SubscribeThe aviation industry is in an unprecedented crisis following the events of September 11th 2001 and all sectors have been affected.
The airline industry has lost over $30 billion in two years and with over 2,000 aircraft in storage, there is a distinct oversupply of capacity. Never-the-less, the industry continues to take delivery of considerable numbers of new aircraft and there is still a backlog of over 3,400.
Traffic levels may be improving after the drastic declines in the last months of 2001, but many of the world's airlines are still making heavy losses, as many of the higher yield business travellers are either not flying, or buying cheaper economy class tickets.
In such uncertain times, especially with the prospect of a war in Iraq, the forecasting of demand in the short term (next 5 years) becomes more difficult, although over the long term (20 years), the industry is still expected to require almost a doubling of the fleet. The major forecasts are produced by the aircraft manufacturers, although these are usually slanted towards the product sectors in which they compete.
The Airclaims Global Aircraft (AGA) Forecast provides an independent forecast of new deliveries by aircraft type and variant over a period of up to 20 years. The forecast is updated through each year to take account of new industry developments.
The forecast gives Low, Median (Most Likely) and High scenarios. The Low and High scenarios reflect either lower or higher than forecast traffic growth, or alternatively a change in the mix of aircraft used to satisfy demand (so the High forecast for one type could mean a Low forecast of another). AGA also predicts retirements, cargo conversions and the fleet inventory each year.
AGA is the result of a combination of analyses including the following:
- Reviewing other major traffic and aircraft demand forecasts produced in the industry, especially from Boeing, Airbus, Rolls-Royce, the FAA, IATA, ICAO, regional manufacturers and engine manufacturers.
- Analysis from the Airclaims CASE Database of the current fleet and age profile, current airline and lessor orders and backlogs, options and letters of intent, historical deliveries and retirements, analysis of changes in fleet make-up, seat capacity etc.
- Review of announced fleet plans by airlines and lessors, plus production rates of manufacturers.
A forecast is made of likely levels of future orders and deliveries by seat size category and a view is taken as to the share of these deliveries which each aircraft type and variant may account for.
In the short term, the orders backlog guides the share each aircraft will have, while, in the longer term, there is more uncertainty, especially if new aircraft programmes are launched. The First Quarter 2003 AGA Forecast is predicting demand in the 20 years between 2003-2022 for 25,036 jet airliners, including 10,850 single-aisle types, 8,296 regional jets and 5,890 wide bodies.
Deliveries are predicted to total some 940 during 2003, down from 1065 in 2002, whilst 2004-2005 are expect to see further reductions to around 850 per year, before a recovery in 2006.
However, it will not be until 2008 that deliveries rise above 1,000 again. Airbus, Boeing and the RJ manufacturers will take close to a third share each of deliveries, with Airbus likely to out-deliver Boeing for the first time. The following is a review of the various commercial jet seat sizes and the predicted demand.
30-40 seater RJ market
This market is almost entirely driven by the USA where scope clauses at most of the US Majors limit the numbers of larger aircraft and have led to artificially high numbers of 33-44 seaters.
Although the 328JET programme is being acquired by Avcraft, there are still questions as to whether it can regain market share; most demand is for the ERJ-135/140 and to a lesser extent the 40-44 seat versions of the CRJ. Airclaims predicts demand for 400 in the next ten years but only 70 thereafter, as we expect scope clauses to be phased out.
50 seater RJ market
With over 1,200 in service, in the past ten years the 50 seater CRJ and ERJ-145 have revolutionised the regional market, especially in the US and Europe, developing both hub and point-to-point networks with more frequent flights and longer-range thin routes.
There are still just under 300 on order, although market uncertainty in the US has led to some deferrals and a lack of new orders.
The move of carriers like US Airways to a more RJ-oriented fleet may help to boost order books. Although yearly deliveries may drop from around 200 to 120 in the next few years, we expect a recovery to perhaps 170 a year to give 1,600 deliveries over ten years and 2,400 over 20, with a move towards replacement by newer 50 seaters and more 70 seaters post 2012.
70-85 seater RJ market
The CRJ700 will be joined later in 2003 by the new Embraer 170, which starts deliveries to Swiss. With US demand limited by scope clauses, Europe is the main focus for demand. Deliveries are expected to average 50-60 per year through the next 10 years, before an increase to over 100 per year in the second period as airlines upsize from 50 seaters.
Both manufacturers have new 78-86 seater stretches, the CRJ900 and Embraer 175, whilst the new Chinese ARJ21 project will also have an aircraft of this size. The demise of the 728 has removed some of the competition and customers such as Lufthansa have yet to select an alternative.
This size sector is expected to become increasingly popular and account for 1400 deliveries over 20 years, with replacement of older generation types such as 146-200s increasing.
90-110 seater RJ market
The 98-108 seater Embraer 190 and 195 will begin deliveries in 2004/5 and following the demise of the 928 are the sole incumbents at the moment. The Chinese ARJ21 will have a 99-seater variant, but is likely to be mainly for local demand. There are questions as to whether Bombardier will revive its BRJ in the longer term or another plane, such as ATR, may try to replace Fairchild Dornier, perhaps with a revival of the AIRJET.
AGA predicts demand for some 400 aircraft in the next 10 years but with the major focus being in the second period with 1600 more.
100-120-seater single-aisle market
The smallest seat size sector where Airbus and Boeing compete is 100 seats, where Airbus offers the A318 and Boeing has the 737-600 and 717-200. This seat size is being encroached upon by the RJs, which operate at much lower weights.
