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Global Market Forecast

GL

Future
Journeys

AL
OB
R
MA
KE
T

2013 2032

IN

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GD

UE

NC

SH

AR

OF

GI

TR

NG

RE

IGH

TER

P
ASS

ENG

ER

ET

ET

IN

EC

IN

CO

DL

CL

AS

OM

IE

EV

OL

SE

UT

IO

RV

IN S

ICE

ERV

FU

ID

ON

FIC

FLE

FLE

SA

AF

BL

TH

EM

ER

DI

SP

OF

ICE

EL P

INTE

RNATIO

RICE

NAL T

INTERN

ATIONAL

RIPS

STUDEN

TS

TICKET PR

ICE

URBAN POPULATION

KETS

ING MAR

EMERG

ON

I
AT

IS

RA

FA
C

AD

PE

LO

PT
IO
N

ICE

SU

ERV

MID
D
LAT LE EA
S
IN
EUR AMER T
OPE
ICA
CIS
ASIA
AFR -PACIF
IC
IC
NOR A
TH A
MER
ICA

IN S
LEE
T
F

TO

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IR

SE
AT

FT

L
TI

CO
N

VIAT
A

IES

-CIT

EGA

M
ION

EL

RAFT

AIRC

FU

TION
NERA

GE
NEW

NCE OF

INFLUE

Global Market Forecast

GL

Future
Journeys

AL
OB
R
MA
KE
T

2013 2032

IN

FL

GD

UE

NC

SH

AR

OF

EM

GI

TR

NG

RE

IGH

TER

P
ASS

ENG

ER

ET

FLE

ET

IN

EC

IN

CO

DL

CL

AS

OM

IE

EV

OL

SE

UT

IO

RV

IN S

ICE

ERV

FU

ID

ON

FIC

FLE

SA

AF

BL

TH

ER

DI

SP

OF

ICE

EL P

INTE

RICE

RNATIO

NAL T

INTERN

ATIONAL

RIPS

STUDEN

TS

TICKET PR

ICE

URBAN POPULATION

NCE OF

INFLUE

W
NE

KETS

ING MAR

EMERG

CRAF

N AIR

RATIO

GENE

IES

-CIT

EGA

NM

IO
VIAT
A

Traffic
Economy
Ecology environement
Fleet in service
Global markets

ON

TI
SA

LI

Fuel consumption per seat


New generation aircraft
Aviation mega-cities

S
TO

AT

FA
C

PE
R

Eco-efficiency

Fleet-in-service

VIC

UM

PT

IO

SER

MID
D
LAT LE EA
S
IN
EUR AMER T
OPE
ICA
CIS
ASIA
AFR -PACIF
IC
IC
NOR A
TH A
MER
ICA

F
LEE
T IN

NS
FU
EL

CO

Economy &c Demographics

Aircraft utilisation
Load Factors
Middle East
Latin America
Europe
CIS
Asia Pacific
Africa
North America

LO

Traffic & Fleets

Urban population
Disposable incomes
Influence of the middle class
Influence of emerging markets
Ticket price
Fuel price

AD

Traffic evolution
Passenger fleet in service
Freighter fleet in service
International trips
Internation students

CR

R
AI

SE

AF

I
UT

Contents
Introduction 07
01. Executive summary

10

02. Demand for air travel

14

Economy 16
Market drivers
24
Network development
33

03. Traffic forecast

40

04. Demand for passenger aircraft

48

Single-aisle 50
Twin-aisle 52
Very Large Aircraft
54

05. Demand by region

58

Asia-Pacific 60
Europe
64
North America
68
Middle East
72
Latin America
76
CIS
80
Africa
84

06. Demand for freighters


07. Summary & methodology
Summary of results
Passenger methodology
Freight methodology

88
100
102
108
112

Introduction
Aviation at the centre of Future Journeys
With each successive Airbus Global Market Forecast
(GMF) we seek to deliver a 20-year view of the demand
for civil passenger and freighter aircraft that will serve as
a reference for airlines, airports, investors, government
and non-government agencies, air transport and
economic planners world-wide.
We chose the title for this years GMF Future Journeys
to remind us that, behind the data, the analysis and the
predictions contained in our forecast, the community
that constitutes the air transport industry essentially
provides journeys. These journeys involve real people,
each with their own particular reason to embark upon
each journey.
Very soon after the first flights of the early 1900s, flying
became less about the challenge of flight itself and more
about peoples journeys. As early as 1914 passenger
flights were a regular occurrence and 1919 saw the
creation of the first airline that is still operating today.
People were quick to grasp the benefits aviation could
bring to their journeys, beginning with the transport of
high-value freight in the form of air mail.

In this forecast we set out our view of the key economic


and operational drivers of air transport markets in the
next 20 years and their implications on the demand for
passenger and freighter aircraft. But as in the past it
is journeys, how they are performed, where they start
and finish, when they happen and who will take them
that will define the future. This future will steer us all
towards the areas of innovation that will define the
shape and structure of our industry at the end of this
forecasts coverage in 2032 and beyond.
Our regular readers will notice some areas of greater
focus in the 2013 GMF. It is our intent to provide
you with analysis based on the most comprehensive
sets of data and calling on the very best forecasting
techniques to provide a useful source material for your
own analyses. We realise, however, that there is always
room for further improvement and we look forward to
your feedback and your questions in order to make our
future forecasts even more robust.

Aviation continued to innovate to facilitate this need


with a succession of significant airline firsts: across
the Atlantic and Pacific in the nineteen thirties and the
introduction of jet airliners in the fifties. Technological
and operational firsts have continued to this day and
behind each of them are the demand of peoples lives
and their journeys.

E-mail:
market.forecast@airbus.com

Global Market Forecast

www.airbus.com/
company/market/gmf2013

Global Market Forecast

The demand for air transport will grow


Air traffic has doubled every 15 years in the past, and is
expected to double again in the next 15. It rebounded
each time demand was slowed by shocks, such as
the 2008 global financial crisis. This is evidence of the
value people place on the ability to fly to do business,
visit friends and family or simply to relax on holiday. How
much, how quickly and where air transportation will grow
is driven by a number of factors. Some are economic
and others linked to demographics and socio-economic
development. It is the job of the forecaster to determine
which of these will help explain air transportations future
and which will shape its direction. People, where they
choose to live, the work they do and their aspirations are

all a big part of the story, and will drive factors such as
urbanisation, wealth, disposable income and consumer
spending, key factors in the growth of air transportation.
In this years GMF, we will delve a little more deeply into
these factors to show how they in turn drive our forecast
and results. However, its not just about the benefits
aviation can bring to people, but the benefits aviation
can bring to countries for example look at contribution
to GDP. Report after report has shown the scale of
benefits aviation brings in terms of jobs and economic
development. Good reasons to ensure that aviation is
able to reach its potential in the future.

70 %

Aircraft size is growing


This growth has not been without a focus on the
environment; new technologies have constantly driven
down aircraft noise and emissions levels. In the last 40
years, noise has been reduced by 75% and CO2 by
70%. This focus will continue into the future, with the
latest new products and derivatives either just coming
onto the market or arriving in the next year or two like
the A350XWB and A320neo delivering between 15-25%
lower fuel burn and associated CO2 than the aircraft they
are replacing. It is not just new technologies; over recent
years a trend has developed to select larger aircraft. This
is a simple way to reduce the fuel burn and cost per seat

Ticket price has not grown


doubt that it is possible for travellers from all corners of
the world to identify flights they have made in the past
that are now less expensive. Importantly, with cheaper
flights has come a greater ability for people to fly, aiding a
very real democratisation of flight world-wide.

It is possible to believe that the ability to transport a


person to anywhere in the world, with less than a days
travel time would come at a very significant cost to the
traveller. In fact, this was the case. In 1941, it could have
cost the average American more than a years salary to fly
from Los Angeles to Hong Kong. Today, they would have
to work less than a week to do the same trip. According
to data from Airlines for America, domestic US airfares
(including fees) have reduced by 40% since the 1980s.
This decline has not just been in the US, there is little

There are few products in the world that have become


cheaper in this way, in fact it is a struggle to think of more
than a handful.

Reducing air fares helping to democratise air travel - the us example


Source: Airlines for America, Airbus

Average fare (Real US$) paid per domestic round-trip journey


CO2 reduction
in the last 40 years

for the airline and also to meet the growing demand on


the routes that they serve. If the number of seats offered
by the worlds airlines are divided by frequency, it can be
clearly seen that average aircraft seating is increasing. So
it is no surprise that when it is possible, airlines choose
larger aircraft within each market segment to meet
their needs. Airlines are also up-gauging aircraft in their
existing backlogs and densifying, (adding more seats)
existing cabin configurations. Manufacturers in turn are
looking at ways to add seats to existing products and
some considering or launching larger variants of existing
aircraft families in order to meet demand.

500

450

400

-43%

350

300

250

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

200

Average aircraft capacity has grown by more than 25% over the last 20 years
Source: OAG, Airbus

Evolution of the aviation industry over the last 20 years


Base year 1992=1

2.4
2.2
2.0

Traffic in ASKs

1.8

Growth in number of routes

1.6

Growth in frequencies
Growth in per flight capacity

1.4

Growth in average distance

1.2
1
1992

1994

Global Market Forecast

1996

1998

2000

2002

2004

2006

2008

2010

2012

Global Market Forecast

01

Executive
summary

executive summary

Background

36%

Traffic

In the last year, despite continuing social problems


and sluggish economic growth in parts of the world,
aviation has continued to grow through developments in
world economic activity, demographics, positive socioeconomic progress and simply the abilty of aviation to
deliver real benefits to real people. This is something we
are reminded of every year when putting together the
Airbus GMF as the data shows the further evolution of
air transport. Positively the trends driving aviation are not
short term in nature, propelling aviation through the last 30
years to a point where air traffic has doubled, twice, over

that time. These trends will also form the basis on which
aviation will continue to grow in the coming 20 years, with
aviation becoming increasingly accessible to people in all
parts of the world. Each year, Airbus forecasters take the
best macro-economic and operational data and combine
it with a forecasting methodology developed over 20
years, performing more than 208 traffic flow forecasts,
over 100,000 Origin and Destination (O&D) city-pairs and
modelling demand for nearly 750 individual airlines in
order to deliver the forecast.

Airbus analysis shows that traffic growth between


advanced and emerging air transport markets will grow
at an average annual rate of 4.9%, and will represent
30% of global traffic (RPKs) by 2032. Traffic between
emerging markets will grow at an impressive 6.8% and
will represent just over 40% of passenger traffic. On a
world-wide basis, traffic growth is expected to average
4.7% per year. Even though emerging markets are the
key and leading driver of future air transportation, the
importance of advanced aviation markets cannot be
under-estimated.

Share of passenger
and freighter aircraft
delivered to Asia

In fact by 2032, about 60% of all traffic will still involve the
advanced aviation markets, primarily North America and
Europe. As in GMF 2012, traffic carried by airlines from
the Middle East airlines is expected to grow at the highest
rate of 7.1% per annum, accounting for 12% of all traffic
carried in 2032. But the three largest regions in terms of
airline domicile will continue to be Asia-Pacific, Europe
and North America, accounting for 34%, 22% and 18%
of global traffic respectively in 2032. World-wide freight
traffic is expected to grow slightly higher than passenger
traffic at 4.8% per year.

Fleet and Deliveries

Highlights
While GDP continues to be a strong explanitory variable
for aviation growth, Airbus traffic forecasts also test
and use other variables. For example, the Chinese
market is also driven by real consumption and trade,
which are used to forecast future demand. Last year,
Chinese domestic traffic was identified as the largest
flow by the end of the forecast period, a view that
is re-asserted in this years forecast. The emerging
markets as a whole, with their economic growth, large
populations and growing middle-classes continue to
be strong drivers on the forecast, with Asia-Pacific
becoming more significant over time in terms of new

aircraft deliveries, for both passenger and freighter types.


The Single-Aisle market continues to be the most
significant in terms of volumes. However, within this
segment the evolution in terms of aircraft size continues.
The largest segments, the 175 and 210 seat categories,
with demand met by aircraft such as the A321 today,
are forecast to take 44% of all Single-Aisle demand, with
the largest demand expected to remain in the 150 seat
segment. The forecast for larger Twin-Aisle categories,
including the Very Large Aircraft, remain robust, driven
by growth of significant existing city pairs, hubs and
development across all regions, but in particular Asia.

Single-Aisle: 69% of units; wide-bodies: 59% of value


Passenger aircraft ( 100 seats) and jet freight aircraft (>10 tonnes)

20-year deliveries of new passenger and freighter aircraft

2013-2032

29,226
New
deliveries

20,000
18,000
12,000

By 2032, the fleet of passenger aircraft (with 100 seats


or more) and freighter aircraft (10 tonnes or greater), will
be 36,556 aircraft more than doubling the 17,739 aircraft
fleet in service today. Single-Aisle passenger aircraft
represent the largest segment of the new deliveries with
20,242 over the next 20 years. The demand for TwinAisle aircraft will require 6,779 new passenger aircraft and
494 freight aircraft. Due to the growth in traffic demand
in Asia-Pacific, it is no surprise that 47% of the demand

for very large passenger aircraft (VLA) will be within this


region. It is equally important to note that over 40% of all
new aircraft deliveries over 100 seats will be within North
America and Europe. Much of this demand, especially
in North America, is for new, more fuel efficient aircraft
to replace older less eco-efficient types. By 2032, the
worlds airlines will take delivery of more than 29,220 new
passenger and freighter aircraft worth US$ 4.4 trillion at
current list prices.

new Passenger aircraft delivered by region


Passenger aircraft 100 seats

2013-2022

2023-2032

2013-2032

Africa

443

527

970

% of 20 years total new deliveries


3%

Asia-Pacific

4,894

5,770

10,664

36%

CIS

587

508

1,095

4%

Europe

3,035

2,792

5,827

20%

Latin America

1,040

1,239

2,279

8%

Middle East

1,010

989

1,999

7%

North America

2,968

2,553

5,521

19%

Freighters

416

455

871

3%

World

14,393

14,833

29,226

100%

More than 29,200 new aircraft deliveries

8,000

Passenger aircraft 100 seats

28,355

4,000

29,226
New
deliveries

871

0
Single-Aisle
& Small jet freighters
% units
% value

69%
41%

Small Twin-Aisle
& Regional freighters

17%
26%

Intermediate Twin-Aisle
& Long range freighters

8%
17%

Large aircraft
& Large freighters

6%
16%

Passenger
Fleet

5,296

10,798

Global Market Forecast

Freighter
Fleet

12,193

Remarketed
& stay in service

12

1,859 Converted

Retired

1,395

Global Market Forecast

13

02

Demand
for air
travel

Economy

Finally, the on-going geopolitical tensions in the Persian


Gulf and the rest of the MENA (Middle East and North
Africa) region have helped to keep oil prices at elevated
levels. Any adverse effects are however not expected to
derail world economic growth.
All in all, previously identified risks are expected to translate
into loosening tensions, suggesting the idea that a more
negative scenario will be avoided for now and that the
global economies on-going expansion has staying power.
This is illustrated by the fact that downward revisions of
short term economic growth outlooks have stopped. This
is the case for 2013 (expected world economic growth
of 2.3% at the time of writing) and even more true for
2014 economic growth which has been slightly revised
upwards recently (from 3.2% up to 3.3%).

demand for air travel

Over the first half of 2013, negative news concerning the


global economy has gradually slowed, with previously
identified threats beginning to look less likely to materialize.
Although Europes recent performance has been an
issue for the global economy, structural reforms made at
the European Union (European Central Bank) and at a
national level have helped a more optimistic outlook.
The US economy faces some challenges in the form of
the federal spending sequestration. Nevertheless, the
underlying fundamentals of the US economy remain
solid, which should translate into strengthening economic
growth in the second half of 2013, especially given the
resilience of the private sector.
The risk of a hard landing for China is also seen by
economists as less likely than previously thought. With 2012
economic growth at 7.8%, it is still a very impressive growth
rate, even when compared to other emerging countries.

forecast world economic growth rates are no longer being revised downward
Source: IHS Global Insight, Airbus

World real GDP growth (%)


4.5%

3.8%

Commercial air transport development is driven by two main factors: economic growth and air ticket price
stimulation. Economic developments can be measured by several elements including private consumption,
disposable income, exports, imports or tourism growth (national and international). However, the variable
that best combines these different dimensions is the more global Gross Domestic Product (GDP), as shown
in the chart below.

3.3%

3.2%

4.0%
3.5%

Expected world economic


growth for 2014

3.0%
2.5%

3.3%

Expected world economic


growth for 2013

2.0%

2.3%

1.5%

2.3%

1.0%
0.5%

World transport growth is closely correlated to economic growth


Source: IHS Global Insight, ICAO, Airbus

0.0%
J

16%

Air Traffic growth (%)

Real GDP growth (%)

Global Market Forecast

2012

-2%
2010

-4%
2008

-1%

2006

-2%

2004

0%

2002

0%

2000

1%

1998

2%

1996

2%

1994

4%

1992

3%

1990

6%

1988

4%

1986

8%

1984

5%

1982

10%

1980

6%

1978

12%

1976

7%

1974

14%

1972

16

8%

2012

Over the medium term, the global economys performance


is expected to improve gradually, thanks mainly to more
aggressive business investment, which in itself is fuelled
by accumulated pent-up demand in developed and
emerging economies. As a result, the pace of growth
may even strengthen and surpass the long-term trend
level during 2015-2019, before gradually edging down to
a rate close to its long-term trend (3.1% yearly growth)
after 2020.
The post-crisis journey shows further disparities between
emerging and developed countries and even between
developed countries: those that are agile/competitive and
those more indebted/less competitive. Having been faster
to implement structural reforms and debt de-leveraging

2013

measures, emerging countries have rebounded faster


and stronger to pursue their development growth,
increasingly adopting some western consumption
patterns including the use of air travel.
The 54 emerging economies we use in our segmentation
have an impressive cumulated population of almost 5
billion people. Contrary to perception, these 54 emerging
economies are very diverse and not only located in the
Asia-Pacific region but globally (11 in Latin America, 11
in Africa, 8 in Middle East, 14 in Europe-CIS and 10 in
Asia-Pacific).

Population of
emerging economies

5 billion
Global Market Forecast

17

economies in 2002 represented 6% of the worlds total


trade. Currently, this share has grown to an impressive
16% and will continue to grow for the foreseeable future.

As a result of their growing economic power, emerging


economies have begun to build stronger political and
commercial links between themselves, furthering world
globalisation. To illustrate this, trade between emerging

diverse emerging economies, not just located in asia-Pacific


Source: IHS Global Insight, Airbus

EUROPE-CIS

14 emerging economies
380 million people (2012)

demand for air travel

Strong trade growth between emerging economies* over the last 10 years
Source: IMF, Airbus

Share of world trade (%)

16.3%

20%
18%
16%
ASIA-PACIFIC

10 emerging
economies
3,500 million
people (2012)

LATIN AMERICA

11 emerging economies
500 million people (2012)

14%
12%

6.2%

10%
8%

4.6%

6%

AFRICA

MIDDLE EAST

4%

8 emerging economies
60 million people (2012)

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1992

1995

0%

Emerging economies (54 countries)

1994

Advanced or developing economies (150 countries)

2%

1993

11 emerging
economies
430 million
people (2012)

* 54 emerging economies

On their way to converge and eventually catch up


with more mature/advanced economies, emerging
economies have been and will continue to be the single
most important engine of the world economic growth.
Between 1992 and 1997, the 54 emerging economies
identified contributed to a 22% share of the world
economic growth, compared with a 75% share for the 31

more advanced economies. Over time these emerging


economies have gradually increased their share of world
economic growth, up to 55% during the 2007-2012
period (compared with 40% for the advanced economies).
By the next decade, this trend is expected to continue to
reach an impressive 70% of world economic growth from
emerging economies.

represented 12% of the world Foreign Direct Investment


(FDI) in the early 2000s, currently represent more than one
third (38%) of world-wide FDI flows.

Emerging economies increasingly driving World economic growth

A global world: Foreign Direct Investment increasingly directed towards emerging economies*

Source: IHS Global Insight, Airbus

Source: World Bank, Airbus

World GDP growth share (%)

Share of FDI towards emerging economies (%)

100%

45%

80%

22%
55%

70%

60%
40%

Emerging economies (54)

40%

Developing economies (119)

35%

Advanced economies (31)

30%

75%
40%

25%

0%
1992
to 1997

1997
to 2002

2002
to 2007
History

2007
to 2012

2012
to 2017

2017
to 2022
Forecast

2022
to 2027

2027
to 2032

70

of the world economic growth


from emerging economies (2027-2032)

Global Market Forecast

38%

25%

20%

18

Another illustration of this world globalisation lies with


capital flows, which are increasingly spread amongst a
growing number of countries. Emerging countries, which

20%
15%

12%

10%
5%
0%
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

* 54 emerging economies

Global Market Forecast

19

in 2002 to 22% in 2012. Over the same period, offered


capacity share between advanced economies has
declined from 63% to 47%.

It is not surprising to see how increasing globalisation


has democratised air transportation around the world,
especially over the last 10 years. Passenger capacity
offered between emerging economies grew from 12%

Share of world offered


capacity in 2012 for
emerging nations

demand for air travel

A global world: air transports increasing distribution

22%

Source: OAG, Airbus

Share of world offered capacity (%)


100%
90%
80%

47%

70%

Advanced-Advanced

63%

69%

within emerging economies (measured in ASKs) has


grown 55%, compared to a 4% growth in the capacity
offered to/from/within the advanced economies.

Overall, air transport growth during the last few years has
been highly dependent on the emerging markets, which
have regularly grown at a double digit year-over-year
rate. Since 2007, passenger capacity offered to/from/

S
 ince 2007, air travel has grown 55% in emerging economies
Source: OAG, Airbus

Offered capacity (ASKs)


(Base 100 in 2007)

To/from/within

160

ASKs

150

130
120

60%

To/from/within
advanced economies (31)

110
Advanced-Developing

50%

+55%

To/from/within
emerging economies (54)

140

To/from/within

ASKs

+4%

100
90

40%

24%

Advanced-Emerging

80
2007

30%

22%

10%

12%

Emerging-Emerging

The reverse approach is also true: globalisation has been


helped thanks to the development of air transportation.
Although there were 1,500 country pairs served with

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

0%

1993

2010

2011

2012

Developing-Emerging

10%

1992

2009

Developing-Developing

18%

14%

20%

2008

scheduled air transport 40 years ago, this has increased


over time and is expected to reach 3,000 country pairs
in the near future.

n
 early 3,000 country pairs now served with scheduled air transport
Source: OAG, Airbus

air transport productivity improvements from both


airline operations (aircraft utilisation, fleet maintenance,
improved passenger load factors, etc) and more efficient
and capable aircraft. Air transport liberalisation and
emergence of low cost carriers have also played a decisive
role in this productivity improvement and price stimulation.

