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Global Market Forecast 2000 - 2019

July 2000

The Airbus Global Market Forecast can also be found on the Internet at http://www.airbus.com

31707 Blagnac Cedex France Telephone +33/(0)5 61 93 33 33 Airbus Industrie 2000 All rights reserved AI/CP 390.0031/00
The statements made herein do not constitute an offer. They are based on the assumptions shown and are expressed in good faith. Where the supporting grounds for these statements are not shown the Company will be pleased to explain the basis thereof.

Printed in France

Contents

1. Forecast highlights 2. Key forecast parameters 3. Introducing the GMF 4. Demand for air travel 5. Air transport operational evolution 6. Fleet renewal 7. World passenger fleet development 8. Demand for passenger aircraft deliveries: - Regional jets - Mainline single-aisles - 200/250-seaters - Mid-sized & large twin-aisles - Very large aircraft 9. Air cargo forecast Appendices A. Geographical regions & airlines analysed B. Route network development C. Passenger market segmentation D. Seat supply analysis E. Passenger traffic forecast methodology & results F. Aircraft replacement methodology G. Detailed passenger fleet results: - Ten years: 2000 to 2009 - Twenty years: 2000 to 2019 H. Cargo forecast methodology I. Cargo forecast results

4 8 9 12 15 21 23 27 31 32 33 35 36 41

58 61 62 64 66 70 72 74 76 83

2000 Global Market Forecast

1. Forecast highlights
During the last year since the issue of Airbus Industrie's previous Global Market Forecast (GMF), economic forecasters have become somewhat more cautious regarding the prospects for long-term economic growth. Nevertheless the results of the latest GMF confirm Airbus' confidence in the continued strength of the civil aircraft market over the next twenty years, provided ways and means can be found to ease the problems caused by congestion. A significant role in the development of the world fleet will be played by a new generation of aircraft larger and more economical than anything flying today, and designed to be compatible with existing airport infrastructure. Airbus' latest GMF covers the evolution year by year during the period 2000 - 2019 of the fleets of passenger and combi aircraft with at least 70 seats, as well as dedicated freighters, operated by the world's largest 228 airlines and 49 subsidiaries, together with 187 additional cargo operators. In response to widespread demand, this summary document presents the results for the ten-year period to 2009 as well as for the full twenty years covered by the forecast. The major predictions are that: l Driven mainly by continuing economic (GDP) growth and reduced fares, passenger traffic (revenue passenger-kilometres) will grow at an average annual rate of 5.2 per cent during the next ten years. Growth will slow as markets mature, to average 4.6 per cent through the following decade, resulting in twenty-year average annual RPK growth of 4.9 per cent through 2019, when the airlines will be generating 160 per cent more RPKs than today. l Cargo traffic will be stimulated by the development of global e-commerce and manufacturing trends, and freight tonne-kilometres will grow more rapidly than passenger traffic. FTKs will increase at an average annual rate of 6.1 per cent through 2009, slowing to 5.3 per cent annually during the following ten years. Twenty-year annual FTK growth will average 5.7 per cent through 2019. l Modest increases in speed, load factor and utilisation will result in improvements in productivity. The number of annual RPKs produced by each seat installed in passenger aircraft will increase from about 1.66 million in 1999 to 1.8 million in 2009 and more than 1.9 million in 2019. Similarly, the number of annual FTKs produced by each tonne of capacity in freighters will increase from just under 1 million in 1999 to 1.14 million in 2009 and 1.27 million in 2019. l Consequently, to accommodate growing demand, the number of seats in passenger service will increase from 1.85 million today to

Forecast highlights

2.8 million in 2009 and nearly 4.2 million in 2019. At the same time the capacity of the dedicated freighter fleet will grow from nearly 69,000 tonnes to 113,000 tonnes in 2009 and 184,000 in 2019. l As passenger airlines increase frequencies on existing routes and operate additional routes, the number of departures will increase more rapidly than in the past. Annual departures will increase at an average 3.8 per cent per year through 2009. Limited infrastructure capacity will constrain further growth in departures to just 2.7 per cent per year through the next decade, resulting in a twenty-year average annual growth in departures of 3.3 per cent through 2019, when the airlines will be making 90 per cent more daily departures than today. l Since the number of departures will be unable to keep pace with the growth of traffic, the airlines will have to offer more seats per departure. From the current average of 158, seats per departure will reach 168 in 2009 and 190 in 2019; an overall increase of 32. l Smaller aircraft tend to make more flights than larger ones, so the average number of seats per aircraft will need to grow more rapidly than seats per departure. From the current 179 seats, average aircraft size will increase at an accelerating rate to 191 in 2009 and 217 in 2019; an increase of 38. Thus, over the next twenty years, seats per aircraft will increase by 19 per cent more than seats per departure. l As a result, to provide the required increase in capacity, the number of passenger aircraft in service will increase from some 10,350 in 1999 to 14,820 in 2009 and 19,170 in 2019. The world jetliner fleet will grow by nearly 11,000 aircraft
World fleet change 2000 - 2019 (2000 - 2009 in brackets)

14,661
(7,337)

New 15,364
(7,608)

703
(271)

Passenger Freighter Fleet Converted Fleet


2,389 Recycled 3,174
(1,644) (1,166)

3,448
(1,705)

Retired 4,601 (2,408)

1,153
(703)

By 2009, some 4,520 of the passenger aircraft currently in service will have been replaced by their current operators as they seek to

2000 Global Market Forecast

maintain a youthful fleet. Of these, 1,640 will be recycled back into the world fleet, leaving a need for delivery through 2009 of a total of about 7,340 new passenger aircraft. l During the following ten years another 4,500 aircraft will be replaced, of which 1,530 will be recycled, leaving a need for another 7,320 new aircraft for growth and fleet renewal. So over the twenty years through 2019 the airlines will take delivery of a total of about 14,660 new passenger aircraft. And of the 9,000 aircraft replaced during this period, almost 2,400 will be converted to freighters and enter dedicated cargo operations. Nearly 15,400 new aircraft will be delivered ...
2000 - 2009 70- & 85-seater regional jets Mainline single-aisle types like the Airbus A318, A319, A320 and A321 200/250-seaters like the Airbus A300, A310 and smaller model A330s Larger twin-aisles like the Airbus A330-300 and A340 Very large and economical aircraft like the Airbus A3XX Total passenger aircraft Freighters Passenger + freighter aircraft 437* 4,330 1,127 1,083 360 7,337 271 7,608 2000 - 2019 692* 7,570 3,046 2,118 1,235 14,661 703 15,364

* many more of these aircraft will be needed by smaller airlines and current turboprop operators not covered by the GMF

The average delivery rate of 733 new passenger aircraft per year projected through the first ten years of the forecast will be sustained through the second decade in terms of units. However the progressive trend towards larger aircraft means that the dollar value of deliveries in the second decade will be greater. l The biggest share (35 per cent) of deliveries of passenger aircraft will go to airlines in North America. European airlines will take 30 per cent, and Asia-Pacific airlines 24 per cent, leaving just 11 per cent for airlines in Latin America, the Middle East and Africa. l Higher growth in air travel markets outside the USA means that the percentage of the world passenger fleet operated by airlines based in North America will decline from its current 43 per cent to 36 per cent in 2019, while the share of airlines in Europe and AsiaPacific rises. In terms of capacity, the most spectacular gain will be made by the Asia-Pacific airlines, whose share of world seats will grow from 24 to 29 per cent.

Forecast highlights

The world freighter fleet will grow from 1,510 aircraft with an average capacity of 45.5 tonnes in 1999 to 2,240 aircraft with an average capacity of 50.5 tonnes in 2009. During this period some 700 freighters, having reached the end of their economic lives, will be retired, creating the need for acquisition of a total of 1,440 aircraft, including 1,170 passenger-to-freighter conversions and 270 new aircraft. l From 2009 to 2019 the freighter fleet will grow to 3,450 aircraft with an average capacity of 53.3 tonnes, while another 450 old aircraft will be retired. Of the 1,650 aircraft delivered, 1,220 will be conversions and 430 new freighters. Thus a total of some 700 new dedicated freighters will be delivered during the next twenty years. l The new 7,610 passenger and cargo aircraft delivered during the next ten years will be worth approximately $560 billion (2000 catalogue prices) and the 7,750 aircraft delivered during the following decade will be worth another $750 billion, giving a total twenty-year business volume of $1.31 trillion. a business worth $1.3 trillion
2000 $ (billion)
350 300 250 200 150 100 50 0 8.4 5.2 70&85
2 0 0 0 - 2019 2 0 0 0 - 2009 1% 1%

327.4 280.7

319.3 281.8

177.0

161.4 96.0 105.0 77.4 34.0

100 to 175
25% 32%

210 & 250


21% 19%

300, 350 & 400


24% 29%

> 400
22% 14%

freighter
7% 6%

2000 Global Market Forecast

2. Key forecast parameters


The numbers of aircraft and seats needed at any point in time to generate the forecast number of revenue passenger-kilometres at the projected levels of service frequency will flow directly from the assumptions made regarding the evolution of such concrete operational parameters as speed, aircraft utilisation, load factor and average flight distance. To facilitate understanding of the GMF results and comparison with other forecasts, the table below presents the actual and forecast values at the beginning, middle and end of the twenty-year forecast period of eight key parameters, from which the corresponding values of a range of other operational parameters (such as speed) can be easily derived. These values, and the relationships between them, also provide a useful test of reasonableness of the forecast's results. Key forecast parameters
Passenger aircraft only World RPKs (billion) World ASKs (billion) Number of aircraft Number of installed seats Number of departures (000) Seats per departure Average flight distance (km) Block hours per aircraft per year End 1999 3,080.1 4,378.5 10,349 1,852,641 16,156.0 158 1,370 3,502 End 2009 5,100.2 7,076.9 14,815 2,834,332 23,464.6 168 1,414 3,636 End 2019 7,985.7 10,864.2 19,173 4,168,701 30,738.8 190 1,444 3,736

Each of these numbers is a result, not an input !

3. Introducing the GMF


The millennial edition of Airbus Industrie's annual GMF predicts the numbers of passenger and combi aircraft with at least 70 seats, as well as dedicated freighters, that will be required during the twenty years from 2000 to 2019 to accommodate traffic growth and to allow fleet renewal by a total of 228 individual passenger airlines plus 49 subsidiaries, outside the Commonwealth of Independent States, which altogether account for 98 per cent of scheduled passenger operations, as well as 187 additional cargo carriers. The airlines studied, grouped into seven consolidated geographical regions, as well as the criteria for inclusion in the GMF, are listed in Appendix A. The GMF covers 228 passenger airlines ...
North America 29 airlines 4,418 aircraft Europe 78 airlines 2,789 aircraft P.R. China 19 airlines 491 aircraft

Middle East 11 airlines 261 aircraft

Latin America 36 airlines 687 aircraft

Africa 23 airlines 273 aircraft

Asia-Pacific 32 airlines 1,430 aircraft

and 187 freighter operators


North America 47 operators 1,055 freighters Europe 37 operators 168 freighters P.R. China 4 operators 15 freighters

Middle East 15 operators 37 freighters

Latin America 31 operators 75 freighters

Africa 34 operators 63 freighters

Asia-Pacific 19 operators 97 freighters

2000 Global Market Forecast

Airbus recognises the great potential that exists for growth in passenger and cargo traffic carried by airlines based in the Commonwealth of Independent States. Currently, however, the lack of a consistent statistical base and reliable economic projections does not allow the application to these airlines of the forecasting techniques used in the GMF. Consequently Airbus makes a separate forecast of the evolution of the fleets of the airlines in the CIS, based on plausible assumptions, which is contained in a separate document. The GMF is a bottom-up forecast, projecting the year-by-year evolution of passenger traffic, flight frequencies and aircraft capacity on a total of 10,013 individual airport-pair route sectors linking 1,896 airports in 82 distinct domestic and international submarkets. This avoids the errors inherent in top-down forecasts derived from aggregations of averages. The route-by-route projections are then consolidated so as to forecast the evolution of the individual fleets of each of the airlines, and then further consolidated into the regional fleet forecasts shown in this summary document. Appendix B explains how the GMF simulates the impact of new route development. Demand is forecast in 19 categories
Passenger aircraft Cargo aircraft

Q 70 & 85-seaters * Q 100,125,150 & 175-seaters Q 210 & 250-seaters Q 300, 350 & 400-seaters Q 500, 600, 800
& 1000-seaters

Q < 30 tonnes capacity Q 30 to 50 tonnes capacity Q 50 to 80 tonnes capacity Q > 80 tonnes capacity

* the GMF does not predict total demand for aircraft in this category, because many more will be needed by smaller airlines and current non-jet operators

Unlike many forecasts, the GMF uses a very rigorous method of product segmentation into 15 neutral seating categories. Depending on its particular seating layout, any individual passenger aircraft will fall between two categories and contribute seats to each. This ensures that at any time the number of aircraft (and hence flight frequencies) and seats in each individual airline fleet match exactly the forecast demand. Appendix C describes this

10

Introducing the GMF

approach in more detail, while Appendix D illustrates the application of the GMF methodology to a typical route. Cargo aircraft are segmented into four capacity categories. The passenger traffic forecast methodology and results are described in Appendix E. The GMF is a pure demand forecast. The extent to which any available aircraft type will satisfy the predicted future demand for seats (or - for freighters - tonnes of lift) at projected levels of frequency will depend largely on its competitiveness, and a versatile passenger aircraft type, in service in a wide variety of seating layouts, will contribute seats to a number of different neutral seat categories. Moreover, the GMF recognises that many airlines replace passenger aircraft in their fleets long before the aircraft are converted to freighters or definitively withdrawn from airline service. A proportion of these aircraft are then recycled back into the fleets of other airlines through the used aircraft or operating lease markets. At the level of individual airline fleets, the GMF identifies the corresponding opportunities to introduce new aircraft before the existing aircraft reach the end of their economic lives. This summary shows the extent to which overall forecast demand for aircraft deliveries will be satisfied by used aircraft, as described in Appendix F. The detailed results of the GMF passenger fleet forecast through 2009 and 2019 are presented in Appendix G. A significant proportion of airfreight continues to be transported by dedicated freighters on a non-scheduled basis, rendering the available flight schedule databases non-comprehensive. Until a comprehensive database becomes available, the GMF freighter analysis will continue to deduce pertinent information about the nature of the markets served and the type of service offered from available aircraft-by-aircraft operational data. The freighter and passenger aircraft forecasts are presented separately due to the inevitable differences between the methodologies. However the two forecasts are to some extent interdependent because passenger aircraft operations play a crucial role in global airfreight by making available significant freight capacity in the belly-holds of passenger and combi aircraft, and by providing significant dedicated freighter lift capacity through passenger-to-freighter conversions. The freighter forecast methodology and results are shown in Appendices H and I.

11

2000 Global Market Forecast

4. Demand for air travel


Demand for air travel will continue to be driven primarily by economic (GDP) growth, though as markets mature demand tends to become more sensitive to changes in real fares. Initially, when air travel can be afforded by only a tiny percentage of the population, the fare level is largely irrelevant and the convenience of the journey paramount. But as air travel becomes generally affordable, more and more passengers - paying for their own tickets - will, if necessary, go to considerable inconvenience if this enables them to obtain a cheaper fare. To maintain the growth in their business, airlines will have to find ways to continue to reduce fares in real terms. Airbus forecasters predict that in future the availability of still more efficient and productive aircraft will make a major contribution to this. Airbus anticipates that high-speed rail systems will continue to take a share of some highly-travelled short-haul travel markets, and this is reflected in the GMF's growth rate projections. However the enormous investment required, together with environmental concerns, will severely limit the proliferation of such systems. Further, Airbus predicts that advanced telecommunications will have an overall neutral impact on demand for air travel, any direct substitution being counterbalanced by the stimulus they will provide to economic growth. Airbus does not expect that a new-generation supersonic aircraft will achieve any significant penetration of the market during the next twenty years. It also assumes that during this period the development of subsonic air transport will not be significantly Air travel will continue to grow strongly
World annual traffic - trillion RPK
9 8 7 6 5 4 3 2
(11.2% p.a.) (6.9% p.a.) (4.5% p.a.) (5.2% p.a.)

ICAO traffic history

(4.6% p.a.)

