2012-20312012-20312012-2031Navigating the futureTITLEGLOBAL MARKET FORECASTnAVIgATIngTHE fUTURE
1010Demand for air travel• Economy• Urbanisation• Tourism• Network evolution• High speed rail58Demand for passengeraircraf...
Global Market Forecast 7Welcome to this year’s Airbus Global MarketForecast book. We hope that you will findit a useful re...
EXECUTIVESUMMARY
Global Market Forecast 9The last year has been characterised bysocial unrest in various parts of the world, andcontinued e...
New passenger aircraft deliveries per regionPassenger aircraft (≥ 100 seats)2012-2021 413 4,505 492 2,815 1,004 1,007 2,58...
Global Market Forecast 11Retired9,880FreighterFleetPassengerFleetNew deliveries28,20027,3508,5608501,320Passengerto freigh...
DemandforairtravelDEMAnD foRAIR TRAVEL
Global Market Forecast 13
DemandforairtravelEConoMYEConoMIC gRoWTH,THE CoRnERSTonEof AIR TRAffIC gRoWTHOne of the key variables in forecasting air t...
Global Market Forecast 15Cycles are not what they used to beAt the time of writing, inflationary pressure iseasing thanks ...
DemandforairtravelAccording to third party forecasts used byAirbus in its projections, the world economyis expected to gro...
Global Market Forecast 17According to a recent study from the OECDDevelopment Centre, the World “Global middleclass” (hous...
DemandforairtravelWorld trade suffered a sharp decline in 2009,but bounced back robustly in 2010 and 2011,and is estimated...
Global Market Forecast 19Airlines have achieved tremendous fuel efficiencyimprovements over the last decade as illustrated...
DemandforairtravelThe world is more and more urbanisedWorld urbanisation rate (share of World population, left axis) and W...
Global Market Forecast 21China, India and the US will have the largest urban population in 2030Many countries urbanised at...
DemandforairtravelThe urbanisation rate and the level of economicdevelopment in a country are correlated. Peoplelooking fo...
Global Market Forecast 230.000.010.101.0010.000% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Trips per capita (logarithmic sca...
DemandforairtravelTourism plays an important role for many countriesDirect contribution of tourism to the economy (share o...
Global Market Forecast 25The WTTC forecasts that the travel and tourismindustry’s total contribution to GDP andemployment ...
Demandforairtravel2020 share of domestic and visitor spendingsDomesticVisitorShare of domestic and visitor spendings, by r...
Global Market Forecast 27More people studying abroadInternational students in the US (Thousands)1950 1955 1960 1965 1970 1...
DemandforairtravelGlobal migration grew faster than global populationRegions sending migrants Regions receiving migrants10...
Global Market Forecast 29While traffic on economy class representsmore than 95 % of all passengers worldwideaccording to S...
DemandforairtravelBusiness expenditures will grow at 4.0% per year20112020Business expenditures evolution, by region (Cons...
Global Market Forecast 31TRAInS & PLAnESJust as civil aviation has evolved over the lastcentury from soaring tests on self...
DemandforairtravelTransfer of traffic from air to rail0%50%100%0 2 4 6 8Transfer of traffic sharefrom air to railTrain tra...
Global Market Forecast 33In Europe, where modal competition betweenaircraft and train has existed for several decadesand w...
DemandforairtravelnETWoRKDEVELoPMEnTTraffic on the airline network has grown rapidlyover the last decades: measured in Rev...
Global Market Forecast 35This additional traffic has been accommodatedthrough both network and capacity expansion:the netw...
DemandforairtravelThe future evolution of the airline network is animportant input for the Airbus Global MarketForecast. T...
Global Market Forecast 3742 cities in the world handle more than 10,000 long-haul passengers per day.By 2011, some 300 cit...
DemandforairtravelLong-haul passenger traffic and frequency split on routes between the 422011 Aviation Mega-cities16%18%1...
Global Market Forecast 39With the expected growth in air traffic over thenext 20 years, not only will the overall quantity...
DemandforairtravelAlong with the increase in Aviation Mega-cities over the coming decades, the numberof big trunk routes w...
Global Market Forecast 41The air transport’s centre of gravity is moving eastwards:For interest sake let’s imagine the wor...
TRAffICfoRECAST
PASSEngER TRAffICOne of the fundamental inputs of the GMF,used to derive the demand for aircraft, is thetraffic forecast. ...
forecastGlobal Market Forecast 45World map of the GMF regionsNeighbour countries of the same colour belong to the same reg...
TrafficforecastAir travel has proved to be resilient to external shocks0.00.51.01.52,02.53.03.54.04.55.0+53%** since 200019...
Global Market Forecast 47From a forecast perspective, passenger airtraffic is driven by two main factors:Global economic ac...
TrafficforecastDespite the “Arab Spring” events in the Middle-East and North Africa, the tsunami in Japan andrising fuel co...
Global Market Forecast 49Short-term economic outlook is less optimistic than one year beforeEmerging regions will drive th...
TrafficforecastFuel currently represents around 30% of anairlines total operating costs and based on recenthistory and the ...
Global Market Forecast 51Emerging regions will drive long-term economic growthEmerging regions will contribute 56% to the ...
TrafficforecastAs already mentioned, the airlines have achievedremarkable efficiency improvements, their unitoperating cost...
Global Market Forecast 53The four largest flows will represent 34% of the world traffic in 2031With a 7.0 % average growth...
Trafficforecast2011 - 2031CAGR %11.99.98.98.38.38.28.38.38.28.08.07.97.97.97.97.57.37.27.77.9Fastest growing 20 flows in 20...
Global Market Forecast 55The fastest growing flows will mainly concern emerging regionsTraffic with emerging markets repre...
TrafficforecastAggregating the regions at a broader level,Europe and North America will remain in 2031the largest regions f...
Global Market Forecast 57At the airline domicile level, the world 2012-20314.7% average RPK growth will be driven by Middl...
TrafficforecastEuropean and North American airlines are the largest in 2011Emerging countries airlines will be the fastest ...
Global Market Forecast 59Our airlines segmentation consists of 6 groupsof airlines: Global Network, Major Network,Small Ne...
DEMAnDfoR PASSEngERAIRCRAfT
Demandforpassengeraircraftsingle-aisleLow Cost to long-haulDEMAnD BYAIRCRAfT SEgMEnTToday, there are 12,161 Single-Aisle a...
Global Market Forecast 63Single-Aisle aircraft perform a range of operationsfrom direct service to connecting aviation meg...
DemandforpassengeraircraftLike the smaller Single-Aisle aircraft, the Twin-Aisle aircraft also provide a varied operationa...
Global Market Forecast 65In terms of the size of aircraft, the Twin-Aislesegment incorporates aircraft between 250 and400 ...
DemandforpassengeraircraftVery Large aircrafta common sight todayat the world’s major airportsVery Large Aircraft, VLAs, a...
Global Market Forecast 67The A380 network as of July 2012Singapore AirlinesEmiratesQantasAir FranceLufthansaKorean AirChin...
DemandforpassengeraircraftTop 10 A380 airports ranked by weekly departuresA380 weekly departures: Week 24, June 2012 - Sou...
Global Market Forecast 69A380s at all of the top 10 international airports…… and at 16 of the top 20. The future has arriv...
DEMAnDBY REgIon
DemandbyRegionAsia-Pacific still sports the strongest regional economic performance, powered by ChinaAsia-Pacific continue...
Global Market Forecast 73In Asia-Pacific, the second fastest growing regionafter CIS, the strong economic performanceof th...
DemandbyRegionNevertheless, because standards of living in Asia-Pacific, as a whole, are still well behind those ofdevelop...
Global Market Forecast 75Benefitting from the strong regional economicgrowth and the resulting improvement instandards of ...
DemandbyRegionLCC traffic in Asia-Pacific is still highly concentratedon domestic relative to intra-regional traffic. Theh...
Global Market Forecast 77Nevertheless, and despite some past failures,efforts to apply the low-cost model to longer-haul t...
DemandbyRegionOver the next twenty years, this very dynamicregion, with its large and diverse populationcentres, will requ...
Global Market Forecast 79Economic and social impacts of aviationin Asia-PacificBy facilitating and optimising travel across...
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Airbus global market_forecast2012-2031_full_book

  1. 1. 2012-20312012-20312012-2031Navigating the futureTITLEGLOBAL MARKET FORECASTnAVIgATIngTHE fUTURE
  2. 2. 1010Demand for air travel• Economy• Urbanisation• Tourism• Network evolution• High speed rail58Demand for passengeraircraft• Aircraft Segments6868Demand by Region• Asia-Pacific• Europe• North America• Middle East• Latin America• CIS• Africa136136Summary and methodology• Summary of results• Passenger methodology• Freight methodology6Executive summary4IntroductionGlobal Market Forecast 540Traffic forecast122Demand for freight traffic
  3. 3. Global Market Forecast 7Welcome to this year’s Airbus Global MarketForecast book. We hope that you will findit a useful reference. The last year has beencharacterised by social unrest in various parts ofthe world, and continued economic uncertaintyin others. We have witnessed similar difficultevents over the last 10 years or so. However, it isremarkable, that even allowing for some of the mostdifficult periods aviation has faced in its relativelyshort existence, including the banking crisis of 2008/ 2009 and now sovereign debt issues in Europe,aviation has still managed to grow more than 50%.This resilience is a clear sign of the value peopleplace on flying, and something that throughthe data methods we employ, we are able toreflect in our 2012 forecast. An Airbus surveyconducted recently, showed that of the10,000people questioned worldwide, the majoritybelieved that we would fly more in the future.In China and India this number totaled more than80% of respondents.This is exactly the message that Airbus forecastersget from modeling the future, using the best dataand one of the most comprehensive methodologiesemployed in the industry today. It is useful, fromtime to time, to reinforce our findings with anotherform of empirical research.As well as more flyers, we forecast a continuingexpansion of the world’s aviation network, withgreater aviation connectivity and more capacitybetween major population centres helping todrive benefits in terms of jobs, prosperity, andeconomic growth.However, like you, we are determined that thisprogress will not come at the expense of ourenvironment. We will continue to strive to matchand better the achievements of aviation’s pioneers,moving from canvas to carbon, cables to fly-by-wire, one seat to more than 550 seats, massiveimprovements in efficiency in terms of operationsand fuel consumption in order to meet this challenge.www.airbus.com/gmfwww.airbus.com/gmf
  4. 4. EXECUTIVESUMMARY
  5. 5. Global Market Forecast 9The last year has been characterised bysocial unrest in various parts of the world, andcontinued economic uncertainty in others.We have witnessed similar difficult events overthe last 10 years or so. However, it is remarkable,that even allowing for some of the most difficultperiods aviation has faced in its relatively shortexistence, including the banking crisis of 2008 /2009 and now sovereign debt issues in Europe,aviation has still managed to grow more than50%. This resilience is a clear sign of the valuepeople place on flying, and something thatthrough the data and methods we employ, weare able to reflect in our 2012 forecast.Higher economic growth rates in emergingeconomies are expected to drive a large portionof the growth in air traffic. In fact, 56% of theeconomic growth between 2011 and 2031 willcome from emerging regions. This economicgrowth, together with increasing urbanisation,will greatly increase the world population’spropensity to travel by air. By 2031, traffic indomestic PRC will be equal to traffic in domesticUS making them the two largest flows for airtraffic in 2031. These two regions together willaccount for more than 20% of worldwide airtraffic by the end of the forecast.BackgroundNumber of new aircraftPassenger aircraft >100 seats; freight aircraft > to 10 tonnes05,00010,00015,00020,00025,000Single-Aisle Smal Twin-Aisle Intermediate Twin-Aisle Very Large Aircraft19,5184,8182,156 1,70669%40%17%27%8%17%6%16%% Unit% ValueSingle-Aisle 69% of units, Twin-Aisle 44% of valueHighlights
  6. 6. New passenger aircraft deliveries per regionPassenger aircraft (≥ 100 seats)2012-2021 413 4,505 492 2,815 1,004 1,007 2,580 12,8162022-2031 544 5,113 737 2,886 1,081 899 3,271 14,5312012-2031 957 9,618 1,229 5,701 2,085 1,906 5,851 27,347% of 20-year totalnew deliveries 4% 35% 4% 21% 8% 7% 21% 100%AFRICAASIA-PACIFICCIS EUROPELATINAMERICAMIDDLEEASTNORTHAMERICAWORLD20-year new aircraft deliveries per regionTop 10 countries GMF 2012Top 10 countries 20-year new passenger aircraft deliveriesand business volume (2012 – 2031)61% of total new deliveries1 US 5,2892 PRC 4,2723 India 1,2324 Germany 9865 UK 9796 Russia 9587 UAE 8828 Brazil 7819 Ireland 70210 Australia 652New passenger aircraft deliveries60% of total business volume1 PRC 634.02 US 544.03 UAE 223.94 India 173.75 Germany 138.16 UK 129.87 Russia 113.78 Australia 102.19 Brazil 100.110 Japan 98.2Business volume (bn. US$)the trafficAirbus analysis has shown for example that trafficgrowth between advanced and emerging airtransport markets will grow at an average annualrate of 5.1%, not far off the 6.6% annual growthrate forecast between emerging markets. On aworldwide basis, traffic growth is expected toaverage 4.7% per year. Even though emergingmarkets are the key and leading driver of futureair transportation, the importance of advancedaviation markets cannot be underestimated.In fact by 2031, over 60% of all traffic will involvethe advanced aviation markets, primarily NorthAmerica and Europe.Like the GMF 2011, traffic carried by Middle Eastairlines is expected to grow at the highest rate of7.3% per annum, accounting for 11% of all trafficcarried in 2031. But the three largest regions interms of airline domicile will continue to be Asia-Pacific, Europe and North America, accounting for32%, 24% and 20% of traffic respectively in 2031.Freight traffic is expected to grow slightly higherthan passenger traffic at 4.9% per year. Likepassenger traffic, much of the growth will comefrom traffic connected to emerging markets withtraffic between emerging markets commandingthe highest growth rates at 5.7% per year.
