their business, airlines will have to find ways to continue to reduce fares in real terms. Airbus forecasters predict that in future the availability of still more efficient and productive aircraft will make a major contribution to this. Airbus anticipates that high-speed rail systems will continue to take a share of some highly-travelled short-haul travel markets, and this is reflected in the GMF's growth rate projections. However the enormous investment required, together with environmental concerns, will severely limit the proliferation of such systems. Further, Airbus predicts that advanced telecommunications will have an overall neutral impact on demand for air travel, any direct substitution being counterbalanced by the stimulus they will provide to economic growth. Airbus does not expect that a new-generation supersonic aircraft will achieve any significant penetration of the market during the next twenty years. It also assumes that during this period the development of subsonic air transport will not be significantly Air travel will continue to grow strongly World annual traffic - trillion RPK ICAO traffic history (4.6% p.a.) 6 5 (5.2% p.a.) 4 3 (4.5% p.a.) 2 1 (11.2% p.a.) (6.9% p.a.) Airbus projection % per annum

13 Demand for air travel affected by a lack of availability of conventional hydrocarbon fuels, although their increasing price as well as intensifying environmental pressures will continue to provide strong incentives to improve fuel efficiency. Overall, Airbus predicts that during the ten years to 2009 scheduled revenue passenger-kilometres (RPKs) carried by the GMF airlines will grow at an average annual rate of 5.2 per cent, declining to an average annual rate of 4.6 per cent as markets progressively mature during the following decade. This results in a forecast average RPK growth rate of 4.9 per cent per year through Thus during the next twenty years world annual RPKs will grow to eight trillion compared with the current level of three trillion. Compared with the 1999 GMF, Airbus forecasters have increased their estimate of annual traffic growth for the first decade by 0.1 percentage points, and reduced that for the following ten years by 0.3 percentage points. This reflects a change, following the fasterthan-expected recovery of the economies of several Asian nations, in the long-term outlook of the independent economic forecasts used by Airbus as an input to its forecasting models. The result is a modest reduction by one-tenth of a percentage point of the average annual growth in RPKs projected over the next twenty years. Travel growth will vary widely between different markets Average annual growth rate (% p.a.) % of world 2019 RPK Dom. USA Europe - USA Asia - USA Intra Europe Europe - Asia Domestic P.R.China Domestic Europe Africa - Europe P.R.China - Asia Intra Asia 16.8% 13.3% 8.8% 7.6% 6.5% 3.9% 2.9% 2.4% 2.3% 2.2% The individual sub-markets will grow at substantially different rates. The mature US domestic air travel market is expected to grow at just 2.9 per cent per year through 2009 and 2.3 per cent per year through the following decade, resulting in a twenty-year average annual growth rate of 2.6 per cent. In contrast, passenger traffic growth on domestic routes in the People's Republic of China 13

14 2000 Global Market Forecast - driven largely by high GDP growth - is expected to average a stunning 9.2 per cent annual growth through 2009, and 7.0 per cent through the next decade. This means that during the next twenty years domestic PRC traffic will increase nearly five-fold, at an average annual rate of 8.1 per cent per year. The lower-than-average growth projected on US domestic routes will result in the share of world RPKs generated in this market declining to 17 per cent in twenty years' time from its current level of 26 per cent. During the same period domestic routes in the PRC will double their share of world RPKs, increasing from 2.1 to almost four per cent. By 2019 the top ten sub-markets alone will generate two-thirds of total world RPKs, but despite this concentration Airbus believes that to understand the traffic growth potential for each individual airline it is necessary to study all the 82 sub-markets. These are listed in Appendix E together with the average annual RPK growth rates projected over the two ten-year periods covered by the GMF. US domestic share of world traffic will decline US domestic 26% US domestic 17% World total at end trillion RPK World total at end trillion RPK 14