The second pillar of the commercial air transport


development over time has been the air ticket price
stimulation with an average yearly decrease of 3% per
unit of passenger traffic over the last 30 years (in real
terms, inflation removed).
This impressive achievement was helped by outstanding

S
 trong decrease of cost per unit of traffic helping to lower air fares
Source: ICAO, Airbus

Unit cost (cents/RPK in 2012 US$)


25

Number of country pairs linked by air (scheduled service)


3,000

20

2,500

15

2,000

10

1,500

1,000

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

500

1981

1980

20

Global Market Forecast

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

Global Market Forecast

21

demand for air travel

The trend towards increasing oil prices, which has been


observed during the last decade, is expected to continue
in the long-term, the main explanation being basic
supply/demand fundamentals. As experienced over the
last five years, price volatility is not expected to diminish
in the short term. At the time of writing, global oil prices

have been under pressure due to weaker global demand


growth and additions to supplies from North America, the
Middle East and Central Asia. As a result, the price of
Brent crude was hovering close to US$100 per barrel.
Were it not for a US$10-20 per barrel geopolitical risk
premium, Brents price could be well below US$100.

However, oil supply growth (mainly triggered by high


prices) is not expected to cope with long-term oil demand
trends. In the baseline scenario, it is expected that oil
demand will grow at an average yearly rate of 1.5%

from 2011 to 2020 and 0.8% from 2021 to 2030. Long


term increasing oil prices are then expected to be the
adjustment variable of supply and demand imbalance.

Long term World oil demand trend


Source: IHS CERA, Airbus

High oil prices here for the long-term


Source: EIA, IHS CERA (May 2013), Airbus

Annual average percent change in world oil demand

Brent oil price (current US$ per bbl)


9%

180

8%

160

7%

140

6%

120

History

Another element worth mentioning is the rise in


production of non-conventional oil and alternative energy,
especially in North America (oil sands, tight oil and gas).
As a consequence, it is interesting to note that the

2040

2038

2036

2034

2032

2030

2028

2026

2024

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

0%

1998

0
1996

1%

1994

20

1992

2%

1990

40

1988

3%

1986

60

1984

4%

1982

80

1980

100

5%

Forecast

8.1%

Oil supply
shocks reduce
demand growth

3.0%

Low prices
support
demand
growth

Emerging market
demand boom
tempered by rising
prices and
economic recession

1.5%

Emerging market
demand and
economic recovery

1.3%

1.5%

0.8%

2001-2010

2011-2020

2021-2030

-0.8%

-1%

Structural demand changes


in response to price shocks

-2%

US has become the biggest source of growth in liquid


production in recent years (2.4 million barrels per day
growth in production in the US from 2008 to 2012) and
could become a net exporter by 2020.

Slowing population
growth and structural
changes slow oil growth

1961-1970

1971-1980

1981-1990

1991-2000

History

Forecast

 he Great Revival: the US has become the biggest source of growth in liquids production
T
in recent years

2.4

Source: EIA, IHS CERA, Airbus

Growth in production in million barrels per day


3.0
2.5
2.0

Total change in liquids* production


from 2008 to 2012

1.5

million
barrels per day growth
in US production
from 2008 to 2012

This trend in oil prices and its translation into an increasing share of airline operating costs, together with the
volatile nature of fuel prices, has meant that the focus of airlines and manufacturers has been to minimise
fuel burn and costs. Manufacturers like Airbus invest the majority of their R&T spending on reducing fuel
burn. In recent years airlines have focused on reducing seat mile costs by purchasing larger aircraft and even
converting existing orders to larger types or variants or densifying existing aircraft cabins.
All of these economic and industry drivers, and many more not mentioned here, are used in our traffic
forecast in an attempt to correlate them with historical and future air traffic developments. By doing so, we
hope to derive a more comprehensive and detailed understanding of the factors driving our industry.

1.0
0.5

22

Global Market Forecast

Colombia

China

Nigeria

United Arab Emirates

* Liquids include crude oils, condensate, natural gas liquids, biofuels, GTL and CTL

Qatar

Canada

Iraq

Russia

Saudi Arabia

United States

0.0

Global Market Forecast

23

demand for air travel

Market drivers

Urbanisation and emergence of a new global middle-class


According to the United Nations, Department of
Economic and Social Affairs (DESA), the worlds
population will grow to 8.4 billion people in 2032.

Associated with this, two other phenomena will occur:


strong and rapid urbanisation, and middle-class
growth in emerging countries, especially in Asia.

World population (billions) 1950-2050


Source: United Nations DESA, Airbus

2.5

3.7

5.3

6.9

8.3

9.3

1950

1970

1990

2010

2030

2050

61%

Up to 2050, the worlds urban population will increase


at twice the pace of the global population. In 2032,
61% of the world population will live in a city compared
to 52% in 2012. This will represent an increase of 1.5
billion urban dwellers.

Uban share of world population in 2032

It is well known that economic growth is a key factor when explaining air traffic growth. However, forecasters
will often look to demographic trends as another explanatory variable, as these also play a major role in air
traffic evolution: population growth, urbanisation and new middle-class emergence in developing countries
are all factors that explain why and how frequently people travel. Another lever of air traffic is the increasing
connectivity between people, between regions. At first, it can be viewed as a consequence of economic
growth but it is also a facilitator: directly with the multiplication of new routes and the increasing capacity
in airports which extend the supply for future journeys; and indirectly by stimulating the economy through
infrastructure investments and the business they attract.

Urban and Rural populations


1950-2050 (billions)

2050

Source: United Nations DESA, Airbus

2045
Urban
2040

Rural

2035

Air traffic
1955

1950
2030

1960
1965
2025

1970
10
8
billions

1975
2020

Connectivity

1980
2015

1985

Demography

Economy

2010

1990
1995

24

Global Market Forecast

2000

2005

Global Market Forecast

25

demand for air travel

An increasing proportion of the urban population will live


in large urban agglomerations of over 5 million people.
United Nations DESA anticipates that 23% of urban
population, representing 1 billion people, will live in these
cities by 2025 compared to 18% in 2012.

The number of these cities will dramatically increase


between 2012 and 2025 by more than 50%, jumping
to 96 cities of over 5 million. In other words, more large
urban centres, with more people.
5 to 10 million
10 to 15 million
15 to 20 million
> 20 million

largest population centres focused in asia in 2025


Source: United Nations DESA, Airbus

Historically, urbanisation goes hand in hand with the


emergence of a middle-class. This is illustrated with
World Bank data highlighting the strong relationship
between urban population share and GDP per capita

over time. One noticeable element is the fast evolution


in the last three decades of this relationship for Asian
countries, region which tends to overtake more advanced
economies.

E
 volution of the relationship between Share of urban population and GDP per capita
by region 1980-2011
Source: OECD, Airbus

GDP per capita

North America

40,000
Dhaka

30,000
25,000
20,000

Beijing

New Delhi

Europe & Central Asia

15,000
10,000

East Asia & Pacific

Tokyo

New York

Shanghai
Mexico City

5,000
Middle East & North Africa

Mumbai

Latin America
& Caribbean

Karachi
South Asia
Sub-Saharan Africa
Sao Paulo

20%

Tokyo will remain the largest city with more than


38 million inhabitants in 2025, followed by Delhi
(33 million), Shanghai (28 million) and Mumbai (27 million),
making these four Asian cities the most populated in the
world by 2025. Seven out of the top 10 cities with more

than 20 million of inhabitants in 2025 will be located in


Asia, two in Latin America and one in Northern America.
These are places where increasing numbers of people will
live, work and want to travel between and, therefore, focal
points for a large amount of future aviation growth.

40%

60%

Based on a study published by OECD (The Emerging


Middle Class in Developing Countries - Working Paper
No. 285), the global middle-class (defined as households
with daily expanditures between $10 and $100 per
person at purchasing power parity), will grow by 60%
between 2012 and 2022 and by 134% in 2032. Most
of growth will come from Asia, which will represent 2/3

80%
Urban Share (%)

of the middle-class population in 2032, with 3.5 billion


people. In parallel, middle-class consumption will grow at
the same pace. This will constitute a tremendous lever
for global consumption in the next two decades and a
marker of the consumption shift to Asia, after the shift of
production. The worlds producers becoming the worlds
consumers.

Top 20 cities in the world 1950-2025


global middle-class* expected to rise to more than 5 billion people by 2032

Source: United Nations DESA, Airbus

Rank

Rank

New York

1 Tokyo

Tokyo

2 Delhi

London

3 Shanghai

Paris

4 Mumbai

Moscow

5 Mexico City

Buenos Aires

6 New York

Chicago

7 Sao Paulo

Kolkata

8 Dhaka

Shanghai

9 Beijing

Osaka 10

10 Karachi

Los Angeles 11

11 Lagos

Berlin 12

12 Kolkata

Philadelphia 13

13 Manila

Rio de Janeiro 14

Source: Kharas and Gertz, Airbus

Global Middle-Class*
(Millions of people)

5,000

3,576

15 Shenzhen

Mexico City 16

16 Buenos Aires

Mumbai 17

17 Guangzhou

Detroit 18

18 Istanbul

Boston 19

19 Cairo

Cairo 20

20 Kinshasa
1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

757

x2

Other

3,526

x4

Asia-Pacific

4,000
3,000

2,228

2,000

432

578

2,038

856

1,000

14 Los Angeles

Saint Petersburg 15

5,211

265

262

253

675

698

675

2012

2022

2032

7,100

7,800

8,400

32%

46%

62%

North America
Europe & CIS

World population
% of world population

2025
* Households with daily expenditures between $10 and $100 per person (at PPP)

26

Global Market Forecast

Global Market Forecast

27

The aviation industry directly benefits from the growth


in the number of new middle-class consumers and the
progression margin is huge. The propensity to travel

of Asian countries is not at the same level of maturity


compared to more developed economies, but they are
catching up fast.

middle-class population and consumption


demand for air travel

Source: OECD, Airbus

Middle class population


(millions)

Middle class consumption


(2005 PPP $ in billions)

International tourism is an important source of revenues


for all regions. For example, Europe was the most
popular destination receiving more than half of all
International tourist arrivals (millions)

T
 op 10 tourism destinations (millions)

Source: WTO, Airbus

Source: WTO, Airbus

1,200

France

100,000

10,000

international tourists in 2012, representing $458 billion


(43% of tourism receipts), followed by Asia-Pacific (23%
of tourists, 30% of receipts).

United States

1,000

China

Middle east
800

50,000

5,000

600

1,000

Spain

Africa

Italy

Americas

400

Asia-Pacific

200

Europe & CIS

Turkey
Germany
United Kingdom
Russian Federation

10,000
2009

2020

As seen in the following chart, a small increase in GDP


per capita results in a large increase in trips per capita in

2030

1990

less developed economies but only a small increase in


mature economies.

Propensity to travel in 2012 - india and china on the upward curve


Source: Sabre, IHS Global Insight, Airbus

1995

2000

2005

2010

Source: WTO, Airbus

10

Historically driven by Europe, international tourists are


increasingly coming from the Asia-Pacific. For the first
WHERE DO THEY COME FROM?

Trips per Capita

2012
2011

Malaysia

Americas
17%

Middle
East
4%

Africa
3%

20

40

60

80

100

time, in 2012, China was the number one country in


terms of tourism spending with a total of $102 billion.

Not specified
1%

USA
1

China

Europe
53%

Asia-Pacific
22%

0.1

India
0.01
0

20,000

40,000

60,000

80,000

100,000

2012 nominal GDP per Capita ($US)

Reasons to travel
According to the World Tourism Organisation, a billion
people travelled outside their own country in 2012, mainly
by air (52%) and for leisure or visiting friends and relatives
(78%), this number will nearly double to 1.9 billion by
2032, according to estimates.

Why do they travel?


Source: WTO, Airbus

Visit family & friends


/Health/Other

15%
Business/
Professional

7%
Not specified

28

Global Market Forecast

27%

51%
Leasure/Recreation
/Holidays

According to the World Travel & Tourism Council (WTTC),


most of the spending on inbound and domestic travel
generated in 2012 came from leisure travel (76%). This is
expected to grow at 4.6% per year. The share of leisure
travel spending will continue to increase due to the
growth of the new middle-class in emerging countries.
As a result, in ten years China is expected to become
the number one contributor to travel and tourism GDP,
overtaking the USA.
Business travel represented 24% of travel and tourism
spending in 2012 and is expected to grow at 4.1% per year.
To better understand the crucial role of business travel in
the economy, the WTTC launched a study with Oxford
Economics to evaluate the impact on global GDP and
employment of a 25% budget reduction in business travel
during two consecutive years. It was found that, after
five years, Global GDP would be 5% lower compared to
the baseline forecast (no budget cut) and 30 million jobs
would be lost.

Business and Leisure travel


Source: WEF 2013 report on Travel & Tourism competitiveness, Airbus

24%
Business

76%
Leisure

Global Market Forecast

29

Migration is also an air traffic vector. According to the


United Nations DESA, Latin America, Asia and Africa
were net emigration regions whereas Northern America,
Europe and Oceania were net immigration regions in

2010. North America is the number one immigration


region whereas Latin America is the number one
emigration region.

Evolution of the number of students studying abroad


Source: OECD, Airbus

Millions

demand for air travel

4.0
3.5

Net migration (Total immigration stock Total emigration stock) in 2010


Source: United Nations DESA, Airbus

3.0
2.5

Pacific

2.0

North America

1.5
1.0

Latin America & Caribbean

0.5

Europe & CIS

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1975

Asia & Middle East

1976

0.0

Africa
(million)

-30

-20

-10

10

The chart below gives a snapshot of migrants world-wide,


their region of citizenship and where they now reside.
When looking at the migration flows in detail, most

20

30

40

50

migration is within the region. The main exception is the


migration of 23.5 million people from Latin America to
Northern America.

Migration by origin and destination region

In terms of the flow of students, one million international


students come from East Asia & Pacific. Approximately
half of them are studying within the same region,
whereas the other half is studying in North America
Finally, simplification of visa policies, with more and more
visa on arrival programmes replacing the traditional visa,
a form of deregulation, is also having a positive impact on
air traffic growth.

Source: United Nations DESA, Airbus


Pacific

and Western Europe, which is the number one hosting


region with two million international students (Global
Education Digest 2012 - UNESCO).

7million
International students by 2020

North America

Latin America

Visa policies facilitated


Source: WTTC, Airbus

e-visa

Europe & CIS

2%

No visa
18%

Asia & Middle East

17%
17%

Africa

Origin

With the globalisation of the economy, more and more


students feel that studying abroad is positive for their future
careers. Governments also encourage their students to
study abroad with programs, such as Erasmus exchange
program in Europe, with many universities also seeing
foreign students as an important source of revenue.

30

Global Market Forecast

8%

77% 75%

6%

64%

Traditional visa

Destination

As a result, the number of students enrolled outside their


country of citizenship has increased to reach 3.7 million
students in 2009 (OECD). In a 2009 UNESCO report, the
international student population in 2020 is expected to
be around seven million.

16%

Visa on arrival
or e-visa
(2008-2010)

2008
2010
2012

Global Market Forecast

31

Connectivity
demand for air travel

Both the number of airports with at least one flight with


a 100-seater aircraft or larger and the total number of
flights have increased over time. This is a consequence
of economic globalisation and the increasing number
of tourists chich are likely to continue.

For example, Istanbul and Beijing plan to build


additionnal airports before 2020, and according to
press reports, China plans to build 82 new airports
between 2011 and 2015 to meet demand.

Network
development

Evolution of the number of airports and number of flights


Source: OAG, Airbus

Number of airports served by 100-seater aircraft and above and number of flights
2,000
1,800
Number of airports

1,600
1,400
1,200
1,000
800

Number of flights
(thousands)

600
400
200

1992

1997

2002

2007

2012

Air traffic has grown at a steady pace over the last 20 years. Since 1992, air traffic, as measured by revenue
passenger kilometres (RPK), has grown 4.7% annually.

Evolution of long-haul and short-haul traffic (seats offered), 1990-2012, Index 100 = 1990*
300
250

1990-2012

Long-haul

200

CAGR

+4.2%

150

1990-2012

Short-haul

CAGR

100

+2.9%

50

2012

0
2010

Sydney Airports total economic contribution


The total economic contribution of the Sydney Airport precinct that is, the economic contribution encompassing
both the direct and indirect impacts in 2012 can be summarised as follows:
The activities of businesses operating on the Sydney Airport precinct contributed an estimated $9.3 billion in
value-added, with associated employment of 49,930 full time equivalent (FTE).
The contribution of tourism and freight facilitated by the airport represented a further $18.3 billion in value-added
and generated an estimated 234,000 FTE jobs.

Source: OAG, Airbus

2008

Source: The economic value of Sydney airport - Deloitte Access Economics, Airbus

Long-haul traffic grows faster than short-haul traffic,


but is more sensitive to external shocks

2006

T
 he impact one airport can have

Examining air traffic growth in seats


offered by flight length between
1990 and 2012, and despite the
two major external shocks (20012002 and 2008-2010), both shorthaul traffic (flights of less than
2,000nm) and long-haul traffic
have grown at a robust pace. Longhaul traffic grew faster than shorthaul traffic, growing at an annual
4.2% rate during 1990-2002,
compared to 2.9% for short-haul
traffic. Interestingly, while growing
faster, long-haul traffic was more
negatively impacted by adverse
economic shocks, compared to
short-haul. This suggests that
long-haul passengers are more
price sensitive, as the cost of travel
of one of these trips represents a
higher proportion of an individual
income.

2004

increase in connectivity in the past 20 years has provided


an additional $200 billion in global GDP, and because
GDP growth is a key driver for aviation sector, the latter
indirectly benefits from greater connectivity. A kind of
virtuous circle.

2002

The growth of aviation networks provides new


opportunities for both tourism and business, making
the aviation sector an important contributor to global
economic growth. According to an Oxford Economics
study included in the IATA Annual Review 2013, the

2000

Note: month of September of each year

1998

1987

1996

1982

1994

1977

1992

1972

1990

* Long-haul traffic: flight distance >2,000 nm

32

Global Market Forecast

Global Market Forecast

33

Over the last 20 years, air traffic growth has been possible
through more frequent departures, which have increased
44% since 1992; through an increase in the number of
non-stop city pairs, which have grown 47% since1992,
and through larger aircraft, whose average capacity grew
28% over the same period.

Air traffic is getting more concentrated


Source: OAG, Airbus

Average ASKs per airline operating on long-haul routes


1992-2002

1,400
1982-1992

1,200
1972-1982

1,000

Air traffic grows through network and capacity expansions


Source: OAG, Airbus

800

Evolution of long and short-haul traffic, 1992-2012, Index 100=1992

Number
of airlines

2002-2012

Monthly ASKs (millions)

500

+50%

450

+15%

400

+55%

350
300

+35%

250

600

250

200
150

400

Flights

Capacity

28 %

100

50

50
2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

0
1972

Routes

150

100

Since 2005, there are less airlines


operating long-haul traffic

200

1974

ASK

200

Note: Long-haul route >2000 nm - excluding domestic routes

Average long-haul ASK per airline has increased by 50% over the last 10 years.

Long-haul and short-haul networks have


experienced different network development models

0
2012

Average number of seats offered by city-pair


Base 100=1972
200
180

Long-haul

160

Short-haul

140
120
100
80
60
40
20

2010

2008

2006

2004

2002

0
2000

The growth in average


aircraft capacities since 1992

Source: OAG, Airbus

1998

28%

S
 hort-haul and long-haul networks have developed differently since 2000

1996

has increased even faster. Airlines have extended their


networks and have organised it around major hubs, and
since 2007 the long-haul traffic concentration process
has become more significant. For the first time in 40
years, the number of airlines operating on long-haul
routes is decreasing, primarily due to several significant
mergers around the world. Code-share agreements
and joint ventures are becoming more common
between airlines and an increasing number of airlines
belong to global alliances, all driving the concentration
of long-haul traffic.

1994

What is the impact of increased air traffic on the


competitive landscape? Except for the crisis period
following 9/11, long-haul air traffic has still increased
at a faster rate than the number of long-haul operating
airlines. As a result, average capacity (ASKs) per operator
has multiplied by 2.5 in around 30 years (1972 and 2002).
Nevertheless, successive deregulation of air transport
and the development of emerging markets have given
opportunity to new entrants in long-haul markets. While
70 airlines were operating long-haul routes in 1972, there
were more than 200 in 2005; however, long-haul traffic

This process has been driven in part by the spread of


the low-cost model more globally. On the other hand,
long-haul traffic increases have been absorbed to a
greater extent by the existing long-haul network. This is
achieved by either the addition of frequency, new routes
or increased aircraft capacity.

1992

Airlines are accommodating more traffic

The average number of seats offered on short-haul routes


has been stable between 1985 and 2000 and has been
decreasing since 2000. This does not mean, of course
that short-haul traffic is decreasing. However, the shorthaul market has experienced many new routes openings,
as opportunities arise, thus offering more direct services.

1990

2010

1988

2008

1986

2006

1984

2004

1982

2002

1980

2000

1978

1998

1976

1996

1974

1994

1972

1992

2012

demand for air travel

Airlines extend their networks by opening new routes, as


well as expanding the capacity of their existing networks
by offering more frequencies and/or using higher capacity
aircraft. As air passengers value both low prices and
frequent, convenient flights; understanding when a new
route can be opened and the application of capacity vs
frequency is the key for assessing how todays network
will develop in the future.

Note: Long-haul route >2000 nm - excluding domestic routes

Long-haul network development is more concentrated than short-haul.

