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Commercial Aviation Global Growth Analysis - 2020-2038 - Grupo One Air
Commercial Aviation Global Growth Analysis - 2020-2038 - Grupo One Air
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COMMERCIAL AVIATION
been eliminated, and older less fuel-e cient and less emission-e cient aircraft
have been grounded.
Besides, something that we have all witnessed, and which has contributed to the
increase in airlines’ operating revenues, has been the breakdown and
fragmentation of the services o ered to the customer.
For this reason, it has been possible to lower ticket prices, democratising access to
commercial aviation to a broader public and, in turn, maximising the airlines’
pro ts.
In this article, we analyse the growth of commercial aviation from 2020 to 2039,
reviewing the demand for aviation personnel, the growth in deliveries of new
aircraft, or the creation of new routes in di erent geographical regions, among
others.
Based on the fact that commercial aviation is a global industry and is experiencing
continued high growth, some markets are emerging on a signi cantly higher trend.
For this reason, and based on the annual reports of Boeing and Airbus published
this 2020, we are going to analyse the forecasts for the future of commercial
aviation at a global level, segmenting the di erent regions and breaking down
speci c data for each area.
But rst, let us take a look at the di erent reasons that explain this increase in
commercial ights and, consequently, this exponential growth in commercial
aviation.
Although we have already given you some clues, such as the democratisation of the
price of air tickets, the truth is that the most crucial reason for the revolution in
commercial aviation is to be found on the Asian continent.
While in the United States or Europe, commercial aviation has already enjoyed a
great deal of normalization for years; in Asia, it has been experiencing a real boom
in the last decade. The economic awakening of historically less developed countries
has proved to be a vital driver for the development of Asian and international
commercial aviation.
Likewise, the economic growth of the aviation sector in Asia has seen the rise of the
middle class with the higher nancial capacity to y. Thus, in addition to higher
purchasing power, there has been a signi cant rejuvenation of individuals belonging
to the predominantly middle class.
It is expected that by 2030, two-thirds of the world’s middle class will be located in
the Asia-Paci c region; so it is vital to consider the Asian market when nding a job
as an airline pilot because of the need for new professionals.
The demand for aviation personnel to meet the growth of commercial aviation
globally is imminent; this is something we have con rmed in recent years.
Moreover, the gures are growing all the time, as air travel has become the most
e cient means of transport for passengers and goods.
According to Airbus’ GMF 2019 study (Global Market Forecast), over the next two
decades, the demand for commercial aviation professionals, segmented by region,
will reach the following gures:
Asia-Paci c Europe
As the Airbus CEO, Fabrice Brégier said at the company’s annual GMF 2019
presentation
‘The GMF is focused on meeting the sector future needs to facilitate the ow of
growth without hindering its development. Airbus’ economists and data analysts
study the numbers of past years and extrapolate the conclusions, taking into
account the current and future context surrounding commercial aviation’.
Based on using these numbers most e ectively, to improve the reliability and
validity of the analyses carried out by Airbus, a fundamental part is to check and
question the methodologies used with the investigations carried out against the
actual gures of passengers and airlines.
In this way, a realistic vision is identi ed for the growth of air transport over the
next 20 years, supported by rigorous data, comprehensive graphs and industry
knowledge. These analyses are promising for the future, and are decisive in the
choice of obtain the ATPL license.
On the following map you can see the expected demand for aeronautical services
by region. In addition, the commercial aviation industry value is shown in billions of
dollars for each geographic area.
According to the UNWTO, tourism accounts for 10% of global GDP; so with 57% of
the world’s cross-border tourists travelling by air, this is one of the primary sources
of wealth today.
About new routes, the trend is towards sustainability, eliminating less e cient
ways and opening many new short-haul commercial aviation routes, on internal
routes in China, and connecting routes between Europe and Africa.
For the next 20 years, Airbus forecasts average annual growth of 4.3% globally,
with growth being most active in the early years of the period and weakest in the
latter. The regions that will contribute most to this rate are the Asia-Paci c and the
Middle East.
In the following infographic, you can see the average annual growth of passenger
tra c in commercial aviation, segmented by region. Also, the bar graphs show, in
a very visual way, the comparison between the volume of passengers in 2018 and
those predicted for 2038.