However, these regional jets are aimed more at the regional airline operators, with the Airbus and Boeing products considered to be more "mainline" jets, likely to be operated by larger airlines.
The A318 has suffered from the PW6000 problems and customers changing orders to other types, whilst the 737-600 has few orders and the 717 is being built at low rates of production.
Demand is foreseen for only some 300 over 10 years and 660 over 20 years, with the more optimised RJs coming to the forefront.
125-160-seater single-aisle market
The major battleground between the two main manufacturers is in the 125-160 seat class, which is expected to account for some 3,700 deliveries in ten years and 7,050 over 20 years. Boeing's 126-seat 737-700 competes with the A319, a shortened version of the 150 seat A320, which competes with the 160 seat 737-800.
Production for all these models is falling from 400 last year to 330 this year and is likely to stay at similar levels for several more, before an increase to closer to 400 by the end of the decade.
Each manufacturer naturally claims that its products are better than its rivals. Airbus was able to design the A320 from new, offering a wider fuselage, under-floor container capability and a fly-by-wire cockpit giving crew commonality up to the A340. Boeing's 737-NG family is marketed as flying higher and further for less.
Both families have built impressive global customer bases and compete strongly, with the Airbus product perhaps likely to just outsell the 737 over the period. A replacement for the 737 is likely in the second forecast period, with newer engine technology likely to be a major driver.
180-250-seat single-aisle market
For 12 years the 757 had this market sector to itself with the type proving popular with both scheduled and charter operators. The introduction of the A321 has provided strong competition, offering commonality with the rest of the A320 family. Having less range, the lower-weight A321 is optimised for shorter-range missions, though increased weight A321-200 versions do have transcontinental US capability.
Boeing has stretched the 737 into the 170-seater 737-900 to compete (but with limited impact) and so is also planning to launch a 220 seater -900X with an extra set of doors and also higher weight. Entry into service could be in 2005. It has also stretched the 757 into the 250 seat -300 to reposition the type, as new orders for the 757-200 have slowed to a trickle and the backlog is below ten.
However, slow demand for the -300 is likely to lead to the end of the 757 programme in the next few years. AGA predicts some 600 deliveries in the next ten years, increasing to closer to 3000 by 20 years, as replacement of the 150 seaters increases in the second period.
200-250-seat twin aisle market
Airbus was the first to develop a widebody twin, with the A300 entering service in 1974. The latest version, the A300-600R, continues in production, although all of the remaining orders are for freighters. Boeing's competing, and longer range, 767-300ER is still in production and orders from passenger carriers continue, albeit at low levels. Their smaller versions, the A310 and 767-200 series, are now built to order only and production is effectively over, except for military versions.
Focus has shifted to the next generation, the 250-300-seater A330-200 and the 767-400ER, although the latter has failed to generate much interest. Proposals for an A330-500 and 767-400ERX were shelved, with Boeing now looking at the Super Efficient 7E7 instead of a Sonic Cruiser.
This could be in service by 2008 and be a replacement for the 767-300ER, especially with US carriers. Until then, the A330-200 is expected to be the market leader. Deliveries for this sector are likely to total 600 in the next ten years, increasing to 1960 in 20 years.
300-400-seat twin aisle market
The industry predicts that over the next 20 years there will be a greatly increased use of smaller capacity aircraft than the 747, such as the 777 and A330/A340, to enable airlines to open new long-range routes which could not be served economically before; to open new ultra-long-range routes; to increase frequencies and also to completely replace older types.
This is the so-called "market fragmentation" where traffic flows become more dispersed, using secondary cities, and there is more emphasis on frequency rather than capacity.
Airbus has adopted the family approach of the A330 twinjet and A340 quadjet, while Boeing has various versions of the 777 twinjet. The A330-300 and 777-300 have their main markets within Asia, although the A330 is increasing its presence on transatlantic routes, and total demand is expected to be around 1,000 over 20 years. The A340-300 and 777-200ER compete in the 300 seat long-haul market and demand for over 800 in 20 years is foreseen.
Both the A340 and 777 have new variants now entering service. In the higher-capacity long-range sector, Airbus offers the Trent 500-powered A340-600, to carry 380 passengers over 7,500nm, whilst the GE90-powered 777-300ER will carry 360 over 7,300nm. These types will account for some 900 deliveries over 20 years, as they replace 747-200s and then the original A340s and 777s.
Ultra Long Range Market
New ultra-long range non-stop markets over 8000nm, especially Southeast Asia to the US and Europe, will be opened up by the development of the A340-500 and 777-200LR. The former enters service in late 2003, whilst development of the 777-200LR has been delayed to 2005 due to slow orders. This market is expected to be a niche of perhaps only 200 aircraft.
400-550+seat twin-aisle
The market segment where Airbus and Boeing disagree most about its future size and direction is in the 400+ seats sector, where currently only the 747-400 is in production. Since the launch of the A380, A340-600 and 777-300ER, orders for the 747-400 have slowed markedly and are focused more on the freighter version.
Although Boeing continues to propose various new versions of the 747, Airclaims Limited foresees production slowing to low levels and ending in around ten years time, with perhaps another 180 deliveries, mainly freighters.
Airbus has now cut metal for its US$12 billion double-decker 550-seater A380, which is due to enter service in March 2006. The major focus of the type is expected to be on high-density routes into the Asian market. Airbus is much more optimistic on demand than Boeing, not surprisingly.
AGA takes the middle ground, seeing demand for some 700 over 20 years, as the type become necessary at slot-constrained major airports, although the A340/777 will open new markets between secondary centres and replace part of the 747 fleet.