Airbus projection + 4.88 % per annum

1 0 1969

1979

1989

1999

2009

2019

12

Demand for air travel

affected by a lack of availability of conventional hydrocarbon fuels, although their increasing price as well as intensifying environmental pressures will continue to provide strong incentives to improve fuel efficiency. Overall, Airbus predicts that during the ten years to 2009 scheduled revenue passenger-kilometres (RPKs) carried by the GMF airlines will grow at an average annual rate of 5.2 per cent, declining to an average annual rate of 4.6 per cent as markets progressively mature during the following decade. This results in a forecast average RPK growth rate of 4.9 per cent per year through 2019. Thus during the next twenty years world annual RPKs will grow to eight trillion compared with the current level of three trillion. Compared with the 1999 GMF, Airbus forecasters have increased their estimate of annual traffic growth for the first decade by 0.1 percentage points, and reduced that for the following ten years by 0.3 percentage points. This reflects a change, following the fasterthan-expected recovery of the economies of several Asian nations, in the long-term outlook of the independent economic forecasts used by Airbus as an input to its forecasting models. The result is a modest reduction by one-tenth of a percentage point of the average annual growth in RPKs projected over the next twenty years. Travel growth will vary widely between different markets
Average annual growth rate (% p.a.) 1999 - 2019
9 8 7 6 5
Domestic Europe P.R.China - Asia

4
Intra Europe

Domestic P.R.China

3
Dom . USA

Asia - USA

Africa - Europe

Europe - Asia

Europe - USA

2 1 0

% of world 2019 RPK

16.8% 13.3% 8.8%

7.6%

6.5%

3.9%

2.9%

2.4%

2.3%

2.2%

The individual sub-markets will grow at substantially different rates. The mature US domestic air travel market is expected to grow at just 2.9 per cent per year through 2009 and 2.3 per cent per year through the following decade, resulting in a twenty-year average annual growth rate of 2.6 per cent. In contrast, passenger traffic growth on domestic routes in the People's Republic of China

13

Intra Asia

2000 Global Market Forecast

- driven largely by high GDP growth - is expected to average a stunning 9.2 per cent annual growth through 2009, and 7.0 per cent through the next decade. This means that during the next twenty years domestic PRC traffic will increase nearly five-fold, at an average annual rate of 8.1 per cent per year. The lower-than-average growth projected on US domestic routes will result in the share of world RPKs generated in this market declining to 17 per cent in twenty years' time from its current level of 26 per cent. During the same period domestic routes in the PRC will double their share of world RPKs, increasing from 2.1 to almost four per cent. By 2019 the top ten sub-markets alone will generate two-thirds of total world RPKs, but despite this concentration Airbus believes that to understand the traffic growth potential for each individual airline it is necessary to study all the 82 sub-markets. These are listed in Appendix E together with the average annual RPK growth rates projected over the two ten-year periods covered by the GMF. US domestic share of world traffic will decline
US domestic 17%

US domestic 26%

World total at end 1999 3.08 trillion RPK

World total at end 2019 7.99 trillion RPK

14

5. Air transport operational evolution


The results of the GMF flow directly from the assumptions made regarding not just traffic growth but also such operational parameters as speed, aircraft utilisation, load factor and average flight distance. The values of these parameters also provide an excellent test of reasonableness of the forecast results. During the past twenty years the overall values of all these elements have been increasing as route networks have evolved and airlines have responded to global competition. Airbus forecasters predict that during the next twenty years these historical trends will continue, within the constraints of airport and air traffic management capacity. For the GMF passenger airlines, they expect that: l Average flight distance will increase from 1,370 km in 1999 to 1,414 in 2009 and 1,444 in 2019; l Average block speed, severely constrained by congestion, will increase from 611 km/h in 1999 to just 616 in 2009 and 620 in 2019; l Average passenger load factor will increase from 70.3 per cent in 1999 to 72.1 in 2009 and 73.5 in 2019, and l Aircraft annual utilisation will increase from an average of 3,502 block hours in 1999 to 3,636 in 2009 and 3,736 in 2019. Increasing seat productivity will absorb part of traffic growth
RPKs per seat Seats in service

0.7%

World traffic (RPKs) 4.9%

4.1%

-1

Average annual growth (% p.a.) Elements of productivity

1999 611 3,502 70.3

2019 620 3,736 73.5

Block speed (km/h) Utilisation (block hours/year) Passenger load factor

As is invariably the case, these average figures embrace a wide range of variations. Higher-than-average traffic growth on longer international routes flown by the airlines in Europe, the Americas and the Asia-Pacific region will serve to increase average flight

15

2000 Global Market Forecast

distances and hence average speeds over the twenty-year forecast period. The most striking development will be among Asia-Pacific airlines, for which a 146 km growth in average distance will result in a 16 km/h increase in average block speed. On the other hand, higher-than-average growth on local and domestic routes served by the airlines of Africa, the Middle East and the PRC will lead to a reduction in average flight distance and block speed. The projected overall increases in speed, load factor and utilisation combine to enable each seat in service to generate more RPKs each year. Average annual RPKs per installed seat are projected to increase from 1.66 million in 1999 to 1.8 million in 2009 and 1.92 million in 2019. This represents an average annual growth in seat productivity of 0.8 per cent through 2009 and 0.7 per cent through 2019. Consequently, to provide the forecast increase in RPKs, the airlines will have to increase the numbers of seats they operate by respectively 4.3 per cent per year through 2009 and 4.1 per cent per year through 2019. As a result, the capacity of the GMF passenger airline fleet will grow from its current 1,852,600 seats to 2,834,300 in 2009 and 4,168,700 in 2019. Seat productivity and capacity growth will vary between the different airline regional groups
RPK per seat 0.7 Capacity (seats in service)

World traffic (RPKs) 4.9%

4.1

0.6 1.0 1.1 0.7 0.6 0.9 0.7


-2 -1 0

P.R. China 7.7% Latin America 4.7% Asia-Pacific 5.6% Africa 4.4% N. America 3.8% Middle East 4.3% Europe 5.2%
1 2 3 4

7.1 3.7 4.5 3.7 3.2 3.4 4.5


5 6 7

Average annual growth(%)

These global average figures embrace a considerable variation between airlines based in the different geographical regions. Annual average growth in seat productivity by as much as 1.1 per cent is expected for the airlines of the Asia-Pacific region, where the GMF projects a five-point increase in passenger load factor during the next twenty years. On the other hand the highly productive but predominantly short-haul airlines of North America are forecast to

16

Air transport operational evolution

increase seat productivity by an average of just 0.6 per cent per year. During the next twenty years, to accommodate the projected 7.7 per cent annual growth in RPKs, the airlines of the PRC will have to increase the number of seats they operate four-fold, from 97,100 to 380,600. At the other extreme, the airlines of North America will increase capacity by less than 90 per cent, growing from almost 700,000 seats in 1999 to just 1.3 million in 2019. The seat productivity and fleet capacity growth rates shown on the chart are the average increases needed for the airlines based in each geographical region to accommodate the growth in air travel projected in all the sub-markets they serve. They are not the growth in seats needed on routes to, from and within the different regions. Similarly, these figures cover a substantial variation between the different individual airlines based in each of the regions. Among airlines based in Europe, for example, twenty-year annual capacity growth rates are forecast to range from a low of 0.6 per cent to a high of 8.6 per cent, while airlines based in North America will increase capacity at annual rates ranging from 2.2 per cent to as much as 23.2 per cent in one extreme case. The additional seats will be provided partly by an increase in the number of aircraft operated (very largely determined by the increase in numbers of flights), and partly by an increase in average aircraft capacity. The method used by Airbus to determine the relative contribution of these two variables is derived from a detailed study of the actual distribution of flight frequencies between many thousands of airport-pairs as a function of stage distance. For

The GMF assumes liberal frequency development


Daily flights
60 40
Capacity share

Capacity growth only

20

Capacity/ frequency split Maximum service levels

10 8 6 4
Frequency share

Frequency growth only

Satisfactory regional service levels (Europe shown)


4000 6 0 0 0 8 0 0 0 10000

1 200

400

600 800 1 0 0 0

2000

Distance (km)

17

2000 Global Market Forecast

virtually all routes the numbers of daily departures are no greater than those defined by the upper (blue) line. Rational behaviour by the airlines means that this represents the maximum level of frequency beyond which a further increase will not in itself stimulate any additional travel demand. The lower (red) line, specific to each region-to-region sub-market, represents the minimum level of service at which air travel becomes fully attractive. Thus within Europe, for example, on short routes of up to 500 km, the minimum satisfactory service level is seven daily flights each way, and where demand exists the GMF allows daily service to grow to 60 flights each way. Corresponding frequency levels on a 6,000 km flight range from a minimum of two to a maximum of 18 daily flights, each way. As traffic grows on a particular sector, additional capacity will be required. As long as the minimum satisfactory level of service has not been reached, all additional capacity is provided by adding daily flights, keeping the same aircraft size. Beyond this point both frequency and aircraft size will be increased. The transition from frequency to aircraft capacity is carefully tailored to favour increasing frequency as demand grows, so as to simulate the opening of additional routes (this aspect is further discussed in Appendix B). Once frequency reaches the maximum level all further increase in demand is accommodated by an increase in aircraft size. The overall result is a very liberal growth in frequencies. The GMF predicts that in ten years' time the airlines will be making 45 per cent more daily departures than today. This average annual increase Aircraft size will have to increase
No. of seats (4.1%*) No. of flights (3.3%*) Seats per aircraft (1.0 %*)

Flights per aircraft (0.1%*)

No. of aircraft (3.1%*)

*20-year average annual growth rate

18

Air transport operational evolution

of 3.8 per cent represents a faster growth in frequencies than has been achieved during the past 25 years, despite the inevitable increase in congestion and the assumed availability of larger aircraft. The projected 3.3 per cent per year growth in daily departures during the whole twenty year period of the forecast means that by 2019 the airlines will be making 90 per cent more flights than today. Despite the anticipated increase in average flight distance during the next twenty years, the GMF predicts that airlines will be able to increase the average number of annual flights made by each aircraft from 1,561 to 1,603, a gain of nearly three per cent. So to achieve the forecast 90 per cent increase in annual departures, the airlines will have to increase the numbers of aircraft they operate by 85 per cent (1.85 x 1.03 = 1.90). This represents an average annual increase of 3.1 per cent in the number of aircraft operated. This in turn means that to achieve the projected annual 4.1 per cent increase in installed seats, they will have to increase average aircraft capacity by 1.0 per cent per year, from 179 seats per aircraft at end 1999 to 191 in 2009 and 217 in 2019, an increase of 38 seats per aircraft over the twenty-year period. The Asia-Pacific airlines will lead the way in aircraft size growth
Seats per aircraft
300 280 260 240 220 200 180 160 140 Africa Europe

307

242 215 191 183 224 214

243 217 198 189 182 170 157 146


Middle East P.R.China

2019 2009

179

1999

World average
Asia-Pacific Latin America North America

Once again, the global average covers a wide range of regional variations as well as differences within the different regions. Thus airlines in the Americas are expected to continue to carry belowaverage loads and remain well below the world average in terms of seats per aircraft. Airlines in Africa and the Middle East, driven by the need to increase frequencies, will increase aircraft size only marginally. But in contrast the Asia-Pacific airlines, already well

19

2000 Global Market Forecast

above the world average, will have to increase the average size of their aircraft by no less than 65 seats - mostly during the second decade of the forecast - if they are to meet strongly growing demand in an increasingly congested environment. Small aircraft tend to make more flights than large ones, so that any forecast growth in average seats per departure will generally require a more rapid increase in average seats per aircraft. The GMF predicts that average seats per departure will increase by just 32 seats, from 158 at end 1999 to 190 in 2019. Thus during the twenty-year forecast period, average seats per aircraft will need to increase by 19 per cent more than average seats per departure.

20

6. Fleet renewal
Airline fleet forecasters commonly assume that, once introduced into the passenger fleet, an aircraft will remain in passenger service until the end of its economic life. In fact many airlines tend to maintain a young fleet, and replace their passenger aircraft much earlier. Each time an airline replaces a passenger aircraft, and whenever an operating lease expires, this creates an opportunity to introduce a new aircraft into the airline's fleet, while the aircraft replaced assuming sufficient economic life remains - becomes a candidate either for conversion to a freighter or to be recycled back into the world passenger fleet through the used aircraft or operating lease markets. The methodology used in the GMF to determine the numbers of aircraft replaced, recycled, converted to freighters or (ultimately) withdrawn from airline service, is described in Appendix F. It reflects as far as possible each individual airline's approach to fleet renewal. Where no clear pattern of behaviour is apparent, it assumes that passenger aircraft are replaced by their first operator at a regional default age from new which varies from 20 years for airlines in Asia-Pacific to 29 years for airlines in Latin America. The overall result is an average replacement age from new of 24 years. Airlines will continue to replace passenger aircraft before the end of their economic life
Default replacement age
30

25

24 years world average

20

Indian Subcontinent

15

Western Europe

Eastern Europe

North America

North Africa

Asia-Pacific

10

On this basis, the GMF predicts that by end 2019 only 1,338 (13 per cent) of the 10,349 passenger aircraft with at least 70 seats in service with the GMF airlines at end 1999 will still be in service

21

Latin America

Rest of Africa

Middle East

P.R.China

2000 Global Market Forecast

with their current operators. Of the 4,515 passenger aircraft replaced by end 2009: l 1,644 will be recycled back into passenger service with other operators; l 1,166 will be converted to freighters (see Chapter 9), and; l 1,705 will be definitively withdrawn from airline service, to be scrapped or to enter VIP, government or other non-airline use. Another 4,496 passenger aircraft will be replaced during the period 2010 - 2019. Of the total of 9,011 aircraft replaced by end 2019: l 3,174 will be recycled; l 2,389 will be converted to freighters, and; l 3,448 will be withdrawn from airline service. In the case of dedicated freighters, the GMF assumes they will remain in service until the end of their economic life, which is estimated to be 37 years since new for standardbody aircraft and 35 years for widebodies. On this basis, a total of 703 freighters will be retired during the period 2000 - 2009, and another 450 during the period 2010 - 2019.

22

7. World passenger fleet development


At end 1999 the fleet of passenger jets with at least 70 seats operated by the airlines in the GMF included a total of 10,349 aircraft with 1,852,600 installed seats. This will increase to 14,815 aircraft with 2,834,300 seats at end 2009, and to 19,173 aircraft with 4,168,700 seats at end 2019. The GMF passenger fleet will almost double
Number of aircraft
20,000

19,173 a/c @ 217 seats + 2.6 % per annum 14,815 @ 191

+ 3.7 % per annum


15,000

10,349 @ 179
10,000

5,000

0 1999 2009 2019

Over the whole twenty-year period, the PRC airline fleet will grow the fastest, more than tripling from a total of 490 aircraft at end 1999 to nearly 1,600 at end 2019. At the other extreme, the airlines High aircraft size growth in Asia-Pacific; high fleet growth in the PRC
Avg. a/c size 1.0 No. of aircraft in service

World capacity 4.1%

3.1

1.0 0.8 1.2 0.2 0.9 0.2 0.8


-2 -1 0

P.R. China 7.1% Latin America 3.7% Asia-Pacific 4.5% Africa 3.7% N. America 3.2% 2.3 Middle East 3.4% Europe 4.5%
1 2 3

6.0 2.9 3.2 3.5

3.2 3.7
4 5 6 7

Average annual growth(%)

23

2000 Global Market Forecast

of North America will grow their fleet by less than 60 per cent, from about 4,400 aircraft today to 6,900 in twenty years' time. The passenger fleets of the other regions will almost double, growing at average annual rates in the range 2.9 to 3.7 per cent. North American airlines share of the world fleet will decrease
Africa 3% Latin America Middle East Latin America 6% 3% 7% North America 43% P.R.China P.R.China 5% 8% Africa Middle East 3% 3% North America 36%

Asia-Pacific 14% Asia-Pacific 14% Europe 27%

Europe 30%

World total at end 1999 10,349 aircraft

World total at end 2019 19, 173 aircraft

Higher growth in air travel markets outside the USA means that the percentage of the world passenger fleet operated by airlines based in North America will decline from its current 43 per cent to 36 per cent in 2019, while the shares of airlines in Europe and the AsiaPacific region (including the PRC) rise to respectively 30 and 22 per cent. In terms of capacity, the most spectacular gain will be made Airlines in Europe & Asia-Pacific* will operate as many seats as those in North America
(* including PRC)
Rest of World 10% Rest of World 11% P.R.China 5% North America 38% P.R.China 9% North America 31%

Asia-Pacific 19% Europe 27% Asia-Pacific 20%

Europe 30%

World total at end 1999 1.85 million seats

World total at end 2019 4.17 million seats

24

World passenger fleet development

by the Asia-Pacific and PRC airlines, whose share of world seats will grow from 24 to 29 per cent. By 2019, airlines based in Europe and in Asia-Pacific will both be operating nearly as many seats as those in North America. Only ten per cent of world seats will be operated by airlines in Africa, the Middle East and Latin America. Widebodies will increase their share of the world fleet
> 400 <1% 300, 350 & 400 15% > 400 6% 70 & 85 2% 300, 350 & 400 16% 70 & 85 4%

210 & 250 11%

100 to 175 71%

210 & 250 19%

100 to 175 55%

World total at end 1999 10,349 aircraft

World total at end 2019 19, 173 aircraft

As the average seat-count of aircraft in service continues to grow, the composition of the world passenger fleet will progressively shift towards larger aircraft seating capacities. Currently, almost threequarters of the jetliners with at least 70 seats in service with the GMF airlines have fewer than 210 seats. In twenty years' time this share will be down to 59 per cent. Very large aircraft will provide a significant share of future world airline capacity
> 400 70 & 85 1% 1% 300, 350 & 400 28% > 400 18% 70 & 85 1% 100 to 175 36%

210 & 250 15% 100 to 175 55% 300, 350 & 400 24%

210 & 250 20%

World total at end 1999 1.85 million seats

World total at end 2019 4.17 million seats

25

2000 Global Market Forecast

The contribution made by very large aircraft is best illustrated by the distribution of seats among the different aircraft seat categories. The proportion of fleet capacity provided by aircraft in seat categories above 400 seats will increase from under one per cent today to 18 per cent in 2019. Nevertheless, the GMF predicts that in twenty years' time these very large aircraft will account for only 6.4 per cent of the world passenger jet fleet; less than the 7.3 per cent of the current fleet which is represented by the 753 passenger and combi 747s in service today. Detailed results of the GMF passenger fleet forecast to end 2009 and end 2019 are presented in Appendix G. This shows the number of aircraft of different types in service and on firm order at end 1999, together with the associated seat-counts, as well as the number of these aircraft and seats which are forecast to be replaced during the forecast period. Projected deliveries beyond those in the end-1999 backlog are shown for each of the 15 neutral aircraft seat categories. Care is needed in reading the results. The GMF does not, for example, forecast delivery of just 43 A340-600s through 2019. In addition to the 43 aircraft on firm order at end 1999, the A430-600 will compete to supply part of the demand forecast for more than 1,900 aircraft in the 400-seat and adjacent neutral seat categories.