If at the beginning of 2019, there were almost 21,000 Airbus commercial aircraft in
service, this gure is expected to double by 2038, reaching nearly 45,000 aircraft.
According to Airbus, more than 38,000 new aeroplanes are scheduled to be
delivered, some of which will replace the older ones and serve to modernize the
world’s eet over the next 20 years.
In the following graph, we can see how the continuity of only 6,500 of the active
aircraft is foreseen at the beginning of 2019. The rest will be replaced by new, more
e cient and modern models, with consequent growth for the components
manufacturing sector, for example.
Perhaps the most surprising strategic development in Europe in recent years has
been the rapid expansion of the low-cost long-distance business model.
The airlines in the European network are operating low-cost long-haul ights
through their subsidiary airlines; for example, Eurowings, a subsidiary of
Lufthansa, has been increasing this type of ying for several years.
Also LEVEL, the new long-distance low-cost operator, which belongs to International
Airlines Group, has started to operate such ights. This fact is also the case of Air
France-KLM, which has also announced plans to launch low-cost, long-haul ight
operations next year.
The airlines Norwegian, Eurowings, Level, Wow Air, Canadian WestJet or Air
Canada Rouge, have increased their low-cost ight operations the most. They are
also the leaders in demand for airline pilots for long-distance ights between
Europe and North America.
It is a fact that low-cost commercial aviation will support more than 48% of total
ight capacity in the coming years.
The major low-cost airlines continue their incursion into Germany and France,
where penetration has been relatively low. Ryanair managed to establish itself in
Germany, together with Lufthansa.
The willingness of low-cost airlines to move beyond the traditional model for
additional growth is enabling them to give a real boost to the growth of European
and global commercial aviation.
At the same time, airlines are moving more short-haul and point-to-point ights to
their low-cost subsidiaries, to compete more e ciently with independent low-cost
airlines.
The wide variety of business models that the airlines are experiencing are leading
these companies to o er more ights at lower prices. Thus, passengers are taking
advantage of these lower fares to y more, which increases the demand for
aeroplanes and promotes the growth of commercial aviation.
Low oil prices challenged many of the region’s economies between 2015 and 2016,
resulting in government budget de cits, postponement of infrastructure
investments and reduced foreign investment and economic activity within the area.
Currently, energy market analysts are forecasting a recovery in oil prices to levels
that will alleviate many of these problems; this will help to encourage both long-
haul routes to and from the Middle East and short-haul ights within the region.
The challenge of being able to access a market share in global commercial aviation
is nothing new. Middle Eastern airlines have faced signi cant opposition from
established operators in many of the countries they serve; however, they have
realised the leadership of independent carriers.
Recent developments in the United States, the United Kingdom and elsewhere
indicate that a return to more protectionist policies is possible.
While economic and commercial interests oppose such policies, they are
contributing to capital investments, the search for strategic alliances and the
coming together of the region’s airlines to achieve their goals.
IATA reported in early 2019 that Cartagena’s Rafael Núñez International Airport has
cut its fares by less than half, from $92 to $38, and that international arrivals are
increasing, which is having a positive impact on the local economy.
Since the rate was decreased in 2015, the number of international passengers has
increased by 26%, and tourist arrivals in Cartagena have increased by 38%. A
more competitive cost framework has also allowed airlines to establish new ways,
with the introduction of ights to Atlanta, Amsterdam, Fort Lauderdale and Madrid
from this airport.
It is expected that the new airport projects to be undertaken will reduce the
potential problems of congestion in large metropolitan areas and that they will be
able to meet future demand for more ights.
For example, the New Mexico City International Airport will be inaugurated this
2020. Also the expand at São Paulo’s Viracopos International Airport will serve as a
third airport alternative in the region.
Thanks to the constant growth of air tra c in commercial aviation, the demand
for new aircraft for this area is estimated at 2,685 units. Single-aisle aircraft will
make up the majority of the acquisitions, with 85%, representing 2,400 such aircraft.
The airlines intend to expand beyond national borders, taking advantage of the
open skies policy in the Latin American commercial aviation market. The demand
for medium and large-capacity (or double-aisle) aircraft is also expected to increase,
with some 285 new planes.
The total eet in full service is estimated to more than double in the next 20 years,
from 1,375 to 2,895 aircraft. The market share of Latin American airlines is over
60%.