34

Global Market Forecast

Global Market Forecast

35

City-pair traffic forecast


(as measured, for example, by income per capita). This is
significant because different city pairs, even in the same
country, may have different behaviours in terms of traffic
and these need to be accounted for when studying how
the network will evolve.
Interestingly, when examining expected passenger traffic
growth between city pairs belonging to the same country
or region, city pairs in more mature economies are more
likely to behave in a similar manner, than city pairs in
emerging economies.

demand for air travel

By introducing more detailed data at a country and city


pair level, we are able to increase the granularity of our
forecast. Starting from 208 traffic flows, we enlarge our
scope to consider more than 15,000 country pairs and
more than 250,000 city pairs.
When predicting passenger traffic between cities, it
is important to consider the factors that make a city
attractive for passengers; amongst them are the size of
the citys population and its socio-economic development

Even though the network development process of


various airlines around the world involves techniques
ranging from trial and error to very sophisticated
schedule optimisation engines, it appears that the

overall quality of new route forecasting has improved


over time. The survival rate of new routes after five
years of operation has increased from 65% in the 70s
to more than 75% today.

a
 irlines targeting more resilient new routes
Source: OAG, Airbus

New routes survival rate after 5 years


80%
78%
76%
74%
72%

More heterogeneous traffic growth between cities in emerging economies


Source: IHS Global Insight, Airbus

70%

66%

PRC

Asia

Africa

68%

64%

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

60%

8%

1974

62%
1972

9%

South America

CIS

Canada
USA
Australia

Middle East

CAGR O&D city pair passengers 2012-2032

10%

Europe

11%

Japan

O&D city-pair traffic growth and economic growth: 2012-2032

7%
6%

Shifting toward emerging countries

5%
4%

Very much like the total traffic evolution shift towards


emerging countries, a larger number of new route
openings have come from the emerging economies. This
expansion is mainly driven by the liberalisation of aviation
and the emergence of low-cost airlines, which help to
make air travel more convenient and affordable, therefore

3%
2%
1%
1%

2%

3%
4%
CAGR GDP, 2012-2032

5%

increasing passenger demand. We forecast this trend will


continue in the future, maintaining significant potential for
new routes between advanced countries. However, the
bulk of the network development will involve at least one
emerging country per new route.

6%
New route development typically slows as markets mature: More new routes involving
emerging economies

Note: Domestic O&D city pairs with more than 40 daily passengers in 2012. Size of the bubble represents 2012 daily passengers

Source: OAG, Airbus

More new routes


Estimating airline network future
development is a challenging, yet
necessary task which drives the overall
shape and scope of the future aviation
network.
The overall number of routes operated
has increased over time, although
the net addition of airport pairs only
accounts for 50% of the total new
airport pairs opened between 1992
and 2012. The remaining 50% are
routes that have previously been
tried, dropped then re-opened when
development of demand or other
positive factors allow.

36

Global Market Forecast

Only 40% of todays network was there 20 years ago


Source: OAG, Airbus

Number of airport pairs served

25,000

DROPPED
between
1992 and 2012

20,000
15,000
10,000

NEW
between
1992 and 2012

3.5
3
2.5

13,823

-6,041

12,494

20,276

5,000
0

Number of services evolution (routes by airline)


Base 1=1972
4.5
Advanced-Advanced

Advanced-Emerging
Emerging-Emerging
Domestic USA
Domestic Australia
Domestic India

1.5
1992

2012

1
1972

1982

1992

2002

2012

2022

2032

Global Market Forecast

37

Long-haul traffic growing


and more concentrated on Mega-Cities
DEMAND FOR AIR TRAVEL

Aviation Mega-Cities, by our definition, are cities that


handle more than 10,000 long-haul passengers per
day. In 2012, out of some 850 cities handling long-haul
passengers in their airport(s), only 42 met this criteria,
most of them being located in the northern hemisphere.
The long-haul network connecting Mega-Cities with each

other represents 51% of the total world-wide long-haul


traffic, and if we consider the traffic from or to MegaCities (including both the traffic between them and
connecting Mega-Cities to secondary cities), 93% of
world-wide long-haul traffic passes through one of these
aviation Mega-Cities.

CITIES WITH MORE THAN 10,000 DAILY LONG-HAUL PASSENGERS IN 2012 AND 2032

2012

The aviation Mega-City network will grow to 89 in 2032.


This growth will be particularly noticeable in the southern
hemisphere. For example there will be 10 Mega-Cities in
Latin America in 2032, growing from two today. Similarly,
the number of Mega-Cities will increase from one to eight

in Africa over the next 20 years. Extending the aviation


Mega-City network will concentrate an increasing share
of the total long-haul traffic. More than 75% of longhaul traffic will be operated between these main aviation
centres in 2032.

TRAFFIC BETWEEN MEGA-CITIES IN 2032 WILL BE HIGHER THAN TOTAL LONG-HAUL TRAFFIC TODAY

2012

42

2032

89

Aviation
Megacities

0.8M
2.2M

Daily Passengers:
Long Haul traffic
to/from/via
Mega-Cities traffic

93%

of long-haul traffic
>42 (Mega-cities) on routes
to/from/via
%
Mega-cities & cities
>89 (cities)

99

2012 Long-Haul traffic

2032 Long-Haul traffic

26 million

67 million

Monthly
Passengers

Monthly
Passengers

Traffic between
secondary cities

2032
Traffic between Mega-Cities
and secondary cities
Traffic between 2032
Mega-Cities

Traffic between
2012 Mega-Cities

Traffic to/from/via London

Note: Surface is proportional to traffic on this chart - Long-haul traffic: flight distance >2,000nm, excl. domestic traffic.

>50,000 daily long-haul passengers


>20,000 daily long-haul passengers
>10,000 daily long-haul passengers

Long-haul traffic will be more concentrated on main aviation centres.


Traffic as of month of September.
Long-haul traffic: flight distance >2,000nm, excl. domestic traffic.

38

Global Market Forecast

However, due to the importance of Mega-Cities on the


long-haul market, they will enjoy the majority of the future
global growth these flows. While there were only seven
cities in the world handling more than 50,000 longhaul passengers a day in 2012, there will be 26 such

cities in 2032. As an illustration of the growth that will


be experienced by Mega-Cities in the future, the traffic
between these 42 cities in 2032 will be greater than
todays entire world-wide long-haul traffic.

Global Market Forecast

39

03

Traffic
forecast

T
 he World economy will progressively get back to its long-term potential in 2014
Source: IHS Global Insight (January 2013), Airbus

Contribution to the world GDP growth, by region


5%
Pacific

4%

CIS

3%

Central America
Africa

2%

Middle East

1%

South America

traffic forecast

0%

Indian Sub
Europe

-1%

Asia

-2%

North America
PRC

-3%
-4%

Air transport continues to be a growth industry, resilient to external shocks, as it has been since the start
of the jet age. The industrys resilience is illustrated in the rapid recovery of world passenger traffic after
the 2008-2009 economic downturn. Over the period 2009-2012, world passenger traffic, as measured by
Revenue Passenger Kilometres (RPK), has grown at an average 5.9% annually, above the 4.1% observed
during 2000-2008.

Source: ICAO, Airbus

Oil Crisis

Oil Crisis

Asian
Crisis

Gulf Crisis

WTC
Attack SARS

2008

2009

2010

2011

Financial
Crisis

5.0

2012

2013

2014

2012 was another good year for air transport


Despite the widespread economic concerns throughout
2012, especially in Europe, it was a good year for air
transport. Air passenger demand grew 5.0%, slightly
below the 5.8% observed in 2011.
Air traffic growth in 2012 was mainly driven through
the strong performance of the fastest growing regions,
including the PRC, South East Asia and the Middle

Air travel has proved to be resilient to external shocks


World annual traffic (RPKs - trillions)

World average

East. Very high load factors, reaching 79%, was another


takeaway from 2012, illustrating the attention that airlines
give to managing aircraft capacity. This means that on
average more than three quarters of all aircraft and flights
are full. This underlines how increasingly eco-efficient a
form of mass transportation aviation is.

Since 2000

61%

4.0
3.0

A
 lmost 50% of the total RPK traffic growth in 2012 came from the PRC, South East Asia
and Middle East
Source: Airbus

2.0

Contribution of each region* to the world traffic growth in 2012


world RPK traffic (trillions)
5.6

1.0
0.0
1970

1975

1980

1985

1990

1995

2000

2005

2010

5.5
Other

The speed at which air transport returned to its long-term


trajectory after a shock has even outperformed the world
economic recovery. While economic activity is expected
to recover its 3.2% long-term potential by 2014, world
traffic recovered to its long-term trend one year after its
2009 drop.
Many factors have permitted the impressive and steady
growth of air transport. Some key factors have been:
Growing population, in particular, the expanding
urban population.
Macro-economic growth, which has spilled over to

42

Global Market Forecast

wealth creation, allowing people to travel more, or quite


simply for the first time.
Greater globalisation, leading to the need for more air
traffic rights and a greater spread of economic activity
and air travel.
Liberalisation of air transport, which has allowed
new services or airline business models, like Low Cost
Carriers, which have become one of the key drivers
over the last decade .
Entry into service of more capable long-range aircraft.

5.4

Middle East
South East Asia

5.3

PRC

5.2

5.1

2011

2012

*Traffic from/to/within the region Intercontinental traffic: 50% allocated to each region

Global Market Forecast

43

Air traffic and macro-economic theory

The long-term perspective


world traffic will grow at an average 4.7% annually, with
a 5.1% average annual increase in the first decade and a
4.4% expansion per year over the second.

Traffic will double in the next 15 years


Source: ICAO, Airbus

Share of world RPK, by type of flow


100%
90%
%
80%
70%
60%
50%
%
40%
30%
20%
%
10%
0%

0
1972

1977

1982

1987

1992

1997

2002

When looking more in detail at what is behind the


expected traffic growth over the next 20 years, there are
several features to highlight.
The first is the two speed air transport growth model,
which is likely to dominate in the future. On the one hand,

2007

2012

2017

2022

2027

2032

the fastest growing are the emerging regions, which will


drive future demand. On the other hand, the advanced
economies, with more moderate growth rates, are still
expected to be amongst the largest traffic regions in
2032.

 merging regions will drive the World traffic growth, but advanced economies
E
will remain foremost

+6.8%

The second feature to highlight is the reduction of


emphasis on mature markets. With emerging regions
growing faster than advanced economies, although
their growth is still high, forecast traffic growth will
be less concentrated. Supporting this idea, the index
of concentration (as measured by the Herfindahl
Hirschman Index) of the largest 50 traffic flows is
expected to decrease 27% from 2012 to 2032. Note that
a lower index means that the demand of air transport is
less concentrated on mature markets.
If we now focus on the differences between origin
and destination (O&D) traffic flows, there are two
complementary ways to look at it. On the one hand, to

2032

41%
2031

Emerging-Emerging

2030

28

2029

+2.6%

2028

29%

2027

Advanced-Advanced

2026

2012

Air traffic will double


in the next 15 years

43

2025

Air traffic has doubled


every 15 years

+4.9%

2024

30%

2023

Advanced-Emerging

2022

+5.1%

29

2021

2012-2022

20 years
World annual traffic growth

2020

12
10

E
 merging markets will drive traffic growth

2019

traffic forecast

world annual
traffic growth

2018

+4.4%

14

+4.7%

2017

2022-2032

2016

16

Exemplifying this idea, starting from a lower share in


2012, air traffic between emerging regions will grow
at a strong 6.8% annual pace over the next 20 years,
to reach a 41% share of world RPKs by 2032. This
growth is well above the 2.6% expected annual growth
between advanced economies over the same period.

20 years

Airbus
GMF 2013

2015

ICAO
total traffic

2014

World annual RPK (trillion)

Air transport is an example of relative convergence theory


at work. Meaning that air travel should grow faster
in regions where todays population has a smaller
propensity to fly, than in advanced economies, who
already fly in large numbers. Good macro-economic
performance of these emerging economies, in turn
creates new potential for air travel demand.

2013

We expect world traffic to double over the next 15 years,


reaching the 11 trillion RPK threshold by 2027. On a 20122032 forecast horizon, we maintain our expectation that

look at the largest O&D traffic flows, and on the other, to


consider the fastest growing.
When looking at the first dimension, Domestic PRC will
be the largest region in 2032, thanks to an impressive
7.0% annual growth, representing 10.4% of total world
RPKs. With an expected growth of 1.9% per annum,
domestic USA ranks second, reaching 8.5% of total
2032 world traffic, followed by Intra Western Europe
and Western Europe-USA. The latter two will account
for 5.1% and 4.2% of world air travel demand in 2032,
respectively. These figures also demonstrate that
advanced economies will continue to play a major role in
future air transport growth.

Source: Airbus

Contribution of each region* to the World RPK traffic growth (2012-2032)


L
 argest O&D flows

World RPK traffic (trillions)


16
14
12
Emerging

10
8
Mature

6
4
2
0

2012

*Traffic from/to/within the region Intercontinental traffic: 50% allocated to each region

44

Global Market Forecast

2032

20-year CAGR

Domestic PRC
Domestic USA
Intra Western Europe
Western Europe |} USA
Asia |} Western Europe
Domestic India
Asia |} PRC
Domestic Brazil
Intra Asia
Western Europe |} Middle East
Western Europe |} South America
Domestic Asia
Asia |} Middle East
Western Europe |} PRC
Indian Sub |} Middle East
Asia |} USA
PRC |} USA
Central Europe |} Western Europe
South America |} USA
Indian Sub |} USA

7.0%
1.9%
2.9%
3.0%
4.3%
9.8%
6.2%
7.0%
6.1%
4.8%
4.8%
5.7%
8.0%
5.7%
6.1%
4.2%
6.5%
5.9%
5.3%
6.6%

2012
2032

200

400

600

800

1,000

1,200
1,400
2012-2032 billions RPK

Global Market Forecast

45

Fastest growing O&D flows

20-year CAGR

traffic forecast

Domestic India
Indian Sub |} South America
Indian Sub |} PRC
Africa Sub Sahara |} Middle East
Middle East |} South America
Asia |} Indian Sub
Middle East |} South Africa
Middle East |} Russia
Central Europe |} Middle East
Asia |} Middle East
North Africa |} PRC
Africa Sub Sahara |} Japan
PRC |} Russia
CIS |} PRC
Middle East |} PRC
North Africa |} South Africa
Japan |} Middle East
Central America |} South America
Africa Sub Sahara |} CIS
Indian Sub |} South Africa

2012
2032

50

100

150

200

9.8%
9.6%
9.1%
8.9%
8.9%
8.7%
8.5%
8.5%
8.3%
8.0%
8.0%
7.8%
7.7%
7.7%
7.7%
7.5%
7.5%
7.5%
7.5%
7.5%

250
300
350
2012-2032 billions RPK

passenger traffic between the Indian Sub-Continent


and PRC, with a 9.1% annual growth forecast over
the period. This is not surprising when we consider
that over recent years, air traffic from/to/within these
emerging economies have been steadily growing at a
two-digit a year rate.

The fastest growing O&D passenger traffic flows


forecast between 2012 and 2032 will be in emerging
economies. Domestic India ranks first, with an annual
average increase of 9.8%; followed closely by O&D
passenger traffic between Indian Sub-Continent and
South America, with 9.6% forecast annually; and lastly

Airlines in Asia-Pacific and Middle East driving traffic growth


Airlines based in Africa and in the CIS are also expected
to register growth higher than the worlds 4.7% average
annual growth to 2032. Finally, North America and
Europe, which have more mature growth rates are
expected to grow at a slower pace, +3.0% and +3.8%,
respectively, but will still contribute 40% of the worlds
air traffic by 2032.

On a regional basis, the airlines located in the Middle


East, Latin America and Asia-Pacific will enjoy higher
than average traffic development, growing at 7.1%,
6.0% and 5.5% respectively. This is fuelled by the
aspirations of airlines to benefit from privileged access
to fast growing markets which will generate a higher
ability and desire to travel as time passes.

% of 2012
world RPK

20-year
CAGR

Asia - Pacific

29%

5.5%

34%

Europe

26%

3.8%

22%

25%

3.0%

18%

8%

7.1%

12%

5%

6.0%

7%

4%

5.8%

4%

3%

5.1%

3%

North America

1,000

2,000

3,000

4,000

5,000

2012
2032

Middle East
Latin America
CIS
Africa

46

Global Market Forecast

Low-Cost Carriers (LCCs) are now a global phenomenon,


especially in Europe and increasingly in Asia, the Middle
East and Africa. As the propensity to travel is highly
correlated with economic growth and air ticket price
stimulation, LCCs have been able to open new markets
and allow more people to fly more often.
Distinguished by their fleet simplicity, their predominance
on short-haul routes, fast turnaround times and rapid
growth, we expect LCCs to continue to increase their
global traffic market share to reach 21% by 2032, above

the 17% they represent today. Regionally, some shorthaul markets such as the Intra-Europe or Domestic
ASEAN for instance, are expected to have greater low
cost market presence, potentially taking a 60% share of
the short-haul market on these flows by 2032.
However, it is clear that whether considered low cost
or full service, airlines are taking the best from each
others models. This makes a clear differentiation more
difficult in some cases, particularly as we project 20
years into the future.

g
 lobal network carriers are the largest in 2012, but low-cost carriers are the fastest
growing between 2012 and 2032
2012 and 2032 share of World RPK traffic by airline type
Small Network

21%

Charter

Regional and Affiliate

Asia-Pacific to lead in world traffic by 2032


0

LCCs will fly an increasing amount of air traffic

20 years

+4.7%

world annual
traffic growth

% of 2032
world RPK

3% 4%
Major Network

10%

3%

4%
4%4%

Share of LCC traffic in 2032.

9%

LCCs

21%

17%

62%

59%

Global network

2012
2032

Global Market Forecast

47

04

Demand for
passenger
aircraft

Single-Aisle
more range, more seats
Today, there are nearly 12,600 Single-Aisle aircraft serving as a key element of the worlds aviation network,
enabling journeys to take place quickly and efficiently around countries and regions, as well as feeding the
hubs who themselves enable journeys between continents. They represent 78% of the total commercial
airline fleet of aircraft over 100 seats.

demand for passenger aircraft

By 2032, the number of aircraft will more than double to more than 24,600 aircraft. Some 20,242 of these will come
from new deliveries between now and 2032 with around 40% replacing older aircraft and around 60% targeting new
growth in the industry. A large number of these deliveries will come from new more fuel efficient aircraft like the new
A320neo. This variant delivers 15% lower fuel burn through the continuing application of new technology at the right
time, specifically through aerodynamic and engine improvements. Geographically, North America and Europe will drive
the demand, as they look to replace their aging fleets. These two regions combined will account for 46% of the overall
demand for new Single-Aisle aircraft. Asia, with its growing inter-regional and domestic networks and demand will also
take a significant share of the market with 34% of Single-Aisle demand.

The seating configurations in the Single-Aisle


market are broad, with the types segmented
between 100 to 210 seats. Our forecast
predicts that the centre of gravity for the
category will remain at 150 to 175 seats. Larger
capacity types will be more significant in volume
than smaller types, with for example more
than 8,900 deliveries or 43% of all Single-Aisle
demand, expected in the 175 and 210 seat
categories over the period. This broad variation
in operations, ranges and seating capacity
is why Airbus believes providing a family of
aircraft, with the broadest capability, will remain
key to meeting the needs of airlines and their
passengers in the coming years.

Single-Aisle fleet in service evolution


Fleet size

20,000

Growth

12,013
15,000

12,589

Source: OAG, Airbus

Replacement

8,229
5,000

Stay in service & remarketed

4,360

New deliveries & open demand for Single-Aisle aircraft


Neutral Seat category

3,039

210

20%
5,928

23%

6,912

150

1982

1992

2002

31%
3,179

125

2012

1,000
5%

1,000

19%

1,184
7%

100

1,500

2032

Beginning 2013

Route distance (nm)


2,000

New
deliveries
20,242

10,000

175

In 30 years, the average short-haul aircraft capacity increased from 129 to 151 seats
Short haul operations frequency distribution index vs. distance and aircraft capacity

24,602

25,000

2,000
10%

3,000
15%

4,000
20%

5,000
25%

6,000
30%

7,000
35%

Number of new aircraft


% of open demand

New deliveries of Single-Aisle aircraft by region

500

Europe

Total market

4,584 units

~$1.80
trillion

North America

0
0

75

100

150

225

75

100

150

225

75

100

150

225

75

100

150

225

4,676 units

Aircraft capacity

Low number
of operations

The Single-Aisle market has evolved over time, with not


only the number of aircraft in this segment increasing, but
also the size and range over which these aircraft operate.
In 2012, around 5% of the fleet was used on what is
traditionally considered long-haul routes, over 2,000nm;
a trend that it is likely to continue, with the introduction
of newer, more range capable variants over the forecast
period, like the A320/A321neo. It is noticeable from the
heat map above that ranges have increased, but there
has also been a very noted increase in size with average

50

Global Market Forecast

High number
of operations

aircraft used in this segment growing from 129 to 151


seats. One reason for this is simply that existing routes
have grown and the simplest, most efficient way to
meet demand is through up-gauging in terms of aircraft
size rather than adding extra frequency. This has been
achieved by the purchase of larger Single-Aisle units like
the A321 and 737-900, but also through the densification
of existing aircraft cabins through the use of such
innovations as slim back seats.

23%

23%
World
20,242
units

34%
AsiaPacific
6,809 units

Latin
America

9%

1,794 units

4%

CIS

4%
3%

871 units
Middle East
779 units
Africa
729 units

Global Market Forecast

51

Twin-Aisle

New deliveries of Twin-Aisle aircraft by region

Middle East
875 units

North America
783 units
Latin America

a focus for new technology

449 units

The future importance of this segment of aircraft is clear: not only because it will generate value from aircraft
deliveries over the next 20 years, but because of the effort aircraft manufacturers will make to deliver aircraft, with
the latest technologies, meeting airline demand, which has already created a significant backlog for these types.