  7. 7. Global Market Forecast 11Retired9,880FreighterFleetPassengerFleetNew deliveries28,20027,3508,5608501,320Passengerto freight conversionRecycled &stay in service5,2001,790Fleet and DeliveriesBy 2031, the fleet of passenger and freighteraircraft, ≥100 seats and ≥10 tonnes, will be35,490 aircraft more than doubling from the17,170 aircraft in service today. Single-aislepassenger aircraft represent the largest segmentof the new deliveries with 19,500 new deliveriesover the next 20 years. The demand for Twin-Aisle aircraft will require 6,500 new passengeraircraft and nearly 500 freight aircraft. Over thenext 20 years, technological advancements andfuture new products will help deliver capacity,cost and environmental efficiency to not onlymake flying better and more accessible but toalso lessen the impact on the environment.Due to the growth in traffic demand in Asia-Pacific, it is no surprise that 46% of the demandfor very large passenger aircraft will be withinthis region. It is equally important to note that42% of all new aircraft deliveries over 100 seatswill be within North America and Europe. Muchof this demand, especially in North America, isfor new, more fuel efficient aircraft to replaceolder less eco-efficient types.By 2031, the world’s airlines will take delivery ofmore than 28,200 new passenger and freighteraircraft worth US$3.96 trillion at current listprices.Retired9,8808,560 1,320Recycled &stay in service
  8. 8. DemandforairtravelDEMAnD foRAIR TRAVEL
  9. 9. Global Market Forecast 13
  10. 10. DemandforairtravelEConoMYEConoMIC gRoWTH,THE CoRnERSTonEof AIR TRAffIC gRoWTHOne of the key variables in forecasting air trafficgrowth is the growth in GDP. It is thereforeno surprise that it is an area aircraft demandforecasters keep a very close eye on, particularlythroughout 2012.The world economy is showing its resiliencesince bottoming after the 2008 financialcrisis, the worst crisis since World War II.Since this time, some significant progress hasbeen made with improved world governance, inparticular through the emergence of enlargedinternational forums (G20, WEF).As a result, the time spent in recession at worldlevel has decreased over time, from more than40% from 1919 up to 1939, down to less than10 % from 1986 up to 2011.
  11. 11. Global Market Forecast 15Cycles are not what they used to beAt the time of writing, inflationary pressure iseasing thanks to more reactive and coordinatedmonetary policies. With decreasing inflationarytensions and, on the contrary, a growing need tosustain the economy, Central Banks monetarypolicies are easing (remaining acommodating inwestern economies with record low policy rates).Having been faster to implement structural reformsand debt deleveraging measures, emergingcountries have rebounded faster and strongerto pursue their development growth, increasinglyadopting some Western consumption patternsincluding air travel.On their way to converge and eventually catch upwith more mature advanced economies, emergingeconomies are clearly driving world growth, asshown in the two-speed growth pattern startedsince the beginning of the century and reinforcedduring 2008 financial crisis.% of time spent in recession at world levelSource: IHS Global Insight, Airbus0%10%20%30%40%50%1919-1939 1940-1962 1963-1985 1986-2011In contrast to mature economies, emerging economies have kept their debtat relatively low levelsSource: IHS Global Insight, AirbusSovereign debt level as a % of GDPEmergingeconomiesMatureeconomies0%40%80%100%140%120%60%20%2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011ItalyUSFranceGermanySouth AfricaIndiaMexicoChina% of GDP
  12. 12. DemandforairtravelAccording to third party forecasts used byAirbus in its projections, the world economyis expected to grow at a yearly average rate of3.1% over the next 20 years, which, as in thepast, will not be linear. Fast growing emergingcountries (5.3 % yearly average growth rateover the next 20 years) will compensate for thelower growth of the more mature, advancedeconomies, (2.1 % yearly average growth rateover the next 20 years).A two-speed world-4%-2%0%2%4%6%8%10%Emerging economies** 54 emerging economiesMature economies1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016History ForecastReal GDP growth (%)Source: IHS Global Insight, Airbus1 - US2 - Japan3 - Germany4 - France5 - UK6 - Italy7 - Russia8 - Spain9 - Canada10 - Brazil11- Mexico12 - China1 - US2 - Japan3 - China4 - Germany5 - UK6 - France7 - Italy8 - India9 - Canada10 - Spain11 - Brazil12 - South Korea1 - US2 - China3 - India4 - Japan5 - Germany6 - UK7 - France8 - Brazil9 - Italy10 - Canada11 - Mexico12 - South KoreaThe world of 2031 will be very different from today1991 2011 2031As a result, the economic world of 2031 will bevery different from today. For instance, China,currently the 3rdlargest world economy, will soonsurpass Japan. India, currently the 8th largestworld economy is expected to become the 3rdlargest world economy by 2025.Beyond the BRICS, emerging countries arepoised to include in the next 20 years fastgrowing economies such as Nigeria, Mexico,Colombia, Vietnam or Indonesia, which have acombined population of nearly 2 billion people. Asa consequence, the world GDP economic centreof gravity currently located somewhere in Tunisiais expected to gradually move to the East as wellas to the South.Country ranking by GDPSource: IHS Global Insight, Airbus
  13. 13. Global Market Forecast 17According to a recent study from the OECDDevelopment Centre, the World “Global middleclass” (households with daily expendituresbetween US $ 10 and US $ 100 per personat PPP) is expected to reach 5 billion peopleby 2031, up from 2.1 billion people in 2011.Emerging economies, in particular in Asia-Pacific,will account for most of the growth of this “Globalmiddle class”, potentially fuelling the need forincreased mobility. By 2031, it is estimated that60% of the world population could be part of this“Global middle class” segmentation.As world population grows, so does the global middle classNote: Green indicates earlier years, red indicates later years. Orange line highlight the latitudes of Washington and Beijing (for reference)Source: IHS Global Insight, AirbusWorld GDP economic centre of gravity196520102030 2050Millions of people* Households with daily expenditures between $10 and $100 per person (at PPP)Source: Kharas and Gertz, Airbus20117,00030%20217,70044%20318,40060%World population% of World population01,0002,0003,0004,0005,0002,101419746265671OtherAsia-PacificNorth AmericaEurope / CIS3,4135601,8892637015,0487393,377254x 2x 5678
  14. 14. DemandforairtravelWorld trade suffered a sharp decline in 2009,but bounced back robustly in 2010 and 2011,and is estimated to have ended 2011 well aboveits 2008 peak.In the next 20 years, the trade landscape willundergo fundamental change with the emergingeconomies making up a significant share of theglobal output.As a new proof of increasing globalisation, worldtrade is expected to increase much faster thanthe overall world economy (+5.3% yearly averagegrowth to compare with +3.2%).In addition, with growing volumes of consumerfinal goods exchanged at world level, it is expectedthat raw materials trading will represent a greatershare of world trade. In particular, oil will continueto represent a significant share of commoditiestraded because of increasing volumes as well asexpected growing prices in the mid-to-long term.Globalisation expected to generate growing world tradeHigh oil prices here for the long-term010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000History ForecastUS$ (billion)Source: IHS Global Insight, Airbus2001200220032004200520062007200820092010201120122013201420152016201720192021202320252018202020222024202620272028202920302031* Exports + ImportsWorld real GDPCAGR 2012-2031: +3.2%World real Trade*CAGR 2012-2031: +5.3%020406080100120140History ForecastBrent oil price (current US$ per bbl)Source: IHS CERA, Airbus; Average price in the year displayed1980 1990 2000 2010 20302020
  15. 15. Global Market Forecast 19Airlines have achieved tremendous fuel efficiencyimprovements over the last decade as illustratedby the 53 % growth in passenger air travel since2000 with a relatively flat growth in fuel demand.This has been achieved thanks to improvedoperations of more fuel efficient aircraft, withnew generation aircraft progressively replacingold and mid-generation aircraft. This contrastswith short-term fuel hedging policies whosebenefits could be erased in the current volatileprice environment, the best long-term hedgingpolicy is to operate new fuel efficient aircraft.Since 2000, air travel has grown 53%, with relatively flat growth in fuel demandEvolution of RPKs and jet fuel demand(Base 100 in 2000) Traffic+ 53%Fuel+ 3%Traffic growthJet fuel demand2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20118090100110120130140150160Source: IHS CERA, ICAO, Airbus
  16. 16. DemandforairtravelThe world is more and more urbanisedWorld urbanisation rate (share of World population, left axis) and World population (billions, right axis)1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 20303214567890%10%20%30%40%50%60%70%Source : UN Department of Economic and Social Affairs, Airbus% UrbanWorld populationURBAnISATIonOver the past 60 years, the world has becomemore and more urbanised. According to theDepartment of Economic and Social Affairs ofthe United Nations, in 1950, less than one thirdof the world’s population lived in urban areas.In 2010, this share has increased to more thanhalf of the world population. While the worldtotal population will increase from 7 to 8.3 billionpeople in 2030, the urbanisation growth rate isexpected to be 2% per year, representing 60% ofthe world population or 5 billion people in 2030.the world is becoming increasingly urbanised
  17. 17. Global Market Forecast 21China, India and the US will have the largest urban population in 2030Many countries urbanised at more than 80 % in 20300 100 200 300 400 500 600 700 0 200 400 600 800 1,000 1,200Source: UN Department of Economic and Social Affairs, AirbusChinaIndiaBrazilNigeriaJapanPakistanRussian FederationMexicoUSIndonesiaChinaIndiaUSBrazilIndonesiaJapanPakistanNigeriaMexicoRussian FederationUrban population (in millions) by country in 2010 (left graph) and 2030 (right graph) – Top ten countries100%95%90%85%80%75%95%90%85%80%75%70%JapanVenezuelaArgentinaBrazilFranceUSSouth KoreaSaudi ArabiaAlgeriaCanadaVenezuelaArgentinaJapanFranceBrazilSouth KoreaUSSaudi ArabiaCanadaUnited KingdomSource: UN Department of Economic and Social Affairs, Airbus* Countries with a population more than 30M peopleUrbanisation (share of total population) by country* in 2010 (left graph) and 2030 (right graph) – Top ten countriesToday, the countries with the largest urbanpopulations are expected to retain their leadin 2030. These countries include China, India,US and Brazil.Asia-Pacific countries will contribute 53 % ofthe growth to the world’s urbanised population,followed by Africa (23 %), Latin America (8 %)and Middle East (8 %).
