Download market forecast 2014 – 2033

MARKET FORECAST 2014 – 2033
BOMBARDIER COMMERCIAL AIRCRAFT
CONTENTS
03 INTRODUCTION AND EXECUTIVE SUMMARY
08 ECONOMIC ENVIRONMENT AND OUTLOOK
12 COMMERCIAL AIRCRAFT MARKET INDICATORS
21 WORLDWIDE FORECAST
29 REGIONAL FORECAST
40 CONCLUSION
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
02
The airline industry continues to
grow and thrive with a forecasted
3.3 billion passengers in 2014
INTRODUCTION AND EXECUTIVE SUMMARY
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
03
INTRODUCTION AND EXECUTIVE SUMMARY
This Commercial Aircraft Market Forecast provides Bombardier’s 20-year view of the market for 20- to 149seat aircraft.
This year marks the 100th anniversary of the first commercial airline flight. From its primitive beginnings with
a two-seat wooden aircraft, the airline industry continues to grow and thrive with a forecasted 3.3 billion
passengers in 2014, or nine million daily passengers on 100,000 daily flights.
DELIVERY FORECAST
Segments
GROWING AND PROFITABLE INDUSTRY
Bombardier remains confident that continuing economic growth will increase
Deliveries
Revenues
20- to 59-seat
400
$8B
60- to 99-seat
5,600
$185B
7,100
$465B
growth, as measured by Gross Domestic Product (GDP). IHS Global Insight raised
13,100
$658B
its long-term forecast of global GDP growth from 3.2% last year to 3.3% compound
100- to 149-seat
20- to 149-seat total
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
demand for air travel over the next 20 years.
Airline passenger demand has historically been highly correlated to economic
annual growth rate (CAGR) in 2014, an increase of 0.1 percentage points. IHS
forecasts that the emerging regions of Africa, Greater China, India, Latin America
and the Middle East will have a higher than world average GDP growth rate while
Asia Pacific, Europe, North America, and the Commonwealth of Independent States (CIS) will have below
world average GDP growth over the 20-year period.
Today, the airline industry supports $2.4 trillion in economic activity and 58 million jobs in aviation and related
tourism – about 3.5% of global GDP.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
04
INTRODUCTION AND EXECUTIVE SUMMARY
AIRLINE INDUSTRY
NET PROFITS
Billions, USD
Source: IATA
Global airline
revenues increased
from $476 billion in
2009 to $710 billion
in 2013.
REGION
2010
2011
2012
2013
2014F
World
17.3
7.5
6.1
10.6
18.0
North America
4.2
1.7
2.3
7.0
9.2
Europe
1.9
0.3
0.4
0.5
2.8
Asia/Pacific
9.2
4.2
2.7
2.0
3.2
Middle East
0.9
1.0
1.0
1.0
1.6
Latin America
1.0
0.2
-0.2
0.2
1.1
Africa
0.1
0.0
-0.1
-0.1
0.1
The financial outlook for the world’s airlines is improving as economic growth returns to most regions.
Demand for air transportation remained strong through 2013. International Air Transport Association (IATA)
is forecasting a 5.9% year-over-year increase in revenue passenger kilometres (RPKs) in 2014 and reports
that the global average load factor reached 78.7% for the first four months of 2014. This will be the second
consecutive year of improved profitability resulting from positive economic growth, improved business
confidence and relatively stable but high fuel prices.
Global airline revenues have increased from $476 billion in 2009 to $710 billion in 2013. According to IATA,
the global airline industry recorded a net profit of $10.6 billion in 2013 and a net profit of $18 billion in 2014 is
forecasted.
MATURE VS. EMERGING MARKET DYNAMICS
In mature markets, such as North America, Europe, Oceania and Northeast Asia (Japan and South Korea),
the airline industry is highly evolved with carriers operating fleets of aircraft with varying capacities to match
market demand. Most new 20- to 149-seat aircraft deliveries to mature aviation markets will replace retiring
aircraft fleets.
In emerging markets, demand for air travel is growing with increasing GDP and an expanding middle class.
The airline industries in the emerging countries of Asia Pacific, Greater China, India, Latin America and the
CIS are at different stages in their development, but all will require aircraft with different seat capacities and
operating economics to meet passenger demand. The majority of new 20- to 149-seat aircraft deliveries to
emerging regions will accommodate fleet growth.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
05
INTRODUCTION AND EXECUTIVE SUMMARY
EVOLVING BUSINESS MODELS
The airline industry continues to evolve with new business models capturing an increasing
TOTAL 20- TO 149-SEAT FLEET
2013
3,400
2033
2,750
4,650
6,850
share of passenger demand.
Network carriers are consolidating and investing in carriers based outside their home
10,800
markets. The regional airline industry includes airlines affiliated with network carriers and
8,450
16,300
1,000
20- to 59-seat
60- to 99-seat
100- to 149-seat
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
independent carriers that feed their own networks. Low cost carriers (LCC) are introducing
second aircraft fleet types to penetrate new markets or focusing on becoming ultra low cost
carriers (ULCC) with a no-frills business model that stimulates new demand.
In North America, and to a lesser extent in Europe, the fleet composition of regional airlines
affiliated with network carriers is closely tied to the scope clause agreements that are part of
network carrier pilot labour agreements. Bombardier believes that scope clauses will gradually relax to include
the addition of more large-capacity regional aircraft, both jets and turboprops.
THE 20- TO 149-SEAT MARKET
Over the next 20 years, Bombardier forecasts demand for 13,100 aircraft deliveries in the 20- to 149-seat seat
segment valued at $658 billion. 1
Some 400 aircraft in the 20- to 59-seat range will be required, worth $8 billion. New aircraft deliveries in this
segment will continue at a modest pace for the duration of the forecast period as aged aircraft are retired and
replaced with larger types. The low trip costs of 20- to 59-seat turboprops and regional jets are well matched
to small markets, off-peak demand on heavily-travelled routes, and premium markets requiring high frequency
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
06
INTRODUCTION AND EXECUTIVE SUMMARY
The 100- to 149-seat
aircraft segment will
enjoy the strongest
growth, with delivery
demand for 7,100
aircraft.
service. The development of new generation 20- to 59-seat aircraft is expected later in the forecast period
with the availability of new technology, including more efficient engines.
The 60- to 99-seat aircraft market will see substantial growth over the forecast period with delivery demand
for 5,600 aircraft worth $185 billion. Large regional jets and turboprops will become an increasingly important
tool for network connectivity between major, secondary and tertiary airports. Some of the fleet growth in this
segment will be a result of airlines up-gauging to larger aircraft with more seat capacity, lower seat-kilometre
costs and flexible cabins that can accommodate multiple seat classes. In the last round of airline pilot
negotiations in the United States, the relaxation of scope clause conditions stimulated orders and options for
more than 450 large regional jets. In other regions, high fuel prices favour the use of large turboprops, with
high-speed turboprops best suited to replace 20- to 59-seat jets. Overall, demand for regional aircraft with
between 60 and 99 seats will be evenly split between turboprops and jets.
The 100- to 149-seat aircraft segment will enjoy the strongest growth, with delivery demand for 7,100 aircraft
worth $465 billion. This segment has not been the focus of aircraft development for at least the past two
decades. The arrival of new-technology, clean-sheet design aircraft optimized for the 100- to 149-seat
segment will accelerate the economic obsolescence of previous-generation aircraft, challenge re-engined
and legacy aircraft, and reinvigorate aircraft demand in this segment. New clean-sheet aircraft will take full
advantage of next generation engines that offer a substantial reduction in fuel consumption, maintenance
costs, greenhouse gas emissions and external noise.