15 5. Air transport operational evolution The results of the GMF flow directly from the assumptions made regarding not just traffic growth but also such operational parameters as speed, aircraft utilisation, load factor and average flight distance. The values of these parameters also provide an excellent test of reasonableness of the forecast results. During the past twenty years the overall values of all these elements have been increasing as route networks have evolved and airlines have responded to global competition. Airbus forecasters predict that during the next twenty years these historical trends will continue, within the constraints of airport and air traffic management capacity. For the GMF passenger airlines, they expect that: Average flight distance will increase from 1,370 km in 1999 to 1,414 in 2009 and 1,444 in 2019; Average block speed, severely constrained by congestion, will increase from 611 km/h in 1999 to just 616 in 2009 and 620 in 2019; Average passenger load factor will increase from 70.3 per cent in 1999 to 72.1 in 2009 and 73.5 in 2019, and Aircraft annual utilisation will increase from an average of 3,502 block hours in 1999 to 3,636 in 2009 and 3,736 in Increasing seat productivity will absorb part of traffic growth RPKs per seat Seats in service 0.7% World traffic (RPKs) 4.9% 4.1% Average annual growth (% p.a.) Elements of productivity Block speed (km/h) Utilisation (block hours/year) 3,502 3,736 Passenger load factor As is invariably the case, these average figures embrace a wide range of variations. Higher-than-average traffic growth on longer international routes flown by the airlines in Europe, the Americas and the Asia-Pacific region will serve to increase average flight 15

16 2000 Global Market Forecast distances and hence average speeds over the twenty-year forecast period. The most striking development will be among Asia-Pacific airlines, for which a 146 km growth in average distance will result in a 16 km/h increase in average block speed. On the other hand, higher-than-average growth on local and domestic routes served by the airlines of Africa, the Middle East and the PRC will lead to a reduction in average flight distance and block speed. The projected overall increases in speed, load factor and utilisation combine to enable each seat in service to generate more RPKs each year. Average annual RPKs per installed seat are projected to increase from 1.66 million in 1999 to 1.8 million in 2009 and 1.92 million in This represents an average annual growth in seat productivity of 0.8 per cent through 2009 and 0.7 per cent through Consequently, to provide the forecast increase in RPKs, the airlines will have to increase the numbers of seats they operate by respectively 4.3 per cent per year through 2009 and 4.1 per cent per year through As a result, the capacity of the GMF passenger airline fleet will grow from its current 1,852,600 seats to 2,834,300 in 2009 and 4,168,700 in Seat productivity and capacity growth will vary between the different airline regional groups RPK per seat Capacity (seats in service) 0.7 World traffic (RPKs) 4.9% P.R. China 7.7% Latin America 4.7% Asia-Pacific 5.6% Africa 4.4% N. America 3.8% Middle East 4.3% Europe 5.2% Average annual growth(%) These global average figures embrace a considerable variation between airlines based in the different geographical regions. Annual average growth in seat productivity by as much as 1.1 per cent is expected for the airlines of the Asia-Pacific region, where the GMF projects a five-point increase in passenger load factor during the next twenty years. On the other hand the highly productive but predominantly short-haul airlines of North America are forecast to 16

17 Air transport operational evolution increase seat productivity by an average of just 0.6 per cent per year. During the next twenty years, to accommodate the projected 7.7 per cent annual growth in RPKs, the airlines of the PRC will have to increase the number of seats they operate four-fold, from 97,100 to 380,600. At the other extreme, the airlines of North America will increase capacity by less than 90 per cent, growing from almost 700,000 seats in 1999 to just 1.3 million in The seat productivity and fleet capacity growth rates shown on the chart are the average increases needed for the airlines based in each geographical region to accommodate the growth in air travel projected in all the sub-markets they serve. They are not the growth in seats needed on routes to, from and within the different regions. Similarly, these figures cover a substantial variation between the different individual airlines based in each of the regions. Among airlines based in Europe, for example, twenty-year annual capacity growth rates are forecast to range from a low of 0.6 per cent to a high of 8.6 per cent, while airlines based in North America will increase capacity at annual rates ranging from 2.2 per cent to as much as 23.2 per cent in one extreme case. The additional seats will be provided partly by an increase in the number of aircraft operated (very largely determined by the increase in numbers of flights), and partly by an increase in average aircraft capacity. The method used by Airbus to determine the relative contribution of these two variables is derived from a detailed study of the actual distribution of flight frequencies between many thousands of airport-pairs as a function of stage distance. For The GMF assumes liberal frequency development Daily flights Capacity share Capacity growth only Capacity/ frequency split Maximum service levels Frequency growth only Frequency share Satisfactory regional service levels (Europe shown) Distance (km) 17