  18. 18. DemandforairtravelThe urbanisation rate and the level of economicdevelopment in a country are correlated. Peoplelooking for employment opportunities and/orbetter living conditions will move to big urbaneconomic centres. On the other hand, large urbanareas create economies of scale/agglomeration,lower transportation costs, favour technologicaldevelopment, a greater division of labour,enabling better dissemination of information,skills, goods and services.Attracting large multinational corporationsand favouring international trade, cities havebecome a major driver of globalisation.Theworldwillhavemoreandmorelargeurbancentres.In 2025, the 90 largest cities will represent 1 billionpeople, one eighth of the world’s population.The largest 500 cities will represent 2 billionpeople, one quarter of the world’s population.The share of the world’s population in just the top100 cities will equal of more than 13% in 2025.Urbanisation drives wealthProductivity and urbanisation are correlatedPeople will be concentrated in the biggest cities01020304050607080901000% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%GDP per worker (thousands $US at PPP)vs. urbanisation (share of total population) in 2010Source: EIU, UN Department of Economic and Social Affairs, Airbus1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 20250%2%4%6%8%10%12%14%Share of World population in the top 100 populated citiesSource: UN Department of Economic and Social Affairs, Airbus
  19. 19. Global Market Forecast 230.000.010.101.0010.000% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Trips per capita (logarithmic scale) vs. urbanisation (share of total population)Source: Sabre, UN Department of Economic and Social Affairs, AirbusSource: UN Department of Economic and Social Affairs, Airbus0 5 10 15 20 25 30 35 40KarachiBeijingDhakaSão PauloNew YorkMexico CityMumbaiShanghaiDelhiTokyo20102025Top ten agglomerations in 2025 by population (millions)From 1985 to 2010 the number of urban agglomera-tions with more than 5 million inhabitants has grownfrom 27 to 61. By 2025, this number will reach 96urban agglomerations. Today, 62 % of these urbanagglomerations, with more than 5 million inhabitants,are in Asia-Pacific, with 56 % expected in 2025.The fastest growing region, in terms of both numberof agglomerations and populations in cities over 5million inhabitants is Africa; growing from just over30 million inhabitants in 3 cities with over 5 millionto more than 106 million in 12 agglomerations.The ranking of the top ten urban agglomerationsis expected to remain relatively stable from 2010 to2025. But Tokyo, the largest today and in 2030, isexpected to grow at a much slower rate than theother mega-cities.Among the most populated agglomerations, 7 out of 10 will be in Asia-PacificAs urbanisation leads to greater economicgrowth and per capita GDP, the demand forair travel increases. This is clearly shown bythe close correlation between percentage ofurbanisation and the number of trips per capitaof a given country.Not only does urbanisation drive economicgrowth and air travel, it also provides aframework for the development of aviationmega-cities, cities with more than 10,000 dailylong-haul passengers, to be built upon. Today,22 of the 42 mega-cities have a population ofmore than 5 million people and 38 of the 42 haveover 1 million inhabitants.Urbanisation is both a building block for economicgrowth and prosperity. Over the next 20 years,the inhabitants of these urban environments willcontinue to drive the global demand for aviation.Propensity to travel and urbanisation are correlated
  20. 20. DemandforairtravelTourism plays an important role for many countriesDirect contribution of tourism to the economy (share of GDP) – Top ten countries in 2011Source: World Travel and Tourism Council, Airbus0 5 10 15 20 25 30 35 40 45 50Cape VerdeAntigua and BarbudaBahamasVanuatuUK Virgin IslandsArubaAnguillaSeychellesMaldivesMacauToURISM AnDIMMIgRATIonTourism plays an extremely important role inmany countries economies, to the extent thatsome countries choose to base the majority oftheir economy on tourism. For example, thedirect contribution to the economy of the traveland tourism industry in Maldives represented30 % of their GDP in 2011, according to theWorld Travel & Tourism Council (WTTC). Thesehigh percentages can also be seen in a numberof island states around the world.Among all the direct, indirect and induced benefitsthat air transport provides to the world economy,its impact on the tourism industry cannot beunderstated. According to the world TourismOrganization (WTO), 51% of all international tourismarrivals were made possible due to air transportin 2010. Air transport will continue to benefit frominternational tourism as the WTO forecasts thatair transport will represent 52% of all internationaltourism arrivals in 2020.a bright future for the traveland tourism industryThere are a number of reasons why peoplechoose to travel. The WTO (World TourismOrganisation) defines the types of travel as:Leisure, recreation and holidays (54% of allarrivals in 2010).Visiting friends and relatives (VFR),health, religion and other (30% of all arrivals in 2010).And lastly, business and professionaltravel (16% of all arrivals in 2010).Within each of these categories, there area number of drivers which affect people’swillingness to travel and the motivators behindwhich destinations they choose.
  21. 21. Global Market Forecast 25The WTTC forecasts that the travel and tourismindustry’s total contribution to GDP andemployment will remain high in 2020, in everyregion of the world, and that this contributionwill increase in Asia-Pacific and Latin America.According to the WTTC, visitor exports willcontinue to represent a large share of all tourismexpenditures, with almost 50 % for Africa,Middle East and Europe.The large share of domestic spending of Asia-Pacific (China, India and many other countries)and North America is characterised by a strongdomestic demand for tourism activities.Travel and tourism will account for a significant share of the global economy by 2020Source: World Travel and Tourism Council, Airbus0%2%4%6%8%10%12%Asia-Pacific Europe North America Latin America Middle East Africa CISTotal contribution of travel and tourism to the economy, by region (share of GDP)20112020
  22. 22. Demandforairtravel2020 share of domestic and visitor spendingsDomesticVisitorShare of domestic and visitor spendings, by region, in 2020Source: World Travel and Tourism Council, Airbus0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%AfricaAsia-PacificCISEuropeLatin AmericaMiddle EastNorth AmericaEurope will be the largest region in terms of visitor exports19881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022CIS EuropeAfrica Latin America Asia-PacificMiddle East North AmericaVisitor exports evolution, by region (constant 2011 billion $US)Source: World Travel and Tourism Council, Airbus02004006008001,0001,2001,4001,6001,800More and more people emigrate so as tobenefit from studies in a foreign university andemployment opportunities. According to theInstitute of International Education (IIE), morethan seven hundred thousand foreign studentswere in the US in 2010.Not only do these students often needtransportation to get to the country of theirnew university, but they will also travel once theystart their studies, occasionally by air, with theirfamilies also likely to visit them.More international education
  23. 23. Global Market Forecast 27More people studying abroadInternational students in the US (Thousands)1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100100200300400500600700800Source: Institute of International Education, AirbusOn top of expatriates that only live in a foreigncountry for a short period of time, there are alsoincreasing rates of immigration, partially causedby increased globalisation. One of the waysthat immigration feeds economic developmentis through remittances, where immigrantssend money back to family members in theirhome countries. Some countries are heavilydependent on remittances, which can accountfor more than 20 % of their GDP.Emigration and immigrationAccording to the world Bank, more than 215 millionpeople (3% of the world population) live outside oftheir country of birth. In 2010, the US and Russiawere the two largest immigrant destinations.This is a key driver of aviation growth, andone that is often resilient to the early stagesof downturns.Many countries are dependent on remittances0% 5% 10% 15% 20% 25% 30% 35%El SalvadorKosovoLebanonTongaNepalKyrgyzstanSamoaMoldovaLesothoTajikistanSource: World Bank, AirbusRemittances sent (share of GDP) – Top ten countries
  24. 24. DemandforairtravelGlobal migration grew faster than global populationRegions sending migrants Regions receiving migrants100%110%120%130%140%1990 2010+38%+31%World populationThe world counts today214 millionmigrantsInternational migrantsSource: United Nations Population division, International Migrant StockRelative evolution of world population and international migrants, 1990 set to 100% (intra- and inter-regional migration)LatinAmericaNorthAmericaAfricaAsiaEuropeLatinAmericaNorth AmericaAfricaAsiaEurope2010 world inter-regional migration corridors2010 by emigration region (million persons)2010 world inter-regional migration corridors2010 by immigration region (million persons)Region definition according to United Nations;Asia including Oceania, countries of the Middle East and countries of CIS, Europe including RussiaSource: United Nations Population division, International Migrant Stock
  25. 25. Global Market Forecast 29While traffic on economy class representsmore than 95 % of all passengers worldwideaccording to Sabre, premium class is necessaryin the profit management of most carriers:around 15-20 % of all revenue comes from thepremium class. The average yield ratio betweenthe premium and the economy class is aroundthree to one, according to Sabre.Business and professional tourism willmaintain its sharePremium class accounts for 3 % of worldwide passengers and 20% of revenues91%92%93%94%95%96%97%98%99%100%2002 2003 2004 2005 2006 2007 2008 2009 2010 2011World share of premium and economy passengersSource: Sabre, AirbusPremium EconomyEven though the recent economic crisis has hada negative impact on premium class bookings,we expect that business travel will still represent aformidable share of air passenger traffic. Accordingto the WTO, 17 % of international tourism will bebusiness and professional related in 2020.The contribution of business related expendituresin the travel and tourism industry will remainrelatively constant between today and 2020ending 1 % down from today’s level at 23 % ofall expenditures.
  26. 26. DemandforairtravelBusiness expenditures will grow at 4.0% per year20112020Business expenditures evolution, by region (Constant 2011 billion $US)Source: World Travel and Tourism Council, Airbus0 100 200 300 400 500 600CISAfricaMiddle EastLatin AmericaEuropeNorth AmericaAsia-PacificBusiness will account for a significant share of all tourism related spendings20%21%1988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018201920202021202222%23%24%25%26%27%Share of business spendings in direct travel and tourism contribution to the economySource: World Travel and Tourism Council, AirbusBusiness travel will continue to remain a verykey component of the global business world aspeople continue to prefer a face-to-face meetingover video teleconferencing. Today, as in tenyears time it is projected that business travel willremain high in Asia-Pacific, North America andEurope. However, the growth in expendituresin the Asia-Pacific region is expected tobe the most rapid over the next 10 years.In terms of countries the BRIC nations, Brazil,Russia, India and China, will be where the growthin business travel expenditures will be the highest.However, it is likely that airlines willl continueto search for ways to reduce the cost perpassenger with aircraft like the A380, and waysto extract more revenue from the back of theplane.