1
Based on estimated aircraft list prices in 2013 USD.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
07
Over the next 20 years
worldwide GDP is projected to
grow at a compound annual
growth rate of 3.3%
ECONOMIC ENVIRONMENT AND OUTLOOK
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
08
ECONOMIC ENVIRONMENT AND OUTLOOK
WORLD REAL
GDP GROWTH %
Compound Annual Growth Rate
2013-2033
WORLD AVERAGE: 3.3%
1.8%
3.1%
2.5%
3.8%
4.6%
6.1%
6.5%
3.7%
2.5%
Source: IHS Global Insight 2014
ECONOMIC GROWTH
According to IHS Global Insight, worldwide GDP is projected to grow at a compound annual growth rate
(CAGR) of 3.3% over the next 20 years, which is an increase of 0.1 percentage points from the 2013 forecast.
Regionally, economies outside North America and Europe are expected to lead the world in GDP growth from
2013 to 2033. IHS forecasts that India will have the strongest GDP CAGR at 6.5%, followed by Greater China
at 6.1%, Africa at 4.6%, the Middle East at 3.8%, Latin America at 3.7%, the CIS at 3.1% and Asia Pacific at 2.5%.
The North American economy is expected to grow at 2.5%, with Europe trailing at 1.8%.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
09
ECONOMIC ENVIRONMENT AND OUTLOOK
2013
2033
Source: IHS Global Insight
Growth in airline
passenger traffic
is directly linked
to changes in a
population’s
propensity
to travel.
80,000
GDP Per Capita (USD)
GDP PER CAPITA
70,000
60,000
50,000
40,000
30,000
20,000
2033 World GDP Per Capita
10,000
0
North
America
Europe
China
Middle
East
Latin
America
CIS
World
Asia
Pacific
India
Africa
GROWTH OF THE MIDDLE CLASS
Growth in airline passenger traffic is directly linked to changes in a population’s propensity to travel. The propensity to travel increases exponentially when GDP per capita enters the $5,000 to $15,000 per year threshold. Increased demand for air travel drives increased demand for aircraft.
The Organization for Economic Co-operation and Development (OECD) estimates that middle class consumer
spending, as a reflection of a region’s per capita GDP, will expand rapidly in emerging markets.
According to OECD, the size of the global middle class could increase from 1.8 billion people in 2010 to 4.9
billion by 2030, with up to 85% of this growth in Asia Pacific, Greater China and India, which together account
for less than a quarter of the world’s middle class today. Greater China and India are expected to experience
the greatest percentage growth in air travel demand.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
10
ECONOMIC ENVIRONMENT AND OUTLOOK
North Sea Brent Crude Oil
Spot Prices, 1993-2033
Source: U.S. Energy Information Agency (EIA)
Sustained high oil
prices influence airline
decisions to replace
or retire less efficient
aircraft types.
$140
Brent Crude Oil Spot Price
(2012 USD/barrel)
OIL PRICE AND
VOLATILITY
Actual
EIA Forecast
$120
$100
$80
$60
$40
$20
$0
1993
1998
2003
2008
2013
2018
2023
2028
2033
OIL PRICE AND VOLATILITY
Forecasting high oil prices presents a challenge for the world airline industry. Jet fuel – which closely tracks
the price of crude oil – is airlines’ largest single expense, now accounting for some 30% of operating costs on
average.
Current forecasts by the U.S. Energy Information Agency (EIA) indicate that the price of oil will average
$107 USD between 2014 and 2033. Sustained high oil prices influence airline decisions to replace or retire
less efficient aircraft types. This impact is evident in the increased demand for new generation, fuel efficient
turboprop and jet aircraft. For example, fuel efficient turboprops have become increasingly attractive
investments, with high-speed turboprops capable of replacing jets on routes of stage length 1,100 kilometres
or more – at least 300 kilometres beyond the typical coverage of conventional turboprops.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
11
Air travel remains a
central building block of
future prosperity and
continuing development
COMMERCIAL AIRCRAFT MARKET INDICATORS
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
12
COMMERCIAL AIRCRAFT MARKET INDICATORS
Network carriers
are focused on
replacing older aircraft
with newer, more
efficient aircraft to
reduce unit costs.
EVOLUTION OF AIRLINE BUSINESS MODELS
Today’s global airline industry has grown and diversified. Where once airlines could easily be categorized as
network carriers, regional carriers, or low cost carriers (LCC), the segmentation of airlines has fragmented
leading to more specialized business models, each with its unique characteristics: network carriers; franchise,
independent and national regional carriers; low cost carriers (LCC), hybrid low cost carriers and ultra low cost
carriers (ULCC).
Network carriers primarily operate aircraft with 100 seats or more over hub-and-spoke networks to serve
many markets, both domestic and international. Airline consolidation has been very pronounced at network
carriers, particularly in North America and in Europe as a result of the economic downturn beginning in 2008,
cost pressures, high fuel prices and relentless competition. Network carriers are focused on replacing older
aircraft with newer, more efficient aircraft to reduce unit costs. Furthermore, partnership agreements through
alliances, code-sharing or franchise agreements are often used by these carriers to increase their market
penetration.
Franchise regional carriers are contracted by network carriers to provide high-frequency service on shortand medium-haul hub-and-spoke routes that connect small- and medium-sized communities to global airline
networks. Their fleets of turboprops and regional jets are optimized to right-size capacity to match passenger
demand on routes that cannot be profitably and frequently served by larger jets. By specializing in the
operations of regional aircraft, regional carriers maintain lean cost structures that align with the needs of their
partner airlines.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
13
COMMERCIAL AIRCRAFT MARKET INDICATORS
High-speed
turboprops with low
unit costs are being
used to extend
service and penetrate
new markets that
cannot be profitably
served with large
single-aisle jets.
Independent and national regional carriers provide a wide range of domestic and international air services
using diverse aircraft fleets. These airlines are evolving with a combination of regional aircraft and larger jets
that have the right capacity to serve the variety of markets in their networks.
LCCs historically operated a standardized aircraft fleet on point-to-point services connecting large- and
medium-sized markets. The focus of the business model is to keep costs low, aircraft utilization high and
use low fares to stimulate air travel demand. LCCs have captured a significant share of the traditional leisure
and business passengers from network carriers and are now present in nearly every region of the world,
representing a significant market challenge to network carriers.
The LCC market is evolving with hybrid LCCs emerging that have added a second aircraft type to supplement
their fleets of large single-aisle jets. High-speed turboprops with low unit costs are being used to extend
service and penetrate new markets that cannot be profitably served with large single-aisle jets. Modern, large
regional aircraft and 100- to 149-seat aircraft will enable hybrid LCCs to expand their networks and continue
their growth trajectory.
Another development is the ultra low cost carrier (ULCC) business model. Passengers of ULCCs pay a base
fare while additional “ancillary fees” are required for all other services beyond flying from A to B. ULCCs have
become the fastest growing and most profitable airlines in the United States. The business model is now
appearing in other regions, such as Latin America.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
14
COMMERCIAL AIRCRAFT MARKET INDICATORS
IN-SERVICE FLEET
GEOGRAPHIC
DISTRIBUTION
3%
1%
6%
North America
Europe
10%
Latin America
39%
6%
20- to 149-seat In-Service Fleet
(as at December 31, 2013)
CIS
China
Asia Pacific
7%
India
Middle East
10%
Africa
19%
Source: Bombardier analysis, OAG Aviation Solutions
In emerging markets,
airlines can benefit
from the greater
use of regional jets
and turboprops to
right-size aircraft
capacity to market
demand.