18 2000 Global Market Forecast virtually all routes the numbers of daily departures are no greater than those defined by the upper (blue) line. Rational behaviour by the airlines means that this represents the maximum level of frequency beyond which a further increase will not in itself stimulate any additional travel demand. The lower (red) line, specific to each region-to-region sub-market, represents the minimum level of service at which air travel becomes fully attractive. Thus within Europe, for example, on short routes of up to 500 km, the minimum satisfactory service level is seven daily flights each way, and where demand exists the GMF allows daily service to grow to 60 flights each way. Corresponding frequency levels on a 6,000 km flight range from a minimum of two to a maximum of 18 daily flights, each way. As traffic grows on a particular sector, additional capacity will be required. As long as the minimum satisfactory level of service has not been reached, all additional capacity is provided by adding daily flights, keeping the same aircraft size. Beyond this point both frequency and aircraft size will be increased. The transition from frequency to aircraft capacity is carefully tailored to favour increasing frequency as demand grows, so as to simulate the opening of additional routes (this aspect is further discussed in Appendix B). Once frequency reaches the maximum level all further increase in demand is accommodated by an increase in aircraft size. The overall result is a very liberal growth in frequencies. The GMF predicts that in ten years' time the airlines will be making 45 per cent more daily departures than today. This average annual increase Aircraft size will have to increase No. of flights (3.3%*) Flights per aircraft (0.1%*) No. of seats (4.1%*) Seats per aircraft (1.0 %*) No. of aircraft (3.1%*) *20-year average annual growth rate 18

19 Air transport operational evolution of 3.8 per cent represents a faster growth in frequencies than has been achieved during the past 25 years, despite the inevitable increase in congestion and the assumed availability of larger aircraft. The projected 3.3 per cent per year growth in daily departures during the whole twenty year period of the forecast means that by 2019 the airlines will be making 90 per cent more flights than today. Despite the anticipated increase in average flight distance during the next twenty years, the GMF predicts that airlines will be able to increase the average number of annual flights made by each aircraft from 1,561 to 1,603, a gain of nearly three per cent. So to achieve the forecast 90 per cent increase in annual departures, the airlines will have to increase the numbers of aircraft they operate by 85 per cent (1.85 x 1.03 = 1.90). This represents an average annual increase of 3.1 per cent in the number of aircraft operated. This in turn means that to achieve the projected annual 4.1 per cent increase in installed seats, they will have to increase average aircraft capacity by 1.0 per cent per year, from 179 seats per aircraft at end 1999 to 191 in 2009 and 217 in 2019, an increase of 38 seats per aircraft over the twenty-year period. The Asia-Pacific airlines will lead the way in aircraft size growth Seats per aircraft Africa Europe Middle East P.R.China Asia-Pacific Latin America North America World average Once again, the global average covers a wide range of regional variations as well as differences within the different regions. Thus airlines in the Americas are expected to continue to carry belowaverage loads and remain well below the world average in terms of seats per aircraft. Airlines in Africa and the Middle East, driven by the need to increase frequencies, will increase aircraft size only marginally. But in contrast the Asia-Pacific airlines, already well 19