Cargo ratios have increased from 72% to 83% since 2000. The
region’s carriers are also improving, and the region’s airlines are
also optimising their aircraft capacity.
North America is home to some of the most massive passenger air tra c ows in
the world, including the largest today, the US domestic market. Two decades ago,
over 80% of the seats o ered were in local markets.
Today, while the internal market has grown, its overall share has declined to 75%.
This change has been largely due to American international market growing,
which now accounts for 22% of the seats o ered to and from the region.
International markets growth over the last ten years was also higher than that of
domestic and intraregional markets, with a 5.6% growth rate, compared to 2.1%
and 3.6% respectively.
Since 1998, the proportion of seats o ered to and from the region by North
American carriers has been relatively stable. While there has been some uctuation,
with North American airlines reaching about 54%, interestingly at the time of the
last nancial crisis, their share is about the same today as it was twenty years ago.
In the long term, international tra c is expected to grow faster than the local
market, by approximately 4% per year. This increase is driven by the opportunities
that are emerging from emerging markets.
Wide-body aircraft, which will account for 72% of deliveries over the next 20 years,
o er US airlines the ability to operate non-stop ights pro tably from both their
primary and secondary hubs, thereby taking advantage of market opportunities.
With load factors remaining close to historical levels and tra c growth above
standards, the eet has expanded at a faster rate to provide the necessary ight
capacity.
Single-aisle aircraft in the North American eet has increased in recent years and
will continue to expand to represent 75% of the eet in twenty years, compared to
62% today.
Medium-sized aircraft, such as the Boeing 737, remain the most common size used
by network airlines and low-cost carriers, comprising the majority of new deliveries:
5,660 single-aisle aircraft.
Currently, the North American eet represents 30% of all commercial aircraft in
service worldwide. This large eet of more than 7,000 jets constitutes an essential
market for renewal during the forecast period. This area will need 5,970 new
aircraft over the next 20 years, 65% of which will be used to replace aircraft in the
eet currently in operation.
While the population in the CIS is expected to increase moderately in the coming
years, the Middle Class is expected to continue to grow more rapidly. Since 2003,
the Middle Class in the CIS has improved dramatically.
Today, about 60% of the population is considered to be Middle Class, and at the
end of the forecast period, it is expected to be about 75%.
This growing wealth has to turn into strong growth in the Available Seat Kilometre
(ASK) this trend of increasing wealth is expected to turn into a higher propensity to
y in the region.
These factors have been based by impressive capacity growth in the region, which
until 2016 had international and internal growth at similar levels.
However, since 2016, international capacity growth has outpaced that of the region.
In addition to these advances, the region’s operations have become more
e cient, with nearly 60% more requests for assistance per aircraft in 2018,
compared to only ten years earlier.
This fact has been mainly because the average age of the eet has decreased by
two years to just over 13 years of age; this, in turn, is due to an increase in the
number of more eco-e cient modern aircraft in the region’s eet.
The concept of air transport liberalisation in Africa emerged in 1988 with the
adoption of the Yamoussoukro Declaration, followed in 1999 by the Yamoussoukro
Decision.
This agreement provides for the entire intra-African air transport services
liberalisation in terms of market access, free exercise of tra c rights for scheduled
passenger air services, and free exercise of tra c rights for cargo services by eligible
airlines.
In the following graph, you can see the evolution of the working population in
Africa over the next 20 years. From it, we can conclude that this is a region with
incredible business potential for future commercial aviation.
To date, 28 countries have accepted SAATM since its launch in 2018: Burkina Faso,
Benin, Botswana, Cameroon, Central African Republic, Cape Verde, Congo, Chad,
Côte d’Ivoire, Egypt, Ethiopia, Gambia, Gabon, Guinea Conakry, Ghana, Kenya,
Lesotho, Liberia, Mozambique, Mali, Niger, Nigeria, Rwanda, South Africa, Sierra
Leone, Swaziland, Togo, and Zimbabwe.
These countries account for more than 80% of the current aviation market in
Africa. About half of them have also signed a Memorandum of Implementation,
committing themselves to unlock the bene ts of aviation in their respective states.
Africa is the second-largest continent in the world, behind Asia, and covers about
one- fth of the Earth’s total land area.