The common thread that runs through all evolutions of business models in the airline industry is the
imperative to drive down operating costs to remain profitable and competitive. As the airline industry evolves,
there is a continuing need for each airline business model to right-size aircraft capacity so that unit costs and
trip costs match market demand.
Aircraft lessors are playing an increasingly active role in the 20- to 149-seat segment with orders for large
turboprops, regional jets and new generation single-aisle aircraft. The expansion of leasing company portfolios
to include 20- to 149-seat aircraft provides airlines with greater business and fleet flexibility.
AIRLINE LABOUR COSTS AND SCOPE CLAUSES
Labour costs are typically an airline’s second largest expense, after fuel.
In mature markets, network carriers have long utilized regional carriers with lower labour costs to serve
small- and medium-sized markets, as well as premium markets requiring high-frequency service with regional
aircraft.
In emerging markets, airlines can benefit from the greater use of regional jets and turboprops to right-size
aircraft capacity to market demand and develop new markets.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
15
COMMERCIAL AIRCRAFT MARKET INDICATORS
IN-SERVICE
FLEET AGE
1%
3%
16%
Age Profile of 20- to 149-seat
In-Service Fleet
(as at December 31, 2013)
0-10 Years
45%
11-20 Years
21-30 Years
31-40 Years
40+ Years
35%
Source: Bombardier analysis, OAG Aviation Solutions
Orders for large
regional aircraft are
stimulated by
the relaxation of
restrictions defined
by scope clauses.
One significant market constraint, particularly evident in North America, has been “scope clauses” negotiated
between network carriers and their unionized pilots. These contractual agreements restrict the use, number
and seating capacity of regional aircraft flying on behalf of a network carrier. Orders for large regional
aircraft are stimulated by the relaxation of restrictions defined by scope clauses. Over the forecast period,
the assumption – based on historical evidence – is that scope clauses will continue to evolve, allowing
the operation of larger regional aircraft by regional carriers. This evolution is driven by network airlines’
imperatives for cost efficiency and continued network coverage.
CURRENT AIRCRAFT FLEET
Commercial passenger aircraft in the 20- to 149-seat segment totaled 10,800 units in-service as of December
31, 2013. In the 20-to 59-seat segment, there were 3,400 passenger aircraft in-service, comprised of 1,600
regional jets and 1,800 turboprops. In the 60- to 99-seat segment, there were 2,750 aircraft in-service,
comprised of 1,800 regional jets and 950 turboprops. In the 100- to 149-seat segment, there were 4,650
aircraft in-service.
Twenty percent of the passenger aircraft in the 20- to 149-seat segment are more than 20 years old. These aircraft represent a near-term replacement opportunity.
Only 40% of the 20- to 149-seat aircraft fleet is flying with airlines in emerging regions. This share will grow as additional 20- to 149-seat aircraft are delivered to accommodate growth in traffic demand.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
16
COMMERCIAL AIRCRAFT MARKET INDICATORS
100%
Probability of Retirement
COMMERCIAL
AIRCRAFT GENERAL
RETIREMENT
PROFILE
80%
60%
40%
20%
0%
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
The increasing pace
of aircraft retirements
will have a positive
impact on demand
for new aircraft in the
20- to 149-seat
segment.
0
5
10
15
20
25
30
35
40
45
50
Age Years
AIRCRAFT RETIREMENTS
Economic and technological obsolescence, as well as environmental regulations, are expected to drive aircraft
retirements throughout the forecast period. The increasing pace of aircraft retirements will have a positive
impact on demand for new aircraft in the 20- to 149-seat segment.
The forecasted removal of aircraft from service is modelled using retirement curves that are based on aircraft
age and derived from historical analysis. Other factors considered in the timing of forecasted retirements
include airline network growth and brand strategies; entry-into-service dates for new-technology aircraft and
engines; aircraft size and capacity; operating and maintenance costs; and environmental regulations regarding
noise and emissions, and associated fees. Increasingly stringent International Civil Aviation Organization /
Committee on Aviation and Environmental Protection (ICAO/CAEP) noise and emission standards will push
airlines to modernize their fleets.
Bombardier’s forecast assumes that a majority of the current 20- to 59-seat aircraft fleet will be replaced
by larger capacity 60- to 99-seat turboprops and regional jets. A portion of the 20- to 59-seat fleet will
be sustained through the forecast period, replenished by new aircraft deliveries and service life extensions
of existing fleets. The availability of more efficient, new-generation 100- to 149-seat aircraft will fuel a
replacement cycle in this segment as more than 1,400 aircraft are already more than 20 years of age and
an additional 1,700 aircraft in this segment will reach that age within the next ten years.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
17
COMMERCIAL AIRCRAFT MARKET INDICATORS
The aviation industry
has committed to
carbon-neutral growth
by 2020 and a 50%
reduction in carbon
emissions from 2005
levels by 2050.
AIRLINES AND THE ENVIRONMENT
Environmental issues and new environmental regulation will increasingly shape the world’s airline industry
over the forecast period. These issues can be broadly categorized as: local air quality, aircraft emissions and
community noise. The aviation industry – aircraft manufacturers, airlines, airports, air navigation providers and
international bodies – has consistently improved its environmental performance throughout its history and will
continue to do so.
The aviation industry has committed to carbon-neutral growth by 2020 and a 50% reduction in carbon
emissions from 2005 levels by 2050. The application of new technology in aircraft designs will be paramount
in meeting these commitments, with Bombardier to fly new-generation aircraft conceived and designed for
optimal environmental efficiency.
MORE EFFICIENT AIRCRAFT AND OPERATIONS
Fuel saving technology, the implementation of improved operational procedures, and the optimization of
networks and fleets will become increasingly important to airlines throughout the forecast period.
Over the next 20 years, the 20- to 149-seat segment will see the incremental improvement of existing aircraft,
the development of new clean-sheet commercial aircraft, and the application of the right-size and right-type
of aircraft to networks as airlines strive to remain competitive and cost-efficient.
Turboprop aircraft accounted for roughly half of the 20- to 99-seat aircraft deliveries in 2013. Continuing high
fuel prices favour the low fuel consumption and operating costs of turboprop technology for short-haul routes.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
18
COMMERCIAL AIRCRAFT MARKET INDICATORS
High-speed turboprops are being used to replace regional jets in hub-and-spoke networks, to supplement
larger aircraft at off-peak times, and to fly point-to-point routes with a high standard of passenger comfort
and little or no change in block flight times.
Regional jets in the 20- to 99-seat segment continue to play a very important role serving medium-haul
regional markets. The large installed fleet of 20- to 59-seat jets continues to provide low trip costs to connect
regional markets to global networks.
In North America, the relaxation of scope clause agreements has allowed regional airlines to up-gauge
from 50- to 76-seat regional jets, often featuring two- and three-class seating configurations that provide a
seamless product for passengers connecting to mainline flights. In Europe, regional airlines are up-gauging to
large-capacity regional jets to achieve the lower seat-kilometre costs required to compete in a marketplace
with more LCCs.