  27. 27. Global Market Forecast 31TRAInS & PLAnESJust as civil aviation has evolved over the lastcentury from soaring tests on self-made woodengliders to scheduled long-haul traffic doubledecker wide-body aircraft, another, means ofmass transportation, some 100 years older, hasalso evolved: rail transport. What started withwhat were effectively wheeled steam boilers atthe beginning of the 18thcentury, has in manyplaces of the world developed into a networkof modern high-speed trains running up to350 km / h.According to the International Union ofRailways (UIC) more than 90 % of today’s14,600-km-network of high-speed-rail islocated in Europe, Japan and China, anddespite projects all over the world, that in totalcould almost triple the network length by 2025,these three regions will still account for morethan 80% of high-speed rail kilometres.When it comes to modal competition betweentrain and aircraft, a very decisive factor in thetraveller’s choice is the time it takes to go fromone city to another. In terms of travel time anddistance between two cities, air and railwaytransport have some overlapping marketsegments.Up to a certain distance limit, trains cancompensate for the faster travel speed of aircraft.This is because access time from a city centre toa train station might be shorter than to an airport;and less onerous passenger and baggagehandling procedures at train stations alsocontribute to competitive travel times by train.However, there is a trend for new high speed railstations to be situated further from city centres,and as land cost increases and availabilitydecreases, this reduces this advantage over time.
  28. 28. DemandforairtravelTransfer of traffic from air to rail0%50%100%0 2 4 6 8Transfer of traffic sharefrom air to railTrain travel time [h]Assessing the potential modal shift from airto rail in markets where plane and train arecompeting against each other, depends onmultiple and often regionally specific factors.The graph above illustrates the market sharetransfer from air to rail as a function of traintravel time. The blue shaded, s-shaped curverepresents aggregated observations of marketswhere plane and train are competing againsteach other. Market share shift occurs especiallyon trips of up to three hours and reduces morerapidly for train travel times above four hours.Looking at the distribution of domestic andintra-regional traffic in Europe and Chinaover the great circle distance of Origin-and-Destination city pairs (O&D city pairs), the zoneon the left of the dashed line represents thearea of O&Ds separated by up to 1,000 km, adistance that corresponds to a three to four hourtrip at 300 km / h.30% to 40% of domestic PRC passengers on O&Ds of more than 1000 km0%10%20%30%40%50%60%70%80%90%100%02505007501,0001,2501,5001,7502,0002,2502,5002,7503,0003,2503,5003,7504,0004,2504,5004,7505,0005,2505,500Cumulated O&D passengers on route distanceDomestic PRCKilometersDomestic / Intra-EuropeSource: Sabre, Airbus
  29. 29. Global Market Forecast 33In Europe, where modal competition betweenaircraft and train has existed for several decadesand where some traffic has already moved fromair to rail, air travel still represents about 60 %of domestic and intra regional traffic on routeswith great-circle distances of less than 1,000km.High-speed rail in China is relatively recent, withthe first lines having been inaugurated over thelast few years. Therefore only a very limitedamount of air traffic has been transferred to railtransport. There is much greater competition inEurope than in China, as a much greater portionof China’s major city pairs are further apart.Air travel is well positioned to meet the need tolink the rapidly growing population centres inChina, particularly in the central regions, quicklyand efficiently.Given the current state of railway projects inChina, some 35 % of O&D city pairs that areserved today by air transport on non-stop andmulti-stop flights will face competition fromhigh-speed rail. Estimates on modal traffic shiftvary between 5 to 15 % over the next decade.Several factors influence the future air vs. railmarket share and the potential modal trafficshift.Travel time, as mentioned, is one of the majorfactors. In cases where high-speed trains runon a dedicated, high-speed only network, newtrain stations are necessary that might not alwaysbe built in close proximity to the city centre. Inthese cases access time to a station can beas long as those to an airport. Modal shift willalso be driven by competitive pricing, whereespecially low cost carriers might be able tomaintain and enlarge the air transport market.Apart from modal competition there are alsoopportunities for intermodal complementarities.Some major airports are connected to the high-speed rail networks through dedicated stations.In these cases trains can contribute to expendingsurrounding airport catchment areas and may helpto enlarge accessible markets for air transport.High speed rail and air transport might facecompetition on some market segments. But,due to the main performance characteristicsand differences between surface and airtransport large segment markets will remainwell separated. Air transport networks still havethe potential to respond to modal competition.Finally, the advantages of both transport modescan be combined to create synergies on bothsides, meaning that the future will very muchbe a story of air and rail, rather than air or rail.Global Market Forecast 33
  30. 30. DemandforairtravelnETWoRKDEVELoPMEnTTraffic on the airline network has grown rapidlyover the last decades: measured in RevenuePassenger Kilometres (RPK), the global air trafficof 2011 was twice the volume of 1995.RPK (trillion)x 2Global RPK traffic, 1995 - 20110123451995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: Airbus, ICAO
  31. 31. Global Market Forecast 35This additional traffic has been accommodatedthrough both network and capacity expansion:the network has been extended with the openingof new routes and the capacity on the existingnetwork has been increased with more flightfrequencies and larger aircraft.Contrasting network evolution with total trafficevolution shows that a large part of the additionaltraffic has been absorbed with capacity increaseon the already existing network. The total ofoffered seats on the short-haul market by 2011was 58 % above the level of 1995, whereas thenumber of additional non-stop city pairs overthe same period has increased by 25 %; thetotal capacity on long-haul city pairs almostdoubled with an increase in offered seats of93 %, whereas the number of new non-stopconnections increased by around 42 %.Traffic as of month of SeptemberLong-haul traffic: flight distance >2,000nm, excl. domestic traffic;Source: Airbus, OAGEvolution of offered seats and number of served city pairs, long haul and short haul market - 1995 base year at 100%+93%+58%+42%+25%100%125%150%175%200%1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Short haul served city pairsShort haul seats offeredLong haul served city pairsLong haul seats offered2011 vs. 1995Long haulseats offered2011 vs. 1995Long haul servedcity pairs2011 vs. 1995Short haul servedcity pairs2011 vs. 1995Short haulseats offered
  32. 32. DemandforairtravelThe future evolution of the airline network is animportant input for the Airbus Global MarketForecast. The shape of the air transport network,such as the number of routes that are served orthe competition of airlines on a single marketdoes in the end also influence the type of aircraftneeded to satisfy the demand for air travel.The global traffic forecast of 157 traffic flows inthe GMF 2012 is the baseline for further networkanalysis.Adding more country and city-pair relateddetails helps to refine the traffic forecast inorder to reflect country or city pair specificcharacteristics. This enlarges the scope of ourstudy from 157 global traffic flows down tomore than 10,000 country pairs and more than200,000 origin-destination city pairs.The air transport network today comprises morethan 18,000 non-stop connections betweencities with more than 1,500 long-haul and morethan 16,500 short-haul city pairs. Increasedaccess to air travel all around the world willmake further non-stop connections viable andtherefore the network will continue to grow.This evolution is taken into account in the GMF2012 with the introduction of several thousandnew routes into the forecast.Focusing on the detail helps to define the forecast.Macro traffic forecast Micro network forecast>200,000 O&D city pairs >1,000.000 O&Dcity pair routings>10,000 country pairs157 global traffic flows
  33. 33. Global Market Forecast 3742 cities in the world handle more than 10,000 long-haul passengers per day.By 2011, some 300 cities that handle more than100 long-haul passengers per day on average,are connected to the global long haul network.However, the single relative weight of each ofthese cities within the long-haul network varies.Of the more than 300 cities only 42, less than15 %, handled more than 10,000 long-haulpassengers per day.Aviation Mega-cities, 25% of the routes,50% passengers between themthe number of non-stop city pairsoperated exclusively between the AviationMega-cities accounts for only 25 % of thetotal non-stop long-haul city pairs. Contraryto this, more than 50 % of the 2011 long-haulpassengers have been carried between two ofthese cities, either as non-stop origin-destinationpassengers or as connecting passengers todestinations beyond the 42 hubs.The number of non-stop city pairsbetween hubs and secondary cities accountsfor the largest percentage in terms of non-stopconnections, more than 50%. The share slightlyabove 40% in terms of passenger traffic staysbehind the traffic share of city pairs between theAviation Mega-cities. Adding the key figures ofthese two types of long-haul connection togethershows that more than 90% of today’s long-haultraffic travels from, to or via the 42 largest hubs.2011 cities with more than 10,000 daily long-haul passengersLong-haul traffic is concentrated on a few main aviation centresTraffic as of month of SeptemberLong haul-traffic: flight distance >2,000nm, excl. domestic traffic;Source: Airbus GMF42AviationMega-cities (2011)> 90%of long-haul trafficon routesto/from/via42 citiesTraffic as of month of SeptemberLong haul traffic: flight distance >2,000nm, excl. domestic traffic;Share of passenger traffic and # of served city-pairsper long-haul route category0%10%20%30%40%50%60%Aviation Mega-city<>Aviation Mega-cityAviation Mega-city<>Secondary citySecondary city<>Secondary city25%41%57%18%6%53%25%% of passenger traffic% of served city pairsSource: Airbus GMF
  34. 34. DemandforairtravelLong-haul passenger traffic and frequency split on routes between the 422011 Aviation Mega-cities16%18%17%28%9%13%up to 1 (179)Flights per day (# of city pairs)up to 2 (93) up to 3 (50)up to 4 (32) up to 10 (43) more than 10 (5)Share of total passenger traffic between the 2011Aviation Mega-cities per route frequency and number of city pairsSource: OAG, AirbusStepwise global traffic breakdownDistribution of traffic and frequencyThere are three ways to accommodate trafficgrowth on a route: increase frequency, increasecapacity or do both at the same time. The firststep for an airline to expand on a route canbe to increase frequencies; this is limited whenreaching a certain minimum service level, e.g.one flight per day.Once this limit is reached the airline couldincrease frequency and capacity in parallel overa certain period of time, e.g. with additionalflights around the weekend and larger aircrafton some days of the week.This continued expansion would then lead toan upper limit of flight frequencies, above whichadditional frequencies do not necessarily bringadditional value to the passenger. Therefore themore economic alternative for further expansionwould be to upgrade the capacity per flight andto grow solely in aircraft size.However, this upper limit in flight frequenciescan also be reached earlier due to congestedairports that simply do not have airspace, runwayor apron capacity to accommodate more flightmovements.Many of today’s long-haul trunk routes alreadyoffer a high level of frequency:More than 400 non-stop city pairs are offeredbetween the 42 Aviation Mega-cities. These400 city-pairs represent more than 50% of the2011 long-haul passenger traffic. Looking moreclosely at how the traffic between these 42 hubsis carried operationally, it can be seen that 320out of the 400 are served up to three times a day,resulting in some 50 % of the passenger traffic.The other 50 % is on only 80 city pairs that todayalready have more than 3 daily flights.