13%
15%
Europe

demand for passenger aircraft

Like the smaller Single-Aisle aircraft, Twin-Aisle aircraft


also provide a varied and broad operational capability
to the market. These aircraft take passengers on their
journeys on high density, short-haul routes, like many
in China or other parts of Asia, or low-density long-haul
routes, many between the more mature markets and
emerging economies. Some 37% of all RPKs were flown
on the 3,399 Twin-Aisle aircraft in service at the beginning
of 2013. By 2032, the fleet of Twin-Aisle aircraft will more
than double to almost 7,670 aircraft. These aircraft will be
used to connect major aviation hubs across the globe,
but also to connect major hubs to secondary cities. 37%
of the deliveries, 2,510 aircraft, will replace existing, less
fuel efficient aircraft with new, eco-efficient aircraft like the
A350XWB. Some 4,270 aircraft will be used for growth.
Asia-Pacific will be the largest contributor to the demand
for growth in this market segment with nearly half of all
Twin-Aisle deliveries over the next 20 years.

World
6,779

1,034 units

Africa

12%
6%
3%
3%

213 units
CIS
192 units

units

48%

Twin-Aisle fleet in service evolution


Source: Airbus

Fleet size

7,666

8,000

Total market

7,000
6,000

AsiaPacific

Growth

4,267
5,000
4,000

New
deliveries

3,233 units

~$1.82
trillion

6,779

3,399

3,000
Replacement

2,512

2,000
1,000

Stay in service & Remarketed

887

In terms of the size of aircraft, the Twin-Aisle segment


incorporates aircraft between 250 and 400 seats.
The centre of gravity in this segment is in the 250-300
categories, which is expected to represent 70% of the
Twin-Aisle demand, a market where the A350XWB,

A330 and 787 compete today. But, aircraft in the 350400 category will still represent nearly 2,100 units over
the next 20 years, a segment where the A350-1000XWB
and other competing types will meet demand in the years
to come.

2032

Beginning 2013

New deliveries of Twin-Aisle aircraft


Neutral Seat category

779

400

1,306

350

2,256

300

2,438

250
500

52

Global Market Forecast

1,000

1,500

2,000

2,500

3,000

Number of new aircraft

Global Market Forecast

53

Very Large Aircraft

urbanisation trends, it is unsurprising that the regions


airlines will take 47% of these aircraft over the next 20
years. The Middle East will be the second largest region
in terms of demand for VLAs, at 26%. This can be seen
today in the size of the backlog of A380s within Middle
Eastern carriers.

The requirement for VLAs will grow with the worlds


network and as the ability of more and more of the
worlds people to fly grows. By 2032, this demand will
result in a need for more than 1,300 VLAs. Given the
projected growth in Asia-Pacific, both economic and air
passenger traffic growth, the regions demographics and

Moving people between the big points


Concentration of flights in long-haul markets
August 2012 Schedules - Source: OAG, Airbus

Number of departures per hour

In 3 hours

700

50%

600

North
America

of the flights

500

In 8 hours

400

90%

of the flights

300

A380s link the worlds aviation Mega-Cities

Europe

A380 weekly departures: December 2013 - Source: OAG, Airbus

100

Top 10 A380 airports ranked by average weekly departures

150
Singapore
Lufthansa
Emirates

100

Singapore
Qantas
Malaysian
Emirates
British Airways

Thai
Singapore
Malaysian
Emirates
Air France

Thai
Emirates

50

Singapore
Qantas
Korean
Emirates
Singapore
China Southern
Qantas
Malaysian
Emirates
Thai
China Southern Air France
Singapore
Air France

Thai
Singapore
Lufthansa

Thai
Singapore
Qantas
Malaysian
Emirates
British Airways

Dubai

Singapore

London
Heathrow

Paris-CDG

Bangkok

Sydney

Los
Angeles

Narita

Frankfurt

Hong
Kong

23:00-23:50

22:00-22:50

21:00-21:50

20:00-20:50

18:00-18:50

19:00+19:50

17:00-17:50

16:00-16:50

15:00-15:50

14:00-14:50

13:00-13:50

12:00-12:50

New deliveries of Very Large Aircraft by region

Total market

AsiaPacific

11:00-11:50

10:00-10:50

08:00-08:50

07:00-07:50

06:00-06:50

05:00-05:50

04:00-04:50

03:00-03:50

02:00-02:50

200

01:00-01:50

Qantas
Emirates

00:00-00:50

250

200

09:00-09:50

demand for passenger aircraft

Because the Airbus GMF is based on demand rather than a pure supply model, it identified the need for
Very Large Aircraft (VLA) many years ago. It is only today, with more than 100 aircraft in operation, aircraft
like the A380, that the benefits of this segment have become more than analysts predicted. VLAs are truly
connecting the world, whether major hub or secondary city, with well over 100 flights a day carrying more
than a million passengers every month. Many of these passengers have chosen to fly on a VLA due to the
comfort and overall passenger experience this category of aircraft can provide.

Middle
East

622 units

~$519
billion

345 units
26%

Over 150 flights per day carrying more than a million passengers per month.
Today, some airlines are operating the A380 for example,
at an extremely comfortable 407 seats. Offering airlines
the opportunity to pamper their high yield passengers,
and at the same time giving passengers at the back of
the plane more space and comfort than other aircraft
types. Airline customers have chosen various seating
configurations from this luxurious arrangement, right
up to single class layouts of 840 seats, 13 less than
the maximum capacity of 853 seats. This gives airlines
the flexibility to mix comfort, revenue and cost per seat
to more precisely match their own distinct brands
and business models. Today, A380 configurations are
typically between 500-520 seats, and include three
and four class configurations.

54

Global Market Forecast

At an operating level, this capacity flexibility allows


airlines to deploy the right capacity at the right time,
critical to optimally serve their trunk routes, which are
the driver of revenue on their networks. Long-haul
flights, especially between mature and expanding
markets, are characterised by two daily demand
peaks. VLAs allow an airline to capture these
peaks in the most cost efficient way by reducing
or eliminating the need for closely spaced multiple
departures, which add complexity and cost to the
network. There is also a revenue advantage as these
peaks are in part also driven by passenger preference
to have a night or convenient day flight option, for
which they will pay a premium.

46%

Europe

World
1,334
units

209 units
16%

2% 5%
2% 3%
North America
62 units
Africa

Latin America

28 units

36 units
CIS
32 units

Global Market Forecast

55

C
 oncentration of flights between Mega-Cities
August 2013 Schedules Source: OAG, Airbus

A380

London to Singapore
6:00

12:0

18:0

Others

6:00

24:0

Departure time

London

4 flights within 3 hours


Singapore

Singapore to London
6:00

12:0

18:0

6:00

24:0

Departure time

demand for passenger aircraft

4 flights within 2 hours

Slot and time


zone constraints
drive frequency
concentration.
The A380 is the
most efficient
solution for growth.

56

Global Market Forecast

Global Market Forecast

57

05

Demand
by region

Asia-Pacific

S
 easonality is increasing on the PRC-Pacific flow
Source: OAG, Airbus

Billions of ASKs
5.0

+30%

4.5

More flying, near and far

4.0
+5%

3.5

+10%

+27%

+17%

+9%

3.0
2.5
2.0
2006

2007

2008

2009

2010

2011

2012

% is based on the difference between peak and end of seasonal period

Increasing seasonality signifies growing regional tourism.


rapidly; faster than in the rest of the world and in particular
traffic within the region itself. Domestic traffic will increase
6.4% on average every year over the next 20 years. In
2012, Asia-Pacifics domestic traffic represented 36% of
+30%
global domestic traffic in terms of RPKs
and will reach
52% by 2032. Domestic and intra-regional traffic for
Asia-Pacific combined will account for more than 25% of
+10%
total global RPKs by the end of our forecast period.

If we take the specific example of China, the weight


of tourism and leisure travel is becoming increasingly
important. Chinas expenditure on travel abroad reached
US$ 102 billion in 2012, which represents an increase of
40% from 2011. It is, therefore, not a surprise that China
has become the number one source in the world in terms
of tourist spending according to UNWTO.
With these positive drivers, Asia-Pacific traffic has grown

Already developed but much more to come

demand by region

After a decade of tremendous growth, the Asia-Pacific region is recognised as one of the worlds major
economic centres. Taking in the five biggest economies in Asia, it is actually the most important in
terms of GDP, ahead of North America and the EU. While a number of countries in the region can be
considered emerging, they are by no means small or insignificant. In fact, they contribute meaningfully
to the strength, diversity and future growth that the region as a whole represents.

The people of Asia will continue to enjoy the economic


development the region has witnessed in the past.
Looking at the evolution of household earnings, forecasts
published by The Economist Intelligence Unit, show that
the share of households earning more than 10,000 US$
per year in China will grow from 5.9% in 2012 to 14.9%
in 2017. Similarly, in India it will increase from 5.3% to
8.8% over the same period. In addition, the size of the
middle-class in the region is currently booming with this
influential socio-economic group characterised by people

mainly living in urban areas and already highly connected


to the world, with easy access to information and
communication technology. Historical data shows these
positive developments have already started to shape the
aviation market. Examining traffic evolution on some intraAsia flows, it can be seen that seasonality, for example,
is increasing. This trend towards higher seasonality in
regional traffic shows that leisure travel associated with
holidays and tourism seasons are increasingly driving the
shape of demand for air travel in Asia.

western area, heralding the prospect of greater need


and, therefore, greater development in air travel to and
from these regions.

In China, there are currently three aviation Mega-Cities in


coastal areas (Beijing, Shanghai and Hong Kong), while
there are none in the western part of the country. Using
a tool to indicate concentration, such as the Herfindahl
index, it is possible to compare the split of traffic in
different regions in the world. Using this index we can
see that the concentration of air traffic is twice as big in
China than in the US and four times more than Europe.
However, western regions of China are catching up: if
we look at real GDP growth in the third quarter of 2012
for China, IHS Global Insight indicates that economic
growth was 9.4% in the coastal areas, and 11.9% in the

Projected future global network development in AsiaPacific will have an important role in shaping the
future global network as a result of the dynamic air
travel market in the region. Examining just the longhaul routes, more than 50% of the new routes created
between 2013 and 2032 will be connected to AsiaPacific. This gives a flavour of the dynamic nature of air
transportation in the region.

Network development will be particularly active in Asia-Pacific


Share of new long-haul* routes
opened on the 2013-2032 period

Repartition of destinations of new routes opened


from Asia-Pacific to the rest of the world

100%

22%
North America

49%

Within rest of the world

12%
Africa

7%
CIS

50%

51%

39%

31%

Through Asia-Pacific

Europe
0%
* Route length > 2000nm

12%

Within Asia-Pacific

27%

1%

Middle East

Latin America

More than 50% of new long-haul routes will touch the Asia-Pacific region.

60

Global Market Forecast

Global Market Forecast

61

Traffic from Asia-Pacific to the rest of the world will


continue to increase and will experience the most
significant growth in origin and destination (O&D) traffic

on flows connecting Asia-Pacific to other emerging


regions. As a result we are moving to a more balanced air
transportation network.

RPK TRAFFIC GROWTH FROM/TO ASIA-PACIFIC BY REGION

Traffic between Asia-Pacific and emerging regions will increase at a high rate

6.1%

4,000

2012-2032 CAGR

3,500

From Asia-Pacific
to emerging regions

3,000
2,500
4.6%

1,500
500

Europe
North America

Asia-Pacific

4.6%

5.1%

World

Domestic
and Intra-Regional

Asia-Pacific

From Asia-Pacific
to Western regions

2,000

TOTAL RPK TRAFFIC GROWTH

Size of bubbles proportional to RPK volumes

O&D RPK from Asia-Pacific to other world regions (billions)

1,000

Results

6.1%

5.1%

5.1%

7.0%
6.9%

6.7%

Africa

CIS

5.1%

6.5%

2012

2032

0
Europe

Latin
America

Middle
East

With its unique combination of characteristics including


geography, country mix, economic potential and large

North
America

5.8%

6.3%

4.4%

4.7%

20232032

20-year
growth

CIS

Intra
Asia-Pacific

6.7%

Latin
America
6.5%

population centres, Asia also has distinct aviation market


characteristics.

Africa

Middle East

6.9%

7.0%

20132022

Average capacity on intra-regional routes


Source: OAG, Airbus September 2012

Average aircraft capacity (seats)

FLEET IN SERVICE EVOLUTION

NEW DELIVERIES BY SEGMENT

Fleet size*

Number of new aircraft

250
Asia-Pacific

Europe

North America

12,000

200

demand by region

10,000
150

+4.5%

8,000
7,000

per annum

6,000

8,000

5,000

Growth

6,514
6,000

100

4,650

New
deliveries
10,664

4,000
Replacement

50

4,150

200

400

600

800

1,000

1,200

Intra-regional routes are operated with higher capacity in Asia-Pacific.


As previously mentioned, intra-regional traffic volumes are
very important in Asia-Pacific. Combined with a relatively
high concentration of traffic, this results in routes that
are enjoying huge and growing volumes of traffic. As a
result, the way the need for capacity is handled in Asia
is different to other regions, such as Europe and North
America; aircraft size plays a bigger role. For example,
the average aircraft capacity on routes of around 400nm
is between 150 and 200 passengers in Asia, much
higher than in North America where the average capacity

62

Global Market Forecast

1,,400

1600
Range (nm)

is between 50 and 100 passengers. It is not a surprise


therefore, that the Asia-Pacific market is one where the
A380, the largest passenger aircraft in the world can be
used effectively on intra-regional routes.
Another differentiating aspect of Asia-Pacific, is the aircraft
average age of its fleet. Asian carriers fleets are among the
youngest in the world. Contrary to other emerging regions
the weight of remarketed aircraft (i.e. aircraft coming from
another operator), is low in the region, with airlines favouring
new more efficient aircraft to meet their requirements.

2,220

4,000

1,013

3,000

622

2,000

2,000
0

6,809

11,164

1,000
Stay in service & Remarketed

500

2032

Beginning 2013

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

4.5%

Urban population

6.5%

6.1%
Inter-regional

1.9%

5.5%
* Passenger aircraft 100 seats

Singleaisle

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

5.8%

4,650

Beginning 2013
In 2032
11,164

20-year
new aircraft
deliveries

10,664

** 2013-2032 CAGR

Global Market Forecast

63

Europe

which saw airlines cutting flights to match lower levels of


demand. In this GMF it is projected that aircraft utilisation

improvement trend will continue in the future, with up to a


5% improvement by 2032.

Top 20 european airlines average aircraft utilisation has improved


Source: ASCEND, Airbus

Utilisation
(annual flight hours per aircraft)

flying through the turbulence

3,500
3,400
3,300
3,200
3,100
3,000
2,900
2,800
2,700
2,600
2,500

1995

1996

1997

1998 1999

2000

2001

2002

2003

2004

2005

2006

2007 2008

2009

2010

2011

2012

Except during crisis, European airlines keep increasing their aircraft average utilisation.

demand by region

Although the long-term trend of a more equitable distribution of global wealth will reduce the weight of
developed countries in the future, Europe, whose airlines contributed 26% of world-wide ASK in 2012,
is a heavy weight of the air transport market. Its in-service fleet is forecast to represent 20% of the worlds
total by 2032.

Another aspect that needs to be examined is hub


efficiency, which is particularly important for airlines
that rely on connecting traffic to feed their network. The
numerous hub and spoke systems in Europe provide
passengers with a large set of different possible travel
itineraries. These appeal more or less to the potential
customer depending on, amongst other things, total
elapsed time of the journey or the time available for
the passenger to connect at a hub. Obviously flight

schedules, as the primary product offered by an airline,


have to be attractive to passengers, and airlines have
taken the opportunities to offer more connections with
fewer flights. Considering a hub efficiency indicator, which
is constructed by dividing the number of good on-line
connections offered by the theoretical maximum number of
connections, it can be illustrated that many European hub
and spoke airlines have improved their flight schedule at
their respective hub over the last five years.

Hub efficiency index evolution for major european airports


Source: OAG, Airbus

Hub efficiency index

Economy

80%
2007

The Eurozone economy is beginning to stabilise, even if


today confidence levels remain relatively low. IHS Global
Insight forecasts a slight contraction in Europe in 2013
and then returning to low growth in 2014 onwards.
Southern Europe is expected to see a slightly longer
period before a return to growth, partly due to tough
austerity programs, tight credit and a strong euro. But,
by 2015 this is expected to change and southern Europe

will return to growth. By 2022, Southern European


economies are expected to surpass their pre-2008 peaks
in GDP. Even with these on-going difficulties. Europe
will still represent 23% of the world economy by 2032.
Real trade is one area of the European economy that is
expected to see strong growth, with a forecast of 3.6%
CAGR over the next 20 years, signalling the continued
importance of Europe to the global economy.

Market trends
The European air transport market landscape has
changed dramatically in the last 15 years. Low-cost
carriers have not only stimulated demand on short-haul
markets, but also captured some market share from flag
carriers and charter operators. Traditional carriers have in
many cases, adjusted their operating mode to take the
best from the LCCs recipe: increased aircraft utilisation,
unbundled fares, etc. This quest for a lower cost base
has also paved the way for more airline alliances, mergers
and acquisitions. Given the financial difficulties some

64

Global Market Forecast

75%
70%
65%
60%
55%

European airlines still face, this round of consolidation is


likely to continue in the coming years.
With an increasingly challenging environment, airlines
seek productivity improvements wherever they can. A
very common avenue is to maximize aircraft utilisation,
because the fixed cost of ownership can be amortized
on a higher number of flight hours. This is what the top
20 European airlines have achieved over the last 15
years, with the notable exception of 2009/2010 crisis,

2012

CDG

LHR

MAD

AMS

FRA

MUC

European majors have improved their flight schedule connectivity wherever possible.
While the efficiency index increased at most European
hubs, it appears that flight schedule connectivity at
the most congested airports, London Heathrow and
Frankfurt International, hasnt improved over time. This is
mainly due to the difficulty of optimising a flight schedule
with extreme slot constraints, whilst at the same time
accommodating market growth.
Congestion at major European airports has been a long

standing issue that has not yet been fully addressed.


Even though Frankfurt inaugurated a fourth runway in
2011, London airports future remains unclear, with no
existing short-term plans to expand Heathrow or build a
brand new airport. One possible solution for constrained
airports in the short to medium term is for airlines to
increase the average size of their aircraft to preserve their
market positioning.

Global Market Forecast

65

Results

Focus on the "Kangaroo route"


With nearly 1,500,000 passengers a year, the market
between Australia and the United Kingdom, also known
as the Kangaroo route, is the largest non trans-Atlantic
international market from Europe.

Through its membership of the Commonwealth, Australia


has always had strong links with UK both economically
and demographically, leading to significant demand levels
both on the business and Visiting Friends and Relatives
(VFR) segments.

TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO EUROPE BY REGION


Size of bubbles proportional to RPK volumes

Asia-Pacific
Domestic
and Intra-Regional

Europe

4.6%

World

Europe

The kangaroo route is one of Europes largest markets

3.3%

Source: Sabre Global Demand Data, Airbus

5.1%
4.4%

4.7%

4.2%

3.8%

4.0%

20132022

20232032

20-year
growth

2012 Top international country pairs from/to Europe, ex trans-Atlantic


Annual RPKs (millions)
0
5,000

10,000

15,000

20,000

25,000

North
America
3.1%
CIS

Australia |} United Kingdom

5.8%

India |} United Kingdom


China |} Germany

Latin
America

Canada |} United Kingdom

4.4%

Middle East
5.0%

Africa
4.6%

France |} Japan
Hong Kong |} United Kingdom
Germany |} Thailand

FLEET IN SERVICE EVOLUTION

South Africa |} United Kingdom


China |} United Kingdom

+3.1%

Fleet size*

Germany |} Japan

8,000

per annum

NEW DELIVERIES BY SEGMENT


Number of new aircraft
6,000

7,127

4,584

5,000

demand by region

6,000
A very concentrated market
Source: Sabre Global Demand Data, Airbus

2012 Top origin/destinations between Australia and United Kingdom

30%

29%

Others

LON-SYD

11%

17%

LON-BNE

LON-MEL

13%
LON-PER

66

Global Market Forecast

Unlike the majority of international markets from Europe,


the kangaroo route is challenging as it can not be
achieved with direct flights, and it is relatively concentrated
with only four origin/destinations contributing to 70% of
the total demand.
This configuration has prompted many airlines to organise
their flight schedule to address specifically this market,
significantly increasing the level of competition.
Thus, the number of one-stop connecting opportunities
between Australia and the UK rose 80% between 2003
and 2012. At the same time, the market share of UK
and Australian carriers dropped 10 percentage points,
primarily to the benefit of Middle Eastern airlines which
now carry about one third of the demand.
Recent partnerships formed by Gulf carriers with
traditional network airlines should contribute to further
evolve the market, enabling passengers to benefit from
an expanded and increasingly attractive offer. Over the
next 20 years, traffic on the Kangaroo Route is expected
to grow at a robust average annual rate of 4.0%.
Despite the challenging context faced by European
airlines, their traffic is expected to grow at 4.1% per
year over the next 20 years, generating a demand for
5,800 new aircraft, 56% of which to accommodate the
market growth.