The 100- to 149-seat aircraft segment will be stimulated by the arrival of new clean-sheet designs powered
by next-generation engines. These new-generation aircraft offer a substantial reduction in fuel consumption,
maintenance costs, greenhouse gas emissions and external noise. The entry-into-service of new clean-sheet
designs is expected to accelerate the economic obsolescence of older- and present-generation aircraft.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
19
COMMERCIAL AIRCRAFT MARKET INDICATORS
GLOBAL O&D
MARKETS IN 2013
WITHIN 5,550 KM
30%
12,860 city pairs
50-250 PDEW
>250 PDEW
70%
Source: Bombardier analysis,
IATA Passenger Intelligence Services (PaxIS)
A GROWING NUMBER OF ORIGIN AND DESTINATION MARKETS
IATA reports that the number of city pairs receiving scheduled airline service has doubled in the past 20
years. This is the result of economic growth and an expanding middle class, as well as demand stimulated by
frequent air service and low fares.
When it comes to passenger demand, there are more opportunities to develop new markets in small- and
medium-sized cities than in established large markets. Bombardier has identified more than 8,950 Origin and
Destination (O&D) city pairs within 5,550 kilometres with demand of between 50 and 250 passengers per
day each way (PDEW). Opportunities to grow small O&D markets outnumber large markets in all regions,
including North America (56%), Europe (80%), the CIS (85%), Asia Pacific (61%), Africa (86%), Latin America
(71%), the Middle East (77%), Greater China (62%) and India (64%).
These new market opportunities are most economically and efficiently served by 20- to 149-seat aircraft that
are ideally sized to develop smaller O&D markets and establish daily non-stop connections. Airlines with a
combination of aircraft with low trip costs and low seat-kilometre costs will have the flexibility needed to
profitably match capacity to demand and maintain connectivity to smaller markets.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
20
Forecasted demand for 20to 149-seat commercial aircraft
is expected to reach 13,100
deliveries in the 20-year period
from 2014 to 2033
WORLDWIDE FORECAST
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
21
WORLDWIDE FORECAST
FLEET GROWTH
FORECAST
2013 FLEET
DELIVERIES
RETIREMENTS
2033 FLEET
20- to 59-seat
3,400
400
2,800
1,000
60- to 99-seat
2,750
5,600
1,500
6,850
100- to 149-seat
4,650
7,100
3,300
8,450
Total
10,800
13,100
7,600
16,300
WORLD
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
The 2014-2033 Bombardier Commercial Aircraft Market Forecast for 20- to 149-seat aircraft is divided
20-YEAR OUTLOOK
MARKET DRIVERS THAT
INCREASE/DECREASE
AIRCRAFT DEMAND
into three seat segments. The 20- to 59-seat segment will experience low demand for new aircraft and the
in-service fleet will steadily decline as aircraft are retired and migrate to secondary markets, such as air
freight. The 60- to 99-seat segment will continue to see strong growth in both the turboprop and regional
jet categories. The entry-into-service of new-technology, clean-sheet aircraft designs using new-generation
engines will reinvigorate the 100- to 149-seat segment.
Economic Growth
ASSUMPTIONS
Fuel Prices
All forecasts have an underlying set of assumptions and drivers. The assumptions for this forecast include:
Fuel Volatility
• Demand for air travel is directly related to economic growth and per capita wealth creation over the long-term
More Efficient Aircraft
• 3.3% average growth in global GDP over the forecast period
Emerging Markets
• Infrastructure will support growth in demand for air travel
Environmental Regulations
• $107 per barrel average reference oil price
Environmental Fees
• Increasing environmental regulation and rising fuel prices will affect fleet mix and encourage carriers to seek
Scope Clause Relaxation
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
aircraft with lower fuel consumption and emissions
• Contractual restrictions on airline operations based on aircraft size and engine type will ease over time
• Airline markets will continue to be opened to greater competition through liberalization of international
air transportation agreements
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
22
WORLDWIDE FORECAST
Fleet-Seat per Capita vs. GDP
per Capita, 1970-2033
10,000
Fleet-seat per capita
(1 million pop, log scale)
20- TO 219-SEAT
AIRCRAFT
FLEET-SEAT
PENETRATION
FORECAST
1,000
Demand for new
commercial aircraft
is directly related to
the strength of the
global economy
Typical
growth path
North
America
CIS
Middle
East
Europe
Latin America
Africa
100
Asia Pacific
China
10
1
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
1st driving
force: GDP
growth
2nd driving
force: removal
of barriers
India
100
E.g.:
• Evolving business models
• Infrastructure
1,000
10,000
GDP per capita (USD, log scale)
100,000
METHODOLOGY
The Bombardier Commercial Aircraft Market Forecast is a top-down forecast of aircraft deliveries expected
during the next 20 years. Econometric modelling of the historic relationship between GDP, population, and
fleet seat growth is used to forecast the demand for aircraft deliveries, driven by a predictor (changes in
GDP), which forecasts changes in fleet seats.
Key quantitative inputs include in-service fleet data and third-party forecasts for GDP, population and fuel
price. Qualitative inputs include labour contracts (e.g. scope clauses), market liberalization, infrastructure
development and environmental policies. The forecast is conducted at a regional level with the world forecast
a roll-up of the results of nine regions.
FORECAST SUMMARY
Forecasted demand for 20- to 149-seat commercial aircraft is expected to reach 13,100 deliveries in the 20-year period from 2014 to 2033. The forecasted delivery demand is valued at $658 billion. 2
Demand for new commercial aircraft is directly related to the strength of the global economy. In this 20-year
forecast, the GDP CAGR forecast has increased to 3.3% from 3.2% last year.
2
Based on estimated aircraft list prices in 2013 USD.
B O MB A RDIER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
23
WORLDWIDE FORECAST
20-YEAR
COMMERCIAL
AIRCRAFT FLEET
FORECAST
7,100
5,600
Deliveries
2033 Fleet
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
Turboprops are
now expected to
account for half of
the 5,600 deliveries
in the 60- to 99-seat
segment.
8,450
1,500
6,850
3,400
400
4,650
2,800
2,750
1,000
Units, 2013 - 2033
2013 Fleet
Retirements
3,300
20- to 59-seat
20- to 149-seat total
60- to 99-seat
100- to 149-seat
2013 FLEET
DELIVERIES
RETIREMENTS
2033 FLEET
10,800
13,100
7,600
16,300
This year’s forecast continues to reflect the shift in demand to larger-capacity commercial aircraft:
• In the 20- to 59-seat aircraft segment, Bombardier forecasts delivery demand of 400 new aircraft
• In the 60- to 99-seat aircraft segment, Bombardier forecasts delivery demand of 5,600 new aircraft
• In the 100- to 149-seat segment, Bombardier forecasts delivery demand of 7,100 new aircraft
Driving the 13,100 deliveries will be replacement of 7,600 aircraft to be retired in the 20- to 149-seat segment
augmented by growth in the overall fleet of 5,500 units from 10,800 aircraft in-service at the beginning of
2014 to 16,300 at the end of 2033. Overall fleet growth will be 51%, representing a CAGR of 2.1%. About 58%
of deliveries will replace retired aircraft and 42% of deliveries will accommodate fleet growth.
The 20- to 59-seat segment will generate $8 billion in new aircraft sales, the 60- to 99-seat segment $185
billion in sales ($85 billion for turboprops and $100 billion for regional jets), and the 100- to 149-seat segment
$465 billion in sales over the next 20 years.
High fuel prices will continue to favour the operating economics of turboprop aircraft over regional jets on short-haul routes. In fact, turboprops are now expected to account for half of the 5,600 deliveries in the
60- to 99-seat segment.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
24
WORLDWIDE FORECAST
$50
ANNUAL INDUSTRY
REVENUES
20-YEAR REVENUES
$31
Billions, USD; 2011-2013 average, 2023, 2033
$19
100- to 149-seat
60- to 99-seat jets
60- to 99-seat turboprops
20- to 59-seat
22
5
2
$465B
60- to 99-seat jets
$100B
$85B
20- to 59-seat
5
5
0.4
4
2004-2013
average
Bombardier forecasts
deliveries of 13,100
aircraft in the 20- to
149-seat segment over
the next 20 years.