20 2000 Global Market Forecast above the world average, will have to increase the average size of their aircraft by no less than 65 seats - mostly during the second decade of the forecast - if they are to meet strongly growing demand in an increasingly congested environment. Small aircraft tend to make more flights than large ones, so that any forecast growth in average seats per departure will generally require a more rapid increase in average seats per aircraft. The GMF predicts that average seats per departure will increase by just 32 seats, from 158 at end 1999 to 190 in Thus during the twenty-year forecast period, average seats per aircraft will need to increase by 19 per cent more than average seats per departure. 20

21 6. Fleet renewal Airline fleet forecasters commonly assume that, once introduced into the passenger fleet, an aircraft will remain in passenger service until the end of its economic life. In fact many airlines tend to maintain a young fleet, and replace their passenger aircraft much earlier. Each time an airline replaces a passenger aircraft, and whenever an operating lease expires, this creates an opportunity to introduce a new aircraft into the airline's fleet, while the aircraft replaced - assuming sufficient economic life remains - becomes a candidate either for conversion to a freighter or to be recycled back into the world passenger fleet through the used aircraft or operating lease markets. The methodology used in the GMF to determine the numbers of aircraft replaced, recycled, converted to freighters or (ultimately) withdrawn from airline service, is described in Appendix F. It reflects as far as possible each individual airline's approach to fleet renewal. Where no clear pattern of behaviour is apparent, it assumes that passenger aircraft are replaced by their first operator at a regional default age from new which varies from 20 years for airlines in Asia-Pacific to 29 years for airlines in Latin America. The overall result is an average replacement age from new of 24 years. Airlines will continue to replace passenger aircraft before the end of their economic life Default replacement age years world average Eastern Europe Western Europe North America Asia-Pacific Indian Subcontinent P.R.China North Africa Rest of Africa Middle East Latin America 0 On this basis, the GMF predicts that by end 2019 only 1,338 (13 per cent) of the 10,349 passenger aircraft with at least 70 seats in service with the GMF airlines at end 1999 will still be in service 21

22 2000 Global Market Forecast with their current operators. Of the 4,515 passenger aircraft replaced by end 2009: 1,644 will be recycled back into passenger service with other operators; 1,166 will be converted to freighters (see Chapter 9), and; 1,705 will be definitively withdrawn from airline service, to be scrapped or to enter VIP, government or other non-airline use. Another 4,496 passenger aircraft will be replaced during the period Of the total of 9,011 aircraft replaced by end 2019: 3,174 will be recycled ; 2,389 will be converted to freighters, and; 3,448 will be withdrawn from airline service. In the case of dedicated freighters, the GMF assumes they will remain in service until the end of their economic life, which is estimated to be 37 years since new for standardbody aircraft and 35 years for widebodies. On this basis, a total of 703 freighters will be retired during the period , and another 450 during the period

23 7. World passenger fleet development At end 1999 the fleet of passenger jets with at least 70 seats operated by the airlines in the GMF included a total of 10,349 aircraft with 1,852,600 installed seats. This will increase to 14,815 aircraft with 2,834,300 seats at end 2009, and to 19,173 aircraft with 4,168,700 seats at end The GMF passenger fleet will almost double Number of aircraft 20, % per annum 19, seats 15, % per annum , , Over the whole twenty-year period, the PRC airline fleet will grow the fastest, more than tripling from a total of 490 aircraft at end 1999 to nearly 1,600 at end At the other extreme, the airlines High aircraft size growth in Asia-Pacific; high fleet growth in the PRC Avg. a/c size 1.0 No. of aircraft in service World capacity 4.1% P.R. China 7.1% Latin America 3.7% Asia-Pacific 4.5% Africa 3.7% N. America 3.2% 2.3 Middle East 3.4% Europe 4.5% Average annual growth(%) 23