  35. 35. Global Market Forecast 39With the expected growth in air traffic over thenext 20 years, not only will the overall quantityof traffic increase, but also the allocationof this traffic on the route network will alsochange. Not surprisingly, routes to and fromthe emerging economies will grow at a higherrate than those in the developed regions.The opening of new non-stop routes will inevitablytake connecting traffic from today’s existingroutes. This is visible with the evolving trafficshare on non-stop long-haul routes that todayalready connects the 42 Aviation Mega-cities:their relative share of long-haul passenger trafficis 53% today and is expected to slightly decreaseto 49% by 2031. In absolute terms however, thisstill equates to traffic growth of +140% betweenthe top 42 cities, compared to an overall growthof long-haul passengers of +160 %. But, withthe expected overall traffic growth, the numberof cities, which fulfill the criterion of 10,000 dailylong-haul passengers, to become aviation mega-cities will increase to the total of 92 cities by 2031.Composition of long-haul passenger traffic per route category, 2011 and 2031PAX (million)2011(42 AviationMega-cities)2031(42 2011 AviationMega-cities)Secondary city <> Secondary city Aviation Mega-city <> Secondary city Aviation Mega-city <> Aviation Mega-city020406002040602011(42 AviationMega-cities)2031(92 AviationMega-cities)Traffic as of month of September; including direct and connecting traffic - Long haul traffic: flight distance >2,000nm, excl. domestic traffic;Source: Airbus GMF
  36. 36. DemandforairtravelAlong with the increase in Aviation Mega-cities over the coming decades, the numberof big trunk routes will increase as well.By 2011 more than 180 long-haul city-pairshad average daily round trip traffic of more than1,000 passengers.Three quarters of these large city-pairsconnected Aviation Mega-cities with each other.By 2031, it is expected that almost 600 city-pairs will handle 1,000 or more passengersper day.2031 cities with more than 10,000 daily round trip long-haul passengersLong-haul traffic is concentrated on a few main aviation centresTraffic as of month of SeptemberLong-haul traffic: flight distance >2,000nm, excl. domestic traffic;92AviationMega-cities (2031)92 aviation Mega-cities in 2031Number of long-haul trunk routes expected to more than triple by 2031Long-haul city-pairs with more than 1,000 daily passengers*Traffic as month of September; estimates for historic passenger derived from offered seats; Long haul traffic: flight distance >2,000nm, excl. domestic traffic;Source: OAG, Airbus GMF631231883435990100200300400500600700# of city-pairs History ForecastX 3.0 X 3.21991 2001 2011 2021 2031
  37. 37. Global Market Forecast 41The air transport’s centre of gravity is moving eastwards:For interest sake let’s imagine the world as atwo-dimensional slab, just as a projection in anatlas. It’s then possible to find the supporting pointof this slab. This point, defined as the "centre ofgravity", is the point on which the slab could bepositioned and would remain balanced. If the slabis now loaded at several points, the location of thecentre of gravity moves.Let’s assume now that these loads arerepresented by the passenger weight of eachcity, which corresponds to the sum of passengerson departing and arriving aircraft for each singlecity. Then it can be illustrated how the centre ofgravity moves on the surface over time.In the early 1970s the centre of gravity wouldhave been right in the middle of the northernAtlantic. North America and Europe have beenthe regions where air traffic was the mostconcentrated by far.By early 2000s, the point of equilibrium hadalready moved slightly towards the east, but stillremained on the western hemisphere. In 2011,the centre of gravity passed the prime meridianto the eastern hemisphere.Between 1972 and 2011, it has thereforemoved on average some 130 kilometres peryear in south-easterly direction. Over the coming20 years the point of equilibrium is expected tocontinue to move in a south-easterly direction,but at a slower pace of roughly 80 kilometresper year. The total distance that the centre ofgravity is expected to have moved between1972 and 2031 is about 6,500 kilometres,which is the equivalent great-circle distancebetween Amsterdam and Chicago or Frankfurtand Mumbai.The centre of gravity of air traffic moving South and EastTraffic as month of September; estimates for historic passenger derived from offered seats;espective centres of gravity as median of city coordinates weighted by passenger trafficSource: Airbus GMF, OAGGeographic centre of gravity of departing/arriving/connecting passengers per city1971 1981 1991 2001 2011 2021 2031
  38. 38. TRAffICfoRECAST
  39. 39. PASSEngER TRAffICOne of the fundamental inputs of the GMF,used to derive the demand for aircraft, is thetraffic forecast. In the Airbus forecast, theworld is divided in 19 regions: Sub-SaharaAfrica, Asia, Australia / New Zealand, Canada,Caribbean, Central America, Central Europe,CIS, Indian Sub-Continent, Japan, Middle East,North Africa, Pacific, Russia, South Africa,South America, Western Europe, PRC, US.Each region regroups countries which havebeen put together because of their geographicalcloseness and /or because of the similarityof their economic development, the state ofmaturity and the degree of liberalisation of airtransport. That is why, for example, Russia isconsidered separately from CIS, and SouthAfrica separately from Sub-Sahara Africa.Trafficforecast
  40. 40. forecastGlobal Market Forecast 45World map of the GMF regionsNeighbour countries of the same colour belong to the same regionThe nineteen regions of the GMFA traffic forecast is performed for all the traffic flowslinking the 19 regions of the GMF. For this GMF,157 passenger traffic flows have been identified.Similar to the definition of the GMF regions, somespecific traffic flows have been treated separately.For example, Domestic Brazil has been separatedfrom Domestic South America.For each of the 157 traffic flows, data has beencollected from civil aviation authorities, airlineassociations and / or other databases to providethe most reliable historical evolution of passengerair traffic and yields. IHS Global Insight is our mainprovider for historical regional economic dataand forecast. For each flow, several econometricmodels have been carefully designed and the mostrelevant chosen, based on statistical propertiesand market expertise. In other words, the finalchosen model expresses traffic as a function of themost appropriate factors which explain its evolution.
  41. 41. TrafficforecastAir travel has proved to be resilient to external shocks0.00.51.01.52,02.53.03.54.04.55.0+53%** since 20001970 1975 1980 1985 1990 1995 2000 2005 2010Oil Crisis Oil Crisis Gulf CrisisAsianCrisis Financial CrisisWTCAttack SARSWorld annual traffic (RPKs - trillions)Source: ICAO, AirbusAs seen historically, air transport is a growthindustry as proved by its resilience to externalshocks. The several exogenous events it hasfaced in recent years had an impact in theshort-term, but did not prevent air traffic fromrecovering its long-term growth trend.air transport is a growth industryFor example, the 1990-1991 Gulf War provokeda -2.9% decrease in world traffic, expressedin RPKs (Revenue Passenger Kilometre). The1998 Asian crisis slowed the world traffic growthdown to 1.8%. Last decade (2000-2011) hadseveral very pronounced exogenous shocks: the2001 terrorist attacks in the US (-2.9% RPKs in2001, -0.5% in 2002), the 2003 SARS respiratorydisease (+1.3% RPK in 2003), and finally the2008-2009 financial crisis (+2% RPK in 2008, and-2% RPK in 2009). All these events did not preventpassenger traffic from increasing by 53% over theperiod of 2000-2011 period. People definitelywant and need to fly.Growth over the last 40 years was enabledby various factors:Demographic evolution, with both greaterpopulation and especially greater urbanpopulations.Increased wealth, in parallel with thedevelopment of a middle-class in many countries.Progressive liberalisation of air transport,which permitted the creation of the low-costbusiness model. This in turn provoked thereaction of traditional airlines, which improvedthe efficiency of their operations, notably withthe increase of aircraft fleet productivity andload factors and the continued developmentof the hub-and-spoke system. The overalleffect was a decrease of the airlines’ unitcost (average cost per RPK), which itself hastranslated into a decrease in the average ticketprice over time.Globalisation: Allowing increased worldconnectivity of people as well as their overallincreased need and ability to travel.Availability of efficient, operationallycapable aircraft, which has facilitatedpassenger trips.
  42. 42. Global Market Forecast 47From a forecast perspective, passenger airtraffic is driven by two main factors:Global economic activity. Considering onlythe Gross Domestic Product (GDP) at a worldwidelevel, an increase of this indicator translates intoan increase of global wealth, which increasespeople’s propensity to travel. Among the othermacroeconomic activity data, we also look atExports, Imports, Disposable Income, PrivateConsumption, Unemployment Rate, ConsumerPrice Index, Oil prices, etc. For example, tradevariables are more suitable to traditionally businesstraffic flows, whereas total net disposable incomeis more suitable to traditionally leisure traffic flows.Over the last 40 years, the income elasticity ofpassenger air traffic is estimated to be around+1.3 at world level, meaning that if world GDPincreases by 1%, then air traffic is expected toincrease by 1.3%.The price of travel. Everything else beingequal, a decrease in the average price relaxes theconsumers’ budget constraints and makes morepeople economically able to fly. It is estimatedthat the price elasticity of passenger air trafficis around -0.6 at world level, meaning that if theaverage price decreases by 1%, then the air trafficis expected to increase by 0.6%.Air traffic is correlated to the economyAir traffic is correlated to air fares0%-2%-4%-6%4%2%8%6%10%14%12%16%-3%-1%1%3%199319941995199219911988198919901985198619871981198219831984198019961997199819992001200020022003200420052006200720082009201020115%7%9%World real GDP (left axis) vs. RPK traffic (right axis) growthTraffic Real GDPSource: IHS Global Insight (january 2012), ICAO, Airbus-15%-10%-5%0%5%10%15%20%25%30%35%-10%-5%0%5%10%15%20%Domestic US RPK traffic (left axis) vs. airline yields (right axis) growthSource: ATA, AirbusAirline unit revenue expressed in average passenger revenue per kilometer flown (airline yield) as a proxy of air fares19931994199519921991198819891990198519861987198119821983198419801996199719981999200120002002200320042005200620072008200920102011US Traffic Yields
  43. 43. TrafficforecastDespite the “Arab Spring” events in the Middle-East and North Africa, the tsunami in Japan andrising fuel costs, 2011 was a very good year forpassenger air traffic.World RPKs (scheduled and non-scheduled)went past the 5 trillion threshold, with trafficincreasing by 5.8 %, confirming the 6.9 %recovery from the financial crisis in 2010. Witha 5.5 % traffic growth prediction for 2011, theprevious GMF (GMF 2011) was quite accurate.2011 growth was driven by emerging regions,the fastest growing regions in terms of totaltraffic being Russia, CIS, PRC, Middle East,South America and Asia.GMF 2011 slightly underestimated the hugegrowth of these regions. In 2011, the advancedregions continued to grow, although at a slowerpace than the world average, with 3.7 %increase for the US and 4.8 % increase forWestern Europe.The March 2011 earthquake in Japan, the tsunamiit created and Fukushima nuclear plant disasterwas a terrible shock for the country and its airtraffic was very broadly impacted.According to Sabre data, domestic RPK trafficdecreased by -8.3 % and international trafficdecreased by -5.3% for the full year 2011. Loadfactors were significantly impacted as trafficsupply (ASK) did not match demand collapse.The 2011 “Arab Spring” events in North Africaand the Middle East, unpredictable at leastfor the timing and intensity, had a negativeimpact on air traffic, with for example the NATOintervention in Libya closing for some monthsthe airspace for commercial airlines. RPK trafficfrom / to / within North Africa decreased by3.2 %, Libya being the most impacted country.However, ASK traffic from/to/within Algeria keptgrowing.2011 was a good year for air trafficAirbus forecasts are continually conservative-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%2008 2009 2010 2011Actual vs. GMF2011 World RPK year-on-year growth rateSource: ICAO, AirbusGMF 2011Historical data
  44. 44. Global Market Forecast 49Short-term economic outlook is less optimistic than one year beforeEmerging regions will drive the short-term economic growthAfter the recovery from the 2009 economiccrisis, new concerns appeared in mid-2011with the Eurozone macroeconomic difficultiesand the possible contagion to other regions ofthe world.Therefore, the global economic outlook for thenext two years at the beginning of 2012 (+2.4 %real GDP growth in 2012, +3.3 % in 2013) wasmore pessimistic than it was at the beginning of2011 (+3.5 % in 2012, +3.7 % in 2013).The difference in the pace of growth betweenadvanced and emerging regions will still bevalid with, PRC and Indian sub-continent beingthe leaders and Western Europe and NorthAmerica displaying the slowest growth.Expected slowdown of growthin the short-term2012 and 2013 World real GDP forecast (Beginning 2011 and 2012 forecasts)3.5% 3.5%3.7%1.6%-2.0%4.0%2.7%2.4%3.3%-3%-2%-1%0%1%2%3%4%5%2008 2009 2010 2011 2012 2013January 2011 forecastJanuary 2012 forecastSource: IHS Global Insight (January 2012), Airbus2012 and 2013 real GDP forecast by region-1%0%1%2%3%4%5%6%7%8%9%Europe NorthAmericaCentralAmericaJapan Pacific MiddleEastIndianSub-Continent2013 average2012 averageSouthAmericaCIS Asia Africa PRC2012 2013Source: IHS Global Insight (January 2012), AirbusThis slowdown in the world economic growth willbe coupled with high crude oil prices which willcontinue to challenge airline finances. Crude oilprices progressively returned to the peak valueof 2008 after the economic crisis in 2009. Thesehigh prices can be explained by geopoliticaltensions, a high demand in emerging regions andsmall excess capacities in production.