100- to 149-seat jets
60- to 99-seat turboprops
11
1
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
39
0.5
$8B
Total
$658B
5
2033
2023
REGIONAL 20-YEAR 20- TO 149-SEAT DELIVERY FORECAST
Units, 2014-2033
CIS
Europe
830
North
America
3,650
1,840
540
700
1,100
Africa
Middle
East
2,280
Greater
China
760
India
Asia
Pacific
1,400
Latin
America
Total Deliveries
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
13,100 Units
B O MB A RDIER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
25
WORLDWIDE FORECAST
FLEET
EVOLUTION
16,300
5,500
Growth
(2014-2033)
13,100 Deliveries
7,600
Replacement
3,200
Retained Fleet
10,800
Source: Bombardier Commercial Aircraft
Market Forecast 2014-2033
2013 Fleet
2033 Fleet
20- TO 59-SEAT SEGMENT
The regional airline market continues to evolve and with it a preference for larger regional aircraft. The entryinto-service of the 50-seat Bombardier CRJ100 in 1992 shifted demand from smaller commuter aircraft. The
rapid growth of the regional jet fleet substantially increased the number of passengers connecting at hub
airports from secondary airports.
Today, there are 3,400 regional jets and turboprops with 20- to 59-seats operating commercial passenger
service. The 400 new deliveries in the 20- to 59-seat segment will be offset by 2,800 retirements as the fleet
declines to about 1,000 aircraft by 2033.
High fuel prices have sustained modest turboprop production and helped maintain a strong pre-owned
aircraft market. However, continuing relaxation of scope clause agreements has shifted regional jet demand
towards larger aircraft with similar trip costs, but lower seat-kilometre costs. The air freight market is expected
to absorb used 20- to 59-seat turboprops and regional jets, replacing older, less efficient freighters.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
26
WORLDWIDE FORECAST
In the Asia Pacific,
network carriers have
introduced large
regional jets to rightsize capacity across
their networks.
60- TO 99-SEAT SEGMENT
The 60- to 99-seat aircraft segment is one of the most dynamic in commercial aviation with growth being
driven by the evolving relationship between network carriers and regional airlines. Bombardier foresees the
fleet increasing 2.5 times over the forecast period, with new aircraft deliveries evenly split between large
turboprops and large regional jets.
Deliveries of 5,600 new aircraft and retirements of 1,500 aircraft will result in the fleet growing from 2,750 to
6,850 aircraft in 2033. Low-speed performance enables turboprops to serve airports with short runways, while
continued high oil prices will favour the use of large turboprops on short-haul routes. Recent trends include
expanding use of large high-speed turboprops to replace and supplement jets on short- and medium-haul
routes. This shift has allowed airlines to increase capacity and revenues with a high standard of passenger
comfort while reducing fuel burn with little or no change in block flight times.
Bombardier expects that scope clause provisions in network carriers’ pilot contracts in North America will
continue to evolve to allow the use of larger-capacity regional jets and turboprop aircraft.
In other regions, such as Asia Pacific, network carriers have introduced large regional jets to right-size
capacity across their networks, countering the expansion of LCCs, while hybrid LCCs around the world are
turning to large turboprops to continue their growth trajectories by penetrating new markets.
B O MB A RDIER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
27
PROFIT ZONE
– RIGHT-SIZING
AIRCRAFT FOR
TRAFFIC DEMAND
60- to 99-seat
100- to 149-seat
150- to 219-seat
Profit Contribution per Departure
WORLDWIDE FORECAST
High
New design 100- to 149-seat aircraft
Current 150- to 219-seat aircraft
Current 100 - to 149 -se
at aircraf t
Low
60
Source: Bombardier Commercial Aircraft
Market Forecast 2012-2031
Nearly half the
new 100- to 149-seat
aircraft deliveries will
be replacement
aircraft and half will be
for growth markets
Large RJ
or Turboprop
200
Passenger Demand per Departure
100- TO 149-SEAT SEGMENT
The 100- to 149-seat aircraft segment will witness a major fleet transformation with the entry-into-service
of new clean-sheet aircraft designs powered by new-technology engines that will provide a step-change in
efficiency.
These new-generation aircraft will have significantly lower trip and seat-kilometre costs than current aircraft
models. From a current base of 4,650 aircraft, the segment with see 7,100 new aircraft deliveries and 3,300
retirements as the fleet grows to 8,450 units in 2033.
The largest share of the world’s 100- to 149-seat aircraft fleet is found in North America (36%), Europe (21%),
Latin America (11%) and Greater China (9%). More than 1,400 aircraft in this segment are already more than 20 years of age and an additional 1,700 aircraft will reach that age within the next ten years.
Nearly half the new 100- to 149-seat aircraft deliveries will be replacement aircraft and half will be for growth
markets. The largest markets for new deliveries will be in North America (27%), Greater China (20%), Europe
(13%) and Asia Pacific (10%).
With IATA forecasting world airlines to earn an average net margin of just 2.4% in 2014, the airline industry
will increasingly look to new-technology aircraft to reduce fuel expenses and improve operating and financial
performance as well as meet ambitious environmental objectives regarding noise and greenhouse gas emissions.
Bombardier believes the 100- to 149-seat share of single-aisle deliveries will return to its historic norm as fuel economy and operating cost savings are validated for the new clean-sheet aircraft designs.
B O MB A RDIER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
28
Global demand for air
travel and new aircraft will
continue to shift towards
emerging markets
REGIONAL FORECAST
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
29
REGIONAL FORECAST
The commercial aviation market
is profitable and growing
North America and Europe have historically represented both the largest commercial aircraft fleets and the
largest markets for new aircraft. During the next 20 years, 58% of delivery demand will be from other regions
where traffic demand is growing faster.
Over the forecast period, North America is expected to account for 28% of new aircraft deliveries, Greater
China 17%, Europe 14%, Asia Pacific 11%, Latin America 8.4%, the CIS 6.3%, India 5.8%, Africa 5.3% and the
Middle East 4.1%.
Building from a small base, the growth of fleets in Greater China and India will be particularly strong as
a result of strong economic growth, an expanding middle class and large-scale investments in regional
infrastructure.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
30
REGIONAL FORECAST
|
NORTH AMERICA (EXCLUDING MEXICO AND THE CARIBBEAN)
North America is
forecasted to receive
28% of global deliveries
over the next 20 years
North America (excluding Mexico and the
Caribbean) will continue to be the world’s
largest commercial aircraft market during the
forecast period.
IATA forecasts that North American airlines
will have a net profit of $9.2 billion in 2014,
a significant increase over the $7.0 billion
profit recorded in 2013. This represents 4.3%
of revenues, the highest profit margin of any
geographic region and a catalyst for investment
in fleet renewal.
NORTH AMERICA DEMAND DISTRIBUTION
BY SEAT SEGMENT
2%
Total: 3,650 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
54%
44%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
North American GDP, while still the largest, will
decline from a 25% world share in 2013 to a 23%
share by 2033. Although economic growth rates
will be lower than in emerging markets, 3,650
20- to 149-seat aircraft will be delivered to North
America, representing 28% of all new deliveries.
