Leeham News and Analysis
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Leeham News and Analysis
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The aircraft market will double in 20 years
By Bjorn Fehrm
January 17, 2017, ©. Leeham Co: The market for passenger aircraft will double over the next 20 years, says Angus Kelly, the CEO of the world’s largest aircraft lessor, AERCAP. He forecast this growth, which is in sync with those from Airbus and Boeing, in his keynote speech at the Airline Economics Growth Frontiers 2017 conference in Dublin.
Kelly linked the growth with the increase in Global air travel. He started by showing what happened in the air travel industry during 2016, Figure 1.
Figure 1. Air transport market 2016 key facts. Source: AERCAP. Click to enlarge.
Passenger travel grew with 5.6% and airlines were more profitable. Negative news was a slowing GDP in China and a widebody market that had a continued slowdown.
Air travel industry for 2017 and beyond
Kelly predicted there will be no big changes during 2017 for the industry, other than a slight moderation of the profit and air travel growth, Figure 2.
Figure 2. Air transport market 2017 key facts. Source: AERCAP. Click to enlarge.
History has shown that air travel growth is surprisingly resilient. Growth has not been affected by the multitude of negative events in the market such as; political crises, China slowing or Brexit, Figure 3 (red triangles and dots).
Figure 3. Air travel growth since 2007 (blue and yellow lines) . Source: AERCAP. Click to enlarge.
The driving force behind the uninterrupted air travel growth is the “will to travel” for a growing middle class in emerging countries, Figure 4.
Figure 4. Growth of middle class in key markets. Source: AERCAP. Click to enlarge.
This growing middle class has its center in Asia-Pacific, Figure 5.
Figure 5. World population 2016. Source: AERCAP. Click to enlarge.
But these market haven’t a developed air traffic system, Figure 6. Major city pairs, with large population concentrations, have no or only a couple connections per day. In developed markets, this compares to 10-40 connections per day.
Figure 6. The China/India markets are not adequately served. Source: AERCAP. Click to enlarge.
Should the new markets expand their air travel system, it will demand an increase in aircraft operations. The demand for air travel will force a doubling of the world’s aircraft fleet over the next 20 years, Figure 7.
Figure 7. The aircraft fleet will double over the next 20 years. Source: AERCAP. Click to enlarge.
According to the last figure 7 I asked my old HP48G to verify the calculations. One question remains. Are the 3.5 % a more conservative prediction instead of the 5.5 % historic passenger increase or is the lower figure related to the shift to bigger aircraft models A320 -> A321; 787-8 -> 787-9/10; A330-200 -> A330-300/900 …
(All 7 figures are rather small and do not expand by clicking on?)
If you plot “capacity bought” density over time you will notice
a set of humps moving upwards. ( That magic range exceeded 🙂
Probably quite useful to keep track of cumulative capacity sold.
It’s AERCAP’s predictions and it started going more conservative already in the 2017 prediction. Re the graphs I have increased their size.
At which point will infrastructure become an issue and larger aircraft become more attractive? I guess despite the assumed growth there is still plenty of space, especially if small widebodies are replaced by larger types, not necessarily the A380 himself. Without matching the B777X in CASM, the future of the A380 is debatable.
I don’t see any reason to doubt that the middle classes are growing in India and China, but I neither do I see it as highly probable that there is a large business/personal demand to visit between these city pairs. They’re just not major tourist destinations for each other, and from an industrial standpoint they are basically competitors, rather than partners (the latter necessitating business travel; India only exports $11 billion/year to them, though they import a lot more in basically cheap commodity type goods).
It does beg the question though as to how longer range narrow bodies (I dare say MoM) could be useful for “domestic” asian carriers looking to develop international routes. Maybe…maybe not, but that would make more sense to me than a surge in A380/748 demand in these markets. Hot/high performance would seem to be important considerations too.
MHalblaub, you mean like also the 777-200 > -300 > -9x and soon the 380-800 > 380-900 or even -1000 with the tested 800+ pax?
But of course, you are right. That, however, does not provide a future perspective for Mitsubishi, Sukhoi and the C series.
While China, Europe and India might surge ahead with high speed rail there are places lie Philippines and Indonesia with a million islands and countries like Russia, Canada and Australia with a lot of empty space to fly over, so I suspect C-series and the large RJ market in general has a future, the question is how big and exactly for what size, 70-150 seats and 1500-4000 mile is a pretty big area. I see a lot depending on defining the right aircraft here. Russia and China will probably insist on using home grown products as well, so how much ends up left and for who will be interesting. C-series has an advantage in that it can be grown into the A+B mainline market.
interesting global economy perspective inside.. nevertheless I don’t connect the dots with the previous reports showing slow activity with wide body new orders or LOI.. perhaps the air traffic growth will be driving the results with single aisle aircraft market demand which make sense for domestic travel within emerging markers…
If air traffic doubles, larger aircraft in the 1000nm range node are another untapped market. Build an aircraft with more seating area than an A321, moving towards the A300 or 767-200A but on a much lighter platform with less cargo hold. A 50m 2-2-2 at 20% larger, or a 50m 2-3-2 at 40% larger. A middle market aircraft with a purpose built smaller wing for lower weights, shorter range, and smaller gates.
I agree with Ted. There is a lack of a “light widebody” to do 1-3hr jumps. The original A300 was designed for this but Aircraft structures and Engines could not take the cycles. I was surprised the Russian MC-21 was designed to be a A320 copy with some more high Tech structures instead of doing a new market Aircraft. One could argue that the 727, 757, A321 is this type of Aircraft but they are a bit too small, too slow to turn around (757-300) and too heavy. The 767-200, 777-200, A300 were too heavy and with limit cyclic life Engines. The MoM Aircraft is this market. The UDF Engine with its Take-Off and climb performance would fit perfect even though only doing M0.75. on the 1-3 hr flight. Just think of what it could do for Japanese domestic flying taking 250-300 pax per flight.
“The original A300 was designed for this but Aircraft structures and Engines could not take the cycles.”
??
If you follow the gestattion the initial prototype targeted 300 PAX and 132t MTOW. ( OEW probably ~85t )
After that all changes inceased length slightly and range significantly via MTOW increases.
Market outlook seems to have required more range for more sales.
I assume that current airline orders already include the future growth.
Means: the aircraft to fly the expected growth are already ordered, probably already a bit more. If capacity is insufficient, there is always the option to delay retirements.
for Airbus “MOM” capacity 🙂 as delivered has moved from halfway between A319 and A321 (~2000) to halfway between A320 and A321 ( 2017+). I don’t think it stops there.
( IMU why a future A321.5 didn’t make much sense.)
Just as a regional China–US war in the South China Sea/Phillipine Sea is a downed P8A away, a similiar one is brewing with a Himalayas and/or Indian Ocean dustup away. You’ve got China allied with The Pakis, and that gave India quite a bloody nose in ’62 in the Himalayas. (It even took some Indian territory during and after the fight.) China’s also more recently been pushing out very aggressively to secure its oil supply lines through the Indian Ocean to the Middle East. It’s been trying to lock up ports in Pakistan, Sri Lanka, and even, I believe, is working on a base in Djoubuti. India hasn’t been asleep–new P8Is, nuke subs, its own carrier, Andaman Islands base buildup and its own nuke arsenal. So what’s more likely, real significant traffic growth on the China–India routes above, or some serious shooting war action at one or both areas I’ve outlined above?