Home' Asian Aviation : AAV June 2010 Contents 22 AsianAviation | JUNE 2010
Developing countries, led by India
and China, are the key future
commercial air transport markets,
according to John Leahy, Airbus's
chief operating o cer customers.
Analysing passenger traffic
trends by region, he says 54 emerging economies
-- essentially everywhere outside North America,
Western Europe, and Japan -- are showing double-
digit percentage growth rates. Leahy quotes April
2010 data from aviation intelligence provider OAG,
showing a 13.5 percent increase in tra c in these
regions compared with the same period a year earlier.
Year-on-year growth in emerging markets has
remained positive since before 2007, and was at
almost 16 percent in February 2010. is performance
compares favourably with the USA and Western
Europe, where has been declining since the global
recession took hold in the third quarter of 2008, Leahy
says. In April, US passenger tra c fell 3.1 percent from
a year earlier, while Western Europe was 8.4 percent
In contrast, some emerging economies have seen
growth of more than 10 percent, with China reporting
as much as 20 percent.
"Air transport is still emerging in 85 percent of the
world," according to Leahy. All this should be good
news for commercial-aircra manufacturers, especially
since global passenger tra c continues to track broad
OAG data, alongside information from several
airline trade associations, shows almost identical tracks
for trends in global gross domestic product (GDP) and
passenger tra c: from about --1 percent in September
2008 to a low of almost --4 percent March 2009. Since
then, airline performance has very slightly outstripped
global GDP, with both tracks resuming growth a er
about 12 months. By March 2010, passenger tra c
brie y reached 4 percent, about one percentage point
above economic trends.
However, it should be noted that, historically,
international scheduled-ser vice passenger-traffic
trends -- whether positive or negative -- have tended
to exceed those of global GDP by about half. For
example, throughout 2007, traffic growth ran
generally at about 6 percent, compared with the 4
percent seen in economic trends.
us, although Leahy does not highlight this, the
coinciding tracks since the beginning of the most
recent world economic crisis actually represent a
change from previous trends. It is still too early to see
if the traditional di erential will return as the world's
economies recover. What appeared to be the beginning
of a return to historic trends in early 2010 may have
been compromised by the short-term impact of the
volcanic ash cloud over north-west Europe, particularly
More encouraging have been trends in trade and
cargo, with Leahy saying freight tra c is "recovering
Having run about 5-10 percent below equivalent
world-trade trends from early 2007 to mid-2009,
cargo tra c has subsequently led economic recovery.
In March 2010, it was up 25 percent from a year earlier,
more than 15 percentage points above returning trade
growth, according to Leahy.
He predicts that over the coming 20 years India and
China will see annual economic growth of 8.7 percent
and 7.2 percent, respectively (see table). e rest of
Asia -- excluding India, China and the developed
economy in Japan -- will grow at 5.9 percent per year.
Looking forward, Leahy sees only growth: his
worst-case scenario for this year is that global tra c
could remain unchanged, ahead of a 6-7 percent
increase in 2011. More optimistically, tra c could
grow this year could by almost 5 percent. Indeed, the
Airbus global market forecast foresees a doubling
of air tra c over the next 15 years and an average
worldwide annual growth to 2030 of some 4.7
Ending the cycle?
What could this mean for aerospace? Will the cycle of
relative feast and famine continue?
Leahy says some forecasters had predicted a 30
percent drop in deliveries last year, equivalent to the
downturn during the early 2000s' recession (and
following a 50% decline in the mid-1990s), but they had
been wrong. Now, they say the downturn will happen in
2010 and 2011. " ey're still not right," Leahy insists.
Rather, he argues that in the past ve years the
European manufacturer and its main competitor,
Boeing, have "disengaged" the relationship between
order backlog and delivery rates that previously has
led to cyclic volatility.
"Airbus deliveries stayed at during 1999-2004",
as the company sought a stable backlog , even while
becoming "the leading manufacturer " by market share.
In the same period, Boeing deliveries fell dramatically,
varying much more than the company's backlog did.
Comparing deliveries with order backlog, Leahy says
Airbus has maintained an even ratio of about 5:1 over
the longer 1990-2004 period (meaning that, at any time,
the company had about ve years' production work in
hand). is compares with Boeing's average 3.3 ratio for
the same period -- although the relationship between the
US manufacturer's deliveries and backlog volume was
less stable, and so it "caught a cold" as its production rates
remained more volatile, according to Leahy.
Now, since 2004, both manufacturers have
Airbus targets emerging markets
Airbus is focusing its business efforts increasingly on emerging markets, whose economies are predicted to
grow more strongly in coming years. Ian Goold outlines the manufacturer's view of the future, including its
plans for an increasingly global footprint.
Airbus says China and India will be the leading air transport markets in the future.
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