Growth

3,264

3,863

4,000

New
deliveries
5,827

Replacement

4,000
3,000

720

2,000

2,563
2,000

1,300

0
Singleaisle

2032

Beginning 2013

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

1.8%

Urban population

3.6%

3.3%
Inter-regional

0.5%

4.3%
* Passenger aircraft 100 seats

209

1,000

Stay in service
& Remarketed

314

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

4.0%

3,863

Beginning 2013
In 2032
7,127

20-year
new aircraft
deliveries

5,827

** 2013-2032 CAGR

Global Market Forecast

67

North America
Where mature means big

Market Trends
There are several trends in North America that cannot be
ignored, such as the pending replacement demand for
ageing aircraft and the on-going wave of consolidation.
These two trends have a large impact on how airlines
will purchase aircraft and satisfy demand in coming
years: one driving demand mostly for Single-Aisle aircraft
and the other driving up-gauging. In recent GMFs, we
have discussed these trends and how they will affect
our industry. There are three other trends that we have
not as emphasised that are worth exploring; capacity
management/profitability, pockets of growth in mature
markets and the contribution of Visiting Friends and
Relatives (VFR) traffic in North America.
Over the last ten years, airlines in North America
have given a great deal of focus to increasing
profitability through stricter capacity management
and revenue from ancillary services. As an example
of their success in ancillary revenue, carriers
in the US have increased their revenue from baggage fees
by 650% over the last five years; reaching $3.5 billion
in revenue last year. Capacity management has also
been key. Focusing on increasing aircraft utilisation
and increasing load factors means that airlines in North
America were able to absorb growth while their fleet size
has remained relatively stable. However, the amount of

demand by region

The importance of aviation to North Americans and the importance of North America to the aviation industry
today and in 20 years is undeniable. There are more than 800 million passengers originating and/or ending
their trips in North America, driving a 29% share of all world passengers in 2012. Even with slower growth
rates in North America compared to emerging markets, a small amount of growth in such a huge market has
a profound impact. Over the last ten years, origin and destination (O&D) passengers to/from/within North
America has grown at a rate of 1.9% per year. If in 2013 O&D passengers grow again by 1.9%. The delta in
number of passengers between 2013 and 2012 is about one and a half times the population of New York
City. Airbus recognises the great importance of this region and has displayed its commitment this year by
starting work on the new final assembly line in Mobile, Alabama.

growth that can be absorbed through these mechanisms


is limited, and airlines in North America will need to
expand their fleet size or up-gauge their aircraft to meet
this demand.
Over the past 20 years, airlines from the region have
grown load factors from 61% to 82%. Some airlines
from North America are setting the standard for strong
load factor performance. Over the same period, the
level of ASKs carried by each Twin-Aisle and SingleAisle aircraft in the North American fleet has grown by
21% and 15% respectively. But, to continue the growth
in the number of passengers airlines can capture they
will need to increase their capacity either through more
frequencies or through larger aircraft. As explained in the
GMF Methodology section, for each of our regions/flows
we analyse a number of factors to determine whether it
is probable for an airline to increase frequencies, increase
frequencies and aircraft size or solely through increases
in aircraft capacity. North America is known for favouring
increases in frequencies over increases in capacity; but
over the last 20 years, the average size of aircraft flying
on domestic routes and routes between the US and
Canada have grown by 9.5%. This is a trend that we see
continuing into the future.

82%
Average load factor
for the regions airlines

North American carriers still more efficient


Source: OAG, ASCEND, Airbus

North American carriers aircraft utilization, expressed in ASKs per aircraft in service
Millions of ASKs per aircraft
900
800

Economy
The economy of North America is moving in the right
direction: unemployment rates remain below that of
other mature markets and the general economy is again
seeing growth. Unemployment rates are expected to
return to below 6% per year by 2016 and continue its
decline through 2020. Over the same period, private
consumption, which represents around 70% of the US
GDP is expected to rise at a rate of 2.3% over the next

700

ten years. There are still some on-going concerns around


national debt levels, but the worst concerns seem to be
decreasing. Over the next 20 years, the real GDP of North
America is expected to grow at 2.5% per year, slightly
lower than the world-wide average of 3.1%. However,
this means that the North American economy will still
represent over 17% of the world GDP in 2032.

Twin-aisle

600
500
400

Single-aisle

300
200

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Over the last 20 years, ASKs per aircraft in service have grown by 21% and 15% for Twin-Aisle
and Single-Aisle aircraft respectively.

68

Global Market Forecast

Global Market Forecast

69

between North America and Europe (representing 7%


of passengers in 2012). Both of these flows are highly
mature with a huge number of seats being offered.
But, it is not all low growth for North America; there are
a number of regional O&D passengers flows that are
displaying strong growth rates.

Over the past ten years, O&D passengers to/from/within


the region have grown at 1.9% per year according to
Sabre. This low level of growth is mostly a result of the
maturity of the region. The two most important flows in
the region are domestic and intra-regional traffic (which
represent 75% of passengers for the region) and traffic

Results
TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO NORTH AMERICA BY REGION


Size of bubbles proportional to RPK volumes

Pockets of growth in a mature economy

North America

Europe

Source: Sabre, Airbus

3.1%

World

Domestic
and Intra-Regional

CAGR 2002-2012
% of 2012 international traffic

Top ten fastest growing O&D flows with North America

North America
5.1%

1.9%
6.5/1.1
3.9/17.1

North
Africa

Caribbean

5.9/0.6

Central America
with Mexico

3.4/16.0
South America

Sub-Saharan
Africa*

6.3/8.5

Middle
East

5.0/4.6

Latin
America
4.6%

7.6/1.3
South
Africa

* excluding South Africa

demand by region

Africa

Middle East

4.7%

6.5%

20232032

20-year
growth

Number of new aircraft

+2.2%
per annum

6,000

There are also a large number of international students in


North America which further contributes to the amount
of VFR to, from and within North America. According
to UNESCO, there are over 780,000 international
students studying in North America, representing 22%
of all international students in the world. Of these, over
680,000 study in the US making it the largest destination
in the world for foreign students.

4,104

4,000

4,676

5,000

6,394

4,000

2,290

the UN Population Division, there are over 50 million


immigrants living in North America with nearly 43 million
living in the United States; making the US the largest
destination country in the world. Immigrants represent
nearly 20% of the population of North America between
the ages of 20-64 making it a major contributor to the
demographic landscape within the region. Internal
migration within North America is another major
contributor of air traffic. According to a survey by Gallup,
24% of all adults have changed cities within the North
America in the last 5 years.

Asia-Pacific
5.1%

Growth

New
deliveries
Replacement

3,000

5,521

600

2,000

3,231
2,000

183

62

1,000
Stay in service & Remarketed

873

0
Singleaisle

2032

Beginning 2013

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

2.5%

Urban population

4.7%

1.9%
Inter-regional

1.0%

4.4%
* Passenger aircraft 100 seats

Global Market Forecast

20132022

Fleet size*

6,000

70

3.5%

NEW DELIVERIES BY SEGMENT

8,000

Immigration and International students are major drivers


of air traffic, as it drives traffic back to home countries
and VFR. In 2011, 42% of American residents selected
VFR travel as their primary purpose for traveling overseas.
North America is one of the largest destinations for both
immigrants and international students. According to

3.3%

FLEET IN SERVICE EVOLUTION

The top ten fastest growing international O&D flows for North America represent more than 55%
of all international O&D traffic.

Each of the top six fastest growing flows to/from North


America has grown faster than the world-wide average
over the last ten years. In 2002, these flows represented
14% of inter-regional O&D traffic to/from/within North
America, whereas today these flows represent over 20%.
This growth highlights many of the topics that have been
discussed in the drivers of traffic section. When examining
the last decade in terms of country-pair O&D growth, it is
important to note that the majority of the fastest growing
flows to/from North America are in relation to Canada. An
example of this is the growth in traffic between Canada
and Mainland China which has grown at more than 10%
per year over the last ten years.

3.6%

PRC

6.8/3.2

2.9/0.4

4.7%

4.8%

CIS

Indian Sub-continent

7.5/3.7

4.4%

CIS

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

3.5%

4,104

Beginning 2013
In 2032
6,394

20-year
new aircraft
deliveries

5,521

** 2013-2032 CAGR

Global Market Forecast

71

Middle East

Economy
The Middle East is a very diverse region, with some of the
fastest growing countries in terms of GDP and some of the
most troubled. Overall, the Middle East is forecast to have
slower economic growth in 2013 (up 2.6% over 2012)
due to lower fuel prices and continued weak demand
due to the on-going economic difficulties of some major
importers. But, strong growth is expected to return in
2014 with IHS Global Insight forecasting an average of
4.1% annual growth from 2014 to 2020. Over the full 20year period, almost all of the countries of the Middle East

global scale with a global presence

are forecast to surpass the global average growth rate.


Part of the forecast growth in GDP comes from continued
increases in private consumption; over the next 20 years,
real private consumption is expected to grow at 4.6%
per year, far above the world-wide average of 2.9% per
annum. The Middle East is expected to further leverage
its position as a key economic hub between Africa, AsiaPacific and Europe to continue to enhance their global
status in trade and economic development.

Middle East aviations impressive numbers


81%, the worlds population is less than 8 hours flight
from one of the Middle Easts major hubs
22%, the market share of LCCs between countries in
the Middle East region
200 million passengers were handled by Middle
Eastern airports in 2012. Further investments are ongoing to boost the airport capacity to accommodate
ever increasing demand
200 international routes with over 500 daily passengers
departing from or arriving to Middle Eastern airports

in 2012. In comparison, there were only 43 such


routes in 2002
$1.5 billion profit generated by Middle East airlines
in 2011 and 2012; up by 10% in comparison to 2010
despite the gloomy economic situation in Europe and
the civil unrest affecting some parts of the region
Almost 1 million seats offered on A380s every month
at Middle Eastern airports underlining the need for
bigger and fuel efficient aircraft

The regions diversification goals enabled by aviation

demand by region

The last three decades have been witness to the tremendous changes in the Middle East region. From
the hot sands of the gulf desert striking new skyscrapers have risen into cloudless skies, artificial islands
have been created, major business centres developed, leisure areas for booming tourism, highways
connecting expanding cities, with major airlines and airports on a global scale providing the connectivity
and capacity needed for this dynamic region to continue its rise. The Middle East is a very diverse region,
with some of the fastest growing markets and economies in the world in some countries, and on-going
economic and geo-political difficulties in others.
Despite some difficulties, many governments in the
region, are aware of the rising importance of aviation
to the world economy and to their own. They have
made its development a cornerstone of strategic
plans to establish the region as a key element of
globalisation and in the worlds current and future
aviation network. The result of this voluntary policy is
the impressive growth of the Middle Eastern carriers
who enjoyed a remarkable 8.2% traffic growth rate in
2012. Major carriers have confirmed their resolution
to pursue ambitious commercial strategies to
expand both their short and long-haul networks by
confirming orders for latest new and efficient aircraft,
including the A320neo, A350XWB and A380.
If the unique geographic situation of the region is
enabling the local carriers to be best positioned to
capture and satisfy travellers coming from all over
the world, with intra-regional air transportation also
growing.

 teady growth of the traffic from,


S
to or within middle east countries
Source: OAG, Airbus

Middle East monthly traffic evolution


ASKs (billions)

Gulf countries are using the funds generated by their


oil and gas industries to invest and extend their global
influence especially in emerging markets. The investment
internationally is not solely focused on oil and gas: Gulf
countries are looking at numerous fields such as other
energy sources, chemicals, financial services or even
sports. In 2012, the Gulf Cooperation Council (GCC)
members had more than US$160 billion worth foreign
direct investment abroad.
To illustrate the regions commitment to be recognised
and play a more important global role, Qatar, is going to

host 2022 World Cup, bringing the worlds attention to


a country which has just two million inhabitants. Today,
Qatar is one of the world fastest growing economies
with a yearly average growth rate above 15% per
annum between 2005 and 2012. In addition, the Qatari
government plans to invest more than US$225 billion
over the next 5 years, to transform the country into a
regional and world-wide business hub. The aviation
industry will receive its part being considered in Qatar
and in the Middle East in general as a powerful tool for
economic development.

middle east connecting the world

70

Source: OAG, Airbus

Monthly available seats on wide-body aircraft in 2012 (thousands)

60
50
40
30
800

20

JFK

10
0

GLA
AMS HAM
MAN BHX DUS
MUC
LHR LGW
FRA
VIE
CDGZRH
VCE
MXP
FCO
MAD

2007

2008

2009

2010

2011

2012

72

Global Market Forecast

ISB
LHE
DEL
KHI
BOM
ADD

LOS

CMB
MLE

NBO

400

PEK

ICN

NRT

PVG
CAN

DAC

HKG

BKK

MNL

KUL
SIN
CGK

MRU
JNB

This has been very clearly displayed in the rapid expansion of LCC operations and the capture of traffic by LCCs, both within
the region and to/from the region. This is largely driven by a young and dynamic population, many sharing the same language
and eager to seek opportunities for work and leisure both abroad and within the region. The traffic within Middle Eastern
countries has doubled during the last decade. Both international and regional air transport are expected to keep growing,
with billions of dollars being invested in airlines and airports to meet increasing demand and regional aspirations.

IST
CAI

600
2006

SVO
DME

200

PER
SYD

78 distinct routes departing from a Middle Eastern airport were offering more than 1,000 daily seats in 2012.

Global Market Forecast

73

Dubai, with its two million inhabitants, is one of the seven


Emirates of the United Arab Emirates. The city-state has
a long history with aviation and since 1960 government
and industry have been carrying out a consensus-based
partnership favouring a liberal environment to drive the local
carriers and benefit the Emirates economy as a whole.
Investments in the infrastructure have propelled Dubai to
become a major actor in the aviation sector, with an open
skies policy making it possible for 150 airlines to operate
out of Dubai International Airport. To date, the UAE has
signed full liberalisation agreements with 113 countries.

According to Oxford Economics, aviation supported


150,000 direct and indirect jobs in Dubai and another
160,000 in the tourism industry in 2012 and for the
first time more than 10 million tourists visited. Aviation
contributes to over $22 billion of Dubais GDP, from which
$10 billion is generated by the tourism sector. The study
predicted that the contribution of the aviation sector to
rise from 19% today to 32% of the Dubais GDP by 2020.
Abu Dhabi also expects 162,000 jobs to be supported by
the aviation industry and will contribute up to $11 billion
to its GDP by 2016.

Results
TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO THE MIDDLE EAST BY REGION


Size of bubbles proportional to RPK volumes

Middle East

Domestic
and Intra-Regional

North
America

World

Middle East

6.5%

5.2%

Middle East tourism continues to grow

7.3%

Source: UNWTO, Airbus

Europe

Middle East tourism evolution

5.5%

5.0%

70

Arrivals (millions)

60

Latin
America

50

8.3%

6.4%

5.1%

CIS

4.4%

7.8%

4.7%

40

Africa

30
Receipts ($billions)

20

Asia-Pacific

7.6%

7.0%

10
0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

In 10 years, the number of tourists visiting Middle East has doubled.

Fleet development

demand by region

The surge of the aviation industry in the Middle East is


second to none in the world. In the last 20 years, the
fleet size of the regions carriers has quadrupled from 218
aircraft of over 100 seats in 1992 to 875 at the beginning
of 2013. More than half of these aircraft are operated
on medium and long-haul routes, highlighting the global
strategy adopted by the regions airlines, which aim be
able to connect any two cities in the world. But, there has
also been a very impressive growth rate in the SingleAisle market, largely driven by the emergence of LCCs in
the region. The growth in the fleet of Single-Aisle aircraft

20132022

for the region has outpaced the growth in Twin-Aisle and


VLA aircraft at 8.1% per year, compared to 6.5% per year
for widebody aircraft.
The influx of new fuel efficient aircraft into local carrier
fleets, has helped them offer their customers the best
and most comfortable aircraft available in the market.
Today, the average aircraft age domiciled in the Middle
East is nine years old compared to 13 years in 1992.
Some airlines statistics are even more impressive, with an
average age of only five years for the aircraft in their fleets.

Middle East twin aisle fleet multiplied by 2.5 in the last 10 years

FLEET IN SERVICE EVOLUTION

NEW DELIVERIES BY SEGMENT

Fleet size*

Number of new aircraft

+5.5%

3,000
2,500

900

2,606

Growth

1,708

1,500

898

Average seats per widebody


320

370

345

500
400
300

291

200

Stay in service
& Remarketed

100

607

2032

Beginning 2013

310

Single-aisle

800

600

Replacement

500

Widebody

New
deliveries
1,999

1,000

505

700

2,000

20-year
growth

779

800

per annum

Source: ASCEND, Airbus

Aircraft units
1,000

20232032

Singleaisle

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

300

Average widebody seats per aircraft

290

600

ECONOMY**

TRAFFIC**

FLEET*

280
400

270
260

200

250

240
1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

The twin aisle fleet is growing in number and in size, with the average seat count increasing by 12%
in the last 10 years.

74

Global Market Forecast

Intra-regional
& domestic

Real
GDP

Real Trade

3.7%

Urban population

3.8%

5.2%
Inter-regional

2.0%

6.5%
* Passenger aircraft 100 seats

Total
traffic

Fleet in service

6.4%

898

Beginning 2013
In 2032
2,606

20-year
new aircraft
deliveries

1,999

** 2013-2032 CAGR

Global Market Forecast

75

Latin America
A vibrant region with vibrant growth

As global economic conditions improve in 2014 and


beyond, the economic development of Latin America is
expected to reap the rewards.
Longer-term, we expect the region to be amongst those
emerging regions driving long-term economic growth,

with economic growth of 4% per annum, well above


the 3.2% world annual increase over the next 20 years.
Because air transport is highly correlated with economic
growth, this economic expansion will help drive air traffic
growth in the region.

Latin Americas economy will perform above the world average


Source: IHS Global Insight, Airbus

Real GDP average annual growth 2012-2020


9%
8%
7%
Europe

6%

Latin
America

US &
Canada

Africa
China

World
average

5%
4%

South-East
Asia

3%
2%

India

Middle
East

1%
0%
0%

2%

4%

6%

8%

Real consumption per capita


10% average annual growth 2012-2020

Bubble diameter proportional to real GDP at PPP (Purchasing Power Parity) in bn. US$ in 2020

demand by region

Latin America has a long tradition in aviation. With aviation links to other parts of the world going back to
its earliest days. One of the pioneering aviation companies, Aropostale, founded in Toulouse in 1918,
had regular flights between Toulouse and Rio de Janeiro as early as 1927, which later were extended
to Argentina and Chile. Aviation has developed significantly in recent years in Mexico, Argentina, Chile,
Colombia and, notably, Brazil. There is no doubt of either the importance or the need for aviation for the
people of Latin America. This is particularly true when one considers the long distances that separate the
southern most point, Tierra del Fuego, in Argentina, and the northern most point in Tijuana, Mexico; or when
we think of the need to navigate across the Andes Mountains, the Atacama Desert or the Amazon Basin.
In the future, Latin America will continue to be a successful story in aviation. Benefitting from sound macro-economic
fundamentals, growing tourism and a high level of urbanisation, the regions long-term perspective is good. With 5.3%
annual air traffic growth expected over the next 20 years, the region outperforms the forecast for world air transport
expansion at 4.7%. As IATA noted recently concerning Latin America: the economic potential of this vast and varied
geography can only be realised with a successful aviation industry.

Apart from economic growth, tourism and urbanisation


are key drivers of Latin America air transportation
Tourism has been and will continue to be a major driver of
air transport in the region, again outperforming the world
tourism developments. Exemplifying this, as reported by
the UNWTO (United Nations World Tourism Organisation),
international tourist arrivals in Latin America have
increased 4.6% per annum since 1990, above the 4%
increase at a world level over the same period. Tourism
will continue to stimulate air transport growth.

u
 rbanisation levels in latin america are near the highest in the world
Source: United Nations, Department of Economic and Social Affairs, Airbus

Percentage of urban population, 2011 and 2020


100%

Strong fundamentals, to spill over to air traffic


Most Latin American countries have sound macroeconomic
fundamentals, improving debt profiles,
substantial foreign-exchange reserves and increasingly
stable financial systems. Central American countries and
Mexico, the second largest Latin American economy,
are highly tied to the economic development of the US
and have felt the strain of the economic slowdown in that
region. But, as the North American economy is expected

76

Global Market Forecast

to continue its recovery, this will provide significant


growth opportunities for the region. Brazil, the largest
and one of the fastest growing markets in Latin America,
is expected to see accelerated growth rates in GDP as
foreign investors consider greater investment after a
slight decline in 2012. Brazils government has also put
in place a number of monetary and fiscal stimuli ideas to
help boost the economy in the coming years.

Urbanisation is the second key driver. According to


United Nations Department of Economic and Social
Affairs, the region has an exceptionally high level of
urbanisation (79%), higher than that of Europe and
closer to North America. As urban populations tend to
fly more often, this is good news for air transportation
prospects in Latin America.

2011

82%
73%

2020

50%

39%

79%
71%

44%

0%
Africa

Asia

Europe

North
America

Oceania

Latin America
& the Caribbean

Global Market Forecast

77

Results

Challenges and opportunities


Being one of the success stories in aviation in recent
years, the need for airport infrastructure developments
could potentially become a constraint to future growth in
the region. Investment in airport infrastructure, runways
and other airport facilities, will be key to ensure the rapid
expansion of the sector.
To give some examples, Sao Paulo Guarulhos and
Mexico City international airport, which handle 17%
and 34% of Brazils and Mexicos air traffic, respectively,
are two of the largest Latin American airports facing
congestion and delay issues. Moreover, the upcoming

2014 World Cup and 2016 Olympic Games in Brazil


may add additional pressure.
Governments, however, are aware of the issue, and are
acting. Brazil has set out several initiatives to address
this, for example privatisations, modernisation of Infraero
airports and a new airport to replace Congonhas. The
Brazilian government is not alone. Other governments
in the region are following similar initiatives, with
planned investment developments in Buenos Aires,
Lima and Bogota airports; and the newly inaugurated
airport in Quito.

TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO LATIN AMERICA BY REGION


Size of bubbles proportional to RPK volumes

Latin America

Europe

Domestic
and Intra-Regional

World

4.4%

Latin America
5.7%

6.3%

4.8%
5.1%

Traffic and Fleet

4.6%

Traffic to, from and within Latin America is expected to


grow at 5.3% annually over the coming 20 years. Looking
at the distribution of this traffic growth, it can be seen
that from the 60 flows studied in the GMF that link Latin
America, 40 of them are expected to grow at an annual
pace above 4.7%.
Consistent with the recent history, over the next 20
years, traffic within the region is forecast to grow at
5.2% annually, above the overall regional 6.3% average
annual increase. The largest intra-regional traffic flow is
Domestic Brazil, with a predicted 7% annual expansion,
to represent 43% of total traffic within Latin America, in
2032. Reinforcing the integration of the region, the traffic
flows that connect countries in Latin America with each
other, are expected to evolve at a robust pace: Central

Traffic to and from Latin America is forecast to grow at


4.8% annually. Within inter-regional traffic, the two largest
traffic markets for Latin America are Europe and North
America. We expect that they will grow at a 4.4% and
4.6% annual pace, respectively, to account for almost
86% of inter- regional traffic, in 2032.
Finally, rapid growth is expected to come from traffic to
the emerging economies, like the Indian sub-continent,
the Middle East, PRC and Africa. The top five fastest
growing traffic flows will expand at almost 8.0% per
year until 2032.

demand by region

20-year CAGR
Domestic India
Indian Sub |} South America
Indian Sub |} PRC
Arfrica Sub Sahara |} Middle East
Middle East |} South America
Asia |} Indian Sub
Middle East |} South Africa
Middle East |} Russia
Central Europe |} Middle East
Asia |} Middle East
North Africa |} PRC
Africa Sub Sahara |} Japan
PRC |} Russia
CIS |} PRC
Middle East |} PRC
North Africa |} South Africa
Japan |} Middle East
Central America |} South America
Africa Sub Sahara |} CIS
Indian Sub |} South Africa

9.8%
9.6%
9.1%
8.9%
8.9%
8.7%
8.5%
8.5%
8.3%
8.0%
8.0%
7.8%
7.7%
7.7%
7.7%
7.5%
7.5%
7.5%
7.5%
7.5%
50

100

150

200

250

300

350

2012-2032 billions RPK

2012
2032

6.4%

Global Market Forecast

5.7%
MiddleEast

Asia-Pacific

8.3%

6.5%

20132022

20232032

FLEET IN SERVICE EVOLUTION

NEW DELIVERIES BY SEGMENT

Fleet size*

Number of new aircraft

+4.6%

3,000
2,500

20-year
growth

1,794

2,000

2,833

1,800

per annum

1,600
Growth

2,000

1,691

New
deliveries
2,279

1,500

1,142

1,400
1,200
1000

346

800

1,000

600

Replacement

588
500

400

Stay in service
& Remarketed

2032

Beginning 2013

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

4.0%

Urban population

4.5%

6.3%
Inter-regional

1.2%

103

36

200

554

4.8%
* Passenger aircraft 100 seats

78

4.7%

CIS
Africa

to South America will expand at a strong 7.5% per year,


Intra-South America at 5.4% and Intra-Central America,
at a 5.2% per annum.

three out of the top 20 fastest growing O&D traffic flows in the world link to Latin America

4.4%

North
America

5.2%

Singleaisle

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

5.2%

1,142

Beginning 2013
In 2032
2,833

20-year
new aircraft
deliveries

2,279

** 2013-2032 CAGR

Global Market Forecast

79

CIS

Russias middle-class will continue to develop


Source: EIU, Airbus

Income distribution in Russia


100%
90%

Aviation facilitating change

80%

2015
2010
2005
2000

Share of households
earning more than
each income threshold

70%
60%
50%
40%
30%
20%
10%
0%
1,000

3,000

5,000

10,000

15,000

According to IHS Global Insight, this trend will continue in


the long-term: Russian consumer purchasing power will
be close to convergence with major advanced economies
by the time the end of our forecast period in 2032 is
reached. Real disposable personal income is expected to
increase by 3.5% per year on average between 2012 and
2022, whilst it will remain below 1.5% per year for major
advanced economies. The development of a middleclass in Russia and the rest of CIS, and their willingness
to diversify their consumption basket, has helped to drive

demand by region

100: The number of airlines in the CIS region studied by the GMF. Even if in 2012, the 10 biggest airlines
represented more than 70% of the total RPKs produced by the airlines of the region, this number of
airlines and the variety of business models in the region underline the importance of CIS for the worldwide aviation market.
The dynamics of CIS favour a large potential for growth in air transport for the region. From 2000 to 2012,
ASK traffic from/to/within the region increased by almost 10% annually, and real GDP increased by 5.1% per
year on average, which had a positive impact on the economic development of its population.
Combined with this high growth potential, the region is characterised by a large demand for replacement: in
2013, only 53% of the CIS fleet is new generation aircraft, with 72% remarketed aircraft.

25,000

35,000
50,000
75,000
Household yearly income (2005 $ US)

outbound tourism. Between 2002 and 2012, the number


of Russian international tourists increased at 7.9% per
year on average. According to the UNWTO, this number
reached almost 40 million in 2010, the main destinations
being Ukraine, Turkey, Egypt, China and Kazakhstan
(these five countries received more than 15 million Russian
tourists). This endogenous development of tourism through
the middle-class will in turn have positive impact on the
Russian economy and air transport industry, thanks to the
induced additional services which will be put in place.

Outbound tourism has been stimulated by the wealth effect


Source: UNWTO, EIU (estimates), Airbus

Outbound tourism from Russia (number of departures)

Millions
50

CAGR 2009-2012

8%

CAGR 2000-2008
9%

45
40
35
30
25

Economy

20
15
10

The CIS region is forecast to have strong economic growth up to 2020, despite some countries experiencing difficulties
from the fallout of the global economic situation, particularly from Europe. The fastest economic growth rate is expected
to be in the second and third largest economies in the CIS, Ukraine and Kazakhstan. Even with the faster growth in
the smaller economies in the region, Russia is expected to continue to represent more than 70% of the regions GDP in
2032. International trade, a key driver for the region, is expected to grow strongly over the 20 year period with growth
in imports tripling and growth in exports doubling.

Aviation, tourism and the middle-class


The strong development in consumer behaviours and the rapidly growing middle-class have perfectly set the stage
for growth in air transportation within the region. The successes of the CIS economic transitions were keenly felt from
2000 to 2012, with a GDP annual average growth rate of 5.1%, which translated into the economic development of its
population. In 2012, 43% of the Russian households earned more than $10,000 per year (US$ 2005), this figure being
expected to reach 50% in 2016.

80

Global Market Forecast

5
0

1999

2000

2001

2002

2003

2004

2005

Over the same period of time, the number of international


air passengers (including foreigners) with Russia as the
origin or destination, increased by 13.7% per year on
average, this faster than outbound tourism. This increase
of the air transport markets share with respect to other
modes of transportation, underlines the importance of
the aviation sector in a more connected and globalised
world, where mobility is key for economic development.
Inbound tourism, which was below its potential in recent
years, is expected to boom in the next decade: the
WTTC forecasts that international arrivals will reach 56
million in 2023, from 31 million in 2012. As a result, visitor

2006

2007

2008

2009

2010

2011E 2012E

exports will increase by 5.1% per year on average, so


that they will represent almost 4% of all Russian exports
in 2023, compared to 3% in 2012. This will be achieved
through a simplification of travel procedures, notably with
the facilitation of visa procedures. Many policy changes
have been applied during the last decade (20002010),
but a recent study from the WTTC shows that in 2011,
28% of all tourist arrivals in Russia required visas, less
than the US (36%) or South Korea (35%), but above the
G20 group average (17%). The study also shows that
the facilitation of visa procedures may enable the G20
group of countries to receive between 20 and 112 million
additional international tourists by 2015.

Global Market Forecast

81

International tourists will boost Russias economy: from 3% of all exports in 2012 to 4% in 2023
Source: WTTC, Airbus

Visitor exports
Billion 2011 $US
35

56M

International arrivals (millions)

31M

Results
TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO CIS BY REGION


Size of bubbles proportional to RPK volumes

30

Europe

25
20
15

CIS

10

5.5%

North
America

4.8%
2010

2011

2012

2013

2014

2015

2016

2017

According to the UNWTO, Kazakhstan was the fastest


growing country of the region for tourism in the last
decade: its international attractiveness made the number
of arrivals increase by 7.6% per year on average from

2018

2019

2020

2021

2022

World
6.7%

5.1%

2023

2002 to 2012. Over the same period, personal disposable


income per capita, expressed in real 2005 $US, increased
by 9.1% per year on average, which made the number of
departures increase by 17.3% per year on average.

5.9%
5.1%
4.4%

4.7%

AsiaPacific

Latin
America

6.7%

5.7%

Africa

Kazakhstan was the fastest growing CIS country for tourism

Middle East

6.8%

7.8%

Source: UNWTO, EIU (estimates), Airbus

Thousands

CIS

5.8%

Domestic
and Intra-Regional

20132022

Number of departures/arrivals in Kazakhstan

20232032

20-year
growth

9,000
8,000

FLEET IN SERVICE EVOLUTION

NEW DELIVERIES BY SEGMENT

Fleet size*

Number of new aircraft

7,000
6,000

Outbound
CAGR 2002-2012

5,000

17.3%

3,000

+4.5%

4,000

2,500

3,000

demand by region

2,000

Inbound
CAGR 2002-2012

1,000

7.6%

0
2002

All of the growth in middle-class and expansion of the


tourism in the region will continue to stimulate the air
transportation industry to/from within the region. This
development coupled with the continuously increasing

2012

economic activity in these countries and their increasing


connection to other emerging markets, such as China,
will stimulate growth both in lower-yield economy traffic
and higher-yield business traffic.

per annum

2,000

900
800

1,987

1,500

700

Growth

1,095

New
deliveries
1,095

829

1,000

The dynamics of the Russian and other CIS countries


middle-classes and the appeal of outbound and inbound
tourism provide a strong platform for the development of
LCCs in the region. In May 2013, the LCC market share
reached 14% of total ASK from Russia to Middle East,
8% from Russia to Western Europe, 4% from Central/
Eastern Europe to Russia. The potential for growth is
significant for European and Russian carriers that have
already expressed their interest in this market: the lowcost market share from Europe to Russia could eventually
reach the same levels as in the intra-Europe zone (around
50% of ASK in 2013).

82

Global Market Forecast

500
400

Stay in service
& Remarketed

500

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

3.3%

Urban population

3.3%

5.5%
Inter-regional

0.3%

44

32

100

2032

Beginning 2013

6.2%
* Passenger aircraft 100 seats

148

200

Russia will likely follow in Ukraines steps, where LCCs are


now well established on the markets to Europe, within
CIS and to the Middle East. In May 2013, the LCC
market share on international traffic from/to Ukraine
is now more than 20% in terms of ASK. Remarkably,
the LCC market share from Ukraine to Middle East
reached nearly 60% in May 2013.
Development of LCC traffic to/from/within the region
is expected to further stimulate traffic growth and as a
result is likely to increase the demand for Single-Aisle
aircraft here.

600

300

892

Potential for low-cost carriers

871

1,000

Singleaisle

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

5.9%

829

Beginning 2013
In 2032
1,987

20-year
new aircraft
deliveries

1,095

** 2013-2032 CAGR

Global Market Forecast

83

Africa

Migration, a driver for aviation demand

aviation facilitating economic diversity

Movement of people seeking to improve their economic


situation and to help provide for their families is nothing
new. But this demographic phenomenon is particularly
strong in Africa. In a recent Gallup survey, residents
of Sub-Saharan Africa remain the most likely worldwide to express a desire to migrate permanently.
Sub-Saharan African residents are also the most likely

world-wide to say they would like to work temporarily


in another country, with nearly half of adults across
the subcontinent expressing this desire. Aviation,
and its increasing accessibility, both physically and
economically will no doubt aid this process, with the
Visiting Friends and Relatives (VFR) component of air
travel also likely to increase.

Tourism, significant growth, coming or going!


Africas tourism growth faster than the average for emerging economies
Source: UNWTO 2012 Tourism Highlights Report, Airbus

International tourist arrivals (millions)

2005-2011

60

CAGR

+6.3%

50
40
30

7.9%

Sub-Saharan Africa

3.5%

North Africa

20

demand by region

Africa is a huge and diverse region, in terms of its people, languages, landscape, history and importantly,
in the way its aviation infrastructure has developed. It has long been a region where analysts have seen a
huge potential for growth in the use of aviation. After all, what better way to get to where you want to go,
either travelling from outside the region or within it, with its large distances, patchy ground transportation
infrastructure and at times difficult terrain. In the past, aviation had its strongest presence in northern and
southern Africa. Then the west of the continent with its large population centres and its eastern region
started to grow strongly. Today, the whole region is seeing positive development, as airlines both from within
Africa and from outside seek to capture growing demand. New airlines are also emerging, who are adopting
the low cost model seeking to further tempt Africa into achieving its aviation potential.

Africas economic activity taking new directions, mainly up


A recent Frost & Sullivan report stated that much has
changed since The Economist labelled Africa as The
Hopeless Continent ten years ago, with the latest
predictions forecasting that seven of the worlds top
ten fastest growing countries in 2015 will be in Africa.
Long relying on its much sought after natural resources,
Africa is now beginning to achieve some success in
economic diversification. In numerous countries, valueadded processing of agricultural commodities, light
manufacturing, the retail sector, and the services sector
are now the principal drivers of economic expansion. A
tendency towards convergence of the GDP growth rates
of oil-exporting countries and non-oil-exporting nations

is a welcome indication of this development. Primary,


extractive industries typically have less employment
potential and have a low economic multiplier, compared
to value-added processing and the range of tertiarysector activities that make up a consumer-based
economy. In the best-managed African countries, a
self-sustaining cycle of consumer-oriented economic
expansion involving the growth of retail trades and skilled
services is starting to take a hold. It is in this environment
that aviation will have its biggest impact and benefit, not
only in terms of the skilled jobs it brings itself, but by
facilitating connectivity and acting in some cases as a
nucleus for the business diversification that is developing.

10
0
1990

1995

2000

Tourism is another important component in the growth


in air transportation in the region. Over 50% of tourists
world-wide arrive by air, with international tourist
arrivals in Africa growing almost five times since 1990,
at an impressive rate of 6.3% per annum. Taking SubSaharan Africa alone, tourist arrivals have grown even
more quickly at nearly 8% per year, faster than the
average for all emerging countries which stood at 5%
between 2005 and 2011 according the to the UNWTO.
World tourist arrivals grew at 3.5% per year over the

2005

same period. Latest data shows that the resulting tourist


receipts for African nations in one year totalled some
$30.4 billion ($US).
But tourism has not been one way, with the growing
wealth and middle-class in the region, tourism from Africa
has also grown significantly in recent years. Over the
same period, international tourist arrivals originating from
Africa have reached close to 30 million people, having
grown at more than 7% per year since 2005.

Increasing wealth driving increased tourism from Africa


Source: UNWTO, Airbus

International tourist arrivals originating from Africa (millions)


35
30
25
20

2005-2011

15

CAGR

10

+7.2%

5
0

84

Global Market Forecast

2011

1990

1995

2000

2005

2011

Global Market Forecast

85

Africas aviation developments

Results

2012 traffic to/from and within Africa well above 2000 levels

Size of bubbles proportional to RPK volumes

Traffic to/from Africa (Available Seat Kilometers), 2012 vs. 2000

6.2%

+577%

Europe

Asia/Pacific

Latin
America

CIS

+134%

6.4%

6.8%

Latin
America

Middle
East

+118%

Despite the continued impediments to growth that exist


in Africa, including some protectionism, high taxation on
departures and fuel, and high air fares in some cases,
there have been postive improvements across the region
in all of these areas. Very often where this has happened,
strong growh in aviation traffic has followed, a fact that will
not be lost on countries where progress has been slow.
A 2006 study quoted by Aviation Week found selected
markets that had been opened up benefitted from
increased passenger numbers. For example, the route
between Nairobi and Johannesburg grew 69-fold once
liberalised. In other markets, fares fell and passenger
numbers went up. This is clearly not a lone example, with
traffic within Africa having grown 86% over all since 2000.
However, the difficulties that some new carriers faced to
cut through the barriers that persist, in terms of access

and cost, shows there is still much yet to be achieved.


International travel has also grown significantly since the
start of the new millenium, with 90% more international
traffic since 2000.
A significant portion of this is flown by airlines from
outside of the region, with Africas airlines carrying just
under 40% of passenger traffic in 2012 and their share
having fluctuated around 45% for much of the last two
decades. However, given the level of new capacity
flying to and from Africa in recent years, it shows that
African airlines are both able and willing to compete
with the higher levels of competition they have been
facing. Today, many airlines are developing their own
effective hub strategies to compete more effectively in
Africas future market.

90%

4.4%

6.9%

20132022

20232032

FLEET IN SERVICE EVOLUTION

NEW DELIVERIES BY SEGMENT

Fleet size*

Number of new aircraft

+4.8%

1,800
1,600

1,540

900

per annum

1,400

Growth

932

1,000

New
deliveries
970

700
600
500
400

608

600
400

38

300

Stay in service
& Remarketed

200

570

200

0
2032

ECONOMY**

TRAFFIC**
Intra-regional
& domestic

Real
GDP

Real Trade

4.4%

Urban population

4.9%

6.2%
Inter-regional

3.1%

58

28

100

5.6%
* Passenger aircraft 100 seats

155

Replacement

Beginning 2013

20-year
growth

729

800

1,200

800

4.7%

1,000

More international traffic since 2000.

Global Market Forecast

5.1%

4,6%

+86%

Intra-Africa traffic: +86%


International traffic: +90%
Overall traffic:
+89%

5,7%

AsiaPacific

7.6%

Intra-Africa

demand by region

6,4%
5.0%

Middle East
+307%

World

Africa

CIS

+80%

Domestic
and Intra-Regional

4.7%

+49%
North America

Africa

North America

Europe

86

TOTAL RPK TRAFFIC GROWTH

RPK TRAFFIC GROWTH FROM/TO AFRICA BY REGION

Source: September traffic from OAG, Airbus

Singleaisle

Small Intermediate Very Large


Twin-aisle Twin-aisle
aircraft

FLEET*
Total
traffic

Fleet in service

5.7%

608

Beginning 2013
In 2032
1,540

20-year
new aircraft
deliveries

970

** 2013-2032 CAGR

Global Market Forecast

87

06

Demand
for
freighters

Air

freight industry in 2013
Source: ASCEND, Airbus

World figures 2013


Operators

197

34
798

North
America

Latin
America

Europe
& CIS

22
77

51
339

47
314

15
61

28
56

Fleet

1,645

Asia
Pacific

Middle
East

Africa

There is no disguising that recent years have been very difficult for the freight industry. On a world-wide
basis, freight traffic has stagnated for the last three years. The financial crisis has had a direct impact on
peoples willingness to spend and on international trade growth. In total, world trade has grown at just 2%
in recent years with that growth largely driven by emerging economies. The mature markets, especially
Europe, have been the most negatively impacted by on-going debt issues and as mature markets
have been the biggest consumers of high value products (which tend to use air freight) this has had an
increasingly important knock on effect on air freight. However, air transportation, with 30% of its value,
is still hugely important to world trade.

demand for freighters

These issues have caused many to question whether or not there has been a significant long-term shift away from
air freight to other modes. However there are positive signs. The world economy is showing improvement, and as
discussed in the economy chapter, many of the risks we were monitoring last year, whilst not gone completely, have
become less of a concern. This is why Airbus has the view that growth will return to the air freight industry over the
next year.
Customers still value the speed, reliability and quality of air transportation. Even with some on-going trends that we are
monitoring in modal shift and near-sourcing, we believe that industry will continue to value these unique aspects of air
freight. According to the data provided by Seabury, we see no clear trend indicating a modal shift. In fact, the split in
terms of weight carried by aircraft vs shipping (after removing bulk commodities, such as oil and grains) has remained
stable with around 1% of total weight carried by aircraft. In terms of near-sourcing, it is too early to say definitively how
much of an impact this will have on traffic, but what is visible today, is that large multi-national corporations will continue
to strive to optimise their supply chain and manufacturing costs based on global and regional trends.

Traffic today
Even during this difficult period, air freight remains key
in the supply chain of almost every industry in the world.
The speed and reliability offered by main deck freighters
services has a positive impact on the effectiveness and
efficiency of high tech industries for example, who rely
heavily on air cargo. Pharmaceutical businesses use
temperature controlled containers to transport sensitive
bio-chemicals and drugs by air. Flowers, cars parts,
machinery, horses, fruits, mail are all commodities where
air transportation is the only viable option. In 2012, world
traffic in FTKs decreased 3% year on year, with the shift
towards emerging economies continuing. Today, 70% of
air freight traffic is with or between emerging countries,
compared to just 64% 10 years ago.

N
 orth America, Asia-Pacific and Europe
combined represents 81% of the air
cargo traffic
Air cargo traffic wheel, FTKs in 2012
North America

Asia
Pacific
Africa

Latin
America

Europe

Freighter fleet today


During the last five years, the total number of freighters
has changed little, remaining between 1,600 and 1,700
units. Today, North America represents 49% of the
worlds main deck freighter fleet followed by Asia-Pacific
at 19% and Europe at 17%. Together, these three regions
represent 85% of the fleet. High fuel prices and the
persistent crisis in the air freight market, has triggered
the early retirement of older freighter types such as the
747 classics and DC10F aircraft. In most cases these

90

Global Market Forecast

Middle East

CIS

Freight growth drivers


freighters were replaced by more fuel efficient aircraft
in a bid to drive down unit costs. Moreover, in some
markets heavily affected by overcapacity issues, a
number of large freighters have been parked in order
to try and increase yields that are continuously driven
down by a negative relationship between capacity and
demand. For example, at time of writing, 33 large Asian
freighters were parked compared to 17 just before the
crisis with similar demand.

On top of the drivers from the airline and freight forwarders,


there are a number of general economic trends that have
a very large impact on the freight industry, namely:
Economic activity, expressed in GDP
World trade flows, combined imports and exports
Private consumption
Industrial production
Each one of these factors, though inherently connected in
the global economy, play a key role in the freight market.

World trade has continued to struggle since the depth of


the crisis in 2009 when it was down 11% from 2008. In
2010 and 2011, emerging markets reacted quickly with
trade rebounding to 27% above pre-crisis levels. But,
trade is still depressed with IHS Global Insight forecasting
improvements in the short to medium term. Over the 20
year period, trade is expected to grow at 3.8% per year
with the recovery in 2014 expected to positively drive the
freight industry to an improved result.

Global Market Forecast

91

 orld-wide economic growth is expected


W
to strengthen through 2013

 orld-wide trade volumes are expected


W
to more than double in the next 20 years

Source: IHS Global Insight, Airbus

Source: IHS Global Insight, Airbus

Year-over-year quarterly evolution of GDP by market type

Based on the econometric variables previously described


and many others, Airbus forecasts an annual CAGR of
4.8% per year for the next 20-years. Today, Asia-Pacific,
including PRC and the Indian Sub-continent, represent
the largest share of world traffic, 36% overall. These are
followed by Europe & CIS and North America which jointly
represent 51% of world-wide traffic. Unsurprisingly, PRC

Total world-wide trade evolution


35

10%

30

8%
Emerging markets

6%

World

4%

25

Advanced economies
0%

F
 astest growth from traffic between and within emerging regions
Source: IATA, Seabury, US DOT, CAAC, Airbus

10

Forecast

FTKs (billions)
600

History

Outside of the key general economic trends driving the


freight industry, there are two more economic indicators
that have a key impact on freight volumes: industrial
production and private consumption. The topics
discussed in the earlier economic section of two speed
worlds are even more apparent in these two indicators.
Over the last 20 years, industrial production in emerging
markets more than tripled, whilst at the same time,

2030

2026

2022

2018

2015
Q1

2014

2014
Q1

2010

2013
Q1

2006

2012
Q1

2002

2011
Q1

1998

2010
Q1

1994

-2%
2009
Q1

industrial production in advanced markets grew by only


30%. Over the next 20 years, advanced markets will
grow by nearly 50% and emerging markets will grow by
nearly 180%. All of this growth in production is expected
to spur the air freight market into further growth. On
the opposite side of the market, private consumption is
expected to return to substantial growth by Q4 2013,
positively driving air freight growth.