North American airlines will require 1,670 aircraft
in the 20- to 99-seat segment and 1,980 aircraft
in the 100- to 149-seat segment.
The United States’ air transportation network
is the most developed in the world, but is
evolving as airlines battle rising costs. While
regional aircraft operate approximately 33%
of commercial flights worldwide, 50% of all
commercial flights in the United States are flown
by regional aircraft with less than 100 seats.
According to the Regional Airline Association
(RAA), average capacity of U.S. regional aircraft
has increased from 37 seats in 2000 to 50 seats
in 2005 and to 56 seats in 2013. Average trip
length increased from 476 kilometres in 2000
to 763 kilometres in 2013. These trends are
expected to continue as new large regional
aircraft replace 20- to 59-seat aircraft.
While airline consolidation in the U.S. has
resulted in the rationalization of network
carriers’ hubs, the RAA reports that the industry
continues to play a vital role flying 157 million
passengers in 2013. A total of 614 U.S. airports
are served by regional airlines, with 70% (431
airports) relying exclusively on regional airlines
for their scheduled service.
Deliveries of new 100- to 149-seat aircraft to
North American airlines will replace less efficient
older and present-generation aircraft, including
more than 500 aircraft in this segment that
are more than 20 years old and 750 additional
aircraft that will be more than 20 years old in the
next 10 years.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
31
REGIONAL FORECAST
|
LATIN AMERICA (INCLUDING MEXICO AND THE CARIBBEAN)
Over the next 20 years,
Latin American economic
growth is expected to
average 3.7% per year
The Latin American airline industry continues to
evolve as a result of economic growth, market
liberalization, new investments in airlines and
infrastructure, fierce competition and crossborder airline consolidation.
Latin American economic growth is expected
to be above world average with a 3.7% CAGR
for the forecast period, which creates an
environment for growth in air travel and new
aircraft deliveries. Latin America’s share of world
GDP is forecasted to remain steady at 8% from
2013 to 2033.
LATIN AMERICA DEMAND DISTRIBUTION
BY SEAT SEGMENT
5%
Total: 1,100 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
54%
41%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
IATA estimates that passenger traffic in Latin
America will increase by 6.0% in 2014, following
a 6.5% increase in 2013. Latin American airlines
were once constrained to the secondary aircraft
market due to weak balance sheets, but many
now have the financial strength to seek out
deliveries of new-technology aircraft.
Bombardier forecasts delivery demand for 1,100
new 20- to 149-seat aircraft in Latin America
over the forecast period. This region (which
includes Mexico and the Caribbean) will account
for 8.4% of global delivery demand over the
next 20 years, of which 46% (or 510 aircraft) are
expected in the 20- to 99-seat segment and 54%
(or 590 aircraft) are expected in the 100- to 149seat segment.
Olympic Games in Brazil, will help to stimulate
new investments in aviation infrastructure.
Moreover, several governments in Latin America
have indicated their intention to invest in
regional aviation infrastructure, such as Brazil’s
plan to build and improve 270 regional airports.
The recent growth of LCCs in countries throughout
Latin America will make air travel accessible
to a larger share of the population. Improving
aviation infrastructure, growing airline networks,
and an increasing middle class that can afford to
travel by air will require additional 20- to 149-seat
aircraft to serve new regional markets.
Strong, growth-oriented policies in many Latin
American countries will drive economic growth
and passenger demand for air travel. Largescale world events, such as the recent 2014 FIFA
World Cup and the upcoming 2016 Summer
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
32
REGIONAL FORECAST
|
EUROPE
Europe will take
delivery of 14% of
20- to 149-seat aircraft
over the next 20 years
European airlines will continue to evolve as
competition from LCCs drive efficiencies across
the entire industry.
The European economy is expected to expand
at a rate of 1.8%, which is the lowest CAGR of
any region in the forecast. As growth shifts to
emerging markets, Europe will decline from 25%
of the world’s GDP to 21% over the next 20 years.
Modest growth and the requirement to replace
aging fleets will drive deliveries of 1,840
new aircraft, representing 14% of worldwide
deliveries, with demand evenly split between the
20- to 99-seat and 100- to 149-seat segments.
EUROPE DEMAND DISTRIBUTION
BY SEAT SEGMENT
2%
Total: 1,840 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
50%
48%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
The introduction of more efficient newgeneration aircraft into European airline fleets
will provide significant fuel and operating costs
savings, with turboprops favoured in the 20- to
99-seat segment.
of distinction between LCC and network carriers
are also blurring as each takes new initiatives to
lower their cost base while adding new services
designed to capture greater market share and
high-yield business travelers.
The European Regional Airlines Association
(ERA) reports the average regional aircraft size
increased from 63 seats in 2001 to 67 seats by
2013. European regional airline stage lengths are
on average 483 km, which is shorter than in the
US where the average is 763 km.
European operating costs are high as a result
of regulation, congestion, fees and taxes. New
investments in infrastructure are required at
airports and in the air navigation system to
ease congestion and improve connectivity. Left unresolved, passengers accustomed to low
airline fares will spill to surface transportation
modes.
Carriers caught in the middle of the competition
between LCC and network carriers have been
fighting for survival by restructuring and
searching for new sources of capital. Regional
services operated on behalf of network carriers
are transitioning to larger aircraft to drive
down seat-kilometre costs while offering fewer
frequencies.
Environmental sustainability is a high priority in
Europe and is reflected in a committed push to
include aviation in the E.U. Emissions Trading
Scheme (ETS), even though the final form of this
scheme is still being debated.
Further consolidation is underway with several
European carriers receiving new investments
from Middle Eastern carriers. The previous lines
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
33
REGIONAL FORECAST
|
CIS
The CIS will account for
6.3% of global deliveries
of 20- to 149-seat
aircraft by 2033
The CIS airline industry has been consolidating
and modernizing. New fleet additions will
accommodate growth and replace aging
domestic-built passenger aircraft.
The Russian commercial aviation industry is
growing with almost 85 million passengers
carried by domestic carriers in 2013, a 14.2%
increase over the previous year.
The CIS is forecasted to see a GDP growth rate
of 3.1% over the next 20 years, slightly below the
world average of 3.3%, but allowing the region
to maintain a 3% share of world GDP over the
forecast period.
From a base of 710 aircraft in the 20- to 149seat segment, the CIS will account for 6.3%
of worldwide demand with deliveries for 830
new aircraft. Demand will be heaviest in the
20- to 99-seat segment, accounting for 55% of
deliveries (or 460 aircraft), with the balance of
370 deliveries in the 100- to 149-seat segment.
CIS DEMAND DISTRIBUTION
BY SEAT SEGMENT
3%
Total: 830 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
44%
53%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
Consolidation of the industry continues with
the five largest Russian carriers carrying 63% of
passengers in 2013. Although barriers to entry
have been increasing with current legislation
deterring the start-up of new carriers, the CIS is
still expected to be a growth market.
Bombardier’s forecast was revised upwards in
2012 when the Moscow-based Interstate Aviation
Committee announced the grounding of a
number of domestically-built aircraft fleets. This
grounding created an immediate opportunity
for new and used aircraft. Demand in the 2014
forecast has again been revised upward by 90
units compared to the 2013 forecast.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
34
REGIONAL FORECAST
|
MIDDLE EAST
The Middle East is playing a
transformational role in the
global aviation network
The Middle East has seen strong GDP growth
for two decades with Gulf governments leading
commercial aviation developments by investing
in airline and airport infrastructure.