26

8. Demand for passenger aircraft deliveries


Global summary During the next ten years the GMF airlines will need to add 4,466 aircraft with 981,700 seats to accommodate traffic growth, and to acquire another 4,515 aircraft with 772,900 seats for fleet renewal. Thus during this period the airlines will need a total of 8,981 passenger aircraft with 1,754,600 seats. During the following decade they will require a further 4,358 aircraft with 1,334,400 seats for growth and 4,496 aircraft with 839,000 seats for fleet renewal, leading to demand for delivery of a total of 17,835 passenger aircraft with 3,928,000 seats through 2019. Nearly 18,000 aircraft will be required for fleet renewal and growth
Number of aircraft 20,000
+ 3.1 % per annum 8,824 @ 262 19, 173 @ 217

15,000

+ 3.7 % per annum

14,815 @ 191 4,466 @ 220

10,349 @ 179

Growth Replaced 4,515 @ 171

17,835 deliveries

10,000
9,011 @ 179

5,000

5,834 @ 185

1,338 @ 180

1999

2009

2019

The biggest share (35 per cent) of deliveries will go to airlines in North America. European airlines will take 30 per cent, and AsiaPacific (including PRC) airlines 24 per cent, leaving just 11 per cent for airlines in Latin America, Africa and the Middle East. As described in Chapter 6, 1,644 of the aircraft required through 2009 and 3,174 of those needed through 2019 will be recycled aircraft acquired through the used aircraft or operating lease market. Consequently the manufacturing industry can expect to deliver to or for the GMF airlines a total of 7,337 new passenger and combi aircraft with at least 70 seats during the next ten years, and a total of 14,661 new aircraft during the next twenty years. The recycled aircraft will provide 307,200 seats through 2009 and 636,000 seats through 2019, leaving respectively 1,447,400 seats and 3,292,000 seats to be delivered in new aircraft. So the average

27

2000 Global Market Forecast

Most small jetliners will be needed in North America & Europe; most very large aircraft in Asia-Pacific
Per cent of aircraft delivered
100%
Africa 3% Latin America 6% Middle East 2%

P.R.China 9%

80%
Asia-Pacific 15%

60%

Europe 30%

40%

20%

North America 35%

0%
70 & 85 100 to 175 210 & 250 300, 350 & 400 > 400

Seat category

capacity of new aircraft delivered during the first ten-year period will be 197 seats, increasing to an average 252 seats per aircraft during the following decade. Of the new passenger aircraft delivered through 2009, 61 per cent with 68 per cent of the seats will be acquired for growth and 39 per cent with 32 per cent of the seats for fleet renewal. For the whole twenty-year period, 60 per cent of the new aircraft delivered, with 70 per cent of the seats, will be for growth, and 40 per cent of the aircraft with 30 per cent of the seats for fleet renewal. Almost 14,700 new passenger aircraft will be delivered
Number of aircraft 20,000
+ 3.1 % per annum 8,824 @ 262 19, 173 @ 217

15,000

+ 3.7 % per annum

14,815 @ 191 4,466 @ 220

10,349 @ 179

Growth Replaced Recycled 2,871 @ 162 1,644 @ 187

14,661 new aircraft

10,000
5,837 @ 167

5,000
3,174 @ 200 5,834 @ 185 1,338 @ 180

1999

2009

2019

28

Demand for passenger aircraft deliveries

New passenger aircraft deliveries will average 733 per year ...
Number of aircraft (total demand - recycled)
8,000 7,000 6,000 5,000 4,000 3,000 2,118 2,000 1,235 1,000 0 692 437 70 & 85 100 to 175 210 & 250 300, 350 & 400 1,127 1,083 360 > 400 4,330 3,046 7,570 2010 - 2019 2000 - 2009 7,324 7,337

Seat category

The new aircraft will be distributed among the different seat categories as follows: l 437 (through 2009) and 692 (through 2019) aircraft in the 70 and 85-seater categories. The GMF makes no attempt at a comprehensive forecast of demand for these small aircraft. Many more will be needed for regional operations and by smaller airlines and current turboprop operators not covered in this study. However operations by these aircraft in the fleets of major airlines have to be studied in order to define the lower bound of operations by 100seaters; l 4,330 (through 2009) and 7,570 (through 2019) aircraft in the 100, 125, 150 and 175-seater categories, where the outstanding sales success of the A318, A319, A320 and A321 reflects airlines' recognition of the tangible cost and revenue benefits offered by these advanced and efficient aircraft; l 1,127 (through 2009) and 3,046 (through 2019) aircraft in the 210 and 250-seater categories. A300s and A310s have sold well in the past, but in recent years sales of all aircraft types in this category have slowed down. The A330-200 has now made a strong start, and Airbus foresees great potential for this and other A330 family members; l 1,083 (through 2009) and 2,118 (through 2019) aircraft in the 300, 350 and 400-seater categories, where the larger A330-300 and the A340 family have progressively built a dominant share of annual orders, likely to be reinforced once the stretched A340-500 and -600 enter service in 2002; l 360 (through 2009) and 1,235 (through 2019) aircraft in seat categories above 400 seats. The GMF confirms that if the airlines

29

2000 Global Market Forecast

are to continue profitably to meet growing demand for low-cost air travel in the face of intensifying global competition and increasing congestion, they will need substantial numbers of a new generation of aircraft like the A3XX, larger and more economical than anything flying today. Despite a small reduction in projected twenty-year RPK growth compared with last year's forecast, this year's GMF identifies a need for slightly more very large aircraft. This suggests that demand for aircraft in this category will prove to be robust in the face of changing market conditions. Based on the current catalogue flyaway prices (2000 $) of current aircraft types, this business will be worth a total of $526 billion through 2009 and $1.22 trillion through 2019. a business worth $1.2 trillion
2000 $ (billion)
350 300 250 200 150 100 50 0
2 0 0 0 - 2019 2 0 0 0 - 2009

327.4 280.7

319.3 281.8

177.0

161.4

105.0 77.4 8.4 5.2 70 & 85


1% 1%

100 to 175
27% 34%

210 & 250


23% 20%

300, 350 & 400


26% 31%

> 400
23% 15%

Seat category

The greatest business volume will be provided by the 100, 125, 150 and 175-seater category of the A318/A319/A320/A321. This will be closely followed by the 300, 350 and 400-seater category of the A330-300 and A340 family, which will account for 31 per cent of the total during the first decade and 26 per cent over the full twentyyear forecast period. An outstanding 23 per cent of the twenty-year business volume will be accounted for by very large aircraft in seat categories above 400 seats, a market now targetted by Airbus with the all-new A3XX. At the other end of the scale, the GMF understates demand for 70 and 85-seaters because many more of these small regional jetliners will be needed by airlines outside the GMF's domain. The operation of the GMF airlines' passenger jet fleet will continue to be highly concentrated. By 2019, flights from just the Top 20 out of 1,896 airports served worldwide - led by Chicago O'Hare and

30

Demand for passenger aircraft deliveries

Los Angeles International - will absorb the utilisation of 25 per cent of the aircraft, and half the aircraft will be used on flights from the Top 62 airports. The table shows the Top Ten airports ranked by the numbers of daily departures, aircraft used and seats offered by the GMF fleet: Rankings of Top Ten airports in 2019

Daily departures 1. Atlanta 2. Chicago OHare 3. Dallas 4. London Heathrow 5. Frankfurt 6. Paris CDG 7. Los Angeles 8. Amsterdam 9. Detroit 10. St. Louis

Number of aircraft 1. Chicago OHare 2. Los Angeles 3. London Heathrow 4. Atlanta 5. Dallas 6. Frankfurt 7. Paris CDG 8. Amsterdam 9. New York JFK 10. Newark

Number of seats 1. London Heathrow 2. Los Angeles 3. Tokyo Narita 4. Frankfurt 5. New York JFK 6. Chicago OHare 7. Paris CDG 8. Atlanta 9. Singapore 10. San Francisco

Results by mega seat category - Regional jets The GMF does not attempt a comprehensive forecast of demand for regional jets. Many more of these small aircraft will certainly be needed for operations not covered here. However regional operations of 70 and 85-seaters by major carriers have to be studied in order to define the lower bound of operations by 100-seaters. The number of regional jets concerned will triple during the forecast period, growing from 254 at end 1999 to 763 at end 2019; an increase of 509. During the same period almost the whole of the current fleet of these aircraft will be replaced, leaving just eight still in service with their current operators in twenty years' time. Of the 246 aircraft replaced, 63 will be recycled back into the world passenger fleet through the used aircraft or operating lease markets. This will create a need for delivery through 2019 of 692 new aircraft (380 70-seaters and 312 85-seaters) to potential users in the GMF.

31

2000 Global Market Forecast

The GMF covers only a portion of global regional jet operators


Fleet development
900 800 700 600 500 400 300 200 100 0 1999 2019
254 @ 73 Growth Repl. Rec. + 5.7 % per annum 763 @ 77

Number of new aircraft


400 350
509

380

300 250

312

692 new aircraft

200 150 100 50 0 70 85

183 63 8

Seat category

- Mainline single-aisles The GMF airlines' fleet of 100, 125, 150 and 175-seaters will grow from some 7,330 aircraft at end 1999 to 10,490 at end 2019. During the period, 6,350 aircraft (87 per cent of the current fleet) will be replaced, with some 1,930 aircraft being subsequently recycled back into the passenger fleet and 4,420 withdrawn from passenger service. This will create a need for delivery during the next twenty years of a total of 7,570 new aircraft in this category. 40 per cent of these will be 100 and 125-seaters, and 60 per cent Mainline single-aisles will grow less rapidly ...
Fleet development
12,000
+ 1.8 % per annum 10,486 @ 144 3,153

Number of new aircraft


3,000

10,000
7,333 @ 140

2,500 2,496

8,000

Growth 7,570 new aircraft

2,000 1,943 1,500

2,077

6,000

Repl.

4,000
4,417

1,000

1,054

2,000

Rec.

1,933 983

500

0 1999 2019

0 100 125 150 175

Seat category

32

Demand for passenger aircraft deliveries

150 and 175-seaters. As a result, the average capacity of the subfleet will increase slightly, from 140 to 144 seats per aircraft. with more than 40% flown by airlines in North America
Africa 10% Middle East 5% North America 12% Africa Middle East 3% 2% Latin America 8% P.R.China 8% Latin America 16%

North America 44%

Asia-Pacific 7%

P.R.China 8%

Europe 34% Asia-Pacific 14% Europe 27%

221 airlines

10,486 aircraft

GMF mainline single-aisle fleet in 2019

Operation of these aircraft will be widely dispersed. By 2019, no less than 1,586 of the 1,896 airports served by the GMF airlines will be served by aircraft in this category, with flights from the Top 20 airports using a quarter of the aircraft, and half the fleet being used on flights from 73 airports, led by Dallas and Chicago OHare. 44 per cent of these aircraft will be in operation in the large fleets (averaging 170 aircraft) of the North American airlines and 27 per cent will be used by European airlines (34 per cent of the operators). The remaining 28 per cent will be spread in the other regions.

- 200/250-seaters The GMF airlines' fleet of these aircraft is expected to grow at an average annual rate of 5.9 per cent during the next twenty years, from fewer than 1,200 aircraft at end 1999 to nearly 3,700 at end 2019. With almost 90 per cent of their current fleet being replaced, and only some 500 aircraft being recycled back into passenger service, the GMF airlines will need delivery of some 3,000 new aircraft in this category during the next twenty years. About 60 per cent of these will be 210-seaters, and 40 per cent 250seaters. As a result, the average capacity of this sub-fleet will decline slightly, from 234 seats per aircraft to 229. Much of this demand is likely to be supplied by versatile aircraft such as A321s and smaller members of the A330 family.

33

2000 Global Market Forecast

The fleet of 200/250-seaters will more than triple ...


Fleet development
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500
Rec. 1,168 @ 234 Growth Repl. 546 496 126 + 5.9 % per annum 3,668 @ 229

Number of new aircraft


2,000 1,800
2,500

1,600 1,400 1,200

1,764

1,282

3,046 new 1,000 aircraft

800 600 400 200 0 210 250

0 1999 2019

Seat category

Operation of these aircraft will be relatively concentrated. By 2019, they will be serving just 735 of the airports served by the GMF airlines. Flights from the Top 20 airports will use one-third of the aircraft, and half the fleet will be used on flights from 44 airports, led by Chicago O'Hare and Los Angeles International. In 2019, 180 airlines will be operating 200/250-seaters. Almost 70 per cent of the aircraft will be in service with airlines in Europe and North America. 35 per cent of operators, flying 38 per cent of the aircraft, will be in Europe. Only 12 per cent of operators will be in North America, but their large fleets (averaging 50 aircraft per airline) mean that they will be operating 30 per cent of the aircraft. with airlines in Europe the largest users
Middle East 6% North America 12% Africa 3% Middle East 3% Latin America 5% P.R.China 8%

Africa 9%

North America 30%

Latin America 12%

Asia-Pacific 13%

P.R.China 9% Asia-Pacific 17%

Europe 35% Europe 38%

180 airlines

3,668 aircraft

GMF 200/250-seater fleet in 2019

34

Demand for passenger aircraft deliveries

- Mid-sized & large twin-aisles The GMF fleet of 300, 350 and 400-seaters will nearly double during the next twenty years, from nearly 1,600 aircraft at end 1999 to more than 3,000 at end 2019. With 86 per cent of the current fleet being replaced, and fewer than 700 aircraft re-entering passenger service with other operators, there will be a need for delivery of a total of about 2,100 new aircraft in this category. Half of these will be 300-seaters, with the rest split evenly between 350 and 400-seaters. Consequently, the average capacity of the current in-service fleet will grow from 331 to 336 seats per aircraft. 2,100 new mid-sized & large twin-aisles will be needed ...
Fleet development
3,500 3,000 2,500 800 2,000 1,500 1,000 500 0 1999 2019
Rec. 1,558 @ 331 2,118 new aircraft + 3.4 % per annum 3,021 @ 336 1,463

Number of new aircraft


1,200

1,000

1,036

Growth Repl.

600 576 506

655

400

200
682 221

0 300 350 400

Seat category

with Asia-Pacific & the PRC the largest regional market


Africa 7% Latin America 8% Middle East 6% North America 14% Africa 2% Middle East 5% Latin America 3% P.R.China 9%

North America 25%

P.R.China 11%

Europe 33% Asia-Pacific 20% Asia-Pacific 24% Europe 32%

123 airlines

3,021 aircraft

GMF mid-sized & large twin-aisle fleet in 2019

35

2000 Global Market Forecast

Operation of these large aircraft will be highly concentrated. By 2019 they will be serving only 490 (a quarter) of all the airports served by the GMF fleet. Flights from the Top 20 airports will use 42 per cent of the aircraft, and half the fleet will be used on flights from just 27 airports, led by London Heathrow and Frankfurt. In 2019, one-third of the world fleet of these aircraft will be in service with airlines in Asia-Pacific, and another third with airlines in Europe, compared with just a quarter with airlines in North America. - Very large aircraft By definition, the market for aircraft larger than anything flying today is driven by growth. Currently only 36 high-density aircraft are in service with more than 500 seats, with an average capacity of 551 seats each. By 2019 all of these aircraft will have been withdrawn from passenger service. At the same time the airlines will need a total of 1,235 very large and economical aircraft to accommodate traffic growth on highly-travelled routes at projected levels of frequency, and to meet intensifying global competition. The need for very large aircraft builds progressively throughout the forecast period; 360 will be needed in ten years' time. Despite the fact that Airbus forecasters have reduced their projections of long-term passenger traffic growth by one-tenth of a percentage point, the 575 500-seaters, 404 600-seaters, 223 800seaters and 33 1,000-seaters for which a need is forecast in twenty years' time represent a slight increase compared with last year's GMF. (Note that the maximum exit-limited seat count in a ninedoor A3XX is 990 seats.) Demand will develop for more than 1,200 very large aircraft ...
Fleet development
1,400
1,235 @ 600

Number of new aircraft


700 600 575 500 400
1,235 new aircraft

1,200 1,000 800 600


Growth (+ 19.3 % per annum)

1,199

404

300 200 100 223

400 200
36 @ 551 Repl. 36

0 1999 2019

0 500 600 800

33 1000

Seat category

36

Demand for passenger aircraft deliveries

By 2019 58 airlines will be operating very large and economical aircraft. 28 of these, or almost half the total, will be based in the Asia-Pacific region (including the PRC), making this geographical group by far the biggest users of these aircraft. Operators in Europe and North America will together represent only 37 per cent of the market. with Asia-Pacific dominating demand
Middle East 5% North America 16% Africa 1% Middle East 1% Latin America 2% P.R.China 13%

Africa 5% Latin America 7% P.R.China 17%

North America 17%

Asia-Pacific 31%

Europe 19% Asia-Pacific 44%

Europe 20%

58 airlines

1,235 aircraft

GMF very large aircraft fleet in 2019

The average of 21 very large aircraft per airline covers a wide spread, from 108 aircraft in the fleet of the largest user to just a single aircraft at the bottom. And, as always, the world fleet of these Demand for very large aircraft is highly concentrated
Percent of total demand for aircraft larger than 400 seats
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 10 20 30 40 50 60
700 Cumulated average 600 seats

20 airlines need 79% of aircraft 81% of seats 10 airlines need 59% of aircraft 61% of seats

Number of airlines

37

2000 Global Market Forecast

aircraft will be highly concentrated. Almost 60 per cent of the aircraft will be with just the ten largest users, each of which will need at least 50 aircraft, and three-quarters with the 19 airlines which will need more than 20 aircraft each. The distribution by individual fleet size is actually very similar to the distribution of the world's current passenger 747 fleet. A total of 753 passenger 747s are today operated by 47 airlines, with fleets ranging in size from 76 aircraft to just one. This should ensure the eventual development of an active secondary market for these large aircraft. The large aircraft will be distributed similarly to todays passenger 747s
Aircraft per airline
100

80

> 400 seater in 2019 747 in 1999

60

40

20

20

40

60 Airlines

The operation of very large aircraft will also be highly concentrated. Out of the 10,013 route sectors studied in the GMF, just 230 will by 2019 absorb the utilisation of at least one very large aircraft, and half the capacity of the entire fleet of these aircraft will be used on route sectors linking just 56 airport-pairs. Out of the Top Ten routes served by these very large aircraft, as measured by aircraft usage, only the routes from London Heathrow to New York Kennedy and Los Angeles do not serve the Asia-Pacific region, which once again emerges clearly as the main driver behind demand for these aircraft. Five of the Top Ten routes serve Heathrow, and four serve Los Angeles and Tokyo Narita. By 2019 these Top Ten routes alone will use the capacity of about 170 very large aircraft. The very large aircraft will have to be extremely versatile. The distribution by stage length of the 2019 fleet clearly shows that they will be used on a wide spread of applications, including a number of high-density domestic and local routes - primarily in Asia; several

38

Demand for passenger aircraft deliveries

major intra-Asian and transatlantic routes; and a variety of intercontinental routes largely serving the Asia-Pacific region. Eight of the Top Ten large aircraft routes will serve the Asia-Pacific region
ORD 15 15 16 20 LHR 17 16 16 HKG TPE 18 15

