FUTURE DEVELOPMENTS IN AVIATION BUSINESS & REGIONAL LANDSCAPE February 2015 Altan Büyükyılmaz, Turkish Technic, Executive VP Commerce
Developments in World Aviation
The World Principle Air Routes in 1920 s
The World Principle Air Routes in 1930 s Source: ATAG Aviation Benefit Report, 2014
The World Airport Map 1960 s
Today: Route Map Of The World's Commercial Airline Traffic
Evolution of the Earth s Economic Center of Gravity By far, the most rapid shift in world economic center of gravity happened in 2000-10 Source: Mc Kinsey& Company Report
Center of Gravities Moving Steadily Eastward In the 1960 s economic center of gravity planted in Northern Hemisphere Growing importance of the economic activity of Asia and Emerging Markets Growing economical activities triggers Aviation Activities Source: ATAG Aviation Benefit Report, 2014
Changes in Global Flow of Goods Flow of Goods at 1980 s Flow of Goods at 2011 s $1.8 Trillion $17.2 Trillion Flow of Goods increased 10 times in 30 years. 63% of goods flows through top 50 routes in 1990, down to 54% in 2011 Source: The Global Flow in Digital Age, Mc Kinsey& Company, 2014
Changes in Global Flow of People Flow of People at 2002 s Flow of People at 2010 s # of int. Travelers = 833 million # of int. Travelers = 1.1billion Flow of People increased 1.3 times in 8 years. Source: The Global Flow in Digital Age, Mc Kinsey& Company, 2014
Spending (Middle Class) Consumer Growing Consuming Class Generates New Enormous Hubs 2014 2.4 billion $12 trillion 2025 +1.8 billion $30 trillion This will creates enormous new hubs for consumer demand and global production Source: The Global Flow in Digital Age, Mc Kinsey& Company, 2014
World Population by Latitude & Longitude 90% Of The World Lives In The Northern Hemisphere Source: http://www.businessinsider.com/the-15-maps-that-explain-the-world-in-2012-2012-6?op=1#ixzz3rqck1qwh
Network Today & Tomorrow 91 Mega Cities 2033 > 50,000 daily long-haul passengers > 20,000 daily long-haul passengers > 10,000 daily long-haul passengers Source: Airbus 2014 GMF
TURKEY WORLD Number of Passenger 1994 2014 2034 1,2 billion 3,3 billion 7,3 billion 19,6 million 123 million 381 million Source: IATA, DHMI ve intercompany analysis
Geographical Advantage Silk Road Phenomenona
Location of Anatolia is central, between trading nations
But this is an old phenomenon, as old as the Silk Road
Moving goods and people is part of our culture
Spice Routes just added additional passages
Points we serve today perfectly match with old routes
We serve 50 countries within a short flight
CASK (Cost per Avai. Seat km) 0 100 200 300 400 500 600 700 800 Geographical Advantage OSLO HELSINKI YEKATERINBURG MONTREAL SAN FRANCISCO BOSTON CHOCAGO WASHINGTON LOS ANGELES ATLANTA HAVANA MEXICO CITY MANCHESTER LISBON ORAN CASABLANCA Detour MOSCOW advantage UFA MASHAD ASTANA NAUKCHETE SEBHA ASMARA MUSCAT %17 %6 MUMBAI DAKAR %10 DHAKA ULAN BATUR BEIJING SEUL HONG KONG SHANGHAI OSAKA 12,00 10,00 BOGOTA Unit Cost (CASK) vs. Flight Time ABIDJAN LUANDA KIGALI DAR ES SALAAM MALE HO CHI MINH CITY SINGAPORE JAKARTA 8,00 6,00 SAO PAULO MAPUTO JOHANNESBURG 4,00 BUENOS AIRES CAPE TOWN 2,00 0,00 Flight Time 1 2 3 4 5 6 7 8 9 10 11 12
Cities With Highest Connectivity İstanbul is the 6th most connected city Source: Mater Card Global Destionation Cities Index 2014