  45. 45. TrafficforecastFuel currently represents around 30% of anairlines total operating costs and based on recenthistory and the long-term forecast, it is apparentthat higher prices in fuel are the new baseline.At the time of writing this text, ASK traffic growthhas been positive in 2012 but decelerating.The observed increase in load factors at thebeginning of 2012 is also expected to decelerate.Therefore, we expect RPK growth to be in therange of 3-4% in 2012, which is confirmed by ourshort-term scenario on real GDP and averageticket price and the elasticity of passenger airtraffic related to these indicators.World ASK year-on-year growth rate (monthly data)2009/012009/022009/032009/042009/052009/062009/072009/082009/092009/102009/112009/122010/012010/022010/032010/042010/052010/062010/072010/082010/092010/102010/112010/122011/012011/022011/032011/042011/052011/062011/072011/082011/092011/102011/112011/122012/012012/022012/032012/042012/052012/06-6%-4%-2%0%2%4%6%8%10%Source: OAG, AirbusAfter a strong recovery, ASK traffic grows at a slower paceHigh fuel prices becoming the new norm0204060801001202000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Nominal crude oil price (Brent, $US) historical evolutionSource: IHS Global Insight (July 2012), Airbus
  46. 46. Global Market Forecast 51Emerging regions will drive long-term economic growthEmerging regions will contribute 56% to the total economic growthbetween 2011 and 2031.From 2011 to 2031, it is forecast that world realGDP will grow at 3.2% per year on average,slightly below the GMF 2011 forecast of 3.3%over the same period of time.This slightly lower growth rate mainly reflectsshort-term macroeconomic concerns, but inthe long-term, the economic growth prospectsremain robust.Much of the growth will be driven by Indian SubContinent (+7.1%), PRC (+6.5%), South America(+4.4%) and Africa (+4.4%). Despite the lowergrowth of Europe (+1.8%) and North America(+2.6%), these two regions will contribute to37% of the total real GDP growth, expressedin 2005 $US, between 2011 and 2031. Overall,the advanced economies will account for 40%of the total real GDP growth, and emergingeconomies for 56% (25% for China alone).Robust expectations in the long-term2011-2031 real GDP average annual growth rate, by regionMiddle EastAsiaAfricaSouth AmericaPRCIndian Sub ContinentCentral AmericaCISEuropePacificNorth AmericaJapan2,0%1,0%0 3,0% 4,0% 5,0% 6,0% 8,0%7,0%Source: IHS Global Insight (January 2012), Airbus2040806012010002011 2031AdvancedBRICOtheremergingDeveloping40%38%18%4%2011-2031 contribution to World real GDPgrowth (2005 Billion $US), by type of regionSource: IHS Global Insight, Airbus
  47. 47. TrafficforecastAs already mentioned, the airlines have achievedremarkable efficiency improvements, their unitoperating cost having decreased at a yearlyaverage of -2.3% per year in real terms over theperiod 1980-2011.Although this efficiency has reached a high level,we expect that the non-fuel unit cost will stilldecrease, although at a slower pace, -1.2% peryear on average between 2012 and 2031, inreal terms. This will be achieved thanks to moreefficient airline operations. Fuel costs are expectedto maintain their long-term upward trend, withpersistent volatility leading to the continueddifficulty for airlines today. It is expected thateco-efficient types due to enter service in thenear-future will help by lowering the fuel burdenon airlines and act as a natural fuel hedgingmechanism. We therefore expect that airlines’unit cost will decrease by 0.7% per year onaverage on 2012-2031, in real terms, potentiallyrelaxing the pressure on the price of travellingfor passengers, and stimulating traffic.198019821984198619881990199219941996199820002004200620022008201020122014201620182020202220242026202820300510152025Other costsForecastHistoryUnit cost (cents/RPK in 2011 US$)Unit cost (CAGR 1980-2011: -2.3%)Fuel costUnit cost (CAGR 2011-2031: -0.7%)Fuel cost (CAGR 1980-2011: -1.7%) Fuel cost (CAGR 2011-2031: 0.1%)Other costs (CAGR 1980-2011: -2.5%) Other costs (CAGR 2011-2031: -1.2%)Source: ICAO, EIA, IHS Global Insight, AirbusBased on the main drivers we identified for eachtraffic flow, and the forecast of their evolution,our analysis suggests that RPKs will double inthe next 15 years, as it did in the last 30 years.Air transport is and will remain a growth industry.traffic forecast results02468101214Air traffic has doubledevery 15 yearsAir traffic will doublein the next 15 years1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030ICAOtotal trafficAirbus GMF2012World annual RPK (trillion)Source: ICAO, Airbus2011-20215.1%20-yearworld annualtraffic growth4.7%2021-20314.4%World RPK traffic is expected to increase at a4.7% growth rate per year on average. As 2011was a good year for air traffic, the 4.7% forecastgrowth rate means that passenger traffic in 2030will be similar to 2030 traffic levels of the GMF2011 forecast.Cost per RPK (inflation removed) expected to decreaseby an average of 0.7% yearly until 2031
  48. 48. Global Market Forecast 53The four largest flows will represent 34% of the world traffic in 2031With a 7.0 % average growth rate per year overthe next 20 years, Domestic PRC will becomethe largest single flow in 2031 with 10.4 % ofthe total world RPK traffic, closely followed byDomestic US and followed by Intra WesternEurope. Ranked fourth we find the largest inter-regional flow, Western Europe – US, which will growon average by 3.7% per year on 2012-2031 andwill represent 5.3% of the world RPKs in 2031.Remarkably, the first four flows will represent34% of all RPKs in 2031. They will be followedby Domestic India and Western Europe – SouthAmerica.The fastest growing flows between 2012 and2031 mostly include emerging regions, thanksto untapped demand and robust economicgrowth prospects in these regions.Middle East – South America (11.9% growth onaverage), Domestic India (9.9% average growth)and Indian Sub-Continent – PRC (8.9%) will bethe three fastest growing flows.Emerging regions grow faster, advancedregions remain significantly high2031 Shareof Worldtraffic %10.410.47.55.32.32.92.21.41.31.31.52011 - 2031CAGR %2.27.03.13.75.14.19.96.56.06.55.46.55.75.65.26.23.755.65.42.22.12.12.01.91.91.91.51.8Largest 20 flows in 2031, by RPK (billion)201120314002000 600 800 1000 1200 16001400Western Europe -South AmericaDomestic IndiaWestern Europe -USIntra WesternEuropeDomestic PRCDomestic USAsia to PRCIntra AsiaDomestic BrazilAsia -Western EuropeIndian Sub ContinentMiddle EastWestern Europe -PRCCentral Europe -Western EuropeDomestic AsiaWestern Europe -North AfricaAsia - Middle EastPRC - USJapan - USDomestic RussiaWestern Europe -Middle East
  49. 49. Trafficforecast2011 - 2031CAGR %11.99.98.98.38.38.28.38.38.28.08.07.97.97.97.97.57.37.27.77.9Fastest growing 20 flows in 2031, by RPK (billion)20112031100500 150 200 300 350 450400Sub-Sahara Africa -PRCMiddle East -South AfricaCanada -Indian Sub-ContinentIndian Sub-Continent -PRCDomestic IndiaMiddle East -South AmericaNorth Africa - PRCNorth Africa -South AfricaCIS - PRCCanada -Middle EastCanada -Central AmericaSub-Sahara Africa -South AmericaPacific - PRCSub-Sahara Africa -North AfricaIndian Sub-Continent -USSub-Sahara Africa -CaribbeanPRC - RussiaPRC - South AfricaMiddle East - USAsia -Indian Sub-ContinentDistinguishing between advanced and emergingcountries, the share of “emerging – emerging”traffic flows is expected to become the largestwith 38% of World RPKs in 2031, growing at6.6% per year on average.They are followed by “advanced – advanced”flows, losing market share from 45% in 2011to 32% in 2031, and “advanced – emerging”flows, gaining market share from 28% in 2011to 30% in 2031.The fastest growing flows will mainly concern emerging regions
  50. 50. Global Market Forecast 55The fastest growing flows will mainly concern emerging regionsTraffic with emerging markets represent 55% of traffic today, 68% in 2031201120122013201420152016201720182019202020212022202320242025202620272028202920302031Advanced - AdvancedEmerging - EmergingAdvanced - EmergingWorld annual RPK (trillion), by type of flow0.02.04.06.08.010.012.014.038%30%32%45%28%27%20-yearannualtraffic growth6.6%20-yearannualtraffic growth5.1%20-yearannualtraffic growth2.9%As a result, the fastest growing regions in termsof total RPK traffic will be the emerging regions:Indian Sub-Continent (+7.6%), PRC (+6.8%),Middle East (+6.2%), CIS (+6.2%). The largestwill remain Western Europe and the US, withrespectively 21% and 17% of the total trafficin 2031, followed by PRC (13%), Asia (10%),Middle East (7%) and South America (5%).Western Europe and the US will remain the largest regions in 20312031 RPK (billions) from / to / withinPRCCISWestern EuropeUSSouthAmericaAsiaMiddle EastIndianSub-ContinentSize of the bubble is proportional to 2011 RPK traffic2011-2031 RPK traffic CAGR01,0002,0003,0004,0005,0006,0003% 4% 5% 6% 7% 8%
  51. 51. TrafficforecastAggregating the regions at a broader level,Europe and North America will remain in 2031the largest regions for domestic and intra-regionaltraffic as well as for interregional traffic.Similarly, the transatlantic Europe – NorthAmerica flow will remain the largest interregionalflow in 2031 (13% of all interregional traffic in2031, down from 17% in 2011).Major traffic flows and regions in 2011Major traffic flows and regions in 20312011 RPK traffic by flow and region(1) The size and darkness of each line is proportional to the traffic on the flow.(2) The size of each bubble is proportional to domestic and intra-regional traffic of the region.(3) The darkness of each bubble is proportional to total traffic from/to/within the region.JapanPRCIndianSub ContinentAsiaAfricaSouthAmericaCentralAmericaNorthAmericaMiddleEastEuropeCISPacific2031 RPK traffic by flow and region(1) The size and darkness of each line is proportional to the traffic on the flow.(2) The size of each bubble is proportional to domestic and intra-regional traffic of the region.(3) The darkness of each bubble is proportional to total traffic from/to/within the region.JapanPRCIndianSub ContinentAsiaAfricaPRCSouthAmericaCentralAmericaNorthAmericaMiddleEastEuropeCISPacific
  52. 52. Global Market Forecast 57At the airline domicile level, the world 2012-20314.7% average RPK growth will be driven by MiddleEast airlines (+7.3% per year on average over2012-2031), Latin American (+5.9%), Asia-Pacific(+5.4%), CIS (+5.4%) and African airlines (+5.1%).Although at a slower pace, European and NorthAmerican airlines will continue to grow, respectivelyat 4.1% and 3.3% per year on average.Consequently, between 2011 and 2031, theairlines of the emerging regions will gain themost market share of total world traffic. MiddleEast airlines will represent 11% of total RPKsin 2031 from 7% in 2011, while PRC airlineswill represent 13% of total RPKs in 2031, upfrom 10% in 2011. Airlines from Europe, NorthAmerica will still represent a high share of trafficin 2031, respectively at 24% and 20% of theworld RPKs.RPK growth by airline domicile driven by Middle EastEmerging economy airlines will grow rapidly2011-2031 traffic growth by airline domicile, per regionNorth America2021-20315.2%20-yeargrowth5.9%Latin America2011-20216.7%2021-20314.9%20-yeargrowth5.1%2011-20215.2%2021-20314.4%20-yeargrowth4.7%2011-20215.1%2021-20314.9%20-yeargrowth7.3%2011-20219.8%2021-20315.1%20-yeargrowth5.4%2011-20215.7%2021-20314.8%20-yeargrowth5.4%2011-20215.9%2021-20313.9%20-yeargrowth4.1%2011-20214.3%2021-20313.3%20-yeargrowth3.3%2011-20213.3%EuropeCISAsia-PacificMiddle EastWorldAfrica
  53. 53. TrafficforecastEuropean and North American airlines are the largest in 2011Emerging countries airlines will be the fastest growing until 2031Anamorphic map – 2011 airline domicile RPK traffic, by countryAnamorphic map – 2031 airline domicile RPK traffic, by country
  54. 54. Global Market Forecast 59Our airlines segmentation consists of 6 groupsof airlines: Global Network, Major Network,Small Network, Low-cost, Charter, Regionaland Affiliate. Global Network airlines will be thelargest in 2031, keeping a share of traffic of59%, slightly down from 60% in 2011.Low-cost carriers will gain the most marketshare, from 15% to 20%, thanks to the dynamicsof the American, European and Asian low-costcarriers and as a consequence of ongoingliberalization of air transport all over the world.Global Network and Low-cost carriersare the largest in 2011Low-cost carriers will be the fastestgrowing airlines between 2011 and 2031LCC will continue to growSource: Airbus60%2011 share of World RPK trafficby airline type60%Charter Global NetworkLCCMajor Network Regional And AffiliateSmall Network5%5%5%10%15%Source: Airbus60%2011 share of World RPK trafficby airline typeCharter Global NetworkLCCMajor Network Regional And AffiliateSmall Network5%5%5%10%15%The traffic of airlines considered as subsidiary is counted in the traffic of the principal airline59%2031 share of World RPK trafficby airline type59%Charter Global Network LCCMajor Network Regional And AffiliateSmall Network4%4%3%10%20%Source: Airbus
  55. 55. DEMAnDfoR PASSEngERAIRCRAfT
  56. 56. Demandforpassengeraircraftsingle-aisleLow Cost to long-haulDEMAnD BYAIRCRAfT SEgMEnTToday, there are 12,161 Single-Aisle aircraftproviding service to customers in every cornerof the globe. They represent 78 % of the totalcommercial airline fleet of aircraft over 100 seats.By 2031, the number of aircraft will more thandouble to almost 24,000 aircraft growing at 3.5%per year. Some 19,500 of the 24,000 will comefrom new deliveries between now and 2031 with~40% coming from replacing older aircraft and~60% targeting growth in the industry.A large number of these new deliveries will comefrom new more fuel efficient aircraft like theA320neo. This variant delivers 15 % lower fuelburn through the continuing application of newtechnology at the right time, specifically throughaerodynamic and engine improvements.Geographically, North America and Europe willdrive the demand, as they look to replace theiraging fleets. These two regions combined willaccount for nearly 50% of the overall demand fornew Single-Aisle aircraft.