About half the continent lies on equator either sides and is surrounded by the
Indian and Atlantic Oceans, with the Red and Mediterranean Seas to the north and
east.
Theories suggest that it was the origin of humanity, with its current population of
about 1.3 billion people with challenges to the development of land infrastructure
coming from investment or simply from its geography and climate.
Data from the African Development Bank suggest that the region has two
kilometres of built roads for every 100 km2 of land area and 46,000 km of
railways, compared to 122 km for every 100 km2 and 86,000 km of road and
railways in Europe.
In the last 20 years, 138 million additional seats have been added to routes to,
from and within Africa, almost tripling since 1999.
This impressive growth has been achieved even though the pace of liberalisation in
Africa, particularly among the African States, has been slower than in other
continents.
So it is not unreasonable to suggest that the pace of growth and the bene ts
obtained could have been more signi cant during that time with further
liberalisation.
African citizens do not need a visa to travel to 25% of other African countries
(compared to 22% in 2017 and 20% in 2016).
Also, 24% of other African countries (even 24% in 2017, and 25% in 2016) can
obtain visas on arrival.
Africans need visas to travel to 51% of other African countries (compared to 54%
in 2017 and 55% in 2016).
It is interesting to note how the centre of gravity has shifted south and east over the
last 20 years as the market has evolved.
It is also interesting to note how little will move in the next 20 years, indicating more
balanced growth across the continent.
Since 1970, the share of Asia and the Paci c in the added global
GDP volume has been gradually increased. It grew by 21%
between 1970 and 1980, to 54% between 2010 and 2018.
Ten years ago, Asian low-cost airlines barely operated wide-body aircraft for the
medium and long-range market segments. Today, Asian-based low-cost carriers are
ying nearly 100 wide-body aircraft, with many more in the pipeline.
Meanwhile, wide-body aircraft represent the most cost-e ective way to continue
opening up new markets that were not accessible or productive in the past. In
China, international growth continues to accelerate at over 20% per year.
Small wide-body aircraft such as the Boeing 787 have been vital in opening new
routes in smaller secondary markets; while larger wide-body aircraft have been
instrumental in opening up routes from major centres to North America.
This market dynamism will lead to the need for new aircraft for the area; in
particular, it is estimated that more than 16,000 new aircraft will be delivered by
2038. Of these, around 4,000 will be used to replace older units, while more than
12,000 aircraft will be new additions to the Asia-Paci c eet.
We have often said that the middle class is a crucial socio-economic group in terms
of air travel. Of all the regions, the middle class’ transition is the most impressive in
terms of speed of change, proportion and number of people.
In 2008, 32% (1.2 billion people in Asia and the Paci c) could be considered middle
class. By 2018, this gure had grown to almost 50% (2 billion people) and by the
end of 2038 or is projected to grow further to 72% (3.3 billion people).
As this picture of growing wealth has developed, so has the region’s importance for
air transport. Twenty years ago, Asia and the Paci c’s share of capacity was 23% and
had since grown on average by 6.5% per year, signi cantly faster than Europe and
North America.
For example, ASEAN open skies policy has allowed the market to expand further
than national borders and has supported airlines in implementing new business
models. Visa policy relaxation has also led to a considerable increase in travel both
within and outside of Asia.
The Asian aviation industry is being reworded thanks to several business models,
as well as di erent strategies that airlines are implementing.
Now that this model has been successful in Asia, especially in South and Southeast
Asia, companies are beginning to extend the model to long-haul routes.
Although these routes are currently limited to this area, this new model is
generating high expectations among airline operators and investors, who are
aware that it is beginning to be pro table and strategically viable to compete
e ectively with the traditional airlines.
The increase in airspace liberation in countries like China, which is expected in the
next decades, will undoubtedly help increase connections to new destinations and
the number of ights between di erent cities in the country and international
ights.
Currently, only 20% of this space is used for this purpose, as military aviation
controls the rest. Airlines such as China Eastern, Air China and China Southern have
long demanded an increase in airspace that is expected to continue to open up in
the coming years. An opportunity to be able to work in this economic giant.
At present, pilot training has become international, that is, the crisis that the sector
has experienced in Spain has caused many pilots to seek new professional
adventures in other countries.
Al Grupo One Air, we know that this fact opens a range of essential possibilities to
become reference pilots among the signi cant companies in the aviation sector.
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