New Delhi. In a world growing increasingly uncertain about its future, air transport too is faced with myriad challenges. These include a slowing world economy, high oil prices, and in some markets, slowing traffic growth.
A new survey predicts that on average over the next 20 years, passenger travel will grow at 5 per cent and cargo at 5.8 per cent.
The fastest growing economies will lead the transformation into a more geographically balanced market. More productive, new airplanes will play a greater role, and there will be pursuit of further environmental progress.
The Current Market Outlook 2008-2027, conducted by Boeing, is rooted in today’s realities as it shows how air transport will be transformed over the next 20 years.
Airlines can draw some comfort from the fact that over the past 20 years, air travel grew by an average of 4.8 per cent annually despite two major world recessions, terrorist acts, the Asian financial crisis of 1997, the severe acute respiratory syndrome (SARS) outbreak in 2003 and two Gulf wars.
It is also predicted that airplanes in 2027 will be more productive. Each aircraft will carry about 40 per cent more traffic (RPKs) than its equivalent average airplane today.
Fewer airplanes will be needed accordingly to accommodate the same volume of travel. So the fleet needs to grow by only 3.2 per cent each year, although travel will grow at 5 per cent.
The average growth in airline passenger numbers will be around 4 per cent each year.
More people will be traveling by air as economies grow. Markets will open up through reduced regulation and increased competition. As markets expand, new t ravel opportunities will mostly be on longer distance flights.
The air transport fleet plays a fundamental role in stimulating and sustaining economic activity. This tie-in is apparent for the future as well, with the 3.2 per cent annual fleet growth in line with expected long-term economic growth of 3.2 per cent.
As airlines go after healthier financial returns, they will match the airplanes they employ more closely to the precise economics of the routes they fly.
This would mean that airlines will on average, use larger regional jets and single-aisle airplanes, and more small and medium-sized twin-aisle airplanes.
A natural product of this improved operational efficiency is that the average airplane has a lower environmental impact.
In the year 2027, 82 per cent of the fleet will be airplanes that do not exist today. They all will have been delivered new and will be better than today’s fleet in every respect.
The current record high fuel prices are forcing many airlines, particularly in the United States, to take urgent action in cutting back capacity or reducing planned growth. They are invariably doing so by reducing use of their oldest and least efficient airplanes, while retaining their investment in new airplanes.
The influence of current market conditions on our outlook is clear, with replacement airplanes taking a greater share of demand (43 per cent) than we previously forecast (36 per cent), and a smaller fleet size at the end of the 20-year period (35,800 airplanes) than we predicted in the previous outlook (36,400 airplanes).
With regards to cargo, many of the newer aircraft being displaced from passenger fleets are ideal to satisfy pent-up demand for conversion into freighters.
Around 2,500 airplanes will be converted from passenger to freight use, and 860 new freighters will be needed, most of which will bring new capabilities to the market.
A record 31 per cent of the forecast for airplanes with more than 100 seats is already on firm order (7,900 aircraft).
So there is an unprecedented visibility of future airplane requirements, giving more certainty to the shape of our forecast.
Long-established airlines will soon order further replacements for the aging airplanes that will remain even beyond announced capacity cutbacks. Leasing companies will continue ordering new airplanes in the near to medium term. They have placed a high proportion of their future deliveries with customers, and need to secure an additional supply of new airplanes.
Air transport markets are always changing. New competitors drive changes to ongoing operations. The development of new markets shifts emphasis into new territories. Although the largest markets will remain, emerging markets will become big enough to bring new influences to the world order in
The new hub is going to be Asia, which is now expected to need the most new airplanes as well as representing the largest market by value of deliveries.
For the first time, the value of the European airplane market will be equivalent to that in North America. As the airplane market expands, welcome competition is anticipated from manufacturers in Asia and CIS. New trade routes and global sourcing will stimulate air cargo markets, for example, with strong growth in Southwest Asia.
One-stop-to-anywhere airlines in the Middle East have a highly expansive vision. Investment in infrastructure and airplanes is on a scale to match.
US network carriers are already seeing contraction in domestic operations as they shift emphasis toward more rewarding international routes. Stronger growth in U.S. markets will come back in time.
Meanwhile, the current fast pace of growth in Europe is expected to moderate a little.
Dynamic markets combine to transform the future market toward more balance. In 2027, Asia Pacific and North America will both have around 30 per cent of the fleet in service, with a further 25 per cent in Europe and CIS. There also will be more balance between different types of airlines and between replacement and growth demand for airplanes.
A shift toward larger freighters and new, more efficient airplanes will help keep air cargo transport affordable.
Sustained growth of world trade and global GDP will drive a 5.8 per cent average annual increase in air cargo traffic, consistent with past trends. New air trade routes will reach out to under-served places.
The global economy demands rapid and reliable business-tobusiness exchange. Air cargo transport makes it possible.
Manufacturers depend on air freight services for efficient justin-time inventory management. Air freighters enable the most economical sourcing of components and assemblies. In many areas of the world, ground infrastructure is lacking. Here, air transport sustains vital export markets and allows transportation of even basic commodities.
The tonne-kilometer cost and range advantages of large freighters will enable air carriers to meet demand on high- growth trade lanes, particularly links to Asia.
As world air cargo traffic triples over the next 20 years, the number of freighters in the world fleet will double. Replacement airplanes will generally be larger, increasing the fleet share of large freighters from 26 percent to 35 percent by 2027.
Air transport sustains many developing world economies by making it possible to ship perishable products such as fresh flowers, fruit, and live animals to distant markets.
Reliable, regularly scheduled air freight flights make pharmaceuticals, life-saving blood and tissue products, and emergency equipment available and affordable. Prompt delivery actually adds to the value of a variety of products, including fashion items and leading-edge consumer electronics.
© India Strategic