Embraer China Market Outlook

Size: px
Start display at page:

Download "Embraer China Market Outlook"

Transcription

1 Embraer China Market Outlook

2 executive summary and global trends a look forward china market overview trends and analysis market forecast by the numbers methodology and definitions China Market Outlook

3 Join us as we build a bright future for the Chinese regional aviation market. Guan Dongyuan Senior Vice President, Embraer President, Embraer China 2

4 Embraer China Market Outlook ( ) Foreword In 2011, world air transport was still feeling the effects of the global financial and European debt crises. The downturn led to softer demand which prompted Embraer to revise its forecast for new segment are forecast to surpass those of Europe. The expected future demand for 1,005 new jets in China represents 15% of global deliveries of jets in this capacity segment. aircraft. Over the next twenty years, air transport is expected to grow at an average annual rate of 5%. By 2031, 6,795 new jets in the 61 to 120-seat capacity segment will join airline fleets throughout the world. Leaders from central to local governments agree that the development of civil aviation can drive economic growth and that regional aviation is a natural way to build a strong nation and improve the living standard of its citizens. Around China, there are examples Civil aviation in China will be a bright spot in world air transport and see continued rapid growth with revenue passenger kilometers (RPK) increasing 7.2% year over year. Looking forward to the period of the twelfth five-year plan, China s economy will have strong momentum characterized by high stability and fast growth that, in the long run, will level out. Limits with the environment, resources of that development. Three years ago, the Inner Mongolia Airport Corporation started promoting greater accessibility to remote areas for the many regional airlines operating in that part of the country. This is but one example of how the Airport Corporation is making air travel more affordable to a new segment of consumers in remote parts of China who never travelled before by airplane. and other factors will contribute to gradual slowing although the rate for the world s second largest air transport market will still be higher than the world average. The next one or two decades will see the golden development of China s air transport industry. Its strategic position will become more prominent and regional aviation will play a more significant As of September 2012, Embraer received 156 firm orders from 12 customers in China and has delivered 125 aircraft. To better serve those customers, the company established Embraer China Aircraft Technical Services (ECA) to offer comprehensive before and after sales service. role in boosting economic development particularly with more regional airports coming online in central and western China. Since the official launch of the Essential Air Service program and the gradual implementation and improvement of subsidies and policies supporting regional aviation development, the sector is assured to have a promising future. With their low operating costs and high versatility, Embraer s advanced 61 to 120-seat jets effectively bridge the gap between traditional regional and mainline aircraft. They have enjoyed great Let s join hands and work together to create a bright future for China s regional aviation industry. popularity with airlines around the world that deploy them to replace ageing fleets, reduce excess capacity and develop new routes. The Asia-Pacific region, including China, will be the fastest growing market in the world where deliveries of jets in this capacity Guan Dongyuan Senior Vice President, Embraer President, Embraer China 3

5 4 On every continent, Embraer aircraft are linking cities, growing commerce and connecting people.

6 china market outlook executive summary and global trends a look forward 5

7 Executive Summary Over the past 40 years, worldwide air transport activity has been characterized by strong growth rates led mainly by advanced economies, such as the United States and Western Europe, and to a certain degree by the Asian market in the last years. Some drivers like the globalization of business, technological development, the revolution in communications, tourism, deregulation in the United States, liberalization in Europe, the advent of the Low Cost business model, and lower fares have been the engines of growth. From 2012 to 2031, the center of gravity for aviation will move eastward, most notably to Asia and, to some extent, southward to Latin America. The main drivers that will impact the global air travel industry are: Strong pace of economic growth in emerging markets; Economic growth driven by middleweight cities; Surge of an urban middle class; High fuel prices and increased environmental concerns; Increased competition and search for business efficiency. Air Traffic Demand Forecast Embraer foresees a 5.0% year-over-year Revenue Passenger Kilometer (RPK) growth over the next 20 years, which will require 32,800 new aircraft deliveries representing a total market value of US$ 3.6 trillion. In a baseline scenario, in which global GDP is expected to grow by 3.1%, emerging economies will remain among the fastestgrowing in the world. Apart from Asia, the best-placed regions in economic terms are the Middle East, Latin America and, to a lesser extent, Africa. Midsized and small middleweight cities will drive almost 40% of the global economic growth. Population will become wealthier as a large urban middle class will outpace the number of poor people; more income will be available for discretionary expenditures, including travel. In this scenario, the Middle East, China and the Latin America will be the fastest-growing markets, with an average annual RPK growth rate of around 7.0%, followed by Asia Pacific with 5.8%, the Commonwealth of Independent States (CIS) with 5.6%, and Africa with 5.3% over the next 20 years. Developed economies will grow less due to their market maturity, North America with 3.2% and Europe with 4.1% by Market Drivers Likely Impact Economic growth in emerging markets Economic growth driven by middleweight cities Surge of an urban middle class High fuel prices & increased environmental concerns Increased competition and search for business efficiency - Power more dispersed with new countries/players - Faster pace of air traffic growth in emerging markets - Potential for emerging economies to expand air services through regional aviation - Development of second and third-tier airports - Potential for network diversification/integration - Opportunities for airlines to explore low to medium-density markets - Increased propensity to travel, availability of income for discretionary expenditures - Strong air transport demand growth in emerging markets - Emissions and noise restrictions getting tougher - Increased use of renewable energy sources - Removal of old and inefficient aircraft - Match aircraft capacity to market demand (right-sizing) - Aircraft with new engine technology (lower fuel consumption and emission) 6

8 Embraer forecasts that world air transport demand will increase roughly 2.7 times by 2031, reaching 13 trillion RPK. By 2031, Asia Pacific and China will be the largest market in the world, accounting for 34% of world RPKs. Europe and North America will follow at 21% of RPKs each. (Chart 1) Uncertainty lies ahead with regard to short-term recovery and long-term projection since there are some risks to an economic forecast. Embraer provides alternative scenarios to its baseline forecast, as the high unpredictability of the external operating environment represents a major risk to the forecast. The first alternative scenario is a downside scenario accounting for 30% of probability, characterized by an increasing solvency risk in the Eurozone and a resurgence of political tensions in the Middle East driving oil to a US$ 200 per barrel peak. This will create a demand shock slowing down the fragile economy. Sustained high oil prices would weigh on consumer behavior in many countries, impacting the demand for air transport. Advanced economies will face a recession similar to the 2008/09 economic crisis, and emerging markets will still lead global growth, although at a slower pace as they will feel the effects of a global slowdown due to reduction of exports to advanced economies. In this scenario, over the next 20 years, in which GDP is expected to grow 2.3% per year, global air transport demand is projected to grow 4.5% annually. Additionally, the upside scenario accounting for 10% of probability assumes a faster- than, expected debt reduction in the Eurozone and a gradual improvement in consumer spending and business investment in the United States. Emerging markets will benefit from a better economic outlook with stronger export demand and increasing internal consumption. A surge in final demand in China and other leading emerging markets would further contribute to strong economic development through higher GDP growth rates. This economic background will result in faster RPK growth rates driven by a more optimistic business environment. In this scenario, in which GDP is expected to grow 3.5% per year over the next 20 years, global air transport demand is projected to grow 5.9% annually. Although we forecast different scenarios, the results presented in the sections ahead are based on a baseline scenario. executive summary and global trends a look forward Chart 1 Projected Traffic and Economic Growth ( ) Billions of RPK North America Europe Asia Pacific China Middle East Latin America CIS Africa 2011 Additional Annual Growth Rate RPK GDP 3.2% 2.6% 4.1% 1.9% 5.8% 3.4% 7.0% 5.5% 7.2% 3.9% 7.0% 4.3% 5.6% 3.4% 5.3% 4.4% ,000 1,500 2,000 2,500 3,000 World 5.0% 3.1% Source: Global Insight; EIU; Embraer 7