JFK

NRT 20 LAX

SIN Number of aircraft

SYD

In 2019, the Top Ten airport-pairs alone will use 168 out of 1,235 very In 2019, the Top Ten airport-pairs alone will use 168 out of 1,235 very large aircraft large aircraft

Very large aircraft will be used across the entire range spectrum
Percent of aircraft operated at range
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 500 2000 3500 5000 6500 8000 9500 11000 12500

Range band (500 km steps)

As a final measure of concentration, the GMF predicts that by 2019 flights from just 94 of the 1,896 airports served by the GMF airlines will absorb the utilisation of at least one very large aircraft, while the capacity of more than half the fleet will be used on flights from just the Top Ten airports. High traffic flows on international routes from congested Tokyo will make Narita the largest user of very large aircraft, with these routes utilising the capacity of 116 of these

39

2000 Global Market Forecast

aircraft in 2019. Narita will be closely followed by slot-constrained London Heathrow, which will need the capacity of 96 very large aircraft to handle the growth in traffic projected over the next twenty years. Six of the Top Ten large aircraft airports will be in Asia-Pacific

6 JFK (50)

2 LHR (96)

1 NRT (116)

4 LAX (74) 9 TPE (38)

8 FRA (44) 3 HKG (83) 5 SIN (56)

Rank Airport (no. of VLAs)

7 BKK (47)

10 SYD (35)

In 2019, more than half of the worlds fleet of 1,235 very large aircraft will In 2019, more than half of the worlds fleet of 1,235 very large aircraft will be used on flights from just the top ten airports be used on flights from just the top ten airports

40

9. Air cargo forecast


Global Summary Over the next twenty years participants in the world air cargo industry, including the 187 operators of today's 1,510 dedicated freighters, will face the enormous opportunities and challenges presented by an increasingly integrated and fiercely competitive global economic environment. These trends, as well as continuing developments in manufacturing systems and in the emerging new information economy, will create robust growth in airfreight demand. In response, the world freighter fleet will grow to 3,449 aircraft by 2019. At the same time, intense competition will mean that operators will need to be significantly more efficient both in the air and on the ground. During the twenty-year period of the GMF, 1,153 freighters will be retired from service as they reach the end of their economic lives. The need to replace them, together with the acquisition of 1,939 additional aircraft to accommodate airfreight growth, will combine to create demand for a total of 3,092 freighters. Three quarters of this demand will be satisfied by lift capacity drawn from the passenger fleet through passenger-to-freighter conversions, leaving a requirement for delivery of 703 factory-built freighters worth approximately $96 billion (2000 $). The world freighter fleet will more than double
Number of aircraft
3,500 3,000 1,452 2,500 2,000
1,510 2,244 3,449

Conversions for growth

527 271 639 937 703

1,500 1,000 500 0

New freighter potential Conversions for replacement Retained in service

807 357

1999

2009

2019

Compared with the 1999 GMF, the 2000 edition is slightly more optimistic about long-term demand for factory-built freighters in the upper mid-sized (50-80 tonne) and largest (>80 tonne) aircraft segments. But there is a significant reduction in anticipated demand in the small (<30 tonne) and lower mid-sized (30-50 tonne) aircraft

41

2000 Global Market Forecast

segments, reflecting the difficulty operators will experience justifying the high acquisition costs of new aircraft in the face of modest production levels. The overall result is a slight decrease in total demand for new freighters. Interestingly, the increase in size of the world freighter fleet accelerates slightly in the second half of the forecast period. This is the result of a reduction in the rate of growth of both average aircraft capacity and productivity, which more than offsets the deceleration in traffic growth as markets progressively mature. Faster aircraft capacity growth in the decade through 2009 reflects the tendency of operators to reduce unit costs by increasing aircraft capacity when they replace the large numbers of small and midsized freighters which will be retired during this period, while the superior performance characteristics of current-generation dedicated freighters, especially factory-built aircraft, result in a substantial increase in productivity coinciding with the same replacement wave. Overall, therefore, the world freighter fleet grows at an average 4 per cent per year to 2009 and at an average 4.4 per cent per year to 2019. More information about the cargo forecast methodology, together with the relevant data sources used, can be found in Appendix H. Tables summarising the airfreight and capacity forecast results can be found in Appendix I. Airfreight traffic forecast Globalisation and its resulting economic growth will continue to drive airfreight demand in the long term. The accession of China into the World Trade Organisation represents a continuation of this trend, with virtually all nations now embracing trade and investment as vehicles for long-term growth. Paradoxically, while growth will drive airfreight, airfreight will also drive growth. Advanced manufacturing systems, which depend on global procurement and rely heavily on fast efficient airfreight as well as advanced communication systems, have been contributing to productivity-led economic growth. Moreover, it is widely recognized that the presence of an efficient air transport infrastructure offers a strong inducement for companies contemplating investment in productive capacity in a particular location. This edition of the GMF analyses 120 directional airfreight markets, significantly more than the 36 studied in 1999. Detailed results are available upon request in a separate comprehensive study. Overall, the GMF predicts that airfreight, driven by growth in time-sensitive services in particular, will triple over the next twenty years, growing at a robust average annual rate of 5.7 per cent. Traffic will grow at a faster average 6.1 per cent per year through 2009, and then mature

42

Air cargo forecast

Global air freight will more than triple


FTKs (billion)
500

5.7% p.a
Other flows

400

5.3%
Intra Asia. NA - Lat. A m .

300

Eur . - Lat. A m .

7.0% p.a
200

6.1%

Europe Asia-Pacific Europe North America North America Asia-Pacific

100

0 1990

US domestic

1993

1996

1999

2002

2005

2008

2011

2014

2017

to an average 5.3 per cent per year growth through the following decade. The largest and fastest growing airfreight markets are, and will remain, those linking Europe and North America to the Asia-Pacific region. Together, these markets are expected to represent over 40 per cent of global airfreight in twenty years' time, generating the main demand for long-range large widebody freighters. The global share of shorter-range more mature markets like the domestic US will gradually erode to about 11 per cent in 2019 from 15 per cent today, dragging down demand for, and the global share of, shorterrange smaller freighters. Introduction of a new generation of fast ships on the North Atlantic cargo market is not expected to have a significant impact on airfreight growth, but rather to erode the share of freight carried by direct ocean liner service. While new fast ship services are expected to narrow the very wide service gap between the standard airfreight product and the top ocean service in terms of speed, security and reliability, an overwhelming percentage of North Atlantic airfreight is currently, and will continue to be, handled by very competitive and efficient point-to-point belly/combi service. Belly/combi & dedicated freighter traffic forecast In general, passenger baggage boarding priorities limit the amount of useable space available for cargo on passenger aircraft. Nevertheless in 1999 the passenger aircraft system carried 84.2 billion FTKs, representing 55 per cent of global airfreight traffic, and playing a crucial role in the transport of high-value

43

2000 Global Market Forecast

manufactured and semi-processed goods to market locations around the world. The GMF assumes that, largely because of the compelling economics, airlines will continue aggressively to pursue the incremental profit potential from their available airfreight capacity in passenger aircraft. The extent to which capacity in the passenger aircraft system can grow will be defined by the future development of the passenger aircraft fleet. As a result the GMF predicts that airfreight handled by passenger and combi aircraft will grow at an average 5.4 per cent per year to 2019. Reflecting the progressive introduction of more cargo-capable passenger aircraft over the forecast period, this represents slightly faster growth than the forecast average 4.9 per cent increase in passenger traffic but is slower than overall global airfreight growth. Passenger aircraft will continue to play a crucial role in airfreight transport
FTKs (billion)
500 450 400 350 300 250 200 150 100 50 0 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017
6.3% 6.0% 6.0% Dedicated freighters anticipated traffic 6.1% p.a. 5.3%

Airbus projection total cargo traffic 5.7% p.a.

Total cargo traffic history 7.0% p.a.

6.1%

Belly freight 5.4% p.a. 4.8%

The extent to which belly capacity is available on any particular airfreight market has a significant impact on overall yields paid by shippers. Despite differences in the levels of service, the abundance of marginally-priced belly capacity on the North Atlantic, for instance, tends to push overall yields lower, whereas the shortage of belly capacity out of Asia tends to push yields upwards. In any event the portion of airfreight not handled by passenger aircraft, as well as airfreight demanding a level of service superior to that offered by belly/combi capacity, will need to be served by dedicated freighters. Consequently, airfreight traffic handled by dedicated freighters will need to grow faster than the global average. The growth gap between overall airfreight growth and the portion handled by the passenger aircraft system means that dedicated freighter services

44

Air cargo forecast

will need to grow at an average 6.1 per cent per year over the next twenty years, from 68.2 billion FTKs in 1999 to 223.5 billion in 2019. As a result of a widening growth gap, traffic growth attributed to dedicated freighters will experience more gradual maturation than overall growth. So, over the next ten years dedicated freighter traffic will grow at an average 6.3 per cent, slowing slightly to an average 6.0 per cent in the ten-year period thereafter. Air freight industry structure is converging
Origin

Shippers
Integrated carriers Forwarders

Customer - transport interface Transport Mode(s)

Forwarder

Integrator

Airline

Transport - consignee interface

Agent Consignees

Destination

The GMF freighter forecast does not distinguish between integrated and non-integrated service growth, but nevertheless anticipates that future airfreight growth will overwhelmingly accrue to timesensitive service. Generally, integrators offer the premium level of service and can therefore command the highest yields, but are somewhat less flexible in their operations than are forwarders. Nevertheless, recent trends in the structure of the industry suggest that the boundaries between these conventional groups are gradually eroding, with both demonstrating the product development and operational skills needed to capture the emerging growth opportunities, whether all the elements in the logistics chain are owned or whether they are assembled together and offered seamlessly by a contractor. Freighter fleet retirements In future, additional lift capacity will also be needed to replace capacity currently in service as it reaches the end of its economic life. Based on the demographics of the current freighter fleet, two distinct retirement peaks can be anticipated over the forecast period. The first will take place from 2003-2007, coinciding with the need

45

2000 Global Market Forecast

to replace large numbers of small freighters like converted 727s and lower mid-sized freighters like DC-8s and 707s. The second retirement peak will occur in the second half of the forecast period, coinciding with the need to replace first generations of factory-built large dedicated freighters. Small freighters will be retired first
Tonnes retired
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Based on retirement age 37 years for standardbodies 35 years for widebodies

< 30 tonnes 50 - 80 tonnes

30 - 50 tonnes > 80 tonnes

Financing the cost of acquiring replacement capacity will prove to be a major challenge for some operators, particularly those whose historical orientation towards slower-growing opportunistic charter services means that they are able to achieve only marginal asset utilisation. Some operators will be forced to change strategy, focussing resources on faster-growing time-sensitive services with highly reliable and performance-enhanced newer equipment. A few others will be forced to close down or merge with other weaker players in efforts to achieve meaningful economies of scale and improved asset utilisation. This will provoke a wave of consolidation. Key operational parameters While additional lift capacity will be needed to accommodate traffic growth and to allow for fleet renewal, future freighters will also need to work harder to assure profitable operations in the face of pricing and competitive pressures. The GMF predicts that in twenty years' time each tonne of freighter capacity in service will generate approximately 1.21 million FTKs annually, compared with 0.99 million today, an increase of 22 per cent. Most of this productivity improvement will be achieved through an increase in the average number of annual flight hours* per aircraft from 1,542 in 1999 to

46

Air cargo forecast

1,814 in 2019. Part of the increase in utilisation will result from the attrition of less efficient first-generation jets, many of which are still deployed in marginal operations today. In addition, faster-thanaverage capacity growth in the larger aircraft segments will contribute to an overall improvement in utilisation because such capacity is generally deployed on long-range services that are better able to accumulate high annual flight hours. More, larger, more productive freighters will be needed
*20-year average annual growth rate

18% more tonnes per aircraft (0.8%*) 22% higher FTK per tonne (1 .0%*)

228% more traffic FTK (6.1%*)

128% more aircraft (4.2%*)

Unlike in passenger services where operators are more inclined to increase frequencies in order to improve the quality of service, freighter operators have less incentive to increase frequencies. Even with time-sensitive services driving airfreight growth, there is almost no incentive on the part of freighter operators to offer more than once daily service. While airfreight players can differentiate their products in terms of speed and reliability, by and large airfreight is and will remain a commodity business so that the fundamental strategy is to be a low cost producer. Generally this means achieving very high economies of scale with the largest aircraft that the market will support, thereby minimising unit costs without major disruption to yields. Overall, in contrast to the past ten years when the average capacity of freighter aircraft has remained virtually constant, the GMF predicts that over the next twenty years the capacity of the average freighter will increase by 18 per cent; growing to 53.3 tonnes per aircraft on average from 45.5 tonnes today.
*) The GMF freighter forecast is based on ACAS flight data which report flight hours, whereas the passenger forecast is based on OAG data which report block hours.

47

2000 Global Market Forecast

The combination of a 22 per cent increase in FTKs per tonne (an average annual increase of 1.0 per cent) and a 18 per cent increase in tonnes per aircraft (0.8 per cent per year) means that to provide the forecast 6.1 per cent annual growth in FTKs the world freighter fleet will have to grow at an average 4.2 per cent per year, from 1,510 aircraft at the end of 1999 to 3,449 at end 2019. Twenty-year open production In order to accommodate the forecast 6.1 per cent per year growth in airfreight carried on dedicated freighters, the GMF predicts that overall production measured in available tonne-kilometres (ATKs) will need to grow at the slightly slower rate of 5.9 per cent per year, reflecting a gradual improvement in weight load factors from 65 per cent in 1999 to 67.5 per cent in 2019. This improvement will come largely from the progressive implementation of more sophisticated revenue management systems and through efforts at restructuring networks to help alleviate directional imbalances, which will more than compensate for declining airfreight densities. Large freighters will increasingly dominate world production
ATKs (million)
350,000 additional current

300,000

250,000

5.9 % per annum


200,000

> 80 tonnes
150,000

100,000

50-80 tonnes
50,000

30-50 tonnes < 30 tonnes


2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

0 1999

Observation of the production profile of the world freighter fleet reveals that the largest aircraft segment produces the lions share of global ATKs, generating 67.1 billion, or 65% of the world total, in 1999. The performance and economic characteristics of large freighters, particularly new aircraft, make them the most appropriate for deployment on the fastest-growing longer-range emerging markets. Production growth required by the largest aircraft segment, therefore, needs to keep pace with faster-than-average traffic growth. Hence, the GMF predicts that the largest aircraft segment

48

Air cargo forecast

will increasingly dominate world production, with total ATKs growing at an average annual rate of 6.3 per cent to reach 229.8 billion or 69% of the world total by 2019. The decision whether to invest in factory-built capacity or in converted capacity continues to depend largely on the performance capabilities and operating economics required, which in turn depend on the operators market strategy. Higher production levels can be achieved reliably and economically with factory-built aircraft designed specifically for freight applications. However, their significantly higher acquisition costs can be supported only by amortisation over high levels of production. More high utilisation capacity is and will be found in the larger aircraft segments
Per cent of tonnes
1999 100% 2019 1999 2019 1999 2019 1999 2019 High utilisation High utilisation High utilisation Intermediate utilisation Intermediate utilisation High utilisation

50%

Low utilisation

Low utilisation

Intermediate utilisation

Intermediate utilisation Low utilisation > 80 tonnes

Low utilisation 0% < 30 tonnes 30-50 tonnes 50-80 tonnes

Moreover, a given operators average yield depends largely on the type of service offered. The highest yields are obtained for the most reliable, secure and contractually guaranteed service levels, where the costs of a missed delivery can be very significant. Generally, the lower the average yield captured by the operator, the higher the aircraft production needs to be to support the business case for investment in new aircraft. Consequently the GMF assumes that demand for factory-built freighters will emerge largely from high-utilisation operations, with a progressively higher proportion of new freighter capacity in the larger aircraft segments. The upper mid-sized aircraft segment, however, is unusual in that even at relatively low utilisations the operating costs of new freighters are competitive against many of the available passenger-to-freighter conversions.

49

2000 Global Market Forecast

Freighter capacity development - Under 30 tonnes Operators will be hard-pressed to extract meaningful asset utilisation in the short-range operating environment of small freighters. This, combined with an abundance of low-cost reliable lift capacity available from the passenger aircraft system, means that future capacity required will be provided largely by conversions of passenger aircraft. In fact the GMF predicts that nearly all small freighters will be converted passenger aircraft. Over the next twenty years the total capacity in service in this segment will grow at an average 3.8 per cent per year, from 12,457 tonnes of lift today to 26,277 tonnes in 2019. Only 1,719 tonnes of factory-built lift will be required from a few exceptionally well-exploited aircraft providing increased service levels on the same network. Most small freighter demand will come from converted aircraft
Tonnes
30,000
26,277

25,000

Conversions for growth


18,167

20,000

12,770

15,000

4,919
12,457

791

1,719

New freighter potential Conversions for replacement Retained in service

10,000

6,709 11,001

5,000 5,748 0 787

1999

2009

2019

The prospects for long-term capacity growth in this market segment are relatively modest. Nevertheless, the need to replace almost 95 per cent of the current fleet of small freighters by 2019 will assure a robust and low-risk secondary market for converted versions of todays passenger aircraft. In the long term the A320 aircraft family appears to be an extremely attractive candidate for passenger-tofreighter conversion. - 30-50 tonnes Over the next twenty years, 15,940 tonnes of lift from the lower mid-sized freighter segment will be retired from service as the aircraft reach the end of their economic lives. More than 85 per cent

50

Air cargo forecast

of this total will be retired in the next ten years in the form of significant numbers of DC-8s and 707s. The need to replace this capacity as well as to accommodate growth will combine to create demand for a total 41,187 tonnes of lift. Just over one-eighth of open capacity demand will be for newly-built highly-utilised freighters; the bulk of required lift capacity will come from conversions of passenger aircraft. 13% of the required 30 - 50 tonnes capacity will be new
Tonnes
50,000
45,016

40,000 21,691 30,000


30,249

Conversions for growth

7,650 20,000
19,769

2,830

5,368

New freighter potential Conversions for replacement Retained in service

12,284 10,000 7,485 0 14,128

3,829

1999

2009

2019

The expected surge in demand for replacement capacity, combined with a general shortage of available factory-built products and of similarly-sized passenger-to-freighter conversions, will contribute to sustain values of passenger aircraft like A310s and A300s that are suitable for conversion. It also means that some of the required lift, new or converted, will need to come from the next freighter size segment up. - 50-80 tonnes Starting from a relatively low base of 9,801 tonnes of lift in 1999, the GMF predicts that capacity in service in the upper mid-sized freighter segment will grow to 28,769 tonnes in twenty years' time, representing average growth at 5.5 per cent per year. Nearly half of the requirement for upper mid-sized freighters will be for factorybuilt capacity. Combined with the anticipated demand for newlybuilt lift for the next freighter size segment below, this will contribute to sustain long-term demand for newly-built freighters like the A300-600F. The expected spillover of demand from the next size segment down for passenger-to-freighter converted aircraft in lower-utilisation applications will also serve to enhance demand for conversions of passenger aircraft similar to the A300-600.

