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Centre of gravity for world aviation market swinging to Asia

19th June 2015

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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In less than a decade, a major change has occurred in the global airliner market. In 2005, Airbus delivered 378 aircraft, of which the countries of North America (excluding Mexico), Europe and the former Soviet Union took 62% and emerging countries and the rest of the world together accounted for 38%. In 2014, of the 629 new Airbus airliners delivered worldwide, 42% went to North America (except Mexico), Europe and the countries that once formed the Soviet Union and 58% went to emerging countries and the rest of the world. This was highlighted by Airbus Commercial Aircraft COO: customers John Leahy at the company’s recent Innovation Day 2015 media briefings.

This trend is set to continue. The global middle class is growing strongly. But, while the size of the middle class will remain pretty static in most developed countries (indeed, it is set to decline, overall, due to population decline in much of the developed world), it will grow dramatically in the emerging world, especially Asia. In 1970, globally, the middle class numbered 700-million people, or 18% of the global population of 3.7-billion. In 2014, the global middle class came to 2.4-billion people, or 33% of the total world population of 7.2-billion; 1.4-billion of these middle class people lived in emerging countries.

It is forecast that, in 2024, total global population will be 7.9-billion, of which 3.7-billion (or 48%) will be middle class, 2.8-billion of whom will be in emerging countries. For 2034, the prediction is a global population of 8.5-billion, of which 5.4-billion (63%) will be middle class, with 4.5-billion living in emerging countries. (Middle class being defined as households with daily expenditures between $10 and $100 per person, calculated on a purchasing power parity basis.)

In 2014, in India, there are 0.3 aircraft per million people; for China, the figure was 1.6 aircraft per million people and, for the US, 12.5 aircraft per million people. “Europe is about the same,” said Leahy. “The future of India and China is going to be the same.” Asia is going to need continuing increases in its air transport capacity. “I could say the same for Latin America.”

Airbus forecasts an annual air traffic growth rate of 5.2% for the next decade. “This industry, the airline industry, has been doubling [in traffic terms], since the dawn of the jet age, every 15 years,” he noted. “GDP [gross domestic product] and aviation are intertwined. Aviation is so big that it is part of GDP. You can’t have GDP growth without aviation growth.” Currently, aviation carries 3.3-billion passengers and 50-million tons of freight a year. It contributes $2.4-billion to the global economy and supports 58-million jobs.

As of the end of April, Airbus had an order backlog of 6 399 aircraft. This was composed of 1 350 for A320 single-aisle (or narrow body) family airliners, 3 794 A320neo (new engine option) family single-aisle airliners, 319 A330 twin-aisle (or wide-body) aircraft, 778 A350XWB family aircraft and 158 A380 Superjumbos. This came to 53% of the total airliner backlog (the other 47% being held by rival Boeing) and represents a record for Airbus.

From January 1 to April 30 this year, Airbus won 209 orders as against 128 for Boeing, giving the European company 62% of the order book for the period. In terms of revenues, Airbus’s orders are worth $27.8-billion, while Boeing’s come to $24.7-billion, meaning that Airbus has a 53% share in revenue terms. Regarding single-aisle airliners, Airbus gained 174 orders in this period, as against 66 for Boeing (Airbus share: 73%), but in terms of widebodies, Airbus secured 35 orders, compared with Boeing’s 59, giving Airbus a 37% share in that segment.

“We had less than 20% of the market in 1995,” observed Leahy. “Now we have achieved a stable duopoly [with Boeing].” To be pedantic, Airbus’s market share in 1995 was 18% and Boeing’s was 82%. It became roughly 50:50 at the end of the 1990s and the lead has oscillated between the two companies ever since, although Airbus has had the edge during eight of the last ten years.

Keith Campbell attended the Innovation Day 2015 in Toulouse, France, as a guest of Airbus.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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