In one year the worldwide demand for new aircraft has grown by 1,000 planes.

In its annual forecast, engine maker Rolls-Royce projects that 41,000 planes of all classes will be delivered by 2022. The analysis predicts 8,319 will be regional aircraft - both jet and turboprop that seat less than 100 passengers. A year ago, Rolls-Royce projected 415 fewer planes, or 7,904 regional aircraft would be built.

The price placed on these new planes: $179 billion.

"Despite all the problems the air transport industry has endured since 2000, demand remains strong in certain industry sectors," according to the study. "Financially sound airlines have continued to place new aircraft orders at a much faster rate than in the previous industry downturn. Passenger traffic has continued to grow in markets such as the Middle East, Russia, India and China. Economic recovery in North America is expected to boost demand for business jets.

"Looking longer term, the fundamental drivers of passenger and cargo traffic will remain the same. These are economic growth, linked with increasing inter-dependence of economies and improved disposable income in developing countries. The continued lowering of airfares, based on efficiency gains and technological advances throughout the supply chain, will also help underpin continued demand."

However in the last year, one key assumption has changed. In 2003, Roll-Royce projected that all passenger traffic would grow by 5.3 percent over the 20-year study period. This year it has scaled the estimate back to 4.9 percent. Despite the slight reduction, the study projected the need for more planes will grow.

In a year, the projected growth in demand for regional jets shifted ever so slightly from North America to the developing world. The projected deliveries in the Asia/Pacific market grew by 2 percent in one year to 18 percent. In the South and Central American market the projection grew by 1 percent to 4 percent. And, in the Middle East/African market, the demand doubled in one year to 2 percent.

On the engine side, Rolls-Royce estimates that 18,303 jet engines will need to be produced to power the new regional jets. These new engines will be worth $53 billion.

Rolls-Royce now captures about 43 percent of the regional engine market. The other major player in this niche is Bombardier [BBD].

Although it foresees continued strong demand for regional jets, turboprops will continue to occupy an important niche in the market. "Turboprop aircraft account for around 20- 25 percent of demand in the forecast, with the majority of deliveries concentrated in the latter years," the analysis found. "Currently there are a significant number of parked turboprops, enough to satisfy much of the turboprop demand for several years. In the longer term, however, demand may re-emerge for new-build turboprops and new generation designs. This demand is related to an availability squeeze, when turboprop retirements need to be replaced by secondhand regional jets or by new-build turboprops. The former option may or may not be viable in many developing markets."

>>Contact: Benet Wilson, Rolls-Royce, (703) 621-2823. <<