51

2000 Global Market Forecast

Nearly half of additional 50 - 80 tonnes freighters will be new


Tonnes
30,000
28,769

25,000

9,904

Conversions for growth

20,000
17,140

15,000
9,801

3,199 11,423 4,140 1,579 2,846 8,222 4,596

New freighter potential Conversions for replacement Retained in service

10,000

5,000

1999

2009

2019

- > 80 tonnes The GMF predicts that the bulk of capacity demand at the top end of the market, driven by growth in time-sensitive long-range services, will be supplied by the largest available factory-built freighters. Capacity in service in this segment will grow at an average 5.9 per cent per year to reach 83,913 tonnes in twenty years' time from 26,675 tonnes today. Out of the total 70,824 tonnes of lift required over the next twenty years, more than half will be newlybuilt. The current relatively young age of highly-utilised capacity in the largest aircraft segment means that, as such aircraft are retired More than half of additional >80 tonnes lift capacity will be new
Tonnes
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 22,879 13,089
26,675 47,792 83,913

24,659

Conversions for growth

8,782 12,335 3,796

37,838

New freighter potential Conversions for replacement Retained in service

8,327

1999

2009

2019

52

Air cargo forecast

and replaced later on, demand for new large freighters will more than double in the second half of forecast period. The substantial demand projected for the largest category of aircraft will support development of a new product like the highly efficient and productive A3XX Freighter, to provide cargo carriers with a choice of equipment in this important sector and to assure the continuing competitiveness and crucial role of the air freight industry in tomorrows more global economy. Total fleet capacity forecast The total capacity of the cargo fleet will grow at an overall annual average rate of 5.0 per cent, to reach 183,975 tonnes by 2019 from 68,702 tonnes in 1999; an increase of 115,273 tonnes. Of the lift capacity in service in 1999, 22,301 tonnes will still be in service at the end of the forecast period. Over half of this will be in the largest aircraft segment, reflecting the current relative youth of these aircraft. This will create a need for 46,401 tonnes of replacement capacity. The total lift capacity required during the next twenty years will therefore amount to 161,674 tonnes. Passenger aircraft conversions will provide 105,326 tonnes, or 65 per cent of the lift required, leaving demand for 56,348 tonnes of capacity in new factory-built freighters. Just over two-thirds of total new capacity demand will be supplied by aircraft with more than 80 tonnes lift capacity. One third of future capacity demand will be for new freighters
Tonnes
180,000 160,000 69,025 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 44,334 22,301
68,702 113,348 183,975

Conversions for growth

24,549 56,348 20,096 24,369 36,301

New freighter potential Conversions for replacement Retained in service

1999

2009

2019

53

2000 Global Market Forecast

Cargo fleet evolution Large freighters will increasingly dominate the dedicated freighter fleet. The share of the world freighter fleet capacity provided by aircraft with payload capabilities of more than 80 tonnes will increase from 39 per cent at the end of 1999 to 46 per cent at end 2019. At the same time, the capacity share of the two smallest aircraft size segments will gradually decline. The capacity of large freighters will predominate ...
> 80 tonnes 46% > 80 tonnes 39% < 30 tonnes 18% < 30 tonnes 14%

50 - 80 tonnes 14%

30 - 50 tonnes 29%

30 - 50 tonnes 24%

50 - 80 tonnes 16%

1999 68,702 tonnes

2019 183,975 tonnes

In terms of numbers of aircraft, the world freighter fleet will continue to be dominated by smaller aircraft. But this predominance while the fleet share of smaller freighters will decline
> 80 tonnes 22% > 80 tonnes 18% < 30 tonnes 41% < 30 tonnes 35%

50 - 80 tonnes 11%

50 - 80 tonnes 14% 30 - 50 tonnes 30% 30 - 50 tonnes 29%

1999 1,510 aircraft

2019 3,449 aircraft

54

Air cargo forecast

will decline. The share held by aircraft with up to 50 tonnes capacity will gradually decrease from just under three-quarters today to two-thirds in twenty years time, while the number of large freighters in service with more than 80 tonnes capacity will almost triple, increasing from its current level of 18 per cent of the fleet to 22 per cent in 2019. Cargo aircraft deliveries Of the total 3,092 freighters delivered during the twenty-year forecast period, some 67 per cent will have less than 50 tonnes of lift and 20 per cent will have more than 80 tonnes. While over 90 per cent of freighter deliveries in the smallest aircraft size category (<30 tonnes) will be accounted for by passenger-to-freighter conversions, more than half the aircraft delivered in the largest size category will be new. Overall, three quarters of all aircraft delivered will be converted from passenger configuration. Of the 703 new freighters to be delivered, 45 per cent will be in the largest size category of the 747 and the A3XX. More than 3,000 freighters will be delivered
- 2009 -2019

Number of aircraft
1,400
1,159

Total new a/c 271 Total converted a/c 1,166 Total a/c 1,437

703 2,389 3,092

1,200 1,000 800 600 400 200 0 < 30 tonnes 30 - 50 tonnes

79 1,080

915

New aircraft

119 796 36 529 63 443

Converted from pax configuration


615

403

315 190

69 80

213

103 114

300

50 - 80 tonnes

> 80 tonnes

Capacity

The number of new aircraft deliveries will accelerate in the second half of the forecast period, coinciding with the retirement and replacement of most of the relatively young highly-utilised capacity that is currently in the world freighter fleet. Freighter business volume Based on current flyaway prices (2000 $), sales of factory-built freighters during the next twenty years will represent business worth

55

2000 Global Market Forecast

some $96 billion. Almost two-thirds of this business ($61 billion) is expected to result from sales of very large aircraft, underscoring the need to introduce competition for the first time in this market segment. Robust business of $21 billion is forecast in the 50-80 tonne freighter segment, largely to serve the requirements of operators for exceptional aircraft reliability with the lowest operating costs. The remaining $14 billion of new freighter business volume will be shared between smaller < 30 tonne and 30-50 tonne aircraft segments, with only about $4 billion of the business expected for newly-built small freighters. $96 billion worth of new freighters will be delivered
2000 $ billion
70 60 50 40 30
2 0 1 0 - 2019 $62 billion 2 0 0 0 - 2009 $34 billion

61

21
20

10
10 0

20 8
50 - 80 tonnes > 80 tonnes

4
1
< 30 tonnes

5
30 - 50 tonnes

Capacity

Over the next ten years, the value of new freighter sales is expected to reach $ 34 billion, just over one-third the twenty-year total. This is because at the end of 1999 most highly-utilised freighters were relatively new, so that most of the need for factory-built freighters to replace them does not occur before the second decade of the forecast. Airbus also estimates that the forecast conversion of 2,389 passenger aircraft to freighters will generate an additional business volume of approximately $17 billion during the next twenty years, exclusive of aircraft acquisition costs.

56

Appendices

57

2000 Global Market Forecast

A. Geographical regions & airlines analysed


The GMF is the product of a bottom-up micro analysis that covers 228 airlines with 49 subsidiaries/associates (airlines for which either operations and/or fleets cannot be separated from their associate companies; these are marked in italics in the list below) in seven geographical regions (see map in Chapter 2). For inclusion in the GMF a passenger airline must satisfy the following criteria:
l To be ranked in order among the airlines which account for

98 per cent of scheduled passenger ASKs in its region;


l To be ranked in order among the airlines which operate at

least 95% of the fleet of active jets with at least 65 seats.


l To operate (including announced orders) more than 5 jets

with more than 65 seats.

78 European airlines with 23 subsidiaries


ADH ADR AEA AEF AEL AFR AIH AMC AMM AOM ARP AUA AXX AZA BAG BAL BAW BCM BER BMA BRA C4R CFE CFG CKT CLH CRL CRX CSA CTN CYP DAN DAT Air One Adria Airways Air Europa Aero Lloyd Air Europe SPA Air France Airtours Air Malta Air 2000 AOM French Airlines. L'Aeropostale Austrian Airlines Interimpex-Avioimpex Alitalia Deutsche BA Britannia Airlines British Airways Iberworld Air Berlin British Midland Braathens Braathens Sverige Cronus Airlines CityFlyer Express Condor Flugdienst Caledonian Airways Lufthansa Cityline Corsair Crossair Czech Airlines Croatia Airlines Cyprus Airways Maersk Air DAT - Belgian Reg. DLH E3A ECA EDW EEZ EIN ELY EWG EZY FCL FIN FTI FUA GBL GMI GOE HLF IBE ICE ISS IST JEA JMC KLC KLM KYV LAZ LDA LFA LGL LIB LIL Lufthansa Estonian Air Eurocypria CYP Edelweiss Air Eurofly SPA Aer Lingus Aer Lingus Commuter EIN El Al Israel Airlines Eurowings Easyjet Flying Colours JMC Finnair Fly FTi Futura International GB Airways BAW Germania GO Airlines BAW Hapag Lloyd IBERIA Icelandair Meridiana Spa Istanbul Airlines Jersey European Airways JMC Air KLM Cityhopper KLM KLM Royal Dutch Airlines Kibris Turkish Airlines Balkan Lauda Air Lauda Air Italy LDA Air Alfa Luxair Air Liberte BAW Lithuanian Airlines LIT LOT LTE LTU MAH MAK MON MPH MSK OAL OHY OYC PGA PGT ROT RYR SAB SAS SAW SCW SEU SLR SPP SWR SXS TAP THY TRA TYR UKA VEX VIR VLE Air Littoral LOT - Polish Airlines LTE Intl Airways LTU LTU MALEV Macedonian Airlines Monarch Airlines Martinair Holland Maersk Air Ltd BAW Olympic Airways Onur Air Premiair AIH Portugalia Pegasus Airlines TAROM Ryanair SABENA SAS Sterling European Airlines Malmo Aviation BRA Star Airlines Sobelair SAB Spanair Swissair Sun Express TAP Air Portugal THY - Turkish Airlines Transavia Airlines Tyrolean Airways KLM UK KLM Virgin Express VIR Virgin Atlantic Volare

AFR

BAW

BRA BAW JMC DLH SWR

SAB

11 Middle East airlines


GFA IRA IYE KAC Gulf Air Iran Air Yemenia Kuwait Airways MEA OAS QTR RJA Middle East Airlines Oman Air Qatar Airways Royal Jordanian SVA SYR UAE Saudia Syrian Arab Airlines Emirates

58

Geographical regions & airlines analysed

29 North American airlines with 8 subsidiaries


AAH AAL ABL ACA AMT ARN ASA ASE AWE AWI CDN CDR CMM Aloha Airlines American Airlines Air BC Air Canada American Trans Air Air Nova Alaska Airlines Atlantic Southeast America West Airlines Air Wisconsin Canadian Airlines Intl Can. Regional Airlines Canada 3000 Airlines ACA COA DAL FLA FRL HAL J3K MDW MES MTE NWA QXE ROY RYN Continental Airlines Delta Air Lines Midwest Express Frontier Hawaiian Air JetBlue Midway Airlines Mesaba Airlines NW AirTran Airways Northwest Airlines Horizon Air ASA Royal Aviation Ryan International Airlines SCX SSV SWA TOW TSC TWA UAL USA USS VGD WJW Sun Country Airlines Skyservice Southwest Airlines Tower Air Air Transat TWA United Airlines US Airways USAir Shuttle Vanguard Airlines Westjet Airlines

ACA DAL UAL CDN

USA

19 airlines in the Peoples Republic of China with 1 subsidiary


AMU C3K CBF CCA CES CHH CJG Air Macau Swan Airlines China Northern Airlines Air China China Eastern Airlines Hainan Airlines Zhejiang Airlines CBF CNW CPA CSC CSH CSN CSZ CXA China Northwest Airlines Cathay Pacific Airways Sichuan Airlines Shanghai Airlines China Southern Airlines Shenzhen Airlines Xiamen Airlines CXH CXJ CXN CYH HDA S3D China Xinhua Airlines Xinjiang Airways China Southwest China Yunnan Airlines Dragonair Shandong Airlines

23 African airlines
AGN AMV ATC AZW BLV DAH ETH GHA Air Gabon AMC Aviation Air Tanzania Air Zimbabwe Bellview Airlines Air Algerie Ethiopian Airlines Ghana Airways KQA LAM LBT MAU MDG MSR NMB RAM Kenya Airways LAM Mocambique Nouvelair Tunisie Air Mauritius Air Madagascar Egyptair Air Namibia Royal Air Maroc REU RKA SAA SUD TAR TAS UYC Air Austral Air Afrique South African Airways Sudan Airways Tunis Air Lotus Air Cameroon Airlines

32 Asia-Pacific airlines with 9 subsidiaries


AAA AAR AIC ALK ANA ANG ANK ANZ BBC CAL CPI EVA FEA Ansett Australia Asiana Airlines Air India Srilankan Airlines All Nippon Airways Air Niugini Air Nippon ANA Air New Zealand Ansett New Zealand ANZ Biman Bangladesh Airlines China Airlines Cebu Pacific Air EVA Airways Far Eastern Air Transport FJI FWQ GIA HVN IAC JAA JAI JAL JAS JTA KAL LLR MAS MDA Air Pacific Flight West Airlines Garuda Indonesia Vietnam Airlines Indian Airlines Japan Asia Airways Jet Airways Japan Airlines Japan Air System Japan TransOcean Air Korean Air Alliance Air Malaysia Airlines Mandarin Airlines AAA MKG MNA PAL PIA QFA QFL RBA RNA S3N SIA SLK THA TNA UNI Airways Merpati Nusantara Airlines Philippine Airlines Pakistan Intl Airlines Qantas Airways Airlink QFA Royal Brunei Airlines Royal Nepal Airlines Sahara Airlines (India) Singapore Airlines Silk Air SIA Thai Airways Intl TransAsia Airways

JAL

JAL IAC CAL

36 Latin American airlines with 8 subsidiaries


A3K A3U A4V ACN AES AJM ALM AMX ARG ARU AUT AVA AVE BHS BLC Aerolineas lnternacionales Aerosur AVIACSA Aero Continente ACES Air Jamaica ALM Aeromexico Aerolineas Argentinas Air Aruba Austral ARG AVIANCA AVENSA Bahamasair Transp.Aereos Merid. TAM BWA CAY CMP EEA GUG LAN LAV LCO LLB LPR LRC MXA NES NIS BWIA West Indies Airways Cayman Airways COPA Ecuatoriana AVIATECA TAI LAN Chile Aeropostal Ladeco Lloyd Aereo Boliviano LAPA LACSA TAI Mexicana Aerocaribe MXA Nordeste Nica TAI PUA RDN RO2 RPB RSL SER SET SVV TAI TAM TBA VRG VSP PLUNA Dinar Lineas Aereas Avant National Airline AeroRepublica Rio Sul Aero California SAETA Servivensa Grupo TACA TACA Peru TAM Transbrasil VARIG VASP

AVE TAI

59

2000 Global Market Forecast

In addition the GMF covers a total of 187 cargo carriers, of which the Top 50 are listed below: Largest 50 freighter operators
AAR ABX AFR AHK AJT APW ATI AZA BCS CAL CCA CLX CPA CWC DHL DSR EIA ELY EVA EWW FBF FDX FST GCO GEC Asiana Airlines Airborne Express Air France Air Hong Kong Amerijet International Arrow Air Air Transport International Alitalia European Air Transport China Airlines Air China Cargolux Cathay Pacific Airways Challenge Air Cargo DHL Airways DAS Air Evergreen International Airlines El Al EVA Air Emery Worldwide Airlines Fine Air FedEx Fast Air Gemini Air Cargo Lufthansa Cargo Airlines Asia North America Europe PRC North America North America North America Europe Europe Asia P.R. China Europe PRC North America North America Europe North America Middle East Asia North America North America North America Latin America North America Europe GTI IRZ JAL KAL KFA KHA KLM LHN MAS MKA MPH NCA NWA PAC RYN SIA SNB SVA TCN TLX TMA TOW UAL UPS VRG Atlas Air Saha Air Japan Airlines Korean Air Kelowna Flightcraft Kitty Hawk Air Cargo KLM Royal Dutch Airlines Express One International Malaysia Airlines MK Airlines Martinair Holland Nippon Cargo Airlines Northwest Airlines Polar Air Cargo Ryan International Airlines Singapore Airlines Sterling European Airlines Saudi Arabian Airlines Trans Continental Airlines Cargo Lion TMA Tower Air United Airlines United Parcel Service VARIG North America Middle East Asia Asia North America North America Europe North America Asia Africa Europe Asia North America North America North America Asia Europe Middle East North America Europe Middle East North America North America North America Latin America

60

B. Route network development


The increase in departures forecast by the GMF will be provided both by increasing frequencies on existing routes and by flights on additional routes. The development of new routes will be driven by increasing worldwide air service liberalisation, changes in alliance partnerships, and in some cases by enhanced aircraft performance capabilities. Airlines will exploit a new generation of ultra-longrange aircraft like the A340-500, able to link the most distant cities with direct flights over inhospitable regions and mountainous terrain, to provide direct point-to-point flights for a relatively small number of high-yield fare-inelastic passengers prepared to pay for the convenience. At the same time, the bulk of demand for air travel will continue to be generated by the concentrations of population in and around the major cities, and the great majority of low-price, fare-elastic leisure passengers will, as now, be carried over and through the major hubs. This will create demand for a new type of aircraft like the A3XX, larger and more economical than anything flying today. In recent years some 85 per cent of new routes opened have been in the US domestic and intra-European markets. During the past 25 years the number of routes operated across the North Atlantic has grown from about 100 to nearly 250; those between Europe and Asia from ten to about 125; and those between North America and Asia from ten to about 70. This gives a total increase of about 13 routes per year in these markets out of the total of more than 10,000 operated by the GMF airlines. The populations of Asian nations tend to be much more concentrated than those of Europe or the USA, and the rate of urbanisation is growing. As a result there are fewer secondary destinations in Asia that will generate sufficient traffic to support direct intercontinental air services. Moreover, it is striking that less than half of all the routes opened in a given year are still being flown ten years later. This trend appears likely to continue as the structures of airline alliances evolve; changes in route networks are now being driven by changes in alliance partnerships as well as by a need to respond to perceived passenger demand. Airbus' conclusion is that in future significant numbers of new routes will continue to be opened - and many of them subsequently dropped. The great majority of new routes opened will be in local or domestic markets, and overall - while candidate cities for new air service can be readily identified - it is impossible to determine which will actually be served. Consequently the GMF adopts a methodology which allows frequencies on existing routes to grow in excess of anticipated requirements, so as to simulate the impact of additional routes on the numbers of aircraft needed in the different seat categories.