9 30 to 120-Seat Jet Segment Embraer foresees world demand for 6,795 new jets in the 30 to 120-seat capacity segment over the next 20 years, representing a total market value of US$ 315 billion. From 2012 to 2021, 3,005 new aircraft will be delivered, and the remaining 3,790 units will enter the market between 2022 and The 91 to 120-seat segment will be the largest market, with 3,765 new deliveries in the next 20 years, representing 55% of the segment, followed by the 61 to 90-seat segment with 2,625 new deliveries, or 39%, and the 30 to 60-seat segment with 405 new units, or 6%. Market Segment (seats) ,325 1,300 2, ,680 2,085 3, ,005 3,790 6,795 The 30 to 60-seat capacity segment has been impacted by high fuel prices and a weak revenue environment, mainly in North America, where some 70% of 50-seat jets are in service. However, this category will continue to be essential to hub - and - spoke sustainability, as the aircraft have the capability to link many low to mediumdensity markets to major hubs and to develop regional aviation in emerging countries. Efficiency is paramount. Aircraft in the 61 to 120-seat segment, such as the E- Jets family, position carriers for sustained growth as the use of right-sized equipment allows airlines to maximize operational efficiency and profitability through better yields and competitive positioning. It is a very significant part of today s aviation network and has been providing much-needed flexibility to airlines by right-sizing (complementing or replacing) larger jets, replacing ageing aircraft in the same seat category, developing new markets, and expanding from smaller regional jets (natural growth). (Chart 2) Chart 2 E-Jets Network Around the World Right-sizing Natural Growth Direct Replacement New Markets 8 Source: OAG

10 Commercial Jet Delivery Forecast 30 to 120-Seat Segment, by Region ( ) World Region New Deliveries Share Africa 210 3% Asia Pacific 505 7% China 1,005 15% Europe 1,460 21% Latin America % Middle East 305 4% North America 2,195 32% Russia/CIS 445 7% Total 6,795 Over the next 20 years, 47% of new deliveries (3,225 units) will be added to support market demand growth and 53% (3,570 units) to replace ageing equipment. The world fleet in service of 30 to 120-seat jets will increase from 4,150 aircraft in 2011 to 7,375 by Some 14% (580 jets) of the current fleet will still be in operation. (Chart 3) Turboprops High energy prices and environmental concerns tend to favor turboprop demand growth, mainly in short-haul markets and in routes where there is no direct competition with jets. For medium and long-haul missions, jets will still be preferred due to their higher productivity, overall operational efficiency and schedule compatibility with narrowbody jets. By 2031, 2,515 new turboprops (with a capacity of 30 seats or more) will be delivered, 46% to support market growth and another 54% to replace ageing aircraft. Around 83% of all turboprop demand will be in the capacity segment of 60 seats and greater. Market Segment (seats) ,200 2, ,085 1,430 2,515 In 2011 there were 2,070 turboprops in service with an average age of 15 years. By 2031, 35% of the current fleet will still be in service, and the total turboprop fleet will increase to 3,235 aircraft. (Chart 4) executive summary and global trends a look forward Chart 3 World Jet Fleet Evolution Number of Aircraft (30 to 120-Seat Segment) Chart 4 World Turboprop Fleet Evolution Number of Aircraft (30+ Seat Segment) 7,375 3,225 4,150 3,570 3,235 1,165 2,070 1, Retained Replacement Growth Source: Embraer 9

11 Narrow and Wide-Body Aircraft Over the next 20 years, airlines will require 23,490 new jets with more than 120 seats (70% of total new aircraft deliveries), 17,305 narrow-bodies and 6,185 wide-bodies. Market Segment (seats) Narrow-bodies ( ) 7,855 9,450 17,305 Wide-bodies (210+) 2,855 3,330 6, ,710 12,780 23,490 Of total new deliveries, 54% will be added to support market growth and 46% to replace old aircraft. In this segment, the world fleet in service will increase from 13,395 aircraft in 2011 to 25,985 units in Some 19% of the current fleet in service will remain in operation. (Chart 5) Chart 5 World Narrow and Wide-Body Fleet Evolution Number of Aircraft (120+ Seat Segment) 25,985 12,590 13,395 10,900 Growth Replacement 2,495 Retained Source: Embraer 10

12 World Projected New Deliveries Seat Capacity Segment Share Turboprop % ,200 2,075 6% Total Turboprops 1,085 1,430 2,515 7% Jet % ,325 1,300 2,625 8% ,680 2,085 3,765 12% Total ,005 3,790 6,795 21% NB ,855 9,450 17,305 53% WB ,855 3,330 6,185 19% Total ,710 12,780 23,490 72% Total Jets 13,715 16,570 30,285 93% Total 14,800 18,000 32,800 executive summary and global trends a look forward World Fleet in Service Seat Capacity Segment Turboprop , ,435 Total Turboprops 2,070 3, , ,095 2, ,435 4,020 Jet Total ,150 7,375 NB ,215 18,900 WB ,180 7,085 Total ,395 25,985 Total Jets 17,545 33,360 Total 19,615 36,595 11

13 Global Trends Economic Growth in Emerging Markets The balance of global economic power is shifting to the East and South, paving the way towards the development of a multi-polar world with a greater number of influential countries. While advanced economies have been contributing less to global economic growth than they did 20 years ago, countries commonly called emerging markets are becoming an increasingly significant part of the global economy and financial markets. The economic might of the fastest-growing economies has been matched by their growing geopolitical influence. (Chart 6) Economic Growth Driven by Middleweight Cities Global economic growth includes a demographic component: the process of urbanization. Half of the world s population now lives in cities, and it is expected that the urban population as a percentage of total population will reach 60% by 2030, favoring midsized and small middleweight cities defined as cities with a population between 150,000 and five million inhabitants. The predominant growth pattern in smaller cities is resulting in a more equal level of urbanization across all regions. Urbanization is key to the expansion of the airline industry. Future economic growth will take place mainly in midsized and small middleweight cities. According to the McKinsey Global Institute (Urban World: Mapping the Economic Power of Cities), such cities are poised to drive around 40% of global economic growth in the next 15 years. Megacities per capita GDP growth is slowing down, allowing the middleweight cities to catch up. As companies look for fast-growing cities that are likely to contribute most to global economic growth, there will be a need to develop regional aviation and generate new opportunities for airlines to explore low- and medium-density markets. Expanding global connectivity will be a priority to put economic growth on a solid, more sustainable foundation. Midsized and smaller cities will require better air services, including first-ever non-stop flights in key origin and destination markets and competitive options on hub sectors. The 30 to 120-seat jets are Chart 6 Share of World GDP 100% 80% 60% 40% 20% 0% Advanced Economies Emerging Markets Others Source: Global Insight 12

