Aviation Outlook - Growth Opportunities in Asia Abound

18 Pages·2016·2.31 MB·English

Aviation Outlook
-
Growth Opportunities in Asia Abound
Q1 2016
Aerospace & Defense Practice
Frost & Sullivan
Five Big Takeaways
3X Growth of APAC -
1 APAC is going to be largest region of operating aircraft fleet by 2034 superseding North America
and Europe with triple the volume of aircraft fleet of what it is flying today
Regional Aircraft Entry -
2 Regional aircraft (< 150 seater aircraft market) is witnessing many aircraft entries such as ARJ,
MRJ, C Series, Regioprop (Indonesia) with very short haul point to point airports to be served
MRO Operators to adopt to next generation aircraft -
3 Though MRO markets have witnessed global migration from west to east due to lower costs, new
generation aircraft with composite usage will confront MRO operators on a new playing field
More than 50% of new airport investments in APAC -
4 Out of 346 new airport developments globally more than half of them are going to be in APAC,
which opens huge opportunity for airport support industry
Aerospace is an early adopter of 3D printing -
5 Aerospace has been an early adopter of 3D printing with industry primes such as Airbus, GE,
Boeing and various government agencies putting active investments
In the next 15 years, globally we are set to
see as many flights are we have witnessed
in the last 100 years……
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Global Macroeconomic factors
Various drivers have been identified which are key to the global market growth such as growth of
global middle class composition followed by aviation mega cities, long haul passenger growth etc.
Middle class composition 20 years from 2014
(million) 2014 2034 Growth
Aviation mega
2034 3977 city 93%
Europe Daily long haul 155%
2024 2936 passengers
North America
Emerging countries
Industry of world
56%
2014 2001 GDP
0 2000 4000 6000 Share of private
consumption in
87%
Mega-Cities in 2030 emerging
countries
% people taking a
trip a year in
221%
emerging
countries
The global middle class is to double in 2034 in emerging
countries. The rise in spending power will see a further growth
of tourism . Moreover, with further economic integration and
labour mobility the Asian and Latin America region are also to
>20 million
see a consistent growth of travel within and between regions
>10 million
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Air traffic Overview
Strong growth in “upper middle income group” followed by “lower middle income group” have
paved the way for strong passenger numbers with highest growth in APAC and Middle East region
2015 1st quarter performance by region
Europe
North America
3.9 million, 0.2% YOY
6.1 million, 0.2 YOY
341 million, 5.1% YOY
370 million, 3.8% YOY
Middle East
0.5 million, 6.9% YOY
66 million, 9.2% YOY
Africa
0.5 million, 0.7% YOY
Latin America
34 million, 2.3% YOY
APAC
1.6 million, 1.5% YOY
3.1 million, 4.9% YOY
118 million, 5.6% YOY
Aircraft movement 400 million, 8.5% YOY
Passenger traffic
2014 number of passengers and 2010-2014 growth rate
2,500,000,000 60%
sreg 2,000,000,000 2,056,463,462 44% 49% 50% htw
nessap fo 11,,050000,,000000,,000000 13% 35% 844,632,396 234000%%% org egatn0)411002-
reb 500,000,000 296,523,390 10% ecre2(
m 16,045,574 P
u - 0%
N
High income Lower middle income Upper middle income Low income
Number of passengers (2014) Increase from to 2010
Source: Frost & Sullivan Analysis, ACI annual world airport traffic report; 2014 ATRS Global Airport Performance Benchmarking Project. World Bank
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Global aircraft fleet dynamics
Globally 38,050 aircraft deliveries are going to be done in 20 years between 2015-2034 ; majority of
which will be in APAC hence MRO markets will shift towards APAC in next 20 years
Aircraft Fleet Delivery Forecast *
7,310
1,150
7,890
3,180
14,330
1,170
3,020
38,050 (~ in 20 years)
New Aircraft deliveries expected globally between 2015-2034
Source : Boeing Market Outlook 2015, Frost & Sullivan analysis
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Global aircraft fleet dynamics
Nearly half of the world's air traffic growth will be driven by travel to, from, or within the Asia-Pacific
region in the next 20 years
Shift in global fleet market share in next 20 years Key Insights
Global Market Share of Aircraft Operating Fleet by Region Decline of North America
(2014-2034)
•Today North America is still the
Latin America
region with largest operating fleet
Middle East 8%
CIS
8% which will move to the 2nd spot by
4%
2034
Africa
2034 4% APAC comes to 1st positon
Europe •Currently APAC is the 2nd largest
17% 6% 7% region of operating fleet with 27%
5%
3%
market share which will change to
21%
37% by 2034
2014 Emerging regions
27%
(Middle East & Latin America)
•Middle East fleet share is growing
31%
aggressively by 3 major airlines such
as Qatar airways, Emirates and
North America
Asia Pacific
Etihad
22%
37%
•Latin America will grow at a healthy
pace of 4.6% CAGR
Source : Boeing Market Outlook, Frost & Sullivan analysis
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APAC aircraft fleet dynamics
APAC’s operating fleet stood close to 5,850 by end of 2014 which is expected to add 14,330 new
aircraft deliveries to reach the operating fleet size of 16,180 (after retirements) by 2034
New Aircraft Deliveries (20 yr forecast) New Aircraft Deliveries (20 yr forecast) by type
Asia Pacific
Regional
Jets, 370
Large Wide
4,000 Body, 140
Retirements
14,330
Medium
Asia Pacific
New Wide Body,
Deliveries Single Aisle, 1530
New aircraft
10370
deliveries between
16,180
2015 - 2034
Operating
3X Fleet
Small Wide
5,850
Body, 1920
growth
Existing
2014 2015 - 2034 2034
• APAC fleet is estimated to grow at 5.21% CAGR over • Majority of the addition is in single aisle
the period (2015 – 2034) in the next 20 years aircraft across Asia Pacific
• The fleet size is forecasted to grow to thrice the current • Markets for wide body are smaller in number
fleet size in 20 years time but nevertheless prominent in terms of value
Source : Boeing Market Outlook, Frost & Sullivan analysis
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APAC aircraft fleet dynamics
APAC’s operating fleet is estimated to grow x3 the current size with growth expected in almost all
aircraft segments apart from large wide body segment such as A380 and B747