Economic growth in the Middle East is
forecasted to be above the world average, at
3.8% CAGR. IATA forecasts that Middle Eastern
airlines will record a $1.6 billion net profit in 2014,
up from $1.0 billion in 2013, with passenger traffic
demand expected to grow by 13%, the highest of
any region.
MIDDLE EAST DEMAND DISTRIBUTION
BY SEAT SEGMENT
2%
Total: 540 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
28%
70%
From a base of 280 20- to 149-seat aircraft, the
Middle Eastern fleet will have delivery demand
for 4% of world demand, or 540 new aircraft.
Deliveries will include 160 20- to 99-seat seat
regional aircraft and 380 100- to 149-seat
aircraft.
The Middle East is playing a transformational
role in the global aviation network as a result
of its favourable geographic position as a hub
adjacent to key emerging economic markets like
India, China and Africa. The Arab Air Carriers
Organization (AACO) reports that Middle
Eastern airlines have experienced a 14.2% year-over-year increase in international
passenger travel as of March 2014 with mega-hub airport development most
pronounced in Dubai, Qatar and Abu Dhabi.
Large carriers are making substantial
investments in additional capacity, and in some
instances, airlines located outside the region.
The addition of 20- to 149-seat aircraft to
Middle Eastern airline fleets will support the
development of hub-and-spoke networks
and point-to-point services linking secondary
airports.
Regional political instability has impacted
intra-Middle Eastern traffic and airline financial
performance, resulting in several airline failures.
Local deregulation and liberalization is moving
forward but there are challenges to overcome,
including tight government controls used to
protect national carriers.
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
35
REGIONAL FORECAST
|
AFRICA
Africa will take
delivery of 700
new 20- to 149-seat
aircraft by 2033
While home to 1.04 billion people distributed
across 54 countries, Africa is the smallest region
by air traffic, accounting for just 2.8% of global
revenue passenger kilometres (RPK). Africa’s
GDP growth rate is forecasted to be the third
highest of the regions at 4.6% CAGR for the next
20 years.
IATA forecasts that African airlines will record
a $100 million net profit in 2014, reversing a
$100 million loss in 2013, with passenger traffic
expected to grow 5.8% in 2014.
From a base of 640 aircraft, the African 20- to
149-seat fleet will increase with 700 deliveries.
The continent will see delivery demand for 440
AFRICA DEMAND DISTRIBUTION
BY SEAT SEGMENT
10%
Total: 700 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
37%
53%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
20- to 99-seat regional and 260 100- to 149 seat
single-aisle aircraft. Africa will receive 5.3% of
forecasted world demand in these segments.
Economic growth, a demographic boom,
increasing urbanization and the emergence
of a middle class all contribute to Africa’s
extraordinary potential. However, the continent
is a high operating cost environment with
cost containment particularly difficult in many
African countries, according to IATA. This is the
result of weak local currencies, high fuel prices
that average 21% more than the world average
price, and local infrastructure that is below
international standards.
Many African nations have benefitted from
Indian and Chinese investment and a few from
oil exports, but political upheavals in North
Africa, Egypt and elsewhere on the continent
have reduced valuable tourist revenues.
Airline profitability is not spread evenly across
the continent and a number of issues - from
poor connectivity to high airport costs - hinder
development. Air traffic is growing around hubs
in Southern and Eastern Africa in Johannesburg,
Addis Adaba and Nairobi, but no major hubs
have yet emerged in West and Central Africa.
The growing penetration of Middle Eastern
carriers has challenged the connectivity
advantage of East African hubs while European
hubs have a long history of connecting points
in Africa. Competition from offshore hubs
constrains the growth and profitability of African
carriers and the expansion of regional services
to secondary and tertiary markets.
Other market imbalances exist between
government-subsidized flag carriers and
private carrier development. The slow pace of
liberalization and over-dependence on bilateral
agreements have stalled the international
development of LCCs and regional carriers.
African airlines have historically experienced
low load factors, in the 70% range, indicating a
mismatch between seat capacity and passenger
demand. Aircraft in the 20- to 149-seat segment
are appropriately sized to support profitable
route development.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
36
REGIONAL FORECAST
|
ASIA PACIFIC (EXCLUDING GREATER CHINA AND INDIA)
New-technology aircraft
will drive the next phase of
LCC growth in the
Asia Pacific
A vast area, with many countries often separated
by great distances, the Asia Pacific region can
be subdivided into mature markets, such as
Oceania and Northeast Asia (Japan and South
Korea), and emerging markets that are currently
seeing robust passenger growth, such as
Southeast Asia.
The forecasted average GDP growth rate is 2.5%,
below the 3.3% world average for the forecast
period. The regional share of world GDP will
decline from 16% in 2013 to 14% in 2033.
Averaging the GDP growth rates of countries
within Asia Pacific does not tell the full story.
ASIA PACIFIC DEMAND DISTRIBUTION
BY SEAT SEGMENT
6%
Total: 1,400 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
48%
46%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
Australia and New Zealand have a combined
population of approximately 28 million and
modest economic growth. Emerging countries,
such as Indonesia, the Philippines, Vietnam,
Thailand, Myanmar and Malaysia, have a
combined population of more than 500 million
people and much faster growth rates. The
growth of air traffic in Association of Southest
Asian Nations (ASEAN) countries is averaging
13% per annum.
Asia Pacific (excluding Greater China and India)
will see delivery demand for 1,400 aircraft over
the next 20 years in the 20-to 149-seat segment.
In total, 52% of deliveries (or 730 units) will be
20- to 99-seat aircraft and 48% (or 670 units)
will be 100- to 149-seat aircraft.
The loosening of intra-region aviation
regulations has resulted in a rapid increase in
international air connections, with a growing
middle class and the development of LCCs
helping to create positive long-term growth. In fact, LCCs now account for approximately
60% of traffic in Southeast Asia. Competition has
created a vibrant and intensely price sensitive
market. However, competition for passengers
has put downward pressure on yields, load
factors and airline profitability, most notably in
Thailand, Indonesia, Singapore and Malaysia.
The next step in LCC growth is uncertain, but the
introduction of modern regional jets, turboprops
and new-generation single-aisle aircraft with
low seat-kilometre costs will provide the
opportunity to extend service to the region’s
numerous secondary and tertiary communities.
Turboprops’ ability to serve short runways will
enable the connection of even the most remote
communities to the air transport system.
The mature Oceania and Northeast Asia aviation
markets are seeing modest growth and new
aircraft demand will primarily replace retiring
aircraft.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
37
REGIONAL FORECAST
|
GREATER CHINA
Greater China’s demand for
new aircraft is forecasted
to be second only to
North America
Greater China’s forecasted GDP growth of 6.1%
CAGR will be well above the world’s 3.3% rate,
second only to India during the forecast period.
China will rapidly grow from a 12% share of world
GDP to a 17% share over the next 20 years.
Greater China’s demand for new aircraft is
forecasted to be second only to North America,
with 17% of world deliveries. Bombardier
forecasts delivery demand for 2,280 aircraft over
the forecast period, including 1,440 aircraft in
the 100- to 149-seat segment and 840 in the
20- to 99-seat aircraft segments.
GREATER CHINA DEMAND DISTRIBUTION
BY SEAT SEGMENT
1%
Total: 2,280 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
36%
63%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
Multilateral agreements with countries in the
ASEAN and bilateral agreements with other
nations will expand China’s international
connectivity. China’s need for domestic
transportation is central to its economic growth
plans and supported by government-led
reforms.
At least fifteen new airlines backed by local
governments have been launched in recent
years, or are preparing to launch now. The
eastern coastal part of China has historically
accounted for about 70% of air travel. New
investments in modern airports and air traffic
management systems are connecting more
communities to the air transport system, with a noticeable westward expansion of services in the country.