500

20-year
world annual
FTK growth

400

4.8%

Emerging to
Developed

private consumption

Source: IHS Global Insight, Airbus

Source: IHS Global Insight, Airbus

Quarter-over-quarter evolution (%)

demand for freighters

300

2032

Emerging markets

6%

1992

200

4%

World

150
2%
100

Advanced economies
0%

50

-2%

0
Advanced

92

Global Market Forecast

Developing

Emerging

World

2009
Q1

2010
Q1

2011
Q1

2012
Q1

2.9%
6.2%

200

5.2%

100

5.3%
2000

2004

2008

2012

2016

2020

2024

2028

2032

Forecast

Belly capacity versus main deck

8%

2012
250

CAGR
Growth Rate
2012-2032

Developed to
Emerging

History
industrial production by market

Emerging to
Emerging

Developed to
Developed

300

1996

Industrial Production by market (base year 2012 = 100)

is one of the largest drivers of international air freight traffic


and will represent 22% of the global market by 2032, up
from 15% today. Overall, traffic will be the fastest growing
between emerging regions and the slowest between
mature regions. Between mature and emerging regions,
goods flowing from mature to emerging will grow at a
slightly faster growth than the reverse flow.

20
15

2%

Focus on freight traffic growth

2013
Q1

2014
Q1

2015
Q1

Belly capacity is increasing due to new Twin-Aisle aircraft


which are more cargo capable. The A350-900XWB
for example will be able to transport 20 tonnes of
revenue cargo over 5000nm. Belly cargo is viewed as
a complementary and opportunistic source of revenue
for passenger operations. However, belly cargo will
not completely replace dedicated freighter operations.
This is because dedicated freighters offer reliability and
quality of service not matched by belly freight operations,
mainly because freight operations are secondary to the
passenger business in some airlines. Also on some
routes, demand for air cargo transportation far exceeds
belly capacity: for example belly space alone is far from

being able to cope with the demand between the PRC


and North America. In addition even if the belly capacity
exists, some airlines wont use it because it would add
in the complexity of their operations, slowing turnaround
times for example. Moreover a specific department (sales/
logistic) would have to be created adding surplus costs.
According to US Department of Transportation data, the
average load factors of revenue cargo transported in the
belly of Twin-Aisle aircraft departing or arriving to the US
does not exceed 30%. Some airlines are using more
intensively their belly space, while others do not transport
cargo in their passenger aircraft.

Global Market Forecast

93

Express

T
 he integrators fleet for domestic purposes in the US is shifting for bigger
and more fuel efficient modules
Source: ASCEND, Airbus

In a world where time equals money, the express


business model has been a great success, since it was
first introduced in the US in the early 1970s, enjoying
double digit growth in the US domestic market for more
than two decades. Forty years later, it continues to go
from strength to strength, even when other parts of the

freight business are suffering due to the recent economic


situation and enlarging its market share versus general
cargo. Next day delivery service has value for both end
consumers wanting the product they have just acquired
as quickly as possible and for industries to keep their
supply chains as lean as possible.

US integrators fleet evolution


Nr A/C
500
450
350
300

Source: Seabury, Airbus

250

30%

35t < Widebody < 55t

2.5
2
1.5

20%

0
2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

FedEx commences

4%

1%

1983

8%

1981

0
1979

General Cargo

4%

0.5

50
1977

11%

100

Express

20%

5%

150

25%

25%

10%

10t > Narrow-body <35t

200

% traffic growth

15%

3.5

Fuel price

400

Express market has proved more resilient to the crisis

Jet Fuel price


$US/gallon*

UPS commences

* Real price

-5%

-7%

Distribution of the wide-body freighter operations

-12%

800

Regional
operations

700

94

Global Market Forecast

Small wide-body
< 75t

500

Large wide-body
>75t

400
300
200
100

5,400

5,200

5,000

4,800

4,600

4,400

4,200

4,000

3,800

1,800

1,600

1,400

1,200

1,000

800

0
600

Fleet evolution
High fuel prices and the crisis are accelerating the
retirement of old freighters which are being replaced by
more fuel efficient aircraft. To stay profitable in a tough
period where demand is weak, carriers are trying to
reduce their costs by all means possible. In addition to
modernising their fleets, airlines are striving to reduce
their unit costs by replacing narrow-body aircraft with
mid-sized aircraft and rationalising their networks, especially
in more mature markets. One of the best examples is the
domestic US fleet, where small wide-bodies are replacing
the old fleet of 727s and DC9s. On the inter-regional and
long-haul markets, range becomes one of the main criteria

600

400

This said, the crisis has obliged the main integrators to


review their strategies. One example is a greater focus
on the emerging economies. The biggest potential for
express business in the future is, without any doubt,
China. Although it is difficult to get a clear picture on
what quantity of the cargo carried domestically in China
is express cargo, from the values provided by CAAC,
express is rapidly taking a large share of the growth
in the market. This trend is also visible in the carriers
themselves, with foreign integrators investing in the
region and a corresponding increase in investment by
Chinese carriers.

200

demand for freighters

To satisfy an ever increasing demand for their services,


integrators have rationalised their fleets in order to
optimally organise their networks using small freighters as
feeders or on thin routes, mid-size aircraft for their intraregional routes and large freighters to transport packages
between intercontinental hubs and some few large longhaul destinations. Todays integrator fleet comprises 96
small freighters, 459 mid-size freighters and 145 large
freighters. Express services have proven resilient even
during the on-going crisis with a 4% growth in 2012,
while international general cargo traffic has decreased by
5%, according to Seabury data.

Intercontinental
operations

3,600

2012

3,400

2011

3,200

2010

3,000

2009

2,800

2008

Weekly operations

2,600

2007

Source: OAG, Innovata, DoT, Airbus

2,400

-15%

~
 8500 weekly scheduled operations are performed by wide-body freighters

2,200

-10%

-20%

-1%

-3%

2,000

-5%

Distance (nm)

when it comes to selecting an aircraft for a network. When


long distances and big demand meet, such as on the
Asia North America route, big wide-bodies are often the
chosen aircraft, combining range and impressive tonnage
capabilities over 90 tonnes. On shorter routes, carriers try to
optimise networks and adapt the correct size of aircraft to
the demand they have to satisfy. Thanks to a higher flexibility
and good adaptation to the market demand requirements,
mid-size aircraft are often the choice on a large number of
inter or intra-regional routes. Under 3000nm, 61% of the
wide body operations are performed by medium-size widebodies more suited to these markets.

It is not a surprise that the cargo market is considered a


very opportunistic business. Routes operated by carriers
frequently change to accommodate evolving demand.
New factory equipment in Kenya can generate extra
operations; a drought in North America will stimulate the
demand for fruit and vegetables from Latin America, etc.
This has direct consequences on the type of aircraft a
carrier will choose. While new-build aircraft are directed
to scheduled operations on traffic intensive routes to take
full advantage of their fuel efficiency and their reliability,
smaller markets subject to big seasonal effects will favour

low capital converted aircraft adapted to lower utilisation


rates. Over the next 20 years, the air cargo industry will
require over 1,800 converted aircraft and over 870 newbuild freighters. Africa, Latin America, Europe and North
America are the regions with the highest percentage
of their fleet that are converted aircraft. CIS is at the
other end of the spectrum, with only 18% of their fleet
converted freighters, this due to the large number of
Ilyushin purpose-built freighters in the region. Due to the
on-going difficult situation in the air freight industry and
the sustained high price of fuel a decline in the number of
conversions has resulted in recent years.

Global Market Forecast

95

Fleet in service in 2013: conversion vs new-build. 39% of the freighters are new-build aircraft
Source: ASCEND, Airbus

Converted

Europe & CIS

Africa

Middle East

North America

Latin America

Results

Asia Pacific

371

New-build

F
 reighters fleet in service evolution (2013-2032)
172
37

< 45t

54

26

> 45t

26

108

798/1,062

146

53

28

Mid-Size Freighters
demand for freighters

Mid-size freighters, such as the A330-200F, are the perfect


aircraft to accommodate demand on regional routes where
the demand is big enough to require a capable aircraft but
where the capacity of a large aircraft is inherently higher risk.
General carriers often adopt this solution to minimize the

risk while maximizing the revenue that they can generate


when operating in intra-regional markets. These markets
are expected to experience very high growth rates in the
emerging regions. For example, the traffic within the Asian
region is expected to grow at 6.1% over the next 20
years boosting the demand for regional freighters. Midsize freighters are also used by integrators who need all
capacities and capabilities of freight aircraft to optimise their
hub system. This segment is expected to grow significantly
to 1,294 units by 2032, up from 744 units in 2012.

Large Freighters
Due to the combination of high market demand and
range capability, large freighters are the only freighter
type operating on trans-Pacific routes. They are also the
most popular freighters category on the US-Europe flow
representing 10% of the world traffic, just behind the belly
space of passenger aircraft. The segments growth is mainly
driven by the high density trade lanes forming the tripod
Asia, Europe and North America, which require bigger
aircraft to accommodate the demand. It is forecast that the
fleet of large aircraft will nearly double in the next 20 years.

Fleet in service: small, mid-size & large freighters

1,294

Units

1,002

1400

609

800

481

Source: Airbus

380

376

2013

4
2032

Global Market Forecast

687

521

57

2013

2032

Mid-size freighters

2013

15%
22%

21%
21%

30%
24%

6.6%

Europe
& CIS

4.8%

North
America

3.9%

7%
7%

Africa
& Middle
East

6%
6%

5.0%
%

744

Small freighters

96

T
 he cargo market centre of gravity is slowly but constantly moving toward the east

2012

229

Middle
East

3%
4%
Indian
Sub-Continent

6.3%

PRC

18%
16%
AsiaPacific

4.1%

Growth

600
400

2013
2032

Africa

5.2%

550

1000

56/89

Latin
America

Latin
America

1200

Asia
Pacific

61/164
77/139

Small freighters have a broad spectrum of utilisation thanks


to their versatility and flexibility. Carriers operate them to
transport commodities over geographically difficult terrain
such as mountains, forests or between islands where
surface modes are inefficient or impractical. Today, their
main activity is to serve as feeders for integrators. Thanks
to the huge development of the express business, small
freighters capable of transporting between 10 and 20
tonnes have replaced the smaller Dassault Falcon 20s
used at the start of the express service business. The
expected boom of the express services in emerging
countries like China, India and at a lower scale Brazil, will
boost the number of small freighters from 380 today to
over 600 in 2032.

World Fleet
in service
2013: 1,645
2032: 2,905

15

North
America

Small Freighters

314/970

Europe
& CIS

A focus on

200

339/481

147

142

134

Source: ASCEND, Airbus

138

407

Replacement

114

Stay in service

2032 Traffic volumes & share evolution per region

Traffic growth rate (2012-2032)

2032

Large freighters

Global Market Forecast

97

 reighter fleet to nearly double


F
over the next 20 years
Freighter Aircraft Fleet
3,500
3,000
2,500

x1,8

2,000
1,500

2,904

1,000

2,905

1,645

500
0

2013

2032

O
 ver 870 new-build aircraft will be
required during the next two decades

1,237

Units
1,400

888

Converted

1,200

New built
1,000
824

800

430

600
400
605
200

demand for freighters

Small freighters

413

458

Mid-Size freighters

Large freighters

 he business volume for new-build freight


T
aircraft will reach $234 billion over the
next 20 years
Business volume for new built
freight aircraft (2012-2032)

$77billion
Mid-Size
Freighters

$157
billion

Large Freighters

98

Global Market Forecast

Global Market Forecast

99

07

Summary
&
methodology

Summary of results
Passenger Traffic Flow
Passenger Traffic Flow

CAGR 2013-2032

Passenger Traffic Flow

CAGR 2013-2032

CIS - South Africa

6.8%

Mexico - United States

4.2%

CIS - South America

5.3%

Middle East - North Africa

6.3%

CIS - United States

4.7%

Middle East - Pacific

6.6%

CIS - Western Europe

5.8%

Middle East - PRC

7.7%

Domestic Asia

5.7%

Middle East - Russia

8.5%

Domestic Australia/NZ

3.1%

Middle East - South Africa

8.5%

Domestic Brazil

7.0%

Middle East - South America

8.9%

Domestic Canada

2.3%

Middle East - United States

6.7%

Domestic Caribbean

1.3%

North Africa - Pacific

6.8%

Domestic Central America

5.7%

North Africa - PRC

8.0%

4.7%

Canada - Western Europe

3.7%

Domestic Central Europe

3.5%

North Africa - Russia

6.7%

Asia - Canada

4.4%

Caribbean - Central America

5.2%

Domestic CIS

5.4%

North Africa - South Africa

7.5%

Asia - Caribbean

4.0%

Caribbean - Central Europe

3.1%

Domestic India

9.8%

North Africa - South America

5.4%

Asia - Central America

4.6%

Caribbean - CIS

4.3%

Domestic Indian Sub Continent

3.3%

North Africa - United States

5.0%

Asia - Central Europe

5.6%

Caribbean - Indian Sub Continent

4.8%

Domestic Japan

1.7%

Pacific - PRC

6.2%

Asia - CIS

6.3%

Caribbean - Japan

2.2%

Domestic Mexico

5.0%

Pacific - Russia

5.7%

3.2%

Pacific - South Africa

6.1%

5.2%

Pacific - South America

5.5%

4.4%

Pacific - United States

2.3%

7.0%

PRC - Russia

7.7%

5.1%

PRC - South Africa

6.4%

5.0%

PRC - South America

7.2%

5.8%

PRC - United States

6.5%

6.6%

Russia - South Africa

6.4%

6.8%

Russia - South America

5.7%

1.9%

Russia - United States

5.1%

2.1%

South Africa - South America

6.7%

5.6%

South Africa - United States

4.9%

6.1%

South America - United States

5.3%
6.9%

Asia - Japan
Asia - Middle East
Asia - North Africa
Asia - Pacific
Asia - PRC
Asia - Russia
Asia - South Africa

summary & methodology

Passenger Traffic Flow

CAGR 2013-2032

Asia - Australia/NZ

Asia - Indian Sub Continent

102

CAGR 2013-2032

Passenger Traffic Flow

8.7%
2.7%
8.0%
7.4%
5.1%
6.2%
6.4%
6.8%

Caribbean - Middle East


Caribbean - North Africa
Caribbean - Pacific
Caribbean - PRC
Caribbean - Russia
Caribbean - South Africa
Caribbean - South America
Caribbean - United States

4.7%
4.4%
2.3%
5.4%
6.1%
4.0%
5.4%
2.4%

Domestic Middle East


Domestic North Africa
Domestic Pacific
Domestic PRC
Domestic Russia
Domestic South Africa
Domestic South America
Domestic Sub Saharan Africa

Asia - South America

7.1%

Caribbean - Western Europe

3.5%

Asia - United States

4.2%

Central America - Central Europe

3.6%

Asia - Western Europe

4.3%

Central America - CIS

4.7%

Australia/NZ - Canada

4.0%

Central America - Indian Sub Continent

6.3%

Australia/NZ - Caribbean

4.0%

Central America - Japan

4.3%

Australia/NZ - Central America

4.3%

Central America - Middle East

4.3%

Indian Sub Continent - North Africa

6.2%

Sub Saharan Africa - Asia

Australia/NZ - Central Europe

5.1%

Central America - North Africa

4.8%

Indian Sub Continent - Pacific

6.2%

Sub Saharan Africa - Australia/NZ

4.9%

Australia/NZ - CIS

6.0%

Central America - Pacific

2.5%

Indian Sub Continent - PRC

9.1%

Sub Saharan Africa - Canada

4.3%

Australia/NZ - Indian Sub Continent

5.0%

Central America - PRC

6.3%

Indian Sub Continent - Russia

6.8%

Sub Saharan Africa - Caribbean

5.4%

Australia/NZ - Japan

3.3%

Central America - Russia

5.2%

Indian Sub Continent - South Africa

7.5%

Sub Saharan Africa - Central America

4.9%

Australia/NZ - Middle East

5.8%

Central America - South Africa

5.4%

Indian Sub Continent - South America

9.6%

Sub Saharan Africa - Central Europe

5.9%

Australia/NZ - North Africa

4.6%

Central America - South America

7.5%

Indian Sub Continent - United States

6.6%

Sub Saharan Africa - CIS

7.5%

Australia/NZ - Pacific

4.8%

Central America - United States

5.4%

Intra Asia

6.1%

Sub Saharan Africa - Indian Sub Continent

6.9%

Australia/NZ - PRC

6.0%

Central America - Western Europe

4.1%

Intra Australia/NZ

3.2%

Sub Saharan Africa - Japan

7.8%

Australia/NZ - Russia

5.6%

Central Europe - Indian Sub Continent

6.0%

Intra Caribbean

1.3%

Sub Saharan Africa - Middle East

8.9%

Australia/NZ - South Africa

5.5%

Central Europe - Japan

3.7%

Intra Central America

5.2%

Sub Saharan Africa - North Africa

7.0%

Australia/NZ - South America

6.2%

Central Europe - Middle East

8.3%

Intra Central Europe

5.0%

Sub Saharan Africa - Pacific

4.5%

Australia/NZ - United States

3.7%

Central Europe - North Africa

4.7%

Intra CIS

6.1%

Sub Saharan Africa - PRC

7.1%

Australia/NZ - Western Europe

4.3%

Central Europe - Pacific

3.3%

Intra Indian Sub Continent

6.5%

Sub Saharan Africa - Russia

7.1%

Canada - Caribbean

6.0%

Central Europe - PRC

6.5%

Intra Middle East

5.5%

Sub Saharan Africa - South Africa

6.0%

Canada - Central America

6.1%

Central Europe - Russia

6.5%

Intra North Africa

5.5%

Sub Saharan Africa - South America

7.1%

Canada - Central Europe

3.9%

Central Europe - South Africa

6.0%

Intra Pacific

2.3%

Sub Saharan Africa - United States

4.7%

Canada - CIS

4.5%

Central Europe - South America

5.4%

Intra South America

5.4%

Sub Saharan Africa - Western Europe

4.5%

Canada - Indian Sub Continent

6.4%

Central Europe - United States

4.2%

Intra Sub Saharan Africa

7.2%

Western Europe - Indian Sub Continent

5.2%

Canada - Japan

2.6%

Central Europe - Western Europe

5.9%

Intra Western Europe

2.9%

Western Europe - Japan

2.8%

Canada - Middle East

5.6%

CIS - Central Europe

5.7%

Japan - Middle East

7.5%

Western Europe - Middle East

4.8%

Canada - North Africa

4.6%

CIS - Indian Sub Continent

4.4%

Japan - North Africa

6.8%

Western Europe - North Africa

4.5%

Canada - Pacific

3.3%

CIS - Japan

5.1%

Japan - Pacific

2.9%

Western Europe - Pacific

3.1%

Canada - PRC

6.2%

CIS - Middle East

7.2%

Japan - PRC

5.7%

Western Europe - PRC

5.7%

Canada - Russia

4.0%

CIS - North Africa

6.5%

Japan - Russia

4.2%

Western Europe - Russia

5.6%

Canada - South Africa

4.6%

CIS - Pacific

6.8%

Japan - South Africa

6.6%

Western Europe - South Africa

4.9%

Canada - South America

5.9%

CIS - PRC

7.7%

Japan - South America

5.3%

Western Europe - South America

4.8%

Canada - United States

2.2%

CIS - Russia

6.3%

Japan - United States

3.0%

Western Europe - United States

3.0%

Global Market Forecast

Domestic Turkey
Domestic United States
Domestic Western Europe
Indian Sub Continent - Japan
Indian Sub Continent - Middle East

Global Market Forecast

103

Freight Traffic Flow

summary & methodology

Freight Traffic Flow

104

CAGR 2013-2032

Freight Traffic Flow

CAGR 2013-2032

Freight Traffic Flow

CAGR 2013-2032

Freight Traffic Flow

CAGR 2013-2032

Africa to Asia

4.9%

CIS to Indian Sub Continent

5.5%

Intra Europe

4.0%

North America to Pacific

3.5%

Africa to Central America

5.7%

CIS to Japan

3.7%

Intra Indian Sub Continent

6.6%

North America to PRC

6.3%

Africa to CIS

6.1%

CIS to Middle East

3.0%

Intra Middle East

3.2%

North America to South America

4.8%

Africa to Europe

4.7%

CIS to North America

3.6%

Intra North America

3.1%

Pacific to Africa

4.4%

Africa to Indian Sub Continent

7.2%

CIS to Pacific

4.8%

Intra Pacific

1.5%

Pacific to Asia

2.7%

Africa to Japan

2.2%

CIS to PRC

7.0%

Intra South America

6.1%

Pacific to Central America

6.1%

Africa to Middle East

5.3%

CIS to South America

5.1%

Japan to Africa

4.0%

Pacific to CIS

5.7%

Africa to North America

4.8%

Domestic Brazil

4.1%

Japan to Asia

2.7%

Pacific to Europe

2.5%

Africa to Pacific

4.4%

Domestic India

8.3%

Japan to Central America

2.4%

Pacific to Indian Sub Continent

3.8%

Africa to PRC

6.9%

Domestic PRC

7.5%

Japan to CIS

4.0%

Pacific to Japan

3.5%

Africa to South America

4.2%

Domestic United States

2.1%

Japan to Europe

2.9%

Pacific to Middle East

4.7%

Asia to Africa

5.3%

Europe to Africa

4.7%

Japan to Indian Sub Continent

5.2%

Pacific to North America

2.2%

Asia to Central America

5.7%

Europe to Asia

5.2%

Japan to Middle East

3.4%

Pacific to PRC

5.1%

Asia to CIS

5.6%

Europe to Central America

4.4%

Japan to North America

2.5%

Pacific to South America

5.6%

Asia to Europe

3.9%

Europe to CIS

4.9%

Japan to Pacific

3.4%

PRC to Africa

6.3%

Asia to Indian Sub Continent

5.8%

Europe to Indian Sub Continent

7.0%

Japan to PRC

4.6%

PRC to Asia

5.6%

Asia to Japan

2.9%

Europe to Japan

2.2%

Japan to South America

3.9%

PRC to Central America

6.7%

Asia to Middle East

4.3%

Europe to Middle East

4.2%

Middle East to Africa

4.3%

PRC to CIS

6.2%

Asia to North America

4.2%

Europe to North America

3.3%

Middle East to Asia

4.0%

PRC to Europe

6.6%

Asia to Pacific

4.1%

Europe to Pacific

3.7%

Middle East to Central America

5.5%

PRC to Indian Sub Continent

8.5%

Asia to PRC

5.0%

Europe to PRC

6.7%

Middle East to CIS

5.3%

PRC to Japan

4.3%

Asia to South America

5.1%

Europe to South America

5.0%

Middle East to Europe

2.9%

PRC to Middle East

6.7%

Central America to Africa

5.3%

Indian Sub Continent to Africa

6.5%

Middle East to Indian Sub Continent

6.2%

PRC to North America

6.4%

Central America to Asia

5.9%

Indian Sub Continent to Asia

6.7%

Middle East to Japan

2.2%

PRC to Pacific

6.3%

Central America to CIS

4.6%

Indian Sub Continent to Central America

7.7%

Middle East to North America

3.3%

PRC to South America

6.8%

Central America to Europe

4.1%

Indian Sub Continent to CIS

5.0%

Middle East to Pacific

3.5%

South America to Africa

5.2%

Central America to Indian Sub Continent

7.8%

Indian Sub Continent to Europe

5.5%

Middle East to PRC

5.6%

South America to Asia

5.5%

Central America to Japan

3.6%

Indian Sub Continent to Japan

4.3%

Middle East to South America

4.4%

South America to Central America

5.9%

Central America to Middle East

5.5%

Indian Sub Continent to Middle East

6.6%

North America to Africa

4.8%

South America to CIS

5.7%

Central America to North America

1.9%

Indian Sub Continent to North America

4.1%

North America to Asia

4.1%

South America to Europe

4.5%

Central America to Pacific

5.7%

Indian Sub Continent to Pacific

4.8%

North America to Central America

2.4%

South America to Indian Sub Continent

6.4%

Central America to PRC

7.1%

Indian Sub Continent to PRC

7.6%

North America to CIS

5.2%

South America to Japan

4.3%

Central America to South America

5.7%

Indian Sub Continent to South America

6.5%

North America to Europe

4.3%

South America to Middle East

4.7%

CIS to Africa

4.5%

Intra Africa

5.1%

North America to Indian Sub Continent

6.4%

South America to North America

4.5%

CIS to Asia

4.6%

Intra Asia

4.5%

North America to Japan

1.4%

South America to Pacific

5.5%

CIS to Central America

3.4%

Intra Central America

5.2%

North America to Middle East

4.8%

South America to PRC

6.5%

CIS to Europe

2.8%

Intra CIS

4.1%

Global Market Forecast

Global Market Forecast

105

Summary data
New passenger aircraft deliveries by region
Africa

AsiaPacific

CIS

converted freight aircraft deliveries by region


Europe

Latin
America

Middle
East

North
America

Total

Single-Aisle

729

6,809

871

4,584

1,794

779

4,676

20,242

Small Twin-Aisle

155

2,220

148

720

346

505

600

Intermediate Twin-Aisle

58

1,013

44

314

103

370

Very large

28

622

32

209

36

970

10,664

1,095

5,827

2,279

Total

AsiaPacific

CIS

CIS

Europe

Latin
America

Middle
East

North
America

Total

29

342

11

65

61

90

605

4,694

Mid-size

29

147

24

123

38

39

424

824

183

2,085

Large

11

158

12

56

28

163

430

345

62

1,334

Total

69

647

47

244

101

74

677

1,859

1,999

5,521

28,355

Europe

Latin
America

Middle
East

North
America

Total

total freight aircraft deliveries by region

Europe

Latin
America

Middle
East

North
America

Total

Single-Aisle

729

6,809

871

4,584

1,794

779

4,676

20,242

Twin-Aisle

223

3,349

205

1,095

475

906

1,020

Very Large

36

783

40

273

38

390

988

10,941

1,116

5,952

2,307

Europe

Total

AsiaPacific

Small

New passenger & freight aircraft deliveries by region


Africa

Africa

Africa

AsiaPacific

CIS

Small

29

342

11

65

61

90

605

7,273

Mid-size

37

228

37

170

64

60

641

1,237

151

1,711

Large

21

354

20

134

83

272

888

2,075

5,847

29,226

Total

87

924

68

369

129

150

1,003

2,730

Latin
America

Middle
East

North
America

Total

Passenger aircraft 100 seats and freight aircraft 10 tonnes

New freight aircraft deliveries by region

summary & methodology

Africa

106

AsiaPacific

CIS

Small

Mid-size

81

13

47

26

21

217

413

Large

10

196

78

55

109

458

Total

18

277

21

125

28

76

326

871

Global Market Forecast

Global Market Forecast

107

Passenger
methodology

Forecasting traffic
The objective of the traffic forecast is to assess the quantity
of passengers travelling by air. Initially, all countries are
grouped into 19 traffic regions, based on geographical
proximity and level of socio-economic development.
Each region pair defines a non-oriented traffic flow,
assuming that outbound and inbound passenger traffic
is balanced. Whenever a part of a traffic region develops
very differently from the rest of the region, a new, specific
flow is created, taking into consideration some more
country-related specific characteristics. This process

resulted in 208 flows for the GMF 2013. The main input
data for the traffic forecast are historical traffic volumes
as well as large sets of historical and forecast socioeconomic data from external data providers.
For each traffic flow several socio-economic variables are
selected and fed into econometric equations to identify
the one set or combination of variables that explains
best the historical traffic evolution. Once the model and
variables with the best fit are identified, economic forecast
data is used to derive future traffic volume.

Forecasting the network


Airline networks evolve over time and airlines keep on
adding and removing routes from their network, changing
the supply of travel from the passenger standpoint. The
evolution of the network, with new opened and closed
routes, shifts the demand from one routing to another.
The impact sometimes even visible at a level as high as
the traffic flow. Furthermore, new routes tend to fragment
the market as they partially absorb traffic from the existing
network and, therefore, impact the route-per-route
traffic evolution. The network forecast aims to quantify
these impacts.

The making of the Airbus Global Market Forecast follows a process that has been continuously improved
for more than 20 years. Each major change in the industry (such as the appearance of low cost business
models or the strong development of hub and spoke operations) has been the occasion for Airbus to refine
and improve its modelling in order to best identify and forecast current and future trends.
The GMF process consists of three main steps: the traffic forecast giving the overall shape of traffic evolution,
the network forecast identifying the future evolution of the airlines networks, and the demand forecast estimating
the number of aircraft required to accommodate the traffic growth.
GMF Process steps

Demand Forecast

Backlog &
retirement
assumptions

summary & methodology

Airlines
Calibration

Among the very large set of potential new routes, a


subset of reasonable candidates is devised for each
airline, based on the carriers current network and the
potential size of new markets. This set of routes is fed
into a Quality of Service Index- based model, which
determines for each new route the traffic potential and
the point in time when it could be opened.

Forecasting aircraft demand


The demand forecast estimates the number of aircraft
that will be required over the next 20 years to satisfy
the worlds airline needs. The new demand identified
by the Airbus GMF (on top of current fleet and known
orders) is expressed in neutral seat categories. The
use of such virtual aircraft allows a view of future
demand unconstrained by the product supply. This
theoretical demand represents a solution that would
best match the airlines needs in terms of aircraft

size, if no considerations of supply (specific product


performance, production availability, etc.) are made.
Based on this undistorted view, the results can be used
to consider such things as new product introduction, size
requirements and timing. Examining the market at a route
by route and airline by airline level then also supports a
large number of other activities from discussions with
airlines to our supplier partners for example.

Forecasting Aircraft Demand

Open Demand

Traffic
Forecast

Airlines
Operations
Forecast

Capacity
Frequency
Model

Airlines
Fleet
Build-Up

Remarketed
aircraft

Backlog
Remarketed
Stay in service

Network
Forecast

108

Global Market Forecast

Virtual aircraft by seat category

Real aircraft (known product)


Real aircraft (existing product)
Real aircraft (existing product)

New
Deliveries

Global Market Forecast

109

The airline calibration process

A dedicated model handles the Frequency/Capacity split


Typical evolution on a route enjoying growth:

The Airbus GMF 2013 covers 741 passenger airlines and their subsidiaries world-wide.

Traffic (RPK index 100=year)


250

Airlines distribution per region

Asia
Canada
Central America
Central Europe
CIS
Europe
Indian Subcontinent
Middle East
North Africa
Pacific
PRC
South America
Sub Sahara
USA

30

17

d
talle
Ins

Regional
& Affiliate

seats in ser

100

36

8%

LCC

40

58%

Global
Network

11%
49%
16%

5%

8%

Major
Network
Small Network

60

81
80

Number of airlines
100

120

As a first step and for each of these airlines, a dedicated


calibration process is carried out. It aims to take the
best of several sources of information concerning
the airlines in order to understand how an airline is
operating each of its aircraft. Precise fleet data allows
us to calibrate the detailed operations of a given airline
(either scheduled or unscheduled) and, therefore,
deduce which type of aircraft has been flying on which
sector for a particular month of the year. This detailed
adjustment allows us to determine the way an airline
utilises its aircraft on their network.

summary & methodology

Airline operation forecasts


Once the calibration of an airline has been carried out,
real aircraft are converted into virtual aircraft in a way
that keeps the overall number of seats in the fleet
constant. The whole forecast is then based on neutral
seat categories e.g. 100, 125, 150, 210 for SingleAisle types.
Traffic growth rates are applied to each airlines routes,
also taking into consideration future developments, as
anticipated in the network forecast process. There are
few ways an airline can accommodate traffic growth: load
factor improvement, improvement of its aircraft utilisation,
frequency or capacity increase.
The split between frequency increase and/or capacity
increase is one of the most important factors influencing
the shape of the future demand. A dedicated model
(the Airbus Capacity/Frequency Model) has been
developed to address this issue. The general principle is
that airlines grow on a route by adding frequencies up
until a minimum level of service is reached. Beyond this

110

Global Market Forecast

Capacity
increase

50

Airlines distribution per type

5%
6%

Frequency
& capacity increase

Frequency increase

vice

r of airlin
es
mbe
Nu
20%
9%
5%

150

109

50

43

20

200

100

64
0

Charter

37

19
32

82

41

Threshold depending
on market characteristics

minimum level airlines grow with a mix of both frequency


and capacity increase, until the maximum level of service
is reached, above which time differentiation through
additional frequencies does not bring any further value
to the passenger. Above this maximum service level
the most efficient way to accommodate further growth
is to increase the average aircraft size to achieve lower
costs per aircraft seat. Each market in the world has
its own characteristics. Passengers in North America
for instance, are used to a high level of service (i.e. very
frequent flights between two airports) which is not true for
other regions in the world.
A market in this case can be defined as a set of routes on
a given traffic flow for a certain type of airlines business
model. For each of these markets one or more airlines
may compete and each route might have a different
length. Taking all this into account allows us to specify
how frequencies and capacity will develop over time, for
a given traffic growth.

Time (years)
1

10

11

12

13

14

15

16

17

18

19

20

The calibration of this model has to be reviewed each year based on the market definitions and in light of any market
evolution (e.g. infrastructure development plans).
As a result, the airline operation forecast outputs year by year, the demand in terms of aircraft numbers (yearly utilisation,
flight frequencies and capacity) expressed in neutral categories for the complete network of each airline.

Airline fleet build-up


Once the overall neutral demand is forecast, each airline
fleet build-up can be carried out. This demand is reallocated to the existing fleet and the known orders.
Generic assumptions are made for each region
regarding the retirement age of the fleets adapted for
each airline. Elements such as replacement plans (new
aircraft replacing older types), end of contract lease,
airline business models or economic and financial
environment have to be taken into account in determining
replacements.

The remaining demand, which cannot be satisfied by the


current fleet or the known orders, corresponds to the
open market.
As well as identifying demand, the GMF also allows us
to extract all forecast operational detail e.g. traffic flow,
route, frequencies, utilisation, load factors, etc.

Remarketed aircraft
The final step of the GMF process is estimating
remarketed deliveries, which account for a significant
share of the total demand.
Survival curves applied to the GMF start fleet and backlog
per aircraft type, allow identification of the gap between
the statistical world fleet attrition and the shape of those
that stay in service from the GMF fleet build-ups. The delta
corresponds to the maximum potential for remarketed

aircraft. In parallel to this, candidate aircraft are identified


amongst the existing fleet and reallocated as deliveries to
another airline if the corresponding demand exists.
This study is carried out on a world-wide basis and then
refined by region and by airline. At the end of the process,
these remarketed deliveries are subtracted from total
deliveries, leaving only the new deliveries which are the
figures given in this publication.

Global Market Forecast

111

Freight forecast
methodology

Traffic forecast
Once the calibration of an airline has been carried out,
the first step in the traffic forecast is assessing the
relationship between macro-economic trends and the
cargo traffic. GDP, Real Income, Investments, Exports/
Imports, industrial production and many other parameters
are used in our econometric models to assess the best

comparison to growth in traffic. Alongside these macroeconomic factors, the analysis of historical data allows
us to identify and understand the multiple trends involved
in the evolution of the market, such as modal shifts for
certain commodities.

Traffic forecast methodology

Consumption
behaviours

Economic
Cycles

Air cargo
trends
Growth

Industry
changes

Models:
driver
correlation
with trends
Exports/
Imports

Forecast

GDP

Drivers

The freighter GMF has been part of the Airbus forecasting process for more than ten years and is constantly
enhanced to account for all the key aspects of the cargo market, as well as their evolution. It is closely linked
to the GMF passenger forecast, drawing on results from this forecast to derive future belly hold capacity.

Real
consumption

Industrial
production
Fuel Price

summary & methodology

The freighter forecast process can be divided


into three main steps: the traffic forecast
resulting from econometric projections for
each directional flow, the integration of the belly
traffic co-ordinated with the passenger aircraft
forecast and the demand forecast evaluating
how many freighters will be needed in the next
20 years (and whether they will be new build or
converted freighters).

The freighter forecast process

Historical
traffic data
analysis

Belly capacity and base year calibration

Airline
fleet
calibration

Passenger
forecast

Cargo
capacity
needed

Belly
capacity
available

Econometric
models

Total
traffic
forecast

Retirement

Aircraft

Once the traffic flow forecasts have been established.


It is important to split the future demand between belly
capacity and the dedicated freighters. Thanks to the
passenger aircraft GMF, it is possible to estimate the belly
capacity each airline will offer on its network. In addition,
Airbus monitors how airlines use their belly holds to carry
cargo to establish trends in belly capacity load factors.
As a result, the combination of the airlines passenger
network development and the cargo hold load factor
evolution gives an estimation of the share of freight

transported on the passenger aircraft belly on each flow.


In parallel, a calibration is conducted on todays
freighter fleet. An assessment of multiple data sources
is performed to arrive at the best estimate of airlines
network, aircraft utilisation and load factors for the base
year. Projections based on historical data collected for
more than a decade with current market perspectives
gathered from stakeholders across the industry to ensure
the latest data and trends are incorporated.

Freighter
demand

112

Global Market Forecast

Global Market Forecast

113

Air freight industry in 2013

World figures 2013


Fleet: 1,645
Operators: 197

798
339
Europe
& CIS

34

North
America

51
314
61
15

Latin
America

77
22

56
28

47

AsiaPacific

Middle
East

Africa

Freighter forecast
The freighter forecast for the next 20 years estimates the
number of aircraft required to accommodate the cargo
traffic growth. The demand is divided into four neutral
size categories starting at ten tonnes, including new build
and converted aircraft. Thanks to these virtual categories,
it is possible to assess which aircraft size, on which flow,
best suits the market.

summary & methodology

Domestic express analysis


To address the specific question of the domestic express
market, a dedicated forecast model has been developed
and deals with four countries: the US, which today is the
largest player in express traffic, as well as Brazil, India and
China, who are all expected to become large consumers
of express services over the next 20 years.
This model analyses a distinctive set of parameters to
understand the customers need for express services
resulting from well-known or new behaviours, such
as online purchasing, next-day delivery for business
purposes, service reliability and traceability.
The model for domestic express consists in two parts. The
first estimates the US express traffic and fleets based
on a 40 years historical data to identify the main drivers
of growth. The second, used for the emerging markets,
takes US express development as a benchmark, while
taking into account the unique characteristics of each
country including infrastructure development, labour
costs, internet penetration, for example.

Our freighter forecast is the result of the analysis of the


behaviour of nearly 200 different airlines.
When forecasting an airlines choice of new build or
converted freighters, a detailed study of historical trends
is used to identify the trend in activity per aircraft size
category. On top of using historical trends, an analysis
of current and future fuel prices is performed to simulate
their effect on this decision making process

Express and general cargo in 2013


Source: ASCEND, Airbus

Freighter fleet in service in 2013


General cargo
Units

Mixed carriers

800

744

700

Express

177

600

73

500
400

380

300

129

200

95

100

156

521

329
494
45
147

0
Small

114

Global Market Forecast

Mid-Size

Large

Global Market Forecast

115

116

Regional

Global Market Forecast


A318-100
737-500
CS100
MD-80-87
737-200
ERJ-195
717
737-600
DC-9-50
A319neo
A319-100
737-700
737-300
CS300
MD-80-88
MD-80
737-400
MD-80-83
Tu-154
MD-90
727
IL-62
A320-200
707
MS21-200
C919
737-8 max
A320neo
737-800
Tu-204
A321-200
737-900
757-200
737-9 max
767-200ER
A321neo
A321-100
MS21-300
A310-300
A340-500
767-200
757-300
767-300ER
A310-200
787-8
767-400ER
A340-200
A330-200
767-300
A340-300
IL-96
A300
A300-600
747SP
A300-600R
777-200LR
DC-10
777-200ER
A350-800
A330-300
747-400C
787-9
MD-11ER
A340-600
A350-900
L1011
777-300ER
787-10
777-200
A350-1000
747-8
747-400ER
747-400
777-300
747-100
747-300
747-200
747HD
A380-800

Y-12
An-28
EMB-110
L-410
Dorn 228
Jet31
Beech1900
Metro
DHC-6
SK-105
Arava
CASA 212
Gulfstr
Nord 262
An-38
DC-3
Jet41
EMB-120
Saab 330
Yak-40
Do 328
Do 328JET
Saab 340
An-26
Short 360
An-74
ERJ-135
An-72
HS 748
CN-235
Dash 8
ERJ-140
An-32
Convair
ATR 42
Dash 7
Y-7
An-24
Saab 2000
ERJ-145
CRJ200
CRJ100
F50
F27
An-140
IL-114
MA60
YS-11
Tu-134
ATP
DC-9
CRJ700
ATR 72
ERJ-170
An-148
F28
Q400
F70
ERJ-175
CRJ900
Avro 85
SSJ
ARJ-21
BAe 146
An-158
MRJ90
CRJ1000
Hercules
Avro 100
ERJ-190
F100
Tu-334
DC-9-30
IL-18
Yak-42
A319CJ

Aircraft type

summary & methodology

100

200

300

400

500

Aircraft capacity

600

700

800

900

Capacities

Single-Aisle
Twin-Aisle & VLA

Global Market Forecast

117

Safe Harbour Statement


Disclaimer
This presentation includes
forward-looking statements.
Words such as anticipates,
believes, estimates, expects,
intends, plans, projects, may,
forecast and similar expressions
are used to identify these forwardlooking statements. Examples of
forward-looking statements include
statements made about strategy,
ramp-up and delivery schedules,
introduction of new products and
services and market expectations,
as well as statements regarding
future performance and outlook.
By their nature, forward-looking
statements involve risk and
uncertainty because they relate to
future events and circumstances
and there are many factors that
could cause actual results and
developments to differ materially
from those expressed or implied by
these forward-looking statements.
These factors include but are
not limited to:
Changes in general economic,
political or market conditions,
including the cyclical nature of
some of EADS businesses;
Significant disruptions in air travel
(including as a result of terrorist
attacks);
Currency exchange rate
fluctuations, in particular between
the Euro and the U.S. dollar;
The successful execution of
internal performance plans,
including cost reduction and
productivity efforts;

P
 roduct performance risks, as
well as programme development
and management risks;
C
 ustomer, supplier and
subcontractor performance or
contract negotiations, including
financing issues;
C
 ompetition and consolidation
in the aerospace and defence
industry;
S
 ignificant collective bargaining
labour disputes;
T
 he outcome of political and
legal processes, including
the availability of government
financing for certain programmes
and the size of defence and
space procurement budgets;
R
 esearch and development
costs in connection with new
products;
L
 egal, financial and governmental
risks related to international
transactions;
L
 egal and investigatory
proceedings and other
economic, political and
technological risks and
uncertainties.
Any forward-looking statement
contained in this presentation/
publication speaks as of the date
of this presentation/publication
release. EADS/Airbus undertakes
no obligation to publicly revise
or update any forward-looking
statements in light of new
information, future events or
otherwise.

AIRBUS S.A.S. 31707 Blagnac Cedex, France


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Traffic
Economy
Ecology environement
Fleet in service
Global markets

Traffic evolution
Passenger fleet in service
Freighter fleet in service
International trips
Internation students
Urban population
Disposable incomes
Influence of the middle class
Influence of emerging markets
Ticket price
Fuel price
Fuel consumption per seat
New generation aircraft
Aviation mega-cities

Traffic & Fleets

Economy &c Demographics

Eco-efficiency

Aircraft utilisation
Load Factors
Middle East
Latin America
Europe
CIS
Asia Pacific
Africa
North America

Fleet-in-service