14 better suited for both of those missions. The Surge of an Urban Middle Class As economic activity in emerging markets around the world has been growing significantly and will continue to increase over the next 20 years, the world population is experiencing an increasing equality through distribution of wealth as the GDP per capita grows at a faster pace in regions such as Asia, Eastern Europe and Latin America. (Chart 7) Apart from a substantial reduction in poverty, the world is also witnessing the creation of a large urban middle class. By 2030, emerging market cities will have more higher-end middle-income households than developed cities. According to the Organization for Economic Co-operation and Development (OECD), by 2022 the number of people in the middle class will outpace the number of poor people. The size of the global middle class will increase from 1.8 billion to 3.2 billion people by 2020 and to 4.9 billion by 2030, raising its demand globally from US$21 trillion in 2010 to US$56 trillion in goods by This surge in the global urban middle class is associated with significant wealth redistribution. Today, six out of ten countries with the biggest middle class consumption are in the developed world the United States, Japan, Germany, France, the United Kingdom and Italy. By 2030, this number will be reduced to four out of ten, while India, China, Indonesia, Russia, Mexico, and Brazil will rank in the top ten. executive summary and global trends a look forward Chart 7 GDP per Capita Percentage of Countries 2005 U.S. Dollars % 4% 19% 27% 46% 15% 65% 23% < 7,500 7,500-20,000 20,000-70,000 > 70,000 Source: Global Insight 13

15 Based on spending power, there are four income segments defined by annual household income in PPP terms: Struggling, Aspiring, Consuming and Global. Struggling are those whose annual income is lower than US$ 7,500. Aspiring and Consuming are the intermediate segments whose annual incomes range from US$ 7,500 to US$ 20,000 and from US$ 20,000 to 70,000, respectively. Global are those whose annual income is higher than US$ 70,000. While 64% of today s population belongs to the Struggling segment, it is expected that this portion will be reduced to 20%, bringing the majority of future households to the Aspiring segment, which will represent 60% of world population. The Consuming segment as a percentage of world population will increase from 4% to 19%. (Chart 8) As a growing portion of the population becomes wealthier, more income is available for discretionary expenditures, including travel. High Fuel Prices and Increasing Environmental Pressure Increasing demand for oil from emerging countries is one of the main drivers of oil price escalation. Although the effects of energy prices are incorporated in the 20-year economic and air transport projections, the price of oil is the major downside risk for aviation due to the influence of external events and speculation on the commodity market. In addition, stricter environmental regulations, such as the EU Emissions Trading Scheme, and new government rules tend to reduce noise and emissions, impacting the aviation sector. Oil prices will remain high compared to historical standards. As the major component of a typical airline s cost structure, jet fuel prices put pressure on operating costs. Fuel efficiency is the long-term alternative to reduce the impact of oil price volatility. As every industry looks for untapped opportunities to improve efficiency, the aviation sector has been continuously striving to improve metrics, especially lower fuel consumption, and meet environmental requirements. One solution to reduce jet fuel dependency and greenhouse gas emissions is a more intense use of alternative fuels, in particular carbon-neutral biofuels that must be economically feasible and industrially scalable. This will require an integrated approach among fuel suppliers, airframe, aircraft systems, and engine manufacturers. Chart 8 Percentage of World Population by Disposable Income PPP U.S. Dollars Consumer category Income segment $ PPP % of World Population Global 100, , , Consuming 35,000-70,000 20,000-35, Aspiring 10,000-20,000 7,500-10, ,000-7, Struggling 2,000-5,000 1,000-2, <1, Source: 2011 McKinsey Global Institute Cityscope

16 Increased Competition and Search for Business Efficiency Apart from increased cost, the airline industry will continue to face a weak revenue environment. The search for efficiency is essential in order to temper cost increases as well as revenue reductions. To accomplish the next level of business efficiency, the industry will need to evolve in three major areas: airline operations, aircraft and infrastructure. Competitive positioning, such as cost leadership and differentiation, is an important factor when it comes to airline strategy. The low-fare, high-cost environment will force airlines to rethink their stuck-in-the-middle business strategy in order to provide low-cost services or unique operations widely valued by customers. Airlines will continue to search for efficiency by offering the best costbenefit ratio, through longer-term, highervalue relationships with air travelers. Another aspect, future aircraft engine technology, will balance fuel efficiency, emissions mitigation, and noise reduction. Engine design, geared or advanced turbofan, will enable higher bypass ratios and high-temperature systems for improved thermal efficiency, reduced emissions, and reduced fuel consumption. Moreover, the establishment of the advanced air traffic management (ATM) systems in the United States and Europe, guided by NextGen and SESAR programs, respectively, will enable improvements and consolidation of air traffic control in these regions, increase capacity and reduce system cost. For airports, congestion in major hubs will lead to the emergence of secondand third-tier airports. In order to maintain competitiveness, hub airports will need more integration with ground transportation. Small- and medium-sized airports will benefit from traffic increases, but they will need to improve their own connectivity in order to bring efficiency to the air transport system. executive summary and global trends a look forward 15

17 16 Embraer E-Jets are bringing affordable air travel to people who have never flown before.

18 china market outlook china market overview trends and analysis 17

19 China Regional Market Trends and Analysis In the thirty years since China opened its economy to the global market, the country s total airline revenue passenger kilometers (RPKs) have grown over 17% annually, far higher than that of other transportation modes. China has become civil aviation s second largest air transport region with an increasingly prominent strategic contribution to the national economy and the traveling public. In 2011, it was clear that air transport in China had recovered quickly from the global financial crisis. In that year, airlines and airports posted profits of RMB 27.8 billion and RMB 4.3 billion respectively. Although slightly lower returns than those of the previous year, they were, nonetheless, still bright spots against their counterparts in the rest of the world. With fast growth of the domestic passenger air travel, regional aviation has also made great progress in China with its own characteristics and trends. Current Conditions and Characteristics Stable Increase for Regional Air Transport with Low Volume Stable Increase for Regional Air Transport with Low Volume With dozens of years development, particularly over the last decade, regional aviation has become an indispensable part of China s entire air transport system. The number of routes served by jets with fewer than 100 seats grew from 248 in 2003 to 387 in 2011, a 60% increase. (Chart 9). Regional jets now operate on more routes with greater frequency. The rate of regional airport development is similar. According to 2011 statistics for passenger throughput at civil airports nationwide from the Civil Aviation Administration of China (CAAC), regional airports in third-tier cities had higher YOY growth than those of second or first-tier airports (Chart 10), a very promising trend for regional aviation. The CAAC also cites 1,377 scheduled domestic routes operated by all airlines in The majority of those were categorized as medium and low-density Chart 9 Comparison of Regional Network in China Source: OAG 18