61

2000 Global Market Forecast

C. Passenger market segmentation


Airbus forecasters maintain a rigorous distinction between demand for aircraft in different categories (as forecast in the GMF) and how this demand is fulfilled by the various types of aircraft available (the delivery forecast used by Airbus for its own industrial and business planning purposes). It is obviously vital to ensure that at all times the numbers of aircraft and seats in service match precisely the need predicted in the GMF for frequency and capacity. So the GMF defines a set of neutral seat categories which may be thought of as buckets of seats. Any given aircraft type, with the seating arrangement chosen by each particular operator, will fall between two categories and contribute seats to each on a basis inversely proportional to its distance from that category. In contrast, many other forecasters arbitrarily assign a type of aircraft to a wide-band seat category such as 200 to 400 seats. Such a forecast typically predicts, for example, that an airline will need N aircraft in this category to provide the required capacity and frequency. But if the airline fills this need with 250-seater A330200s, the resultant number of seats will be much lower than if it chooses 380-seater A340-600s. The result is a lack of precision and a good deal of ambiguity. The first step in the GMF methodology is to allocate the seats in existing in-service aircraft into the neutral seat categories. For example, at end-1999 the GMF airlines were operating a fleet of 461 727s with a total of 68,987 seats. Individual seat-counts ranged from 111 to 187. The GMF algorithm allocates the seats in each Equivalence of 727 passenger fleet in GMF
Number of aircraft 374.0
727 passenger fleet : 461 aircraft 727 fleet seat distribution in GMF

100 50
Three 727s @ 111 seats = 1.68 100-seater 1.32 125-seater

42.5

37.7

10 5

4.1

One 727 @ 187 seats

2.7

1 0.5 100 125 150 175 210

Seat capacity

62

Passenger market segmentation

aircraft to the appropriate neutral seat categories, giving the following aggregated results:
Seating range Distribution of 727s GMF contribution 100-seaters 125-seaters 150-seaters 175-seaters 210-seaters Total seats 111-124 125-149 150-174 175-187 13 4.1 8.9 1,523 265 33.6 231.4 38,910 165 142.6 22.4 25,310 18 15.3 2.7 3,244 All 461 4.1 42.5 374.0 37.7 2.7 68,987

The equivalent GMF fleet thus provides a full description of the actual 727 fleet listed in the detailed results of Appendix G. This process is repeated for the entire 1999 GMF passenger and combi fleet. Forecast changes in frequencies, flights per aircraft, seats per aircraft and seat productivity (RPKs per seat) are then applied in order to determine the need at any future point in time for capacity in each of the neutral aircraft seat categories. The following simplistic example illustrates the process. Consider an airline operating 12 140-seater MD-80s and 10 160seater 727s; a total of 22 aircraft and 3,280 seats. The GMF algorithm assigns 40 per cent {(150 - 140) (150 - 125)} of the MD-80s to the neutral 125-seater category and 60 per cent to the neutral 150-seater category. Similarly, 60 per cent of the 727s are assigned to the 150-seater category and 40 per cent to the 175-seater category. Overall, this gives 4.8 125-seaters, 13.2 150-seaters and 4 175-seaters, strictly maintaining the correct totals of aircraft and seats. Suppose the GMF predicts that over time demand for both flights and seats will double. At this point the airline will have a theoretical need for 9.6 aircraft in the neutral 125-seat category, 26.4 neutral 150-seaters, and 8 neutral 175-seaters: a total of 44 aircraft and 6,560 seats. Suppose now that the airline plans to meet this need with a combination of 130-seater A319s and 170-seater A320s. How many of each aircraft type will be required? Simple algebra allows the solution of two equations for two unknowns, giving a fleet composition of 23 A319s (2,990 seats) and 21 A320s (3,570 seats). Of course, with another airline an A319 might have 140 seats, and an A320 165. In this case, the required combination would be 28 A319s (3,920 seats) and 16 A320s (2,640 seats). Whatever the seat count with any particular airline, the approach used by Airbus ensures that the numbers of aircraft (hence frequencies) and seats (hence capacity) exactly match the forecast demand.

63

2000 Global Market Forecast

D. Seat supply analysis


The base status of world airline passenger operations is derived from the September 1999 Official Airline Guide flight schedules. For those charter airlines that do not have their flight plans in the OAG, a quasi-schedule is made up from other sources (reported operations and ASKs, average flight time and utilisation of their aircraft, etc.) A model for flight frequency/capacity development defines for all regional sub-markets the minimum and maximum frequency levels (see also figure on page 17). These are a function of distance, reflecting journey time, departure and/or arrival time preferences, etc To a certain extent the impact of new route development is also simulated in the model. The entry frequency is the service level of ALL airlines operating that sector, but capacities start from the current equipment of each individual airline. The steepness with which the transition from frequency to capacity is effectuated is an important parameter in the simulation of route dispersion. The (depersonalised) computer listing shows the year-by-year evolution of the flight frequency and seating capacity offered by Airline XXX on one typical airport-pair route out of the 10,013 studied in the GMF. The September 1999 OAG shows that the scheduled airlines competing on the 2,719 km great circle flight from AP1 in region RG1 to AP2 in region RG2 were providing a total of 159 monthly flights - more than five per day. Of these, Airline XXX was making one daily flight with a 188-seat 757. Using the GMF aircraft capacity segmentation, Airline XXX's 30 monthly flights with 5,640 seats convert into 18.9 flights with a nominal 175-seater and 11.1 with a nominal 210-seater. Analysis of Airline XXX's block times and aircraft utilisations shows that this absorbs the capacity of 0.345 aircraft, shared between the 175- and 210-seater categories as shown. The GMF projects a year-by-year traffic growth on all flights linking region RG1 to region RG2. Taking into account the annual rate of improvement in seat productivity estimated for Airline XXX, this then determines the rate at which Airline XXX will have to increase the number of seats it operates in order to maintain its market share on this route. The GMF also projects, as a function of flight distance, thresholds for minimum and maximum levels of frequency. On this route the minimum satisfactory level of frequency to be provided by all competitors on the route is 238 flights per month, almost 8 per day. In 1999 the route was not receiving this minimum level of service -

64

Seat supply analysis

as indicated by the code L. So as traffic grows, the aircraft size is held constant until the total frequency reaches the lower threshold. This is achieved in 2007, at which point Airline XXX is providing 45 monthly flights. Thereafter - as indicated by the code M - the GMF algorithm allows aircraft size to increase as traffic continues to grow, so that the additional capacity is provided partly by an increase in aircraft size and partly by a further increase in frequency. By 2017 the aircraft size has grown beyond the GMF nominal 210seater category, so from now on the route demands some seats out of the 250-seater category. By 2019 Airline XXX is providing a little more than two flights per day out of a total of more than ten, absorbing the productive capacity of 0.566 210-seaters and 0.133 250-seaters, for an average aircraft capacity of 218 seats; the 757 has become too small. The projected fleet build-up for Airline XXX is the sum of its capacity needs projected like this on all the routes it flies.
1999 OAG baseline: AP1 in RG1 to AP2 in RG2, great circle distance 2,719 km Airline XXX provides 30 monthly flights out of a total of 159, using a 757 with188 seats
Year of study 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 A/c size A/C Nb Frequency Model Seats Airline Total used 18.9 11.1 19.9 11.7 20.9 12.3 22 13 23.3 13.8 24.6 14.5 25.9 15.3 27.1 16 28.3 16.9 29.4 17.9 28.2 20.8 159 167.2 175.5 185 196 206.5 217.4 228.1 238.8 250.1 258.9 L L L L L L L L M M M 188 188 188 188 188 188 188 188 188.1 188.3 190 Year of study 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 A/c size A/C Nb Frequency Model Seats Airline Total used 26.3 24.4 24.2 27.9 21.4 32.3 17.8 37.5 13.4 43.5 8.7 49.7 4 55.7 59.9 1.2 56 6.4 51.6 12.1 267.8 275.6 283.8 292.3 300.8 308.7 315.7 322.7 329.7 336.7 M M M M M M M M M M 192 194 196 199 202 205 208 211 214 218

SM175 0.217 SM210 0.128 SM175 0.228 SM210 0.135 SM175 0.239 SM210 0.141 SM175 0.251 SM210 0.149 SM175 0.266 SM210 0.157 SM175 0.279 SM210 0.165 SM175 0.293 SM210 0.173 SM175 0.307 SM210 0.181 SM175 0.319 SM210 0.191 SM175 0.331 SM210 0.202 SM175 0.316 SM210 0.234

SM175 0.295 SM210 0.273 SM175 0.271 SM210 0.312 SM175 0.238 SM210 0.36 SM175 0.198 SM210 0.418 SM175 0.149 SM210 0.483 SM175 0.096 SM210 0.551 SM175 0.044 SM210 0.616 SM210 0.66 SM250 0.013 SM210 0.616 SM250 0.07 SM210 0.566 SM250 0.133

65

E. Passenger traffic forecast methodology & results


The twenty-year average traffic growth rate is derived from yearover-year growth projections for 82 independently studied submarkets (see table). Such growth projections can differ significantly depending on the relative maturity and other characteristics of each sub-market, yet they are also among the more significant inputs required for the GMF. Hence, the availability of many sub-market forecasts improves the ability of the GMF to predict the overall growth in traffic carried by each individual airline, based on the extent of its participation in each of the sub-markets it serves. Traffic sub-market definitions have been preserved in an effort to maintain the year-over-year consistency of the GMF. However, the Africa - Canada and Africa - Central America traffic flows have been added to accommodate newly published flight schedules that have been added to the OAG database. Hence, there are now 82 traffic flows in the GMF compared to last years 80. There are several causal relationships and factors that affect passenger traffic. The 2000 GMF is based on the assumption that the long-term demand for air travel is driven by economic developments, notably the growth of world and regional income levels as measured by changes in real GDP, and the cost of air travel as measured by yields. Demographic trends as measured by civilian populations have also been considered where this variable has demonstrated a statistical significance. The traffic forecasting methodology adopted in the 2000 GMF is based on an econometric approach. The selection between linear or logarithmic functional forms, and the inclusion or omission of USA - Asia traffic forecast
Annual traffic - billion RPK
800 700 600 500 400 300
Log model (7% p.a.) f{log(US GDP + Asia GDP)}

2000 Global Market Forecast

Log model (6.3% p.a.) f{log(US GDP), log(Asia GDP)}

Traffic history
200 100
Linear model (4.6% p.a.)

Projection
0 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017

66

Passenger traffic forecast methodology & results

particular independent variables, follows testing and evaluation of numerous combinations. Generally, the statistical model that best fits historical traffic data is deemed to provide the best explanation of future trends unless otherwise suggested by analysis. As an example, the above traffic model predicts average annual air traffic growth of 6.3% on Asia - USA routes over the next twenty years. The model is a log-linear function with USA and Asia real GDP as independent variables. This model gives a better fit than the linear one that has also been studied. Special emphasis has been placed on monitoring and evaluating the impact on air travel demand resulting from economic developments around the world. For instance, initial (controversial) Airbus predictions about the short-term nature of the impact on air travel demand of the recent Asian currency crisis proved in the event quite accurate. The results of such special ad hoc studies are reflected in the traffic forecast and the GMF results. The GMF assumes that the world political and general economic climates remain conducive to growth. No assumptions are made about possible alternative political and economic scenarios, beyond basic GDP growth as adjusted by experts to incorporate known developments such as the Asian currency crisis. One of the challenges faced when preparing traffic forecasts for numerous sub-markets involves the limited availability of reliable and consistently prepared sources of historical traffic and yield data. The collection of data and the improvement of the traffic statistics database are a continual process at Airbus Industrie. The GMF draws on various data sources including those which are available from ICAO, IATA, the AEA, the AAPA, national aviation authorities, and international tourism agencies. While attempts are made to reconcile any material differences between the sources of data, only one source is used on any particular traffic sub-market. In a very few cases where no data are otherwise available for a particular traffic flow, data from the OAG with assumptions about load factors have been used to estimate actual traffic. Historical and forecast data relating to independent variables are drawn from expert and/or official sources including Standard & Poors DRI, WEFA Group and the IMF. Where yields have been included in forecasting models, projections have been made based on best judgement, supported by analyses of the relative maturity of the particular sub-market as well as regulatory and other relevant trends.

67

2000 Global Market Forecast

RPK growth rates for 82 submarkets


Sub-market % of world RPK (1999)
25.65 13.00 6.97 6.56 4.63 2.85 2.72 2.12 2.11 2.09 2.00 1.98 1.71 1.64 1.51 1.50 1.34 1.33 1.21 1.19 1.11 1.07 1.03 1.02 1.02 .86 .81 .81 .77 .62 .46 .46 .43 .37 .35 .35 .32 .32 .30 .29 .29 .28 .26 .25 .23 .21 .21 .18

Avg. annual growth (%) 1999 2009 1999 -2009 -2019 -2019
2.9 5.3 5.5 6.5 6.5 5.1 4.4 9.2 5.4 2.1 5.3 5.1 4.6 5.3 4.7 6.2 8.8 6.8 6.5 4.0 3.8 3.9 8.1 3.2 3.7 5.6 5.3 7.1 6.5 6.5 5.2 4.6 3.5 8.8 5.0 6.8 4.6 5.4 4.5 4.6 4.1 5.6 4.1 5.4 5.0 8.1 5.4 5.4 2.3 4.5 5.0 6.2 6.6 4.6 4.0 7.0 4.7 2.8 4.2 5.1 4.5 4.5 4.3 6.3 6.4 5.3 6.6 4.2 3.2 3.4 6.6 3.1 3.3 5.6 4.3 5.7 6.6 6.2 5.1 3.8 2.6 6.8 5.0 5.4 4.6 4.6 4.7 5.0 4.0 5.6 4.0 4.4 4.3 6.6 4.6 4.4 2.6 4.9 5.3 6.3 6.5 4.8 4.2 8.1 5.1 2.5 4.8 5.1 4.5 4.9 4.5 6.3 7.6 6.0 6.5 4.1 3.5 3.6 7.3 3.2 3.5 5.6 4.8 6.4 6.5 6.3 5.2 4.2 3.1 7.8 5.0 6.1 4.6 5.0 4.6 4.8 4.1 5.6 4.1 4.9 4.7 7.3 5.0 4.9 continued ...