24 2000 Global Market Forecast of North America will grow their fleet by less than 60 per cent, from about 4,400 aircraft today to 6,900 in twenty years' time. The passenger fleets of the other regions will almost double, growing at average annual rates in the range 2.9 to 3.7 per cent. North American airlines share of the world fleet will decrease Africa 3% Latin America Middle East 3% 7% North America 43% P.R.China 8% P.R.China 5% Latin America 6% Africa 3% Middle East 3% North America 36% Asia-Pacific 14% Asia-Pacific 14% Europe 27% World total at end ,349 aircraft World total at end , 173 aircraft Europe 30% Higher growth in air travel markets outside the USA means that the percentage of the world passenger fleet operated by airlines based in North America will decline from its current 43 per cent to 36 per cent in 2019, while the shares of airlines in Europe and the Asia- Pacific region (including the PRC) rise to respectively 30 and 22 per cent. In terms of capacity, the most spectacular gain will be made Airlines in Europe & Asia-Pacific* will operate as many seats as those in North America (* including PRC) P.R.China 5% Rest of World 11% North America 38% P.R.China 9% Rest of World 10% North America 31% Asia-Pacific 19% Europe 27% Asia-Pacific 20% Europe 30% World total at end million seats World total at end million seats 24

25 World passenger fleet development by the Asia-Pacific and PRC airlines, whose share of world seats will grow from 24 to 29 per cent. By 2019, airlines based in Europe and in Asia-Pacific will both be operating nearly as many seats as those in North America. Only ten per cent of world seats will be operated by airlines in Africa, the Middle East and Latin America. Widebodies will increase their share of the world fleet 300, 350 & % > 400 <1% 70 & 85 2% 300, 350 & % > 400 6% 70 & 85 4% 210 & % 100 to % 210 & % 100 to % World total at end ,349 aircraft World total at end , 173 aircraft As the average seat-count of aircraft in service continues to grow, the composition of the world passenger fleet will progressively shift towards larger aircraft seating capacities. Currently, almost threequarters of the jetliners with at least 70 seats in service with the GMF airlines have fewer than 210 seats. In twenty years' time this share will be down to 59 per cent. Very large aircraft will provide a significant share of future world airline capacity 300, 350 & % > 400 1% 70 & 85 1% > % 70 & 85 1% 100 to % 210 & % 100 to % 300, 350 & % 210 & % World total at end million seats World total at end million seats 25

26 2000 Global Market Forecast The contribution made by very large aircraft is best illustrated by the distribution of seats among the different aircraft seat categories. The proportion of fleet capacity provided by aircraft in seat categories above 400 seats will increase from under one per cent today to 18 per cent in Nevertheless, the GMF predicts that in twenty years' time these very large aircraft will account for only 6.4 per cent of the world passenger jet fleet; less than the 7.3 per cent of the current fleet which is represented by the 753 passenger and combi 747s in service today. Detailed results of the GMF passenger fleet forecast to end 2009 and end 2019 are presented in Appendix G. This shows the number of aircraft of different types in service and on firm order at end 1999, together with the associated seat-counts, as well as the number of these aircraft and seats which are forecast to be replaced during the forecast period. Projected deliveries beyond those in the end-1999 backlog are shown for each of the 15 neutral aircraft seat categories. Care is needed in reading the results. The GMF does not, for example, forecast delivery of just 43 A s through In addition to the 43 aircraft on firm order at end 1999, the A will compete to supply part of the demand forecast for more than 1,900 aircraft in the 400-seat and adjacent neutral seat categories. 26

27 8. Demand for passenger aircraft deliveries Global summary During the next ten years the GMF airlines will need to add 4,466 aircraft with 981,700 seats to accommodate traffic growth, and to acquire another 4,515 aircraft with 772,900 seats for fleet renewal. Thus during this period the airlines will need a total of 8,981 passenger aircraft with 1,754,600 seats. During the following decade they will require a further 4,358 aircraft with 1,334,400 seats for growth and 4,496 aircraft with 839,000 seats for fleet renewal, leading to demand for delivery of a total of 17,835 passenger aircraft with 3,928,000 seats through Nearly 18,000 aircraft will be required for fleet renewal and growth Number of aircraft 20, % per annum , % per annum , Growth Replaced ,835 deliveries 179 5, The biggest share (35 per cent) of deliveries will go to airlines in North America. European airlines will take 30 per cent, and Asia- Pacific (including PRC) airlines 24 per cent, leaving just 11 per cent for airlines in Latin America, Africa and the Middle East. As described in Chapter 6, 1,644 of the aircraft required through 2009 and 3,174 of those needed through 2019 will be recycled aircraft acquired through the used aircraft or operating lease market. Consequently the manufacturing industry can expect to deliver to or for the GMF airlines a total of 7,337 new passenger and combi aircraft with at least 70 seats during the next ten years, and a total of 14,661 new aircraft during the next twenty years. The recycled aircraft will provide 307,200 seats through 2009 and 636,000 seats through 2019, leaving respectively 1,447,400 seats and 3,292,000 seats to be delivered in new aircraft. So the average 27

28 2000 Global Market Forecast Most small jetliners will be needed in North America & Europe; most very large aircraft in Asia-Pacific Per cent of aircraft delivered 100% Africa 3% Latin America 6% 80% Middle East 2% P.R.China 9% Asia-Pacific 15% 60% 40% Europe 30% 20% North America 35% 0% 70 & to & , 350 & 400 > 400 Seat category capacity of new aircraft delivered during the first ten-year period will be 197 seats, increasing to an average 252 seats per aircraft during the following decade. Of the new passenger aircraft delivered through 2009, 61 per cent with 68 per cent of the seats will be acquired for growth and 39 per cent with 32 per cent of the seats for fleet renewal. For the whole twenty-year period, 60 per cent of the new aircraft delivered, with 70 per cent of the seats, will be for growth, and 40 per cent of the aircraft with 30 per cent of the seats for fleet renewal. Almost 14,700 new passenger aircraft will be delivered Number of aircraft 20, % per annum , % per annum , Growth Replaced ,661 new aircraft Recycled ,

29 Demand for passenger aircraft deliveries New passenger aircraft deliveries will average 733 per year... Number of aircraft (total demand - recycled) 8,000 7, , ,337 7,000 6,000 5,000 4,000 3,000 2,000 1, ,330 3,046 2,118 1, ,127 1, & to & , 350 & 400 > 400 Seat category The new aircraft will be distributed among the different seat categories as follows: 437 (through 2009) and 692 (through 2019) aircraft in the 70 and 85-seater categories. The GMF makes no attempt at a comprehensive forecast of demand for these small aircraft. Many more will be needed for regional operations and by smaller airlines and current turboprop operators not covered in this study. However operations by these aircraft in the fleets of major airlines have to be studied in order to define the lower bound of operations by 100- seaters; 4,330 (through 2009) and 7,570 (through 2019) aircraft in the 100, 125, 150 and 175-seater categories, where the outstanding sales success of the A318, A319, A320 and A321 reflects airlines' recognition of the tangible cost and revenue benefits offered by these advanced and efficient aircraft; 1,127 (through 2009) and 3,046 (through 2019) aircraft in the 210 and 250-seater categories. A300s and A310s have sold well in the past, but in recent years sales of all aircraft types in this category have slowed down. The A has now made a strong start, and Airbus foresees great potential for this and other A330 family members; 1,083 (through 2009) and 2,118 (through 2019) aircraft in the 300, 350 and 400-seater categories, where the larger A and the A340 family have progressively built a dominant share of annual orders, likely to be reinforced once the stretched A and -600 enter service in 2002; 360 (through 2009) and 1,235 (through 2019) aircraft in seat categories above 400 seats. The GMF confirms that if the airlines 29