20 routes. Measured by each way passenger volume (PDEW), 1,050 routes (nearly 76%) carried an average of fewer than 300 travelers, (Chart 11), suggesting a huge untapped market for regional aviation. Expansion of Regional Fleet with an Imbalanced Profile In mid-2012, there were 1,820 in-service aircraft in China s civil fleet including 140 regional aircraft with 120 or fewer seats, just under 8% of the total. Aircraft with up to 120 seats accounted for only 3.2% of all seat capacity in civil aviation and carried 2.9% of the total passenger volume. The regional fleet was comprised of 41 ERJ145s, 20 CRJ200/700s, 64 E190s and 11 Modern Ark 60s. Ten airlines currently operate regional aircraft. With the exception of Tianjin Airlines, the fleets of the regional airlines are too small to derive true economies of scale which explains their relatively high operating costs. Analyzing the profile of the civil fleet over the past decade, it is not difficult to see that airlines have always preferred trunk routes to regional routes and purchased aircraft accordingly. The disproportionate number of aircraft of large jets to regional aircraft has not been addressed over the past few years and changes to the trend have been marginal. The imbalance in the development of trunk and regional routes has been a long-standing problem. Analysis shows that 69% of flights carried fewer than 120 passengers (Chart 12), which could have been operated by more efficient regional aircraft with fewer seats. The lack of regional aircraft forces trunk airlines to serve medium and low volume routes with large aircraft. More than 75% of routes with fewer than 300 PDEWs were flown by aircraft with 120 or more seats. Bigger aircraft inevitably lead to over-capacity on some routes which adversely affect operating efficiency and prompts airlines to reduce frequency. In the current domestic market, only 10% of airlines offer two or more flights per day, which offers few options for the traveling public. Accessibility to remote areas to be improved Despite the enormous potential for regional aviation and its considerable progress in recent years, a more comprehensive regional network is still in china market overview trends and analysis Chart 10 Regional Airports have higher growth Traffic growth in 2011(%) Big Airports Second-tier Airports Regional Airports Rank of Pax volume in 2011 Source: CAAC 19

21 development. The majority of flights are still point-to-point and non-hub which is a consequence of the current domestic airline fleet profile. It is encouraging to see that Xinjiang and Inner Mongolia have developed Urumqi and Hohhot into regional aviation hubs with a hub-andspoke route network connecting several regional airports. Poor accessibility has been another problem. According to CAAC statistics, 66% of the 185 civil airports with scheduled commercial flights reach fewer than 10 destinations (Chart 13). Poor accessibility is a result of few frequencies and even on some newly-opened routes there is insufficient capacity to match passenger volume. Improving accessibility will require airlines to open more new routes with aircraft with lower risk and operating costs, higher economic benefits and rational seat capacity. They will need to increase frequency in existing markets, too. Those initiatives will require more regional aircraft. China s Regional Aviation Market: Future Development Maintain High Economic Growth and Accelerate Infrastructure Construction Economic development is closely related to air transport. The long term growth forecast for China s economy will be a strong driver of regional aviation development. Both central and local governments agree that in order to be strong, invest in civil aviation. Local governments have noticeably increased their investments in air transport over the years which have led to the construction of new regional airports. That public infrastructure, particularly in the central and western cities, will become a focus of future airport development. To encourage even more development, the Chinese government will emphasize construction and operation of regional airports in the central and western regions in the twelfth five-year plan period. Over the next five years, RMB 425 billion will be used to build the civil aviation infrastructure, including the construction Chart 11 Number of Domestic Routes by Passenger Volume Daily Passengers Each Way > < Number of Routes Source: Civil Aviation Administration of China (CAAC)

22 of 56 new airports, relocation of 16 airports and reconstruction and expansion of 91 airports. The majority of those planned new facilities will be regional airports. By the end of the twelfth five-year plan period, the number of airports in service will have increased to about 230 which will bring access to air travel to within 100 kilometers of 89% of the Chinese population. Construction and operation of such a large number of new airports will undoubtedly bring greater visibility to regional aviation. More New Policies to Encourage Development of Regional Aviation Civil aviation plays a significant role in the development of the economy, in politics, society, military affairs, diplomacy and culture which has raised its profile among governments at all levels. The Several Opinions of the State Council on Promoting the Development of Civil Aviation issued in 2011 clearly defines civil aviation as a strategic industry and regards its development as a national strategy. The declaration has helped to stimulate further development. Regional aviation development is now also recognized by all levels of government. Recently, the CAAC issued the Interim Measures for Administration of Subsidies to Middle and Small Airports, the Interim Measures for Administration of Subsidies to Regional Aviation and the Interim Measures for Loans with Discounted Interest to Construction of Civil Aviation Infrastructures as well as other documents, together with the National Development and Reform Committee (NDRC) and the Ministry of Finance. These entities have stepped up support for regional aviation and vigorously promoted its development. Since the eleventh five-year plan was introduced, the central budget has allocated a total of RMB billion to support development of civil aviation, an amount more than double the figure in the tenth five-year plan period. RMB64.11 billion of the allocation is to support construction of civil aviation airports and air traffic control and RMB billion is used to subsidize middle and small airports, regional aviation, and interest on loans for construction of infrastructure. The Chinese government will also improve existing regional aviation subsidization china market overview trends and analysis Chart 12 China Domestic Market Profile Percentage of Daily Flights Percentage of Markets 10% 15% 69% of departures with up to 120 passengers on-board 32% 22% 15% 16% 15% 75% No Nonstop Service < 2 flights > 2 flights Pax per Departure Source: Embraer; OAG; Airport-IS 21

23 policies to encourage airlines to operate on regional routes. These revisions include an exemption on import duties and the value-added tax for spare parts of regional aircraft, and the exemption of airport construction fees allocated to regional flights. Implementation of these new policies will effectively reduce the cost of travel for passengers, stimulate consumer demand for regional flights, enhance sector profitability and encourage airlines to increase capacity on routes connecting mid and small-size cities. In order for people living in remote areas to benefit from air transport, the Chinese government will need to better understand the experience of the more mature airline industry of developed countries so that it can improve its local policies and guarantee basic services. The government will also need to provide more support to those small and medium-sized regional airports with low passenger volumes and encourage airlines in the form of funding and policies to increase capacity on regional sectors. All these measures will raise regional aviation in China to a higher level. Urbanization Driving Growth of the Regional Aviation Market In the 20th century, urbanization had become the most common social evolution phenomenon in the world. Since 1950, the world s population increased from 2.5 billion to 6 billion. Sixty percent of the population is in urban regions, particularly in developing countries. If the 20th century was defined by urbanization for developed countries, then developing countries will be recognized for their urbanization in the 21st century. China s own drive to urbanization accelerated in 1980 and continues today. (Chart 14) The Chinese Academy of Social Sciences (CASS) highlighted in its 2012 Urban Blue Book: China City Development Report No.5 that China s urban population reached 691 million in 2011 with an urbanization rate of 51.27% and a population urbanization rate of more than 50%. The trend indicated that China began to shift from a predominantly rural society to an urban one. Acceleration of urbanization not only brings huge changes in cities but also Chart 13 Connectivity in China connection<10 connection11-40 connection41-70 connection connection> Source:OAG