Domestic USA Europe - USA Intra Europe Asia - USA Europe - Asia Domestic Europe Africa - Europe Domestic P.R. China Intra Asia Domestic Japan USA -Central America South America -Europe USA - South America Canada - Europe Europe - Pacific Pacific - Asia P.R. China - Asia Central America - Europe Europe - P.R. China Domestic South America Domestic Pacific USA - Canada P.R. China - USA Europe - Middle East Domestic Canada Domestic Asia Middle East - Indian subcontinent Pacific - USA Europe - Indian subcontinent Canada - Asia Domestic Indian subcontinent Middle East - Asia Domestic Central America Pacific - P.R. China Indian subcontinent - USA Indian subcontinent - Asia Intra South America Domestic Middle East Africa - Middle East CIS - Europe Domestic Africa Intra Pacific Intra Africa South America - Asia Africa - USA Canada - P.R. China Intra Middle East South America - Central America

68

Passenger traffic forecast methodology & results

Sub-market

% of world RPK (1999)


.15 .14 .11 .10 .08 .07 .06 .06 .05 .05 .05 .04 .04 .03 .03 .03 .03 .02 .02 .02 .02 .01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 < 0.01 *)

Avg. annual growth (%) 1999 2009 1999 -2009 -2019 -2019
5.4 4.7 4.6 6.7 4.7 5.3 5.4 6.8 4.3 6.7 5.3 5.4 5.4 6.1 4.6 6.8 5.0 5.0 7.1 5.4 4.6 4.6 4.6 4.6 4.6 4.6 5.4 5.4 4.6 5.0 4.6 5.4 5.4 5.7 4.4 3.4 3.8 5.1 5.1 4.2 4.4 5.3 4.7 5.1 5.3 4.4 4.4 4.4 5.0 5.4 5.0 4.3 5.7 4.4 5.0 5.0 5.0 5.0 5.0 5.0 5.6 4.4 5.0 5.3 5.0 4.4 4.4 3.7 4.9 4.0 4.2 5.9 4.9 4.8 4.9 6.0 4.5 5.9 5.3 4.9 4.9 5.3 4.8 6.1 5.0 4.7 6.4 4.9 4.8 4.8 4.8 4.8 4.8 4.8 5.5 4.9 4.8 5.2 4.8 4.9 4.9 4.7

Middle East - USA Africa - Asia Middle East - P.R. China Africa - Pacific Middle East - Pacific Central America - Canada Intra Central America South America - Canada Africa - Indian subcontinent Africa - P.R. China South America - Pacific Central America - Asia Pacific - Indian subcontinent Intra Indian subcontinent CIS - USA P.R. China - Indian subcontinent Indian subcontinent - Canada Africa - Canada Canada - Pacific South America - Africa CIS - P.R. China CIS - Asia CIS - Middle East CIS - Indian subcontinent CIS - Africa CIS - South America Domestic CIS Canada - Middle East Canada - CIS Intra CIS CIS - Central America South America - Middle East Africa - Central America Charter (not in OAG)

Total world

5.2

4.6

4.9

*) to give a percentage for the charter would be misleading since an increasing amount is treated as quasi-scheduled, and hence included in the OAG

69

2000 Global Market Forecast

F. Aircraft replacement methodology


Until quite recently, the great majority of jetliners have been purchased to accommodate traffic growth. But now the need to replace older aircraft has become a much more important consideration for the airlines; whether as part of a competitive strategy to maintain a youthful and up-to-date fleet; to meet new, more stringent noise rules; or simply because existing aircraft have reached an age at which they are becoming no longer economic to operate. Airbus Industrie has analysed the aircraft replacement/fleet renewal process in considerable detail, and developed a methodology which reflects real airline practices. 80% of all jetliners are withdrawn from airline passenger service before they are 30 years old
% in airline service
100%

80%

60% Single-aisle Wide-body All jetliners

40%

20%

0% 0 5 10 15 20 25 30

Age 35

The statistics show that the great majority of jetliners are definitively retired from passenger service before they reach thirty years of age. So far, the earlier generation of widebodied aircraft have tended to be retired earlier than single-aisle types. But many airlines choose to replace their aircraft much earlier. This creates opportunities to place new aircraft, which the GMF - unlike many other forecasts - aims to identify. Where an airline is known to have adopted a policy - for strategic, tax or any other reasons - to maintain a young fleet, the early replacement of its aircraft, long before they are retired from passenger service, is reflected in the forecast. A similar opportunity arises whenever an operating lease expires. So the GMF does not simply assume that aircraft remain in service until retirement; it recognises that many airlines will be looking to replace their aircraft much earlier, and that these

70

Aircraft replacement methodology

prematurely replaced aircraft will then compete with new aircraft for the business of airlines which are prepared to acquire them (these aircraft are referred to as the pool of recycled aircraft). Many airlines deliberately maintain a young fleet
Fleet age
16 14 12 10 8 6 4 2 0 South America Africa North America Europe Asia

1969

1974

1979

1984

1989

1994

1999

The overall prediction is that by end 2019 87 per cent of the 10,349 aircraft in service with the airlines in the GMF at end 1999 will have been replaced. These aircraft account for a total of 1,611,900 seats. The recycle pool includes 3,174 aircraft with a total of 636,000 seats.

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2000 Global Market Forecast

G. Detailed passenger fleet results


Aircraft 1999-2009 (numbers at year end)
Aircraft Type 70 Avro 70 Do 728Jet ERJ-170 F28 F70 85 Avro 85 BAC1-11 DC-9 ERJ-190 100 717 737-100 737-200 737-500 737-600 A318-100 Avro 100 BAe 146 Concorde DC-9-30 DC-9-40 F100 MD-80-87 125 737-300 737-700 A319-100 DC-9-50 Yak-42 150 707 727 737-400 737-800 A320-100 A320-200 MD-80 MD-80-83 MD-80-88 MD-90 Tu-154 175 737-900 757-200 757-300 A321-100 A321-200 Open Market Backlog Total SA 1999 2009 in service 181 4 4 60 30 99 1 42 39 157 65 40 4 40 30 608 8 126 1 613 25 380 300 32 107 120 44 47 141 48 13 349 2 39 249 174 68 56 702 1,003 655 171 485 204 551 74 6 6 1,205 3 461 9 436 352 185 603 18 11 737 1,082 624 315 268 163 157 117 107 108 33 15 637 45 758 585 7 15 83 95 61 188 Replace ments Delive ries 181 60 30 98 3 32 4 40 157 7 Aircraft Type 210 767-200 767-200ER A310-200 A310-300 250 767-300 767-300ER 767-400ER A300 A300-600 A300-600R A330-200 A340-200 300 747SP 777-200ER A330-300 A340-300 A340-500 DC-10 L1011 MD-11 MD-11C 350 747-200 747-300 777-200 IL-86 400 747-100 747-400 777-300 A340-600 500 747HD 747SR 600 800 Open Market Backlog Total WB 1999 2009 in service 723 102 12 102 47 32 3 113 71 544 102 66 381 352 48 75 7 44 13 146 102 52 100 19 17 385 11 156 305 78 126 144 176 21 177 8 66 1 108 74 9 9 201 180 6 54 17 69 87 3 3 301 20 452 430 31 40 43 302 33 18 3 56 2 Replace ments 90 65 29 43 37 90 68 31 44 18 2 11 8 17 26 169 65 34 201 174 37 3 Delive ries 723 10 1 544 1 61 48

30 608 118 1 588 80 1

66 385 157 65 58 21

76 120 3

93 13 347 39 75 12 702 348 26 18 74 340 365

21 301

1,205 3 452 87 15 7 150 309 105 40 2 19

20 62 2

3 433 495

40 11 43 302

15 3 56 2 2,514 603 3,117

242 10 19

3 1 637 45 69 8 22 146 3,490 2,374 5,864

2,762

4,716

1,163

7,587

10,099

3,352

Aircraft Type Open Market Backlog Total

1999 2019 in service

Replace ments

10,349

14,815

4,515

Delive ries 6,004 2,977 8,981

72

Detailed passenger fleet results

Seats 1999-2009 (numbers at year end)


Aircraft Type 70 Avro 70 Do 728Jet ERJ-170 F28 F70 85 Avro 85 BAC1-11 DC-9 ERJ-190 100 717 737-100 737-200 737-500 737-600 A318-100 Avro 100 BAe 146 Concorde DC-9-30 DC-9-40 F100 MD-80-87 125 737-300 737-700 A319-100 DC-9-50 Yak-42 150 707 727 737-400 737-800 A320-100 A320-200 MD-80 MD-80-83 MD-80-88 MD-90 Tu-154 175 737-900 757-200 757-300 A321-100 A321-200 Open Market Backlog Total SA 1999 2009 in service 12,670 316 316 4,200 2,100 6,468 68 3,267 3,035 13,345 4,932 3,141 356 3,121 2,940 60,800 936 14,000 109 69,324 2,802 42,823 33,214 3,742 11,472 12,917 4,386 4,716 12,832 4,574 1,300 35,246 204 4,180 25,048 17,261 7,814 6,361 87,750 132,491 87,014 22,858 63,872 25,379 69,586 9,357 720 720 180,750 476 68,987 1,376 64,085 51,333 29,867 95,491 2,890 1,771 112,843 164,056 89,246 44,770 39,236 23,708 22,518 16,714 15,730 15,797 5,237 2,383 111,475 7,754 145,978 111,427 1,764 3,732 15,667 17,979 12,069 35,730 Replace ments Delive ries 12,670 4,200 2,100 6,400 232 2,274 356 3,121 13,345 483 Aircraft Type 210 767-200 767-200ER A310-200 A310-300 250 767-300 767-300ER 767-400ER A300 A300-600 A300-600R A330-200 A340-200 300 747SP 777-200ER A330-300 A340-300 A340-500 DC-10 L1011 MD-11 MD-11C 350 747-200 747-300 777-200 IL-86 400 747-100 747-400 777-300 A340-600 500 747HD 747SR 600 800 Open Market Backlog Total WB 1999 2009 in service 151,830 21,120 2,928 19,279 8,658 6,939 676 22,598 14,353 136,000 26,502 17,021 87,988 82,252 12,030 20,115 1,719 11,174 3,397 38,529 27,615 14,201 26,385 4,614 4,058 115,500 3,284 43,625 85,922 24,068 38,427 38,314 46,719 6,406 49,321 2,239 19,854 238 29,825 20,621 2,492 2,492 70,350 68,077 2,093 20,533 6,545 23,057 29,695 1,040 1,040 120,400 8,119 172,063 163,890 12,468 15,792 15,336 151,000 18,185 10,181 1,659 33,600 1,600 Replace ments 18,192 12,381 6,263 8,441 9,744 20,733 18,396 7,777 10,914 4,966 556 3,284 2,388 5,222 6,970 47,082 19,616 9,204 70,350 65,984 13,988 997 Delive ries 151,830 1,760 196 136,000 263 14,997 12,030

2,940 60,800 13,064 109 66,522 9,609 116

17,150 115,500 44,685 19,581 15,375 6,406

7,846 12,917 330

8,258 1,300 35,042 4,180 7,787 1,453 87,750 45,477 3,500 2,312 9,357 44,514 46,519

7,635 120,400

180,750 476 67,611 13,187 2,535 1,119 23,529 44,476 15,528 5,804 296 3,011

8,119 23,442 824

435 68,159 74,742

15,269 4,148 15,336 151,000

8,004 1,659 33,600 1,600 780,280 174,831 955,111

47,138 1,892 3,757

363 157 111,475 7,754 12,587 1,968 4,204 27,418 466,790 332,700 799,490

809,043 1,429,008

335,146

1,043,598 1,405,324

437,764

Aircraft Type Open Market Backlog Total

1999 2019 in service

Replace ments

1,852,641 2,834,332

Delive ries 1,247,070 507,531 772,910 1,754,601

73

2000 Global Market Forecast

Aircraft 1999-2019 (numbers at year end)


Aircraft Type 70 Avro 70 Do 728Jet ERJ-170 F28 F70 85 Avro 85 BAC1-11 DC-9 ERJ-190 100 717 737-100 737-200 737-500 737-600 A318-100 Avro 100 BAe 146 Concorde DC-9-30 DC-9-40 F100 MD-80-87 125 737-300 737-700 A319-100 DC-9-50 Yak-42 150 707 727 737-400 737-800 A320-100 A320-200 MD-80 MD-80-83 MD-80-88 MD-90 Tu-154 175 737-900 757-200 757-300 A321-100 A321-200 Open Market Backlog Total SA 1999 2019 Replace in service ments 314 4 4 60 30 99 99 42 6 36 314 65 9 63 4 4 40 40 30 1,026 8 126 1 1 613 613 380 52 328 32 106 2 120 44 21 26 141 141 13 13 349 349 39 39 249 16 233 68 1,003 171 204 74 6 3 461 436 185 18 737 624 268 157 107 33 1,653 106 459 488 1 2,474 68 1,653 897 52 81 74 5 3 461 418 33 18 614 622 260 152 61 33 340 365 Delive ries 314 60 30 Aircraft Type 210 767-200 767-200ER A310-200 A310-300 250 767-300 767-300ER 767-400ER A300 A300-600 A300-600R A330-200 A340-200 300 747SP 777-200ER A330-300 A340-300 A340-500 DC-10 L1011 MD-11 MD-11C 350 747-200 747-300 777-200 IL-86 400 747-100 747-400 777-300 A340-600 500 747HD 747SR 600 800 1000 Open Market Backlog Total WB 1999 2019 in service 1,894 102 102 12 32 113 6 1,461 102 3 381 136 48 75 44 146 2 52 99 19 7 1,032 11 156 260 78 67 144 96 21 177 66 108 14 9 625 180 54 69 3 20 452 31 180 54 57 3 20 400 31 Replace ments 102 100 32 108 100 306 75 44 144 19 12 11 53 76 106 177 66 94 9 625 Delive ries 1,894 10 1 1,461 1 61 48

314 7

30 1,026 118

66 1,032 157 65 58 21

76 120 3

33 727 92 11 43 575

21 727 40 11 43 575

2,474

21 585 618 2 8 5 49 1 2,103 45 178 15 30 178

3 433 495

33 3 404 223 33

33 3 404 223 33 6,974 603 7,577

758 7 83 61

649 75 29

3 1 2,103 45 69 8 22 146 7,884 2,374 10,258

2,762

7,924

2,415

Aircraft Type Open Market Backlog Total

1999

2019

Replace ments

Delive ries 14,858 2,977 17,835

in service

7,587

11,249

6,596

10,349

19,173

9,011

74

Detailed passenger fleet results

Seats 1999-2019 (numbers at year end)


Aircraft Type 70 Avro 70 Do 728Jet ERJ-170 F28 F70 85 Avro 85 BAC1-11 DC-9 ERJ-190 100 717 737-100 737-200 737-500 737-600 A318-100 Avro 100 BAe 146 Concorde DC-9-30 DC-9-40 F100 MD-80-87 125 737-300 737-700 A319-100 DC-9-50 Yak-42 150 707 727 737-400 737-800 A320-100 A320-200 MD-80 MD-80-83 MD-80-88 MD-90 Tu-154 175 737-900 757-200 757-300 A321-100 A321-200 Open Market Backlog Total SA 1999 2019 in service 21,980 316 4,200 2,100 6,468 3,267 426 26,690 4,932 621 356 3,121 2,940 102,600 936 14,000 109 69,324 42,823 5,513 3,742 11,356 12,917 4,386 2,137 12,832 1,300 35,246 4,180 25,048 1,663 7,814 206,625 132,491 14,390 22,858 60,215 25,379 61,746 9,357 720 120 371,100 476 68,987 64,085 2,984 29,867 92,675 2,890 112,843 93,442 89,246 320 39,236 1,120 22,518 715 15,730 6,570 5,237 164 368,025 7,754 145,978 33,083 1,764 3,732 15,667 5,685 12,069 33,764 Replace ments 316 4,200 2,100 6,468 2,841 4,794 356 3,121 26,690 483 Delive ries 21,980 Aircraft Type 210 767-200 767-200ER A310-200 A310-300 250 767-300 767-300ER 767-400ER A300 A300-600 A300-600R A330-200 A340-200 300 747SP 777-200ER A330-300 A340-300 A340-500 DC-10 L1011 MD-11 MD-11C 350 747-200 747-300 777-200 IL-86 400 747-100 747-400 777-300 A340-600 500 747HD 747SR 600 800 1000 Open Market Backlog Total WB 1999 2019 in service 397,740 21,120 19,279 2,149 6,939 22,598 1,228 365,250 26,502 699 87,988 32,053 12,030 20,115 11,174 38,529 428 14,201 26,120 4,614 1,740 309,600 3,284 43,625 73,014 24,068 20,125 38,314 25,721 6,406 49,321 19,854 29,825 4,069 2,492 218,750 68,077 20,533 23,057 11,172 1,040 290,800 8,119 172,063 35,451 12,468 4,148 15,336 287,500 18,185 1,659 242,400 178,400 33,000 Replace ments 21,120 18,890 6,939 21,566 26,066 70,932 20,115 11,174 38,101 5,231 2,874 3,284 15,296 23,524 27,968 49,321 19,854 25,756 2,492 218,750 68,077 20,533 19,520 1,040 8,119 151,881 12,468 Delive ries 397,740 1,760 196 365,250 263 14,997 12,030

2,940 102,600 13,064 109 69,324 37,310 232 2,579 12,832 1,300 35,246 4,180 23,385 7,814 118,101 7,157 10,152 9,357 600 476 68,987 61,536 5,351 2,890 94,143 88,926 38,116 21,803 9,523 5,230

17,150 309,600 44,685 19,581 15,375 6,406

7,846 12,917 330

206,625 44,514 46,519

7,635 290,800 15,269 4,148 15,336 287,500

371,100

435 68,159 74,742

18,185 1,659 242,400 178,400 33,000 2,323,440 174,831 711,985 2,498,271

125,482 14,186 5,723

363 157 368,025 7,754 12,587 1,968 4,204 27,418

809,043 2,595,329

1,043,598 1,573,372

1,097,020 332,700 899,946 1,429,720

Aircraft Type Open Market Backlog Total

Delive ries 3,420,460 507,531 1,852,641 4,168,701 1,611,931 3,927,991

1999 2019 in service

Replace ments

75

2000 Global Market Forecast

H. Cargo forecast methodology


Cargo forecast methodology
Global FTK growth forecast Belly/Combi FTK growth forecast Open ATKs in year n

Freighter FTK growth forecast Open capacity in year n Freighter ATK growth forecast

ATKs offered by 1999 fleet

ATKs required in year n

New capacity needed in year n

P to F capacity needed in year n

Retirement/ productivity assumptions

ATKs offered by 1999 fleet in year n

New aircraft needed in year n

P to F aircraft needed in year n

World freighter fleet and capacity segmentation Airbus' prediction of future freighter demand begins with a detailed analysis of the current world freighter fleet. Initial operational parameters and production levels (ATKs) are established and reconciled with estimated traffic levels using actual aircraft-byaircraft utilisation data and by making reasonable assumptions regarding aircraft speeds and weight load factors. All existing or projected western jet aircraft in cargo configuration Freighter fleet at end 1999
Source: Airclaims
707 727-100 727-200 737-100/200 737-300/400/500 757 DC-8-50/60 DC-8-70 DC-9-14/15 DC-9-30/40 BAC One-Eleven BAe 146 56 212 261 24 3 77 128 101 21 80 1 22 A300-600 A300-B4 A310 DC-10-10 DC-10-30/40 MD-11 L-1011 767-200 767-300 747-100 747-200 747-400 Total widebodies 38 46 39 35 45 59 11 9 33 37 136 36 524

Total standardbodies

986

Available Freight Tonne Kilometres at end-1999: 104.90 billion

76

Cargo forecast methodology

are then grouped into four different size categories, each of which has been defined broadly to capture the capability of current and future freighter types. The base for the forecast is provided by the number of tonnes of lift capacity actually in service, so each aircraft in the 1999 fleet is converted into its equivalent tonnes of lift and the results aggregated into the respective size categories. Within each size segment, capacity in service is further segmented into a set of homogeneous market and operational categories, which are deduced from the current freighter fleet's aircraft-by-aircraft capacity profile as determined by statistically-established thresholds for each aircraft size segment. Market categories are identified by analysis of individual aircraft average flight hours per cycle, while operational categories are based on aggregate aircraft flight hours per year. The identification of the amount of capacity deployed on high-utilisation operations also facilitates the evaluation of demand for new freighters as opposed to passenger-to-freighter conversions. Freighter market segmentation
Payload Existing aircraft types
BAC One-Elevens, BAe 146s, DC-9s, 737s, 727s 707s, DC-8s, 757s, A310s, A300B4s 767s, DC-10s, A300-600s, L-1011s MD-11s, 747s