Aircraft Operating Market Share by aircraft type Key Insights
2034 2014 Growth
• Almost all segments expected to
380 3X grow by 3 times
Regional
Jets growth
130 • Large wide body segment (A380
and B747) is not expected to
11,730 3X
Single
growth grow
Aisle
4,130
• Prominent growth is forecasted to
3X
Small 2,270 be witnessed in Single Aisle
growth
Wide Body 3X
780 • Intra-Asia Pacific routes are
Overall growth 3X estimated to get thicker over time
1,620
Medium
growth
Wide Body and hence there is a huge
530
anticipated demand of medium
- X
180
Large wide body and small wide body
growth
Wide Body
280
aircraft to almost triple of what
0 5000 10000 15000 they stand today in 2014
Source : Boeing Market Outlook, Frost & Sullivan analysis
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North Asian fleet dynamics
North East Asia has overall smaller market potential compared to South East Asia ;
Stark difference in fleet composition where North East Asia will have higher % of wide body aircraft
and South East Asia will have more of single aisle aircraft
North East Asia (New Aircraft Deliveries) Vs. South East Asia (New Aircraft Deliveries)
1,450 3350
New Planes by 2034 New Planes by 2034
Regional Jet, Regional
4.1% 2.1%
60 Jet, 90
Single Aisle, Single
43.4% 76.3%
630 Aisle, 2860
Small Wide Small Wide
22.1% 15.8%
Body, 320 Huge Body, 510
concentration
of Wide Body Medium
Medium Wide
27.6% Aircraft Wide Body, 7.2%
Body, 400
250
Large Wide Large Wide
2.8% 1.5%
Body, 40 Body, 40
0 500 1000 1500 2000 2500 3000 0 500 1000 1500 2000 2500 3000 3500
• 49.7% concentration of wide body in new aircraft • Single aisle is dominant with 76.3% of all new
deliveries for North East Asia aircraft deliveries in South East Asia
• MROs should concentrate on wide body segment in • Wide body constitutes for only 20.4% of all new
North East Asia deliveries in South East Asia ; MROs could focus
mainly on single aisle aircraft
Source : Boeing Forecast, Frost & Sullivan analysis
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