24 promotes closer social, economic and cultural contact and exchanges with others. In such a process, rural people flood to cities and become consumers of transportation. With the emergence of a greater number of midsize and small cities, China s regional cities will be at the forefront of rapid development. Changing life styles associated with that development also impacts methods of consumption. With more disposable income, people are more willing to travel and their spending on transport can increase in multiples. Statistically, the proportion of travel expense per capita as a percentage of disposable income increased from 7.9% in 2000 to 14.73% in 2010 ( Chart 14) Increasingly Fierce Market Competition Urging Airlines to Keep Improving Operating Efficiency Rapid development of Chinese aviation has led to increasingly fierce competition among airlines in the more developed eastern regions of the country where air transport markets are becoming saturated. Carriers are shifting their attention to remote areas and seeing the development of regional aviation as a new source of profit. There are few flights between many second and third-tier cities and there is even a lack of nonstop flights between some cities. In the future, Chinese airlines will need to serve these markets with more economical aircraft that have lower risk and fewer seats so that they may maximize both social and economic returns. High-speed rail means more competition and challenges for air transport but it also signals new opportunities for regional aviation. Firstly, high-speed rail mainly serves the densely populated and economically developed regions so its impact on trunk air routes is far greater than that on regional routes. As a result, regional aviation will still be the dominant mode to connect the vast western regions to the world. Secondly, because the distances between high-speed rail stations are long, regional airlines can provide convenient services between many second- and third-tier cities. This is also applicable in the developed areas in the east of the country. Finally, on some city pairs that are also served by high-speed rail, airlines will certainly face the problem of over-capacity as their passengers migrate to rail. In order to stay competitive and profitable, carriers will need aircraft with fewer china market overview trends and analysis Chart 14 Proportion of Travel Expense per Capita as a Percentage of Disposable Income 60 Proportion of urban porpulation(%) % 12.55% 14.73%

25 seats. Regional jets with their more appropriate seat capacity can become powerful competitive tools. The age of low fuel prices is long gone. Both aircraft manufacturers and airlines are relentless in their efforts to improve fuel efficiency. The impact of fuel prices on the operating cost of an advanced 100-seat jet is far lower than that on the operating cost of an existing widely-used 150-seat aircraft (Chart 15). Jets with fewer seats are an ideal choice for airlines to open new markets with lower risk, offer more frequent flights, and with more optimized fleets. As fuel prices keep rising, airlines in China are facing increasing pressure to adopt practices that protect the environment. Chinese airlines have been replacing a large number of ageing aircraft such as the MD82, BAe146 and B with new, more environmentally-friendly, fuelefficient types and improving the efficiency of flight operations to save energy and reduce emissions. In the future, airlines will pay more attention to right-sizing their fleets to better match capacity to market demand in order to increase seat occupancy and reduce over capacity. Regional jets will be instrumental in delivering true advantages in markets with low and medium passenger volumes. A Break with Tradition Creating New Ways for Regional Aviation Inner Mongolia is an important heavy industrial, commercial, tourism, agricultural and animal-rearing province in North China. Its transport system is underdeveloped in a region that spans 2,400 kilometers from east to west and 1,700 kilometers from north to south. There are a large number of airports separated by long distances that, by themselves, give regional airlines an advantage. There are 14 civil airports in the Inner Mongolia Autonomous Region, all of which are regional airports with the exception of Hohhot Airport(Chart 16). For years, several factors prevented the development of regional aviation in Inner Mongolia. First, airlines did not have the right capacity aircraft for regional routes. Second, airlines were not willing to start regional flights because of high operating costs. Third, airlines were reluctant to Chart 15 Impact of fuel prices on operating costs hange of operating cost per flight segment (RMB) 3,500 3,000 2,500 2,000 1,500 1, seat jet Advanced 100-seat jet ,000 1,500 2,000 2,500 3,000 3,500 4,000 Fuel price change (RMB) 24 Source: Embraer

26 deploy their existing aircraft on regional city pairs that had a wide range of passenger volumes that made it difficult to develop markets and generate profits. Contrary to the reluctance of airlines to introduce more regional flights, local governments were eager to respond to the urgent demand for new service since new frequencies would attract local economic investment. To address the stalemate, the Inner Mongolia Airport Corporation broke with tradition and actively explored new ways to develop regional aviation. In February 2006, it established a virtual airline to operate several regional routes that not were not served by airlines. A virtual airline is different from a true airline in that it is not required to be registered or to buy aircraft that operate under a corporate structure. An entity of this kind can lease aircraft from other airlines, pay rentals through daily usage rates, and fly on any regional route within Inner Mongolia over a long period of time. A virtual airline is intended to cultivate the market as a market pioneer. Once is becomes profitable, the route is transferred to an airline. This process reduces the risk for airlines operating in regional environments and encourages carriers to participate in the development of more regional services. Since this initiative was introduced, many airlines have partnered with the Inner Mongolia Airport Cooperation. The concept of a virtual airline has stimulated the regional airline industry in Inner Mongolia by making air travel more accessible to consumers. After two years of operating a virtual airline, government subsidies to the Civil Aviation Administration of Inner Mongolia reached RMB 850 million. In that time, the government realized the tremendous importance of regional aviation and was recognized for contributing to the social welfare that air transport provides. Governments of various other cities in Inner Mongolia noticed the positive impact of regional aviation and offered their own financial incentives. Many domestic airlines began increasing capacity on regional routes within Inner Mongolia. Today, there are 15 domestic airlines serving routes in the region. The establishment of the virtual airline not only addressed Inner Mongolia s poor market forecast by the numbers 25

27 air service, it also brought significant economic returns to its airlines Moreover, it has satisfied consumer demand for more flights and promoted more economic activity. A virtual airline has one main advantage carriers do not need to find new business in the market. They need only to focus on flying their aircraft, maximizing daily utilization and performing routine maintenance. Before the virtual airline concept was introduced, airlines opened routes and then abandoned them. Today, regional routes have regular flight schedules with aircraft of sufficient capacity to meet market demand. Operational risk to airlines has been reduced and airports have seen improvements in cash flow. Where there was once monopoly service, there are now several carriers competing on the same route. In 2011, airports in Inner Mongolia enplaned million passengers (a YOY increase of 21.3 %,) had cargo throughput of 46,000 tons (a YOY growth of 34.3%) and recorded 100,000 landings and takeoffs (a YOY increase of 22.8 %.) Today, some 164 air routes connect over 60 destinations. The virtual airline concept has made a remarkable difference in the region. In developing the virtual airline concept, 50-seat ERJ145s were favored by the Inner Mongolia Airport Corporation. Their low operating costs and smaller seat capacity gradually became the predominant type in the virtual airline. Over the years, Tianjin Airlines and China Eastern Airlines operated ERJ145s in Inner Mongolia with economic success. From the perspective of the Inner Mongolia Airport Corporation, there can be no B777 aircraft in the Inner Mongolia air transport market which, however, cannot work without ERJ145. Recently, the ERJ145s have been gradually withdrawn from some of the long-established, mature routes and redeployed on new ones.the mature routes are now flown with 100-seat E190s that offer more capacity and better economics. The Inner Mongolia Airport Corporation s innovative and successful development of regional aviation clearly shows that aircraft with fewer than 100 seats have great potential in China. The imbalance in trunk route and regional aviation has been one of the factors restricting development of civil aviation. The tough challenge has been successfully addressed by the CAAC Chart 16 Airports in Inner-Mongolia 26