Open market size


22 tonnes nominal 45 tonnes nominal 60 tonnes nominal 120/110 tonnes (new/used) nominal

Segment 1

< 30 tonnes

Segment 2

30 - 50 tonnes 50 - 80 tonnes

Segment 3

Segment 4

> 80 tonnes

Traffic forecast Airbus' forecast of global airfreight traffic (measured in FTKs) is derived from econometric analyses of 120 directional airfreight flow sub-markets. This involves identifying independent variables driving airfreight demand in each market studied, and developing functional relationships between such independent variables and historical airfreight traffic. Models strive to capture elements that push airfreight from the exporting region to the importing region as well as elements that pull airfreight into the importing region from the exporting region. Typical air freight drivers include economic growth, international trade, airfreight yields, industrial production

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2000 Global Market Forecast

Typical directional airfreight forecast model


Airfreight tonnes
4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000
7.7%
Fastest growing sectors (share of total freight): ( 10.2% Electrical Components (3.5%) ( 8% Printing and Publishing (2.9%) ( 7.1% Telecom Equipment (2.5%) Slowest growing sectors (share of total freight): ( -0.5% Apparel and Footwear (1.8%) ( 1.4% Perishables (4.9%) ( 1.9% Textiles (2.2%) Fastest growing sectors (share of total freight): ( 11.5% Electrical Industrial Apparatus (3.8%) ( 11.5% Telecom Equipment (1.6%) ( 9.7% Computers and Peripherals (2.9%) Slowest growing sectors (share of total freight): ( 5.5% Apparel and Footwear (6.5%) ( 5.8% Industrial Chemicals (3.7%) ( 5.9% Miscellaneous Products (7.6%)

North America-Europe Europe-North America


4.8%

4.8% 5.7%

5.3%

500,000
4.3%

History

Forecast

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: MergeGlobal

and other independent variables. Detailed results by airfreight submarket are summarised in Appendix I. The extent to which airfreight carried in the bellies of passenger aircraft will grow depends largely on the future development and cargo capabilities of the passenger aircraft fleet. The forecast therefore draws on the results of the GMF passenger fleet forecast to quantify the freight capacity offered and airfreight carried by passenger aircraft. The cargo capacity assumed for each neutral passenger aircraft size category is based on that provided by the current production Airbus model in the category. A340-600 underfloor cargo capacity

Forward hold 8 x 96 pallets or 24 LD3 containers

Aft hold 6 x 96 pallets or 18 LD3 containers

96"

96"

96"

96"

96"

96"

96"

96"

LD3 LD3 LD3

LD3 LD3 LD3 LD3 LD3 LD3 LD3 LD3 LD3

pallets or containers

96"

96"

96"

96"

96"

96"

LD3 LD3 LD3 LD3 LD3 LD3 LD3 LD3 LD3

bulk hold 19.7m3 695ft3

Forward available volume 3256 ft3 or 3792 ft3

Aft available volume 2442 ft3 or 2844 ft3

78

Cargo forecast methodology

The results of the belly traffic forecast are deducted from the total forecast FTKs, leaving the portion of future airfreight demand to be transported by dedicated freight aircraft. The so-called growth gap between forecast total airfreight and belly service means that traffic carried by dedicated freighters will have to grow faster than overall airfreight. Production forecast Analysis of global airfreight traffic shows that long-range emerging markets grow faster than short-range more mature markets. Moreover, research indicates that well-known international freight contractors, as well as passenger airline cargo managers and the largest integrators running higher-utilisation freighter operations, possess superior product development, sales, marketing and operational capabilities, and are therefore better positioned to stimulate and to capture market growth opportunities than are the more marginal operations. To simulate these aspects in the absence of a comprehensive freighter schedule database, an algorithm has been developed to distribute traffic growth by detailed market and operational category. Production growth (measured in ATKs) over the forecast period is distributed in a similar fashion, except that every combination of market and operational category is assumed to grow at a marginally slower rate than traffic growth, reflecting a slight improvement in weight load factor. Relevant production growth is applied to capacity in service, which is also segregated into identical market and operational categories in order to allow the application of a more appropriate growth rate to relevant capacity in service. Elasticities of the cargo market
Mature Market Opportunistic Low ownership costs Low utilisation Operation Intermediate utilisation High utilisation Reliable Short range Very slow growth Slow growth Moderate growth Medium range Slow growth Moderate growth Fast growth Long range Moderate growth Fast growth Rapid growth High ownership costs Emerging

79

2000 Global Market Forecast

Retirements Unlike in the passenger fleet section of the GMF, where the notion of replacement reflects the end of the first major phase of typical aircraft life-cycles, the freighter forecast assumes that aircraft are kept in service until the end of their useful economic lives. Aircraft life-cycle analyses have demonstrated that the economic lives of standardbody aircraft are slightly longer than those of widebodies, reflecting the greater accumulation of flight hours by widebodies deployed on longer-range operations. The freighter forecast therefore assumes that standardbody aircraft survive an average 37 years in service, whereas widebodies will survive an average 35 years. The freighter forecast also assumes that utilisation levels deteriorate towards the end of aircraft useful economic lives. Forecasting open demand In order to derive the level of open production (ATKs) to be performed by new freighters or passenger-to-cargo conversions, the production of the 1999 freighter fleet over the forecast period is removed from the aggregate production forecast results. The forecast methodology defines at least three combinations of neutral aircraft size and utilisation levels within each aircraft size segment, which may be thought of as buckets of structural payload with differing performance levels that absorb the open production requirement. Unlike passenger services, where airlines are under pressure to improve service levels by increasing frequencies, freight operators are more likely to accommodate traffic growth by increasing aircraft size in order to achieve lower operating costs through scale. While time-sensitive products are increasingly demanded in the market place, there is little incentive for the typical freighter operator to increase frequencies beyond once-daily service. This is reflected in the forecast model by setting nominal aircraft size at a capacity level moderately above the current average size in service unless the profile and magnitude of potential conversion capacity deems otherwise (see segmentation table above). Moreover, the model recognises that the capabilities of newer generations of freight aircraft, whether new or converted from passenger service, as well as continuing competitive pressures, mean that future aircraft will operate at slightly higher utilisation levels than achieved today. New aircraft vs. passenger aircraft conversions The choice between new aircraft or passenger aircraft conversions hinges largely on the cost of aircraft acquisition. It will, of course, depend also on the availability of suitable capacity leaving passenger service for conversion into freighters, and on the type of operation for which the capacity is intended.

80

Cargo forecast methodology

The demand for passenger-to-freight conversions is largely for intermediate and low-utilisation applications, which make up the lion's share of current world freighter operations. The freighter forecast model ensures that wherever demand is forecast for converted capacity, sufficient capacity will indeed - according to the GMF passenger fleet results - be potentially available. New aircraft demand, however, is principally derived from high-utilisation operations, which present more stringent requirements for reliable aircraft that can support the higher acquisition costs. High utilisation operators are more likely to purchase or lease new aircraft
High Utilisation New a/c operators :
Air France Asiana Airlines Cargolux China Airlines China Eastern A. EVA JAL Lufthansa Nippon Cargo Singapore Alitalia Atlas Cathay Pacific Air China E l Al Fedex Korean Martinair Saudia

Intermediate Utilisation New a /c operators:


Air France Asiana Ailines Cargolux Fedex Lufthansa Air China Atlas EVA JAL Saudia

Low Utilisation New a/c operators:


Polar Air Cargo

new capacity converted capacity

Per cent tonnes deployed in > 80 tonne segment

100%

10% 24% 69% 75%

4%

50%

0% 1999 Fleet Forecast 1999 Fleet Forecast 1999 Fleet Forecast


High Utilisation Intermediate Utilisation Low Utilisation

Constraints and data sources The inadequacy of currently available freighter schedule data makes the development of a freighter forecast model particularly challenging. The availability of such data would enhance the forecaster's ability to identify the nature of capacity and the markets on which such capacity is deployed, thus facilitating the application of appropriate traffic growth projections to capacity in service. It would also permit the development of a more refined frequency/capacity algorithm. Under the circumstances, any meaningful forecast must deduce this pertinent information from alternative sources of data. The GMF cargo forecast therefore relies on aircraft-by-aircraft utilisation data (hours and cycles) as available from ACAS. This source has allowed the forecast model to identify the nature of the markets as well as the types of operation on which the aircraft are deployed. The freight aircraft inventory in service at year-end, however, has been derived from Airclaims; hence, the independent sources are linked via aircraft serial numbers.

81

2000 Global Market Forecast

Historical country-to-country airfreight data used for traffic forecast modelling is from MergeGlobal. Historical and forecast data relating to independent variables driving airfreight are largely from Standard & Poor's DRI.

82

I. Cargo forecast results Freight growth rates for 120 directional submarkets
Sub-market (directional) % of world FTK (1999)
0.09 0.01 0.03 0.01 0.89 0.01 0.03 0.20 0.02 0.27 0.63 0.82 0.06 6.21 0.22 0.63 0.38 7.31 0.33 0.01 0.01 0.09 0.01 0.00 0.56 0.01 0.01 0.57 0.01 0.09 0.21 0.78 0.20 0.08 2.85 0.06 0.17 2.94 0.19 0.41 0.01 0.03 0.01 0.06

Avg. annual growth (%) 1999 2009 1999 -2009 -2019 -2019
5.5 5.5 7.8 5.5 7.8 5.5 5.5 5.5 5.5 4.2 9.5 7.7 7.6 7.7 6.9 9.0 4.1 7.4 6.0 7.0 5.5 9.4 9.3 5.5 4.7 5.5 5.5 5.4 5.5 7.7 10.1 5.4 4.2 4.1 7.3 7.8 8.7 7.6 7.7 8.8 5.5 4.5 5.5 5.7 6.2 5.5 5.7 5.5 5.5 5.5 5.5 5.5 5.5 2.6 6.5 5.7 2.8 6.1 5.4 6.2 2.5 6.1 5.2 4.2 5.5 6.5 6.2 5.5 3.6 5.5 5.5 4.9 5.5 4.5 6.3 4.8 3.0 2.6 5.4 5.8 6.6 6.6 6.9 6.1 5.5 4.3 5.5 4.0 5.9 5.5 6.7 5.5 6.6 5.5 5.5 5.5 5.5 3.4 8.0 6.7 5.2 6.9 6.2 7.6 3.3 6.7 5.6 5.6 5.5 8.0 7.7 5.5 4.1 5.5 5.5 5.2 5.5 6.1 8.2 5.1 3.6 3.3 6.4 6.8 7.6 7.1 7.3 7.4 5.5 4.4 5.5 4.9 continued ...

Africa to Asia Africa to Central America Africa to China Africa to CIS Africa to Europe Africa to Indian Subcontinent Africa to Middle East Africa to North America Africa to Pacific Asia to Africa Asia to Central America Asia to China Asia to CIS Asia to Europe Asia to Indian Subcontinent Asia to South America Asia to Middle East Asia to North America Asia to Pacific Africa to South America Central America to Africa Central America to Asia Central America to China Central America to CIS Central America to Europe Central America to Indian Subcontinent Central America to Middle East Central America to North America Central America to Pacific Central America to South America China to Africa China to Asia China to Central America China to CIS China to Europe China to Indian Subcontinent China to Middle East China to North America China to Pacific China to South America CIS to Africa CIS to Asia CIS to Central America CIS to China

83

2000 Global Market Forecast

Sub-market (directional)

% of world FTK (1999)


0.03 0.01 0.00 0.04 0.00 0.01 15.05 1.02 3.20 0.69 1.11 0.04 0.28 0.61 6.07 1.03 1.61 0.04 0.17 0.02 0.07 0.02 0.87 0.06 0.04 1.04 0.06 0.11 2.53 0.02 0.79 0.01 0.02 0.69 0.11 0.16 0.03 0.09 0.01 0.02 0.01 0.36 0.01 0.41 0.02 0.04 0.34 5.42 0.61

Avg. annual growth (%) 1999 2009 1999 -2009 -2019 -2019
4.4 5.5 5.5 7.2 5.5 6.2 4.8 6.1 6.7 7.4 7.2 7.1 6.3 6.4 5.7 4.7 7.6 5.5 5.9 5.5 7.9 5.5 7.3 9.1 5.5 6.1 5.5 8.2 7.0 6.3 6.2 6.2 4.4 4.7 6.0 9.4 5.5 7.2 5.5 7.6 5.5 5.9 5.5 7.1 5.5 6.3 5.5 6.4 7.6 4.2 5.5 5.5 4.3 5.5 3.8 4.0 5.7 6.5 5.5 5.5 3.5 5.1 5.9 4.8 3.6 4.4 5.5 5.0 5.5 5.7 5.5 5.4 4.1 5.5 4.8 5.5 4.7 8.1 5.3 5.5 4.5 2.7 4.0 5.1 6.4 5.5 6.0 5.5 5.7 5.5 4.8 5.5 5.6 5.5 3.6 5.5 7.3 5.8 4.3 5.5 5.5 5.7 5.5 5.0 4.4 5.9 6.6 6.4 6.3 5.3 5.7 6.1 5.2 4.2 6.0 5.5 5.5 5.5 6.8 5.5 6.3 6.5 5.5 5.4 5.5 6.5 7.5 5.8 5.8 5.3 3.6 4.4 5.6 7.9 5.5 6.6 5.5 6.7 5.5 5.4 5.5 6.4 5.5 4.9 5.5 6.8 6.7 continued ...

CIS to Europe CIS to Indian Subcontinent CIS to Middle East CIS to North America CIS to Pacific CIS to South America Domestic US Europe to Africa Europe to Asia Europe to Central America Europe to China Europe to CIS Europe to Indian Subcontinent Europe to Middle East Europe to North America Europe to Pacific Europe to South America Indian Subcontinent to Africa Indian Subcontinent to Asia Indian Subcontinent to Central America Indian Subcontinent to China Indian Subcontinent to CIS Indian Subcontinent to Europe Indian Subcontinent to South America Indian Subcontinent to Middle East Indian Subcontinent to North America Indian Subcontinent to Pacific Intra Africa Intra Asia Intra Central America Intra Europe Intra Indian Subcontinent Intra Middle East Intra North America Intra Pacific Intra South America Middle East to Africa Middle East to Asia Middle East to Central America Middle East to China Middle East to CIS Middle East to Europe Middle East to Indian Subcontinent Middle East to North America Middle East to Pacific Middle East to South America North America to Africa North America to Asia North America to Central America

84

Cargo forecast results

Sub-market (directional)
North America to China North America to CIS North America to Europe North America to Indian Subcontinent North America to Middle East North America to Pacific North America to South America Pacific to Africa Pacific to Asia Pacific to Central America Pacific to China Pacific to CIS Pacific to Europe Pacific to Indian Subcontinent Pacific to Middle East Pacific to North America Pacific to South America South America to Africa South America to Asia South America to Central America South America to China South America to CIS South America to Europe South America to Indian Subcontinent South America to Middle East South America to North America South America to Pacific Other

% of world FTK (1999)


0.97 0.08 5.80 0.24 0.62 0.83 1.99 0.05 0.65 0.03 0.26 0.01 0.83 0.06 0.06 0.34 0.04 0.04 0.37 0.07 0.12 0.08 1.37 0.02 0.07 2.85 0.02 9.60

Avg. annual growth (%) 1999 2009 1999 -2009 -2019 -2019
7.5 7.2 5.3 5.9 5.5 4.6 5.6 5.5 5.0 5.5 7.1 5.5 4.7 5.5 5.5 4.4 7.2 4.3 7.1 3.6 8.6 7.1 6.1 7.2 6.3 5.6 7.2 4.0 5.8 4.3 4.8 4.9 5.5 4.0 4.7 5.5 5.5 5.5 5.4 5.5 3.6 5.5 5.5 3.7 4.3 3.0 5.6 2.6 6.0 3.8 4.8 5.5 3.6 4.7 4.3 4.0 6.6 5.7 5.1 5.4 5.5 4.3 5.1 5.5 5.3 5.5 6.3 5.5 4.2 5.5 5.5 4.1 5.7 3.6 6.3 3.1 7.3 5.4 5.5 6.3 4.9 5.1 5.7 4.0

Total world

6.1

5.3

5.7

Key freighter forecast parameters


End 1999 FTKs (million ) ATKs (million ) Number of aircraft in service Capacity in service (tonnes) Flight hours per aircraft per year 68,184.1 104,898.7 1,510 68,702.3 1,541.9 End 2009 124,815.9 188,440.8 2,243 113,347.6 1,690.7 End 2019 223,469.9 331,077.6 3,449 183,974.8 1,814.0

Each of these numbers is a result, not an input !

85

2000 Global Market Forecast

Ten-year cargo forecast results


Capacity (tonnes) Aircraft size segment < 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes Total In service 1999 12,457 19,769 9,801 26,675 68,702 Deliveries New converted 791 2,830 4,140 12,335 20,096 11,628 19,934 4,778 12,578 48,918 Retire- In service ments 2009 6,709 12,284 1,579 3,796 24,368 18,167 30,249 17,140 47,792 113,348

Numbers of aircraft Aircraft size segment < 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes Total In service 1999 624 456 162 268 1,510 Deliveries New Converted 36 63 69 103 271 529 443 80 114 1,166 Retire- In service ments 2009 367 273 25 38 703 822 689 286 447 2,244

Twenty-year cargo forecast results


Capacity (tonnes) Aircraft size segment < 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes Total In service 1999 12,457 19,769 9,801 26,675 68,702 Deliveries New Converted 1,719 5,368 11,423 37,838 56,348 23,771 35,819 12,750 32,986 105,326 Retire- In service ments 2019 11,670 15,940 5,205 13,586 46,401 26,277 45,016 28,769 83,913 183,975

Numbers of aircraft Aircraft size segment < 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes Total In service 1999 624 456 162 268 1,510 Deliveries New Converted 79 119 190 315 703 1,080 796 213 300 2,389 Retire- In service ments 2019 578 358 81 136 1,153 1,205 1,013 484 747 3,449

86