  57. 57. Global Market Forecast 63Single-Aisle aircraft perform a range of operationsfrom direct service to connecting aviation mega-cities to smaller airports in the region, for thepurpose of hubbing. One way that clearly displaysthe use of Single-Aisle aircraft to connect larger hubairport is seen in the transition of regional airlinesfrom aircraft with less than 100 seats to Single-Aisleaircraft. Not only does the type of operation varywithin the Single-Aisle but the range or distanceflown also varies greatly. Between 5-7% of the fleetin 2011 is used on what is traditionally consideredlong-haul routes, over 2,000 nm; a trend that it islikely to continue, with the introduction of newer,more range capable variants over the forecastperiod, like the A320/A321neo.The size of aircraft is the third category displayingthe great flexibility of Single-Aisle aircraft.The seating in the Single-Aisle segment is broadwith the types segmented between 100 to 210 seats.Our forecast predicts that the centre of gravityfor the category will remain at 150 seats, but withlarger capacity types more significant in volumesthan smaller types, with for example more than7,600 deliveries expected in 175 and 210 seatcategories over the period. This broad variationin operations, ranges and seating capacity is whyAirbus believes in providing a family of aircraft,clearly shown by the many airlines who areexpected to purchase more than one category ofSingle-Aisle aircraft.Single-Aisle fleet in service evolutionNew deliveries of Single-Aisle aircraft by regionSingle-Aisle 2012-2031 new passengeraircraft deliveries1,6473,0817,1414,8772,77201,0002,0003,0004,0005,0006,0007,000100 125 150 175 2108,000Single-Aisle 2012-2031 new passenger aircraft deliveriesSingle-Aisle passenger aircraftNumber of new aircraft10,0005,00015,00025,00030,00020,0000Beginning 2012 2031Fleet sizeGrowthReplacedStay in service& recycled11,8377,6814,480Single-Aisle passenger aircraft23,99812,161Newaircraft19,518+ 3.5 %per annum4,956WORLD : 19,518Single-Aisle passenger aircraft6,0281,658724792North America25%31%Europe22%Latin America9%Middle East4%Africa4%CISAsia Pacific5%1,018= 500 units4,34220-year demand (2012-2031)
  58. 58. DemandforpassengeraircraftLike the smaller Single-Aisle aircraft, the Twin-Aisle aircraft also provide a varied operationalcapability to airlines around the world. Takingpassengers on high density short-haul routes,like Singapore to Kuala Lumpur, or low-densitylong-haul routes, like Rome to Buenos Aires.37 % of all RPKs were flown on the 3,320 Twin-Aisle aircraft in service at the beginning of 2012.By 2031, the fleet of Twin-Aisle aircraft willdouble to almost 7,200 aircraft; growing at arate of 3.9 % per year. These aircraft will beused to connect major aviation hubs acrossthe globe, but also to connect major hubs tosecondary cities. 40 % of the deliveries, 2,600aircraft, will replace existing, less fuel efficientaircraft with new, eco-efficient aircraft like theA350XWB. 3,900 aircraft will be used for growth,Asia-Pacific will be the largest contributor to thedemand for growth in this market segment.Today, Asia-Pacific represents 36% of the totalfleet of twin-aisle aircraft, and this percentagewill continue to grow over the forecast period tomore than 40% in 2031. The Middle East alsohas a large appetite for aircraft in this category,representing 42 % of the demand for aircraftabove 100 seats for the Middle East and 12%of the world’s Twin-Aisle demand. North Americaand Europe jointly represent 30% of the overalldemand.twin-aisleBroad requirements, broad capabilityTwin-Aisle fleet in service evolutionFleet sizeTwin-Aisle passenger aircraftBeginning 2012 2031+ 3.9 %per annum01,0002,0003,0004,0005,0006,0007,0008,0007,1983,320GrowthReplacedStay in service & recycled3,8782,619701Newaircraft6,497
  59. 59. Global Market Forecast 65In terms of the size of aircraft, the Twin-Aislesegment incorporates aircraft between 250 and400 seats. The centre of gravity in this segmentis in the 250-300 category, which is expectedto represent 70 % of the Twin-Aisle demand,a market where the 787 and A350XWB competetoday. But aircraft in the 350-400 category willstill represent more than 1,900 units over thenext 20 years, a segment where the A350-1000XWB is designed to fit efficiently.New deliveries of Twin-Aisle aircraft by regionTwin-Aisle 2012-2031 new passenger aircraft deliveries827Twin-Aisle passenger aircraft2,9811,105393204806North America13%46%Europe17%Latin America6%Middle East12%Africa3%CISAsia Pacific3%181= 250 unitsWORLD : 6,49720-year demand (2012-2031)2,5002,0001,5001,0005000Number of new aircraft2,2081,2107102,369250 300 350 400Twin-aisle passenger aircraft
  60. 60. DemandforpassengeraircraftVery Large aircrafta common sight todayat the world’s major airportsVery Large Aircraft, VLAs, are becoming acommon sight in the largest aviation cities aroundthe world. In 2012, 16 of the top 20 largestairports for international traffic were or soon willbe serviced by the A380. Through their size andnew technologies, these aircraft are designed tomeet demand efficiently by minimising seat costsin both fuel and CO2. The VLAs, like the A380provides the flexibility airlines need to managetheir revenue through providing unmatchedspace onboard to their strategies and the needsand wants of their customers.Looking at the segmentation and seating chart inthe summary section of this document, it showsis the most adaptable aircraft in this respect, withseating, either in service or on order, ranging fromjust over 400 seats to just over 800 seats; a cabinwith unrivalled versatility. VLAs are optimally suitedfor meeting the increasingly expanding demandfor passengers not only between mega-citiesbut also with secondary cities and high densitydomestic routes.Today, there are many more markets and routeswhich are ideally suited to VLAs, and as moredeliveries are made and more customers join theexisting customer base of the A380, these too willbecome the home for these aircraft.The requirement for VLAs exists today and willgrow with the world’s network and the needs ofpeople to fly. By 2031, this demand will result ina need for more than 1,300 VLAs.Given the projected growth in Asia-Pacific, botheconomic and air passenger traffic growth, theregions demographics, urbanisation trends andthe dense traffic flows between Asia-Pacific andEurope and North America, it is unsurprising thatthe region’s airlines will take 46% of these aircraftover the next 20 years. The Middle East will be thesecond largest region in terms of demand for VLAs,at 23%. This can be seen today in the size of thebacklog of A380s within Middle Eastern carriers.Europe is expected to be the third largest region interms of demand with 19% of the demand.
  61. 61. Global Market Forecast 67The A380 network as of July 2012Singapore AirlinesEmiratesQantasAir FranceLufthansaKorean AirChina SouthernMalaysia AirlinesThai AirwaysSeasonal or temporary Routes(e.g. during early ops)not currently operatedMontréalTorontoNew YorkWashingtonAtlantaMiamiHoustonLos AngelesSan FranciscoJohannesburgJeddahDubaiKuala LumpurSingaporeBangkokSydneyMelbourneAucklandHong KongGuangzhouLondonAmsterdamParisFrankfurtMunichZurichRomeManchesterShanghaiSeoulBeijing TokyoFrankfurtAmsterdamMunichRomeZurichParisLondonMontrealTorontoNew YorkWashingtonAtlanta GuangzhouDubai
  62. 62. DemandforpassengeraircraftTop 10 A380 airports ranked by weekly departuresA380 weekly departures: Week 24, June 2012 - Source: OAGAir FranceChina SouthernEmiratesKorean AirLufthansaQantasSingapore AirlinesDubai Singapore Frankfurt London(LHR)Paris(CDG)Sydney HongKongSeoul(ICN)New York(JFK)LosAngeles204060801001201400A380s link the world’s aviation mega-citiesNew deliveries of Very Large Aircraft by regionOver 100 flights per day carrying more than 1m passengers per month68Very large passenger aircraft60925434 29308North America5%46%Europe19%Latin America3%Middle East23%Africa2%CISAsia-Pacific2% 30= 100 unitsWORLD : 1,33220-year demand (2012-2031)
  63. 63. Global Market Forecast 69A380s at all of the top 10 international airports…… and at 16 of the top 20. The future has arrived !London-LHRParis-CDGHongKongDubaiFrankfurtAmsterdamSingapourSeoul-ICNTokyo-NRTBangkokMadridLondon-LGWMunichKualaLumpur-KULRome-FCOTapai-TPENewYork-JFKZurichIstanbulTorontoSource: ACIA380 Service in 20127550250International Passengers 2010 (mill.)
