[Avionics Today 11-17-2014] As passenger demand for air travel across all segments continues to increase, air traffic is sure to pick up dramatically by 2033. Global market forecasts released by Airbus, Boeing and industry analysts at Deloitte Aerospace and Defense predict air traffic will grow at nearly 5 percent annually due to a healthy up-tick in the world economy over the next two decades.
|Global demand will see the need for 30,000 new aircraft by the year 2033. Photo: Airbus
“Global Revenue Passenger Kilometers (RPKs) are expected to grow at about 4.5 to 5 percent per year, which is a little bit above the historic norm,” said Deloitte Global and U.S. Aerospace and Defense Leader Tom Captain in an interview with Avionics Magazine. “But that can be explained because of the wealth-creating economies in parts of the world that haven’t had a history of air travel.”
These increases promise to present unique challenges to each affected region as nearly $4.6 trillion will need to be spent on more than 31,000 new passenger and freighter aircraft by 2033 in order to satisfy future global demand. Therefore, we’ve drawn from these market forecasts as well as insights from market experts to provide a breakdown on how each region will address the projected increase.
Airbus forecasts that the Asia-Pacific region will be responsible for more aircraft deliveries in the next 20 years than any other area of the world. Coming in at more than 12,000 deliveries in the next 20 years the demand is driven by a growing passenger increase spurned by a closing wealth gap and a move to replace outdated aircraft with more fuel and cost efficient models.
“It’s been shown both in India and China that as wealth is created and the middle class is growing that there is a correlation to traveling for leisure and business. That is certainly the case in China where over the next 20 years 600 million people will enter the middle class. Which is fueling a very large increase in the demand for travel,” said Captain.
As passenger traffic grows to be 60 percent larger than today’s airline customer base in the region, the exploding industry will have to work provide the infrastructure necessary to support it. “To handle that much traffic the airports will have to absorb all that. In China, 40 new airports are being built to deal with that. They’re jumping right over rail and road to airports,” said Captain.
Even with substantial increases in infrastructure and Air Traffic Management (ATM), aircraft component and avionics manufacturers will have to keep pace in order to maintain a fleet that can withstand the incoming traffic. “The next challenge is the ability of the suppliers to support aircraft manufacturers. We’ve doubled the number of airplanes that were being built just nine years ago and we’re going to substantially increase the number of airplanes we’re producing.”
According to Airbus’ latest forecast, Latin American and Caribbean airlines will require 2,294 new passenger and freighter aircraft between 2014 and 2033, worth an estimated $292 billion. As the economy in the region strengthens so does the need and means for air travel, in countries such as Brazil and Mexico in particular.
“I think most of it is the accumulation of wealth, high network individuals the growth of that community has been pretty dramatic in that part of the world,” Rolland Vincent, president of Rolland Vincent Associated told Avionics Magazine earlier this year. “It has a strong resource-based economy, but more and more we see manufacturing and service related growth, telecoms, oil and gas extraction. Those are the industries that are booming right now and Brazil and Mexico in particular are doing very well.”
The pick up in industry means more reason for business passengers to enter the country and more attractive opportunities for tourists to visit as well. This is all good news for the aviation market, but, as with China, there are infrastructure issues that will need to be addressed before the countries can compensate for the demand. “Lack of infrastructure is absolutely the biggest problem,” said Vincent. There’s a lack of infrastructure, airways, airports FBOs [Fixed-Base Operators], MROs [Maintenance, Repair and Overhaul facilities], even technical talent. It’s still very early days.”
With oil growing the economy in certain parts of Africa along with a population expected to increase by 50 percent to reach 1.7 billion people by 2033, the continent’s often overlooked air transportation industry is bound to expand eventually, according to Captain.
“If you look 10 to 20 years out we fully expect that Africa will come into its own and fall into the same pattern that we’ve seen in Southeast Asia in the past 20 years,” said Captain. “Africa is replacing [their fleet] because they have very obsolete aircraft and they’re accumulating wealth through the oil, especially in West Africa. They’re buying new fuel efficient aircraft that are being produced right now that can save 15 to 20 percent on the fuel costs.”
The growing middle class breeds good news for Africa’s burgeoning aviation market and with the world’s youngest population, according to Airbus, the labor force is blooming alongside the industry, presumably providing a work force that can absorb the 5.5 percent RPK growth in air traffic.
While other regions are just coming into their own, Europe is home to the world’s most congested airspace and shows no signs of letting up as market forecasts predict the region will take delivery of 20 percent of new aircraft deliveries in the next 20 years. The air traffic system is looking for ways to handle the further increases it will come to see, for which Single European Sky ATM Research (SESAR) promises to offer relief.
“By 2025, globally, we should see a savings of 4 million flight hours, 3 billion gallons of fuel, and 29 million metric tons of emissions saved per year,” said Captain, in reference to SESAR in conjunction with the FAA’s NextGen efforts. “This is just at the right time because as the skies get more congested, because there will be more people and flights in the sky, the air traffic control system needs to be able to increase its capacity.”
And nothing, not even a slower-than-anticipated economic recovery that some may worry will slow growth and infrastructure, will slow down the region’s thriving air transportation industry.
“Past is prologue and we would expect anything that would happen to have a significant impact, even a potential security incident or a pandemic like Ebola or SARS, or a recession, although those would certainly have an impact over the short term,” said Captain. “But over the long term we forecast for some 35,000 or more commercial jets to be produced over the next 20 years and I do not see any appreciable impact any of those black swan events could have on those orders.”