30 2000 Global Market Forecast are to continue profitably to meet growing demand for low-cost air travel in the face of intensifying global competition and increasing congestion, they will need substantial numbers of a new generation of aircraft like the A3XX, larger and more economical than anything flying today. Despite a small reduction in projected twenty-year RPK growth compared with last year's forecast, this year's GMF identifies a need for slightly more very large aircraft. This suggests that demand for aircraft in this category will prove to be robust in the face of changing market conditions. Based on the current catalogue flyaway prices (2000 $) of current aircraft types, this business will be worth a total of $526 billion through 2009 and $1.22 trillion through a business worth $1.2 trillion 2000 $ (billion) & to & , 350 & 400 > 400 Seat 1% 27% 23% 26% 23% category % 34% 20% 31% 15% The greatest business volume will be provided by the 100, 125, 150 and 175-seater category of the A318/A319/A320/A321. This will be closely followed by the 300, 350 and 400-seater category of the A and A340 family, which will account for 31 per cent of the total during the first decade and 26 per cent over the full twentyyear forecast period. An outstanding 23 per cent of the twenty-year business volume will be accounted for by very large aircraft in seat categories above 400 seats, a market now targetted by Airbus with the all-new A3XX. At the other end of the scale, the GMF understates demand for 70 and 85-seaters because many more of these small regional jetliners will be needed by airlines outside the GMF's domain. The operation of the GMF airlines' passenger jet fleet will continue to be highly concentrated. By 2019, flights from just the Top 20 out of 1,896 airports served worldwide - led by Chicago O'Hare and 30

31 Demand for passenger aircraft deliveries Los Angeles International - will absorb the utilisation of 25 per cent of the aircraft, and half the aircraft will be used on flights from the Top 62 airports. The table shows the Top Ten airports ranked by the numbers of daily departures, aircraft used and seats offered by the GMF fleet: Rankings of Top Ten airports in 2019 Daily departures 1. Atlanta 2. Chicago O Hare 3. Dallas 4. London Heathrow 5. Frankfurt 6. Paris CDG 7. Los Angeles 8. Amsterdam 9. Detroit 10. St. Louis Number of aircraft 1. Chicago O Hare 2. Los Angeles 3. London Heathrow 4. Atlanta 5. Dallas 6. Frankfurt 7. Paris CDG 8. Amsterdam 9. New York JFK 10. Newark Number of seats 1. London Heathrow 2. Los Angeles 3. Tokyo Narita 4. Frankfurt 5. New York JFK 6. Chicago O Hare 7. Paris CDG 8. Atlanta 9. Singapore 10. San Francisco Results by mega seat category - Regional jets The GMF does not attempt a comprehensive forecast of demand for regional jets. Many more of these small aircraft will certainly be needed for operations not covered here. However regional operations of 70 and 85-seaters by major carriers have to be studied in order to define the lower bound of operations by 100-seaters. The number of regional jets concerned will triple during the forecast period, growing from 254 at end 1999 to 763 at end 2019; an increase of 509. During the same period almost the whole of the current fleet of these aircraft will be replaced, leaving just eight still in service with their current operators in twenty years' time. Of the 246 aircraft replaced, 63 will be recycled back into the world passenger fleet through the used aircraft or operating lease markets. This will create a need for delivery through 2019 of 692 new aircraft ( seaters and seaters) to potential users in the GMF. 31

32 2000 Global Market Forecast The GMF covers only a portion of global regional jet operators Fleet development % per annum 73 Growth Repl. Rec new aircraft Number of new aircraft Seat category - Mainline single-aisles The GMF airlines' fleet of 100, 125, 150 and 175-seaters will grow from some 7,330 aircraft at end 1999 to 10,490 at end During the period, 6,350 aircraft (87 per cent of the current fleet) will be replaced, with some 1,930 aircraft being subsequently recycled back into the passenger fleet and 4,420 withdrawn from passenger service. This will create a need for delivery during the next twenty years of a total of 7,570 new aircraft in this category. 40 per cent of these will be 100 and 125-seaters, and 60 per cent Mainline single-aisles will grow less rapidly... Fleet development Number of new aircraft 12,000 10,000 8,000 6, % per annum 140 Growth Repl ,153 7,570 new aircraft 3,000 2,500 2,000 1,500 1,943 2,496 2,077 4,000 4,417 1,000 1,054 2,000 Rec. 1, Seat category 32