Aerospace Update

January 2006

An Airbus Global Market Forecast, released in December 2004, predicts strong industry growth through 2023, with the need for more than 17,300 new passenger and freighter aircraft worth US $1.9 trillion.

Airbus forecasts that of this total, 16,600 new passenger aircraft of more than 100 seats will be needed in the coming 20-year period, creating an average 830 deliveries per year.

This requirement results from a three-fold growth in passenger traffic, or an average annual traffic growth in revenue passenger kilometres (RPKs) of 5.3 per cent, and the replacement of 9,200 less fuel-efficient passenger airliners through to 2023.

Airfreight is forecast to grow even faster, with freight tonne kilometres (FTKs) increasing annually by 5.9 per cent over the same period, generating the need for more than 700 new and 2,400 converted freighters.

Overall, this period is expected to include the strongest traffic-growth recovery seen since 1980 - highlighting the airline industry's resilience to the effects of recent world events.

The Asia-Pacific region's strong economic development, especially in emerging economies, and the increasing impact of low-cost carriers in all domestic markets will significantly contribute to the traffic growth. The nine trillion RPKs forecast in 2023 will largely be generated in Europe (32 per cent), Asia-Pacific (31 per cent) and North America (26 per cent).

To accommodate this three-fold growth in passenger traffic, the number of flights offered on passenger routes and the number of passenger aircraft in service will more than double in 20 years, accompanied by the use of larger aircraft. Airbus therefore forecasts that the average number of seats per passenger aircraft will increase by 20 per cent from 181 to 215 over this period.

Demand for air travel will result in the expansion of international traffic through the development of new routes, as well as through consolidation of the major hubs. The bulk of the traffic growth will be driven by the concentration of population, wealth and industrial activities as well as the desire for low fares.