MORE AIRCRAFT ORDERS EXPECTED

Global airlines will buy US$3.5 trillion of aircraft

LONDON: Global airlines will buy US$3.5 trillion of aircraft over the next 20 years to meet relentless demand for travel to and from Asia's burgeoning “mega-cities” and renew ageing fleets in the West, according to Airbus.
The world's largest civil jet maker raised its forecast for airplane deliveries over the next 20 years by around 8% to 27,800 aircraft as part of an annual market survey. The figure includes 900 freighters to keep up with a projected expansion in global trade.
The European company shrugged off turmoil in financial markets, saying population growth and urbanisation would continue to promote strong aviation demand. The industry has recovered more quickly than expected from the last recession but some are nervous over the short-term outlook.
“People need and want to fly more than ever before,” Airbus said in a statement.
“Over the next 20 years the aviation sector is expected to remain as resilient to cyclical economic conditions as in the past.”
Revenue passenger kilometres the number of people boarding planes adjusted for the distance flown would grow by an average 4.8% per year, which is equivalent to traffic more than doubling in the next 20 years, Airbus said.
Boeing is even more optimistic, with a recent forecast of 5.1% a year.
The predictions underscore soaring demand for narrow-body or single-aisle jets like the Boeing 737 and Airbus A320, the backbone of many airlines.
Both plane makers have decided to refresh their best-selling models with new engines to cut fuel costs and see off newcomers such as Canada's Bombardier or builders in China and Russia.
Airbus raised its demand forecast for these 100-200 seat aircraft by 7% to 19,200 airplanes worth US$1.4 trillion between 2011 and 2030. Boeing sees a market worth US$2 trillion, though its data includes airplanes from 90 seats upwards instead of 100.
Airbus and Boeing are increasing production rates to keep up with demand.
There is concern, however, over what the plane makers' optimism means for airlines on the eve of a widely-watched airline industry profit forecast from lobby group International Air Transport Associa-tion.
The association halved its forecast for 2011 airline profits in June and could trim it again in the light of Europe's debt crisis and fears of a new US recession.
Premium travel is where airlines make most of their profits and is seen as a sensitive guide to business confidence.
Many airlines are investing in new lightweight airplanes to lower their fuel costs.
Airbus sees strong demand for wide-bodied twin-jets like the Boeing 787 Dreamliner, which is due to be delivered to its first Japanese customer next week after three years of delays, and smaller versions of its own A350. Airbus hiked its forecast for 250-300 seat jets by 11%.
The Airbus survey also acts as a signpost to the next big battle with Boeing over the future of mini-jumbos like the Boeing 777, which Airbus has countered with its planned A350-1000.
Boeing must decide in the next year or so whether to redesign the 777 or just commission a replacement for the world's largest civil jet engines as it tries to keep its dominance of the 350-400 seat market. Airbus sees demand for 2,100 new aircraft in this category over the next 20 years.
However, Airbus and Boeing continue to disagree on the demand for the industry's behemoths the Airbus A380, the world's largest airliner, with 525 seats, and Boeing's newly-revamped 747 jumbo.
Airbus sees a US$600bil market for airplanes with 400 seats or more, representing 1,781 units. Boeing sees demand for less than half that, just 820 planes - Reuters

(First published in The Star on Sept 20. 2011)