28 of Inner Mongolia through incentives to local governments, leading departments of the industry, airlines and airports. In 2011, the RPKs on regional routes already exceeded those on trunk routes in Inner Mongolia, proof that the model can work elsewhere in the country. The Inner Mongolia Airport Corporation has expanded its development plan for regional flights through the introduction of regional express airlines that follow the principles of using small aircraft with high frequency and selling tickets at low prices to generate high passenger loads. Regional expresses offer consumers transport between regional and neighboring hub airports, strengthening the network scope of those regional airports. Preferential ticket pricing policies are enabling more people to benefit from air service. Aircraft passenger load factors are climbing which, in turn, is keeping operations viable. In 2010, the Inner Mongolia Airport Corporation launched the Hohhot- Xilinhot Regional Express. The objective was to establish frequent flights rather than immediate profitability. Even in the peak season when seats were in limited supply, fares were kept low to ensure more passengers would travel. Seven daily flights offered tremendous convenience and assured that Xilinhot was always accessible. Its location in a relatively remote area is now connected with several regional points including the hub airport in Hohhot where passengers can transfer to any destination in China and then to the world. The opening of regional expresses has brought new benefits to a large number of passengers. The flights have introduced affordable air travel to an entirely new segment of consumers, improved accessibility of cities served by regional airlines and strengthened regional airports. Today, regional airlines in the Inner Mongolia Airport Corporation are raising the profile of essential air services. Although the road ahead has many challenges, the outlook for regional aviation in Inner Mongolia looks bright as more people become aware of the benefits of air travel and the market grows. Success of the Inner Mongolia Airport Corporation undoubtedly provides valuable experience for the development of regional aviation in other areas of China. market forecast by the numbers 27

29 28 Right-sized aircraft are opening new markets and building the emerging economies of the world.

30 china market outlook market forecast by the numbers 29

31 Regional Aircraft Market Forecast - China China s impressive growth over the past few decades has established it as largest economy in the world, only second to the USA. Although there are a number of challenges in developing regional aviation in China, Embraer remains optimistic with its forecast. In the future, the gradual implementation of the Essential Air Service program and the operation of more new airports together with the improvement of the country s regional route network will require Chinese airlines to introduce more regional aircraft. More flights in those markets will, in turn, promote natural development of the sector. China s economy is forecast to continue with a high rate of annual GDP growth rate no lower than 5.5% over the next twenty years. By 2031, China s airlines will have 4,705 aircraft which will represent 12.9% of the world fleet. growth and 12% to replace old aircraft in the current fleet (Chart 17). The 30 to 120-seat jet fleet will increase from the current 125 units to 1,005 by 2031 with its share of the total feet increased to 21%. Turboprops From 2012 to 2031, 170 new turboprops will be delivered to Chinese airlines: 6% to replace ageing and old aircraft and 94% to support market growth. The turboprop fleet in service is projected to increase from 20 to Seat Jet Segment Embraer foresees a requirement of 3,375 new aircraft with more than 120 seats and of various types: 46% to replace ageing and old aircraft and 54% to support market growth. The 120+ seat jet fleet will grow from the current 1,685 to 3,520. Eight percent of the current fleet will still be in service by to 120-Seat Jet Segment Embraer forecasts a need for 1,005 new aircraft by Chinese airlines in the next two decades: 88% to support market Chart 17 China Regional Aircraft Fleet Evolution Number of Aircraft ( Seat Segment) 1, Growth Replacement Source: Embraer

32 Projected New Deliveries - China Seats 2012 ~ ~ ~ 2031 Turboprop 30~ Total Turboprops Jet 30~ ~ ~ Total ,005 NB ,695 2,670 market forecast by the numbers WB Total ,285 2,090 3,375 Total Jets 1,735 2,465 4,380 Total 1,820 2,730 4,550 Projected China Fleet in Service Seat 2011 年 2031 年 Turboprop 30~ Total Turboprops ~ ~ ~ Jet Total ,005 NB ,395 2,670 WB Total ,685 3,520 Total Jets 1,810 4,525 Total 1,830 4,705 31

Management Discussions and Analysis for the three-month and six-month period ended 30 June 2014 and 2015

Management Discussions and Analysis for the three-month and six-month period ended 30 June 2014 and 2015 Executive Summary Overview of the global economy during the second quarter of 2015 (Q2/2015) are as following; the US economy has been in recovery mode as a result of an increase in household consumption

More information

Randy Tinseth. Current Market Outlook. Vice President, Marketing. Boeing Commercial Airplanes July 2014. July 2014

Randy Tinseth. Current Market Outlook. Vice President, Marketing. Boeing Commercial Airplanes July 2014. July 2014 Current Market Outlook 2015 Boeing Commercial Airplanes July 2014 The statements contained herein are based on good faith assumptions and are to be used for general information purposes only. These statements

More information

Current Market. Predicting the future is a risky business. Meet your new

Current Market. Predicting the future is a risky business. Meet your new By Dawsalee Griffin Meet your new Current Market Outlook What s in store for the next 20 years of the global jetliner market? The just-released version of this annual Boeing report offers the company s

More information

Network of International Business Schools

Network of International Business Schools Network of International Business Schools WORLDWIDE CASE COMPETITION Sample Case Analysis #2 Qualification Round submission from the 2015 NIBS Worldwide Case Competition, Ottawa, Canada Case: Ethiopian

More information

ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY

ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY Net balance responses. =no change ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY This new semi-annual report replaces the quarterly Airlines Financial Forecast, and takes a broader look at how the industry

More information

UNIFE World Rail Market Study

UNIFE World Rail Market Study UNIFE World Rail Market Study Status quo and outlook 2020 Commissioned by UNIFE, the European Rail Industry And conducted by The Boston Consulting Group 2 1 Executive Summary This is the third "World Rail

More information

The Emerging Middle Class in Developing Countries. Homi Kharas, Brookings Institution June XX, 2011

The Emerging Middle Class in Developing Countries. Homi Kharas, Brookings Institution June XX, 2011 The Emerging Middle Class in Developing Countries Homi Kharas, Brookings Institution June XX, 2011 1 Introduction Middle class consumers in the US and other G7 powers have been a key source of demand in

More information

CARGO E-CHARTBOOK Q3 2014 OVERVIEW

CARGO E-CHARTBOOK Q3 2014 OVERVIEW CARGO E-CHARTBOOK Q 4 OVERVIEW Air freight volumes continue to show solid gains on a year ago, supported by economic improvements in some regions, but high jet fuel prices and overall weakness in yields

More information

3.0 Forecast Growth. 3.1 Performance and Assumptions. Recent Performance Passenger Numbers. International Freight and Mail.

