Aviation is an increasingly integral part of life, bringing people closer together.
As the world’s emerging markets continue to grow and new business models expand,
airplane manufacturers are seeing greater diversity in their customer base.
In 1994, airlines in Europe or North America carried more than 73 percent of all traffic.
By 2034, that share will shrink to 38 percent, with Asia Pacific and Middle East airlines
becoming prominent in global aviation.
The low-cost business model continues to drive growth in the single-aisle market.
Passengers have access to a wider range of destinations and the benefit of the speed and convenience that
flying offers over traditional modes of transportation. Meanwhile, new, efficient widebody airplanes are enabling smaller operators in developing markets to compete on longer routes that large foreign network carriers have traditionally dominated. The range and economics of these airplanes are dramatically expanding the number of long-haul nonstop city pairs offered. Rapidly evolving aviation services in emerging regions are broadening the geographical balance of airplane
demand, spurring a worldwide requirement for 38,050 new jet airplanes, valued at $5.6 trillion.
REGIONAL FOCUS
Each region will respond to its unique situation and conditions with specialized requirements.
Middle East airlines continue to favor widebody airplanes and premium passenger services to leverage the area’s geographic advantages and prominence in business travel.
Europe and North America airlines will respond to growing competition from low-cost carriers by replacing older, fuel-inefficient airplanes with more economical single-aisle models. The large installed airplane base in these areas generates a need for a considerable number of replacement airplanes, even though growth is slower than in other parts of the world.
In Asia, rising demand will require a mix of single-aisle and widebody airplanes.
All regions will face similar challenges of fuel-price volatility, emission control regimes, and ever-increasing airport congestion as the growing world fleet works to keep pace with burgeoning international and local demand for air travel.
TODAY’S MARKET
Asia has become one the biggest aviation markets in the world—at last count, a billion passengers travel to, from, or within the region each year.
And more than 100 million new passengers are projected to enter the market annually for the foreseeable future.
As a result, the airlines and airports in this region are continually growing, with several ranked among the largest in the
world.
This evolution has been due largely to regional economic growth; liberalization and deregulation; new, efficient airplanes, and new business models.
Over the past decade,
· Jet fleets of Asia airlines have nearly doubled, from 2,900 to 5,850.
· The number of Asia airlines with jet fleets has grown from 150 to 225.
· The capacity that these airlines provide has grown on average by 7 percent annually.
· Routes to, from, and within Asia have increased 57 percent, from 2,200 to 3,800.
AIRLINES
The low-cost carrier (LCC) business model has proved successful throughout the world but particularly so in Asia Pacific.
Typical LCC strategies include operating at secondary airports, flying a single airplane type, increasing airplane utilization, relying on direct sales, offering a single-class product, avoiding frequent-flyer programs, and keeping labor costs low.
Over the past 10 years, the region’s LCCs have generated an average annual growth rate of 24.5 percent. By comparison, Europe’s LCCs grew 13.4 percent annually during the same period, and North America’s grew a modest 2.2 percent annually.
The countries in Southeast Asia were some of the first in the region to employ the LCC business model, and today, LCCs are flying nearly 20,000 weekly flights. Northeast Asia, on the other hand, has been slower to see the growth of LCCs, owing in part to the large high-speed rail network in Japan and to an aging population.
China is the latest region to embrace the LCC model, with a large increase in the number of entrants in the past two years.
To expand outside their home country, many airlines have created joint-venture subsidiaries to avoid restrictions on foreign ownership.
These subsidiaries, which employ the LCC business model, are often cobranded with the parent airline and share its name and livery.
Although the vast majority of this activity has been in short-haul markets using single-aisle airplanes, the region is beginning to see joint ventures flying widebody airplanes on medium-haul operations in response to strong traffic growth.