2013 Passenger Number Low volume High volume Picture of Today and Tomorrow Airport Growths Millions MAD DUB 100 90 ATL 80 LHR HND 70 LAX ORD CDG HKG DFW 60 DEN FRA JFK AMS LAS 50 CLT IAH PHX SFO EWR MCO NRT MUC BCN DTW SEA SYD MIA PHL 40 MSP FCO YYZ BOS MEL LGW LGA MEX PMI ORY IAD 30 MAN FLL BWI CPH ZRH SLC VIE DUS OSL BNE DCA ARN MDW 20 JNB BRU 10 CAI CPT CMN PEK 1. BKK SIN ICN BOM TPE MNL SZX AYT DME GMP CAN PVG SHA GRU DEL HGH KUL 3. DXB 2. 4. KMG IST CGK SVO CTU JED BOG DOH RUH AUH XIY 0-5% 0% 5% 10% 15% 20% Low growth High growth Africa Asia Pasific Europe L. America Middle East N. America Buble width: Forecasted 2025 airport passengers Growth rates are forecast by our analyst team based on ACI 2012 country passenger forecast, last 10 year growth rate of airports, regional growth expectations of Airbus & Boeing 2008-2013 Annual Passenger Growth (CAGR)
MRO Perspective
Development in Aircraft Fleet in 10 Years 35.000 30.000 25.000 20.000 15.000 10.000 5.000 0 NarrowBody Jet WideBody Jet Regional Jet Turboprop 23,010 2.664 3.384 4.506 12.456 3.052 3.357 5.554 16.056 3.222 3.125 6.733 19.826 2014 2019 2024 32,906 In 2024, the aircraft fleet will expect to grow to ~33,000 A/C 3,6% Cumulative Annual Growth Rate Expected 6,650 A/C will be retired in this period In 10 year period the number of NB Jet A/C will continue to dominate the market Number of Regional Jets will decrease in this period In 10 year period the number of aircraft which deliveries to customer is 16,500+ Source: The Global MRO Forecast 2014-2024, Team SAI, 2014
The Future of Aviation in 20 Years More than 29,200 new aircraft deliveries Source: Airbus Global Market Forecast 2013-2032
New Passenger A/C Delivery by Region ~29,220 A/C 5521 5827 1095 2553 2792 508 10664 2968 North America 2279 1239 1040 Latin America 19% 8% Source: Airbus Global Market Forecast 2013-2032 3035 Europe 970 527 443 Africa 20% 3% 587 CIS 4% 1999 989 1010 Middle East 7% + Freigter Delivery: 871(3%) 5770 4894 Asia-Pacific 2013-2022 2023-2032 36%
The Future of Aviation MRO s OEM Dominance MROs are vying for a diminishing share of work tied to mature fleets, which are not dominated by OEMs Recent retirements shrink the mature A/C market and will adversely impact MROs Source: Transport and Logistic Report, Oliver Wyman, Fall 2013
(X billion) World MRO Market Line Component Engine Base 73,2 $ 57,7$ 14,8 11,9 15,3 86,8 $ 17,7 18,7 12,2 22,1 29,9 33,2 11,5 13,2 17,2 2014 2019 2024 Asia 27% ME- Africa 10% 13% Americas Americas 28% 35% Europe 28% ME-Africa Asia 34% Europe 25% 2014 2024 In 2024, the World MRO Market will expect to grow up to ~87 Billion$ 4,2% CAGR expected Global Market Share of Asia will expect to increase 10% in this 10 year period Source: The Global MRO Forecast 2014-2024, Team SAI, 2014
LOW Market Growth Rate (%) CAGR:(2013-2023) HIGH MRO Market Growth by Regions Market Growth Rate(%) / Market Size(US$Bn) India %10.80, 1.62 US$Bn 10,00 5,00 Middle East %6.2, 3.30 US$Bn Eastern Europe/CIS %6.6, 3.87 US$Bn Africa %4.8, 2.74 US$Bn Latin America %5.0, 4.43 US$Bn China %7.7, 6.68 US$Bn Asia Pacific %5.3, 10.05 US$Bn Western Europe %2.4, 10.05 US$Bn Kuzey Amerika %0.6, 13.42 US$Bn 0,00 LOW 0 Market Size 10 ( US$Bn ) 20 Source: Intercompany Analysis, 2014
North American Airlines Widebody HMV Outsourcing Source: The MRO Business Planning Consederations 2014-2024, Team SAI, 2014
Difference in Annual MRO Spend by Region By the year 2022, will expect to increase 3,2B$ in CIS & Eastern Europe annual MRO spend Center of Gravity Moving Steadily Eastward Source: ICF SH&E Analysis Market Overview Local & Global May13, Ian Ferguson
Billion $ Market Growth in CIS&Eastern Europe 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 1,65 0,90 0,79 0,97 2,88 1,62 1,18 1,70 2013 2022 Heavy Line Component Engine 5.8% CAGR For CIS & E.Europe Region T o Take MRO Spend To 7.4B By 2022 An Increase Of $3.2B The strongest driver of growth is expected to be the engine market Source: ICF SH&E Analysis Market Overview Local & Global May13, Ian Ferguson
Thank you