China seeks to grow its number of airports
from 175 in 2010 to 230 by 2015. A total of 101
new airport projects will be initiated between
2011 and 2015, mostly located in Central and
Western regions.
As new airports are established, China is
expected to require a significant number of
60- to 99-seat regional aircraft and 100- to
149-seat, single-aisle aircraft to serve remote
communities.
Government guidance has provided official
encouragement for airlines to adopt an LCC
business model but further market liberalization
is required.
Rapid growth of air services has resulted in
congestion at Tier 1 airports, forcing carriers to
expand their presence at secondary airports
to sustain growth. In the 12th five-year plan,
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
38
REGIONAL FORECAST
|
INDIA
India’s large population,
robust growth and expanding
middle class have increased
air travel demand
The recent election of a majority government
in India has created high expectations for
pro-business initiatives. Economic forecasts
predict annual GDP growth of 6.5%, which is
nearly twice the world average of 3.3% over the
forecast period, and the fastest of any region.
India will grow from a 3% share of world GDP to a 4% share by 2033.
INDIA DEMAND DISTRIBUTION
BY SEAT SEGMENT
1%
Total: 760 units
20- to 59-seat
60- to 99-seat
100- to 149-seat
35%
64%
Source: Bombardier Commercial Aircraft Market Forecast 2014-2033
India is expected to require 5.8% of worldwide
aircraft deliveries in the 20- to 149-seat segment,
including 270 20- to 99-seat aircraft and 490
100- to 149-seat aircraft.
India’s large population, robust growth and
expanding middle class have increased air travel
demand. Expansion of existing airports and
construction of new airports has been identified
as a priority, but investment has lagged
requirements, creating barriers to growth.
India presents many opportunities for the
development of new air services to second- and
third-tier airports that would be best served
by modern regional jets, turboprops and newgeneration single-aisle aircraft. In some regions,
financial incentives are available for operators
of aircraft with less than 80 seats, such as
waived landing fees and lower jet fuel taxes to
encourage regional airline services.
The Indian airline industry requires billions of
dollars in new investment over the next decade
to match demand. The expensive operating
environment and low fares have consistently
challenged profitability across the airline
industry, resulting in near-term requirements for major cash infusions.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
39
By the time he is 25,
more than 13,100 new
20– to 149-seat aircraft
will have been delivered
around the globe
CONCLUSION
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
40
CONCLUSION
The 100- to 149-seat
aircraft segment
will witness a major
fleet transformation
with the entryinto-service of new
clean-sheet aircraft
designs.
The commercial aviation market is profitable and growing. The industry continues to evolve to manage
growth, high fuel prices and increased competition. New business models are capturing an increasing share of
passenger demand. As the airline industry evolves, there is a continuing need for each airline business model
to right-size aircraft capacity so that unit costs and trip costs match market demand.
Over the next 20 years, the 20- to 149-seat segment will see continuous improvement of existing aircraft and
the development of new clean-sheet commercial aircraft designs. This market will see delivery demand for
13,100 aircraft valued at $658 billion.
Aircraft in the 20- to 149-seat segment have a vital role to play in the development of new markets,
non-stop connections and increased frequencies. About 70% of the world’s short- to medium-haul markets
serve between 50 and 250 passengers per day each way (PDEW), and are best served by
20- to 149-seat aircraft.
The 60- to 99-seat aircraft segment will remain one of the most dynamic in commercial aviation. The fleet will
more than double with new aircraft deliveries evenly split between large turboprops and large regional jets.
The 100- to 149-seat aircraft segment will witness a major fleet transformation with the entry-into-service of
new clean-sheet aircraft designs which will significantly lower trip costs and seat-kilometre costs. More than
1,400 in-service aircraft are already more than 20 years of age and an additional 1,700 aircraft in this segment
will reach that age within the next ten years.
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
41
FORWARD LOOKING STATEMENTS
This presentation includes forward-looking
Certain factors that could cause actual results
Uncertainties” in the Management’s Discussion and
statements. Forward-looking statements generally
to differ materially from those anticipated in the
Analysis of BOMBARDIER’s Annual Report. Readers
can be identified by the use of forward-looking
forward-looking statements include risks associated
are cautioned that the foregoing list of factors that
terminology such as “may”, “will”, “expect”, “intend”,
with general economic conditions, risks associated
may affect future growth, results and performance
“anticipate”, “plan”, “foresee”, “believe” or “continue”
with BOMBARDIER’s business environment (such
is not exhaustive and undue reliance should not be
or the negatives of these terms or variations thereon
as the financial condition of the airline industry,
placed thereon. The forward-looking statements set
or similar terminology. By their nature, forward-
government policies and priorities and competition
forth herein reflect BOMBARDIER’s expectations as
looking statements require BOMBARDIER to make
from other businesses), operational risks (such as
at the date hereof and are subject to change after
assumptions and are subject to important known
regulatory risks and dependence on key personnel,
such date. Unless otherwise required by applicable
and unknown risks and uncertainties, which may
risks associated with doing business with partners,
securities laws, BOMBARDIER expressly disclaims any
cause BOMBARDIER’s actual results in future
risks involved with developing new products and
intention, and assumes no obligation to update or
periods to differ materially from forecasted results.
services, warranty and casualty claim losses, legal
revise any forward-looking statements, whether as a
While BOMBARDIER considers its assumptions to
risks from legal proceedings, risks relating to the
result of new information, future events or otherwise.
be reasonable and appropriate based on current
Corporation’s dependence on certain key customers
information available, there is a risk that they may
and key suppliers, risks resulting from fixed term
not be accurate. For additional information with
commitments, human resource risk and environmental
respect to the assumptions underlying the forward-
risk), financing risks (such as risks resulting from
looking statements herein, please refer to the
reliance on government support, risks relating to
sections on BOMBARDIER’s aerospace segment
financing support provided on behalf of certain
and BOMBARDIER’s transportation segment in
customers, risks relating to liquidity and access to
the Management’s Discussion and Analysis of
capital markets, risks relating to the terms of certain
BOMBARDIER’s Annual Report.
restrictive debt covenants and market risks, including
Bombardier, CRJ700, CRJ900, CRJ1000, CS100,
CS300, CSeries, NextGen, Q400 and The Evolution
of Mobilty are trademarks of Bombardier Inc. or its
subsidiaries.
All monetary amounts are expressed in 2013 U.S.
dollars (USD), unless otherwise stated.
currency, interest rate and commodity pricing risk).
For more details see the heading entitled “Risks and
B O MB A RDI ER COMMER CI AL AI R CR AFT | MARKET FORECAST 2014-2033
42
RESOURCES
Resources used in the Bombardier Commercial Aircraft Market Forecast:
AACO – Arab Air Carriers Organization
ASEAN – Association of Southeast Asian Nations
ATAG – Air Transport Action Group
CAAC – Civil Aviation Administration of China
CAPA Centre for Aviation
DOT – U.S. Department of Transportation
EIA – U.S. Energy Information Administration
ERA – European Regional Airline Association
Eurocontrol
IATA – International Air Transport Association
IATA Passenger Intelligence Services (PaxIS)
ICAO – International Civil Aviation Organization
IHS Global Insight
MAK – CIS Interstate Aviation Committee
OAG Aviation Solutions
OECD – Organization for Economic Co-operation and Development
RAA – Regional Airline Association
Rosaviatsiya - Russian Federal Agency for Air Transport