  64. 64. DEMAnDBY REgIon
  65. 65. DemandbyRegionAsia-Pacific still sports the strongest regional economic performance, powered by ChinaAsia-Pacific continues to be one of the fastestgrowing regions in the world, and a key componentin the world’s economy. Representing more thana quarter of the world economy today, Asia-Pacific’s economy is growing 2.5 times fasterthan in Europe or North America, which explainswhy the region continues to be the main driver ofglobal economic growth and air transport.Extrapolating the same trend in the future, Asia-Pacific will represent more than one third of theworld economy in twenty years time. This newgrowth will also help other developing regions,such as Africa and Latin America, to find newmarkets in addition to their more traditionalcustomers.8,0009,00010,00011,00012,00013,00014,00015,00016,00017,000010,00020,00030,00040,00050,00060,000200220012000199919981997 2003 2005 2007 20092004 2006 2008 2010 2011USA & CanadaAsia-PacificEuropeWorld (Right)Evolution of real GDPSource: IHS Global Insight, AirbusASIA-PACIfICMoRE PEoPLE,MoRE fLYIng
  66. 66. Global Market Forecast 73In Asia-Pacific, the second fastest growing regionafter CIS, the strong economic performanceof the traditional tiger economies continuesto be reinforced by the booming Chinese andIndian economies, which today represent 40%(30 % and 10 % respectively) of total 2011regional GDP and are expected to represent60 % of the same total in the next twenty years(44 % and 16 % respectively).Asia-Pacific provides us with an interestingillustration of the income convergence theory,according to which poorer economies (lowerGDP per capita) tend to grow at faster ratesthan richer economies. For example, althoughstarting from a much lower real GDP per capita in1990, China is narrowing the gap that separatesit from wealthier economies like Japan.India and China leading global economic growthAsia-Pacific, to drive world growth020,00040,00060,00080,000100,000120,000Real GDP per capita per region, selected years.Africa1997 2011 2030Share of real GDP per regionMiddle East Latin America Asia-Pacific Europe CIS US & CanadaSource: Global Insight and Airbus8%10%12%0%0% 2% 4% 6% 8% 10% 12%2%4%6%Western EuropeUnited StatesAustraliaMiddle EastLatin AmericaChina IndiaAfricaJapan* Circle diameter approximately proportional to 2020 real GDP at PPP (2005 US$)Source : IHS Global Insight, AirbusConsumer spending (2005 US$)Real GDP (2005 US$)Evolution of GDP and consumer spending, 2011 – 2020 average annual growth*
  67. 67. DemandbyRegionNevertheless, because standards of living in Asia-Pacific, as a whole, are still well behind those ofdeveloped countries, this regional "catching up"effect will continue in the coming years.With differences between countries, Asia-Pacificalso provides us with an example of how publicinvestment has been used by local governmentas an instrument to stimulate economic growth.As shown below for airport investment, asignificant portion of the region’s investmenthas been made by state-owned enterprises and,in recent years, by private-public partnerships.Source: ADB, the Planning Commission of India, Frost & Sullivan. (*) Excluding India.Asia Pacific, catching upAnnual average growth rate of real GDP per capita, 1990-20111990 Real GDP per capitaSource: Global Insight and GMF 2012-4%-2%0%02%4%6%8%10%5 10 15 20 25 30 35JapanIndiaChina1990 Real GDP per capita and annual average growth rate of real GDP per capita, 1990-2011Country Public PrivateCambodia 0% 100%China 78% 22%Malaysia 61% 39%Philippines 17% 83%India 39% 61%Thailand 97% 3%Vietnam 0% 100%Total* 65% 35%PUBLIC INVESTMENT, A KEY DRIVERInvestment in airports, selected countries, 1991-2011Asia-Pacific’s economic prosperity, leadingto the steady up scaling in the standard ofliving of its expanding middle class, combinedwith a growing population and increasingurbanisation, has and will continue to lead toa higher desire (and ability) to fly. The hugepotential for the region’s “propensity to travel”to continue increasing is evident. An Americanmakes 1.8 flights per year, a German makesone flight per year, whilst even allowing forsignificant growth in recent years, people fromChina and India make a relatively low 0.2 and0.1 flights per year, respectively. Still growth tocome.While the region’s population is expected torepresent nearly 60% of the world’s population by2031, the demand for air travel, as measured bytotal RPK from/to/within Asia-Pacific, is forecast togrow at a 5.8% per year over the next 20 years,above the 4.7% increase in total world demandover the same period.Another reflection of these positive regionaltrends, is the fact that air transport in Asia-Pacificis becoming much more accessible, as witnessedby the 23% increase in the number of regularlyserved cities in Asia-Pacific, between 2005 and2011, which contrasts to the -1% in North Americaand the +6% in Europe, over the same period.
  68. 68. Global Market Forecast 75Benefitting from the strong regional economicgrowth and the resulting improvement instandards of living, Low Cost Carriers (LCCs)in Asia-Pacific have been able to profit from thispositive trend by increasing their relative shareof total traffic in Asia-Pacific.Being a true success story in the industry overthe last decade, their market share in terms ofseats offered in 2005 increased to more than20% in 2011.Air transport becoming more accessible is Asia-PacificLCC market share in Asia-Pacific above 20%0150300450Africa&MiddleEastLatinAmericaNorthAmericaAsia-PacificEuropeEvolution of number of regularly served cities per regionTraffic as of month of September; regular service referring to a minimumof two daily departures on a 150-seater aircraftSource: OAG, Airbus2005 2011+19%171204 211232269 266283300358441+10% -1% +6% +23%Low Cost Carriers2005Market share2006 2007 2008 2009 2010 20110%5%10%15%20%25%Traffic as of month of September; domestic and international traffic within Asia-Pacific; GMF 2012 airline segmentationSource: OAG, GMF 2012Evolution of market share for LCCs in Asia-Pacific (seats offered)7%10%11%12%14%18%21%
  69. 69. DemandbyRegionLCC traffic in Asia-Pacific is still highly concentratedon domestic relative to intra-regional traffic. Thehigher relative share of domestic traffic in theAsia-Pacific LCC market in 2011 contrasts withthe relative predominance of intra-regional trafficin the European LCC market (11% difference infavour of intra-Europe traffic) and suggests that ifEurope can be considered as the benchmark of aliberalised LCC market, there is large potential forincreasing intra-regional integration in Asia-Pacific.Number of routes served by LCCs has almost tripled over the last yearsAsia-Pacific’s LCCs expanded their marketpresence through both adding capacity onroutes that they already serve and throughincreasing the number of new routes.In fact, the number of offered city pairs hasalmost tripled over the last years.2005# of served city-pairs2006 2007 2008 2009 2010 2011-200400600800Traffic as of month of September; domestic and international traffic within Asia-Pacific; GMF 2012 airline segmentationSource: OAG, GMF 2012Evolution of number of city-pairs served by LCCs in Asia-Pacific255376421 4585216417342005 2006 2007 2008 2009 2010 2011100%200%300%400%Traffic as of month of September; domestic and international traffic within Asia-Pacific; GMF 2012 airline segmentationSource: OAG, GMF 2012Evolution of seats offered and number of flights on LCC network in Asia-Pacific (relative to 2005)x4.3x3.3Seats offeredNumber of flights
  70. 70. Global Market Forecast 77Nevertheless, and despite some past failures,efforts to apply the low-cost model to longer-haul travel have accelerated in the last years, aswitnessed in the entrance of new LCCs to thelong-haul market, together with the settlement ofnew subsidiaries and new strategic alliances in theregion, such as the recent joint ventures in Japan.Whether the long-haul, low-cost modelsucceeds or whether these new strategicalliances are to be permanent will dependon time. But still, what seems certain for theforthcoming years is that LCC will continue withits previous trend, growing at a higher pacethan full service carriers.Over the next ten years, the region is expectedto grow at 6.4% per year, mainly driven by PRCand India, with expected growth rates of 7.7%and 8.6%, respectively.Potential for LCCs to increase intra-regional integration within regions01030504020Africa&MiddleEastLatinAmericaNorthAmericaAsia-PacificEurope2011 LCC market share on intraregional traffic per global region (Seats offered)Traffic as of month of September; regular service referring to a minimumof two daily departures on a 150-seater aircraftSource: OAG, GMF 2012Domestic: traffic within the countriesIntra-regional: traffic between the countries32%43%6%12%23%29%9%43%7%16%Large potential for increasing intra-regional integration
  71. 71. DemandbyRegionOver the next twenty years, this very dynamicregion, with its large and diverse populationcentres, will require larger longer range aircraft.As an example, the region will need more than600 VLAs, which represents 45% of the totalworldwide demand.RPK development from/to Asia-Pacific (2012-2031 CAGR)Europe4.5%Africa7.1%North America5.0%Latin America6.6%Middle East6.1%CIS6.7%Domestic andIntra-Regional6.3%2022-20315.2%20-yeargrowth5.8%Asia-Pacific2012-20216.4%2022-20314.4%20-yeargrowth4.7%World2012-20215.1%4,0002,0006,00010,00012,0008,0000Beginning 2012 2031Fleet sizeGrowthReplaced6,1373,481822Recycled & stayin servicePassenger aircraft ≥100 seatsSource: Airbus GMF10,4404,303Newaircraft9,618+ 4.5 %per annumSingle-aisle Smalltwin-aisleIntermediatetwin-aisleVery Largeaircraft6,0288796092,102Number of new aircraft01,0002,0003,0004,0005,0006,0007,000Passenger aircraft ≥100 seats
  72. 72. Global Market Forecast 79Economic and social impacts of aviationin Asia-PacificBy facilitating and optimising travel across theworld, air transport significantly contributesto improving living standards in Asia-Pacific.As aviation enables both direct contact withforeign partners and regular on-site visits, ithas significantly fostered investments andoutsourcing to the region. For example in China,the development of air cargo (which grew ata 10.7% yearly rate between 1995 and 2011)has further enabled increased production oftime-sensitive products such as electronicsand perishables. These growing internationalinvestments have created jobs and developedskills across a wide range of sectors in a regionwhere underemployment has long been a socialand economic problem.Aviation yields positive benefit for local economies.In 2010, the air industry generated more than$258 billion1in this region, representing almost20% of the global aviation GDP. Aviation alsosupports a total of 6.1 million jobs2, split intofour categories: airlines (24%), aerospace (10%),airports (6%), and other on-airport activities (60%).1Including direct returns (equal to USD 94 billion) plusindirect and induced impacts.2Total here refers to the direct, indirect and inducedimpacts but excludes catalytic impacts.Economy 1 Real GDPReal tradeUrban population4.6%7.2%1.8%Fleet 2Traffic 1Fleet in service beginning 2012Fleet in service 203120-year new aircraft deliveries4,30310,4409,618Intra-regional & domesticInter-regionalTotal6.3%5.2%5.8%12012 – 2031 CAGR - 2Passenger aircraft ≥ 100 seatsRWC 2011 IN NEW ZEALANDIn 2011, the land of the long white cloud heldthe largest sporting event in its history and oneof the biggest sporting events of the year: theRugby World Cup. Gathering 20 teams from allover the world and thousands of supporters, thecup could only be organised in New Zealandthanks to air travel. Hosting more than 133,000overseas visitors for this six-week event (againstthe 65,000 expected), the air transport industrywas crucial in helping supporters get to theevent. It increased the international image of thecountry, thanks to the 2,000 international mediaattending the event. It also brought economicspillover: ticket sales amounted to over $224.5million, accommodation-related spending was$204.1 million, and food and drinks $187 million.The fiscal stimulus represented nearly 1.4% ofquarterly GDP for New Zealand.ASIA-PACIFIC

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