3.0 Forecast Growth. 3.1 Performance and Assumptions. Recent Performance Passenger Numbers. International Freight and Mail. 3.0 FORECAST GROWTH 13 3.0 Forecast Growth 3.1 Performance and Assumptions Recent Performance Passenger Numbers In the four years between 2005/06 and 2009/10 (following the approval of the 2006 Master

More information

ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY

ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY Net balance responses. =no change ECONOMIC PERFORMANCE OF THE AIRLINE INDUSTRY This new semi-annual report replaces the quarterly Airlines Financial Forecast, and takes a broader look at how the industry

More information

Finnair Q3 Result 2012. 26 October 2012

Finnair Q3 Result 2012. 26 October 2012 Finnair Q3 Result 2012 26 October 2012 1 Content Market environment in Q3 Business performance and strategy execution Outlook Financials 2 Finnair Q3 Result, 26 October 2012 Market Environment The global

More information

Air China Limited Announces 2014 Annual Results

Air China Limited Announces 2014 Annual Results Air China Limited Announces 2014 Annual Results Hong Kong March 26, 2015 Air China Limited ( Air China or the Company, together with its subsidiaries, collectively the Group ) (HKEX: 00753; LSE: AIRC;

More information

Current Aircraft Finance Market Outlook 2015

Current Aircraft Finance Market Outlook 2015 Boeing Capital Corporation Current Aircraft Finance Market Outlook 2015 Copyright 2014 Boeing. All rights reserved. T he Current Aircraft Finance Market Outlook for 2015 anticipates continued strength

More information

years in the community

years in the community Montréal-Trudeau, from the 70 past to the future years in the community The airport s beginnings Montréal Pierre Elliott Trudeau International Airport is 70 years old! It was on September 1, 1941, that

More information

Low cost airlines What's in it for tourism?

Low cost airlines What's in it for tourism? TRAVEL, LEISURE & TOURISM Low cost airlines What's in it for tourism? Executive summary ADVISORY Our supporters: 3 Introduction Methodology of research study The KPMG study is based on a series of primary

More information

Air China Limited Announces 2013 Annual Results

Air China Limited Announces 2013 Annual Results Air China Limited Announces 2013 Annual Results Hong Kong March 26, 2014 Air China Limited ( Air China or the Company, together with its subsidiaries, collectively the Group ) (HKEX: 00753; LSE: AIRC;

More information

Fifty years of Australia s trade

Fifty years of Australia s trade Fifty years of Australia s trade Introduction This edition of Australia s Composition of Trade marks the publication s 50th anniversary. In recognition of this milestone, this article analyses changes

More information

Issue. September 2012

Issue. September 2012 September 2012 Issue In a future world of 8.5 billion people in 2035, the Energy Information Administration s (EIA) projected 50% increase in energy consumption will require true all of the above energy

More information

MARKET FORECAST 2014 2033 BOMBARDIER COMMERCIAL AIRCRAFT

MARKET FORECAST 2014 2033 BOMBARDIER COMMERCIAL AIRCRAFT MARKET FORECAST 2014 2033 BOMBARDIER COMMERCIAL AIRCRAFT CONTENTS 03 INTRODUCTION AND EXECUTIVE SUMMARY 08 ECONOMIC ENVIRONMENT AND OUTLOOK 12 COMMERCIAL AIRCRAFT MARKET INDICATORS 21 WORLDWIDE FORECAST

More information

Global aluminium outlook and our focus on Tier 1 assets

Global aluminium outlook and our focus on Tier 1 assets Global aluminium outlook and our focus on Tier 1 assets Gordon Hamilton, Vice president Metal Management Sales and Marketing, Rio Tinto Alcan Platts Aluminium Symposium Fort Lauderdale Short term economic

More information

Insurance market outlook

Insurance market outlook Munich Re Economic Research 2 May 2013 Global economic recovery provides stimulus to the insurance industry long-term perspective positive as well Once a year, MR Economic Research produces long-term forecasts

More information

Photograph by P. Casier, CGIAR. Africa s enormous potential for regional trade in staples is not being exploited

Photograph by P. Casier, CGIAR. Africa s enormous potential for regional trade in staples is not being exploited Photograph by P. Casier, CGIAR Africa s enormous potential for regional trade in staples is not being exploited 11 Africa Can Help Feed Africa Africa has considerable variation in its climatic conditions

More information

Financial Statement 1 Jan 31 Dec 2010

Financial Statement 1 Jan 31 Dec 2010 Financial Statement 1 Jan 31 Dec 2010 A turn to growth in the sector Demand in passenger and cargo traffic turned up Business travel has clearly picked up Moderate capacity growth, load factors on healthy

More information

Strategic Roadmap Development for international education in the PTE sector

Strategic Roadmap Development for international education in the PTE sector Strategic Roadmap Development for international education in the PTE sector What are Strategic Roadmaps? Strategic Roadmaps are planning tools that identify strategic goals and pathways for growth in international

More information

THE AMERICAN AIRLINEW INDUSTRY AND SOUTHWEST AIRLINES. low profit margins. Within the industry, however, there have been differences in terms of

THE AMERICAN AIRLINEW INDUSTRY AND SOUTHWEST AIRLINES. low profit margins. Within the industry, however, there have been differences in terms of THE AMERICAN AIRLINEW INDUSTRY AND SOUTHWEST AIRLINES Introduction The domestic airline industry in the USA has been characterized by intense rivalry and low profit margins. Within the industry, however,

More information

Machinery and equipment manufacturing in China

Machinery and equipment manufacturing in China Machinery and equipment manufacturing in China Focal point: NBSO Dalian The layout of the global equipment manufacturing industry is changing fast. Production capacity relocates from developed countries

More information

CURRENT MARKET OUTLOOK 2015 2034

CURRENT MARKET OUTLOOK 2015 2034 CURRENT MARKET OUTLOOK 2015 2034 Copyright 2015 Boeing. All rights reserved. 1 CURRENT MARKET OUTLOOK 2015 2034 OUTLOOK ON A PAGE 4 Outlook on a page DELIVERIES BY AIRPLANE SIZE AND REGION Region Asia

More information

IPA Global Publishing Statistics. Rüdiger Wischenbart

IPA Global Publishing Statistics. Rüdiger Wischenbart IPA Global Publishing Statistics Rüdiger Wischenbart 1 International Publishers Association The 20 Largest Publishing Markets A list of the 20 largest publishing markets therefore highlights complex dynamics

More information

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario Medium and Long Term Natural Gas Outlook CEDIGAZ February 215 Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario 4 3 %/year 199-213 213-235 6 Main consuming markets - %/year (213-235)

More information

Main trends in industry in 2014 and thoughts on future developments. (April 2015)

Main trends in industry in 2014 and thoughts on future developments. (April 2015) Main trends in industry in 2014 and thoughts on future developments (April 2015) Development of the industrial sector in 2014 After two years of recession, industrial production returned to growth in 2014.

More information

Finnair Q1 result info

Finnair Q1 result info Finnair Q1 result info 7 May 2014 CEO Pekka Vauramo CFO Erno Hildén 1 Updated mission and strategic targets 2 Our Mission Offer the smoothest connections in the northern hemisphere via Helsinki, and the

More information

World Energy Outlook London, 12 November

World Energy Outlook London, 12 November World Energy Outlook 2013 London, 12 November The world energy scene today Some long-held tenets of the energy sector are being rewritten Countries are switching roles: importers are becoming exporters

More information

TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST

TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST Tuesday, October 13 th 2015 Christopher Doan Vice President Oliver Wyman acquired TeamSAI and integrated the business

More information

PREMIUM TRAFFIC MONITOR MAY 2015 KEY POINTS

PREMIUM TRAFFIC MONITOR MAY 2015 KEY POINTS PREMIUM TRAFFIC MONITOR MAY 2015 KEY POINTS Passenger travel on international markets rose 6.2% in May compared to a year ago, accelerating on the 3.8% increase in April. Economy class travel grew at a

More information

Deutsche Bank. Andean Region Conference. London, May, 2016

Deutsche Bank. Andean Region Conference. London, May, 2016 Deutsche Bank Andean Region Conference London, May, 2016 This presentation may include forward-looking comments regarding the Company s business outlook and anticipated financial and operating results.

More information

Comparing Chinese Investment into North America and Europe

Comparing Chinese Investment into North America and Europe Comparing Chinese Investment into North America and Europe 1 EXECUTIVE SUMMARY Chinese outbound foreign direct investment (OFDI) has grown rapidly in recent years and is increasingly flowing to high-income

More information

Insurance Market Outlook

Insurance Market Outlook Munich Re Economic Research May 2014 Premium growth is again slowly gathering momentum After a rather restrained 2013 (according to partly preliminary data), we expect growth in global primary insurance

More information

Management Report Corporate Profile Annual Report 2014 Continental AG 42

Management Report Corporate Profile Annual Report 2014 Continental AG 42 Management Report Corporate Profile Annual Report 2014 Continental AG 42 Corporate Strategy A balanced product portfolio, technological and market leadership in the market segments relevant to us, as well

More information

QUALITY OF SERVICE INDEX

QUALITY OF SERVICE INDEX QUALITY OF SERVICE INDEX Advanced Presented by: David Dague ICF SH&E Principal 2012 Air Service Data and Planning Seminar January 22-24, 2012 0 Workshop Agenda Introduction QSI/CSI Overview QSI Uses Historical

More information

Thailand s Logistics

Thailand s Logistics Thailand s Logistics Over the past fourteen years, overall international trade with Thailand has grown 340% and manufacturing trade 370%; this growth, aided in part by the nation s bilateral trade agreements

More information

Gatwick Vision CONNECTING THE UK NATIONS AND REGIONS TO GLOBAL GROWTH

Gatwick Vision CONNECTING THE UK NATIONS AND REGIONS TO GLOBAL GROWTH Gatwick Vision CONNECTING THE UK NATIONS AND REGIONS TO GLOBAL GROWTH gatwickobviously.com // @LGWobviously Gatwick s Vision Gatwick s vision for the future is for airports outside London to thrive, growing

More information

Differentiation and profitable growth in a changing environment

Differentiation and profitable growth in a changing environment KONE CMD 2015 Differentiation and profitable growth in a changing environment Henrik Ehrnrooth, President & CEO We want to make the coming five years as exciting as the previous five... KONE in 2009 in

More information

LAN AIRLINES REPORTS NET INCOME OF US$60.6 MILLION FOR THE SECOND QUARTER OF 2010

LAN AIRLINES REPORTS NET INCOME OF US$60.6 MILLION FOR THE SECOND QUARTER OF 2010 FOR IMMEDIATE RELEASE LAN AIRLINES REPORTS NET INCOME OF US$60.6 MILLION FOR THE SECOND QUARTER OF 2010 Santiago, Chile, July 27, 2010 LAN Airlines S.A. (NYSE: LFL), one of Latin America s leading passenger

More information

Working Paper Research Unit Global Issues Stiftung Wissenschaft und Politik German Institute for International and Security Affairs.

Working Paper Research Unit Global Issues Stiftung Wissenschaft und Politik German Institute for International and Security Affairs. Working Paper Research Unit Global Issues Stiftung Wissenschaft und Politik German Institute for International and Security Affairs Friedemann Müller Paper presented at KAS CFIE CFISAE AHK International

More information

WORLDWIDE RETAIL ECOMMERCE SALES: EMARKETER S UPDATED ESTIMATES AND FORECAST THROUGH 2019

WORLDWIDE RETAIL ECOMMERCE SALES: EMARKETER S UPDATED ESTIMATES AND FORECAST THROUGH 2019 WORLDWIDE RETAIL ECOMMERCE SALES: EMARKETER S UPDATED ESTIMATES AND FORECAST THROUGH 2019 Worldwide retail sales including in-store and internet purchases will surpass $22 trillion in 2015, up 5.6% from

More information

TURBULENCE AHEAD DISENGAGE THE AUTOPILOT

TURBULENCE AHEAD DISENGAGE THE AUTOPILOT TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST 2015 MRO AMERICAS CONFERENCE David A. Marcontell Vice President Oliver Wyman acquired TeamSAI and integrated the business

More information

FLIGHT PATH TO GROWTH THE CASE FOR INCREASING LONDON S AIR CAPACITY

FLIGHT PATH TO GROWTH THE CASE FOR INCREASING LONDON S AIR CAPACITY FLIGHT PATH TO GROWTH THE CASE FOR INCREASING LONDON S AIR CAPACITY THE PROBLEM WHY DO WE NEED TO FLY? The UK is the world s second-largest exporter of services and the sixth-largest exporter of goods.

More information

Economic Growth Rates

Economic Growth Rates 4 Economic Growth Rates Will the poor countries catch up with the rich? GDP and GNP growth rates in developing countries are on average higher than those in developed countries. Moreover, the difference

More information

World Energy Outlook 2012. Presentation to the press London, 12 November 2012

World Energy Outlook 2012. Presentation to the press London, 12 November 2012 World Energy Outlook 2012 Presentation to the press London, 12 November 2012 The context Foundations of global energy system shifting Resurgence in oil & gas production in some countries Retreat from nuclear

More information

European airlines and the Asian market. A Lufthansa Consulting outlook towards the middle of the next decade

European airlines and the Asian market. A Lufthansa Consulting outlook towards the middle of the next decade European airlines and the Asian market A Lufthansa Consulting outlook towards the middle of the next decade Lufthansa Consulting GmbH Von-Gablenz-Str. 2-6 50679 Köln Germany Registration: Local Court of

More information

Norwegian UK set to takeoff as airline is granted UK Air Operating License

Norwegian UK set to takeoff as airline is granted UK Air Operating License Norwegian UK set to takeoff as airline is granted UK Air Operating License New Norwegian UK subsidiary will open the door for further UK expansion and potential new routes to Asia, South America and South

More information

The Analysis of the Mechanism of Coordinated Development between the Road Transport Logistics Infrastructure and the Logistics Service

The Analysis of the Mechanism of Coordinated Development between the Road Transport Logistics Infrastructure and the Logistics Service Journal of Service Science and Management, 2015, 8, 372-381 Published Online June 2015 in SciRes. http://www.scirp.org/journal/jssm http://dx.doi.org/10.4236/jssm.2015.83039 The Analysis of the Mechanism

More information

RESOURCE EFFICIENCY: ECONOMICS AND OUTLOOK FOR ASIA AND THE PACIFIC

RESOURCE EFFICIENCY: ECONOMICS AND OUTLOOK FOR ASIA AND THE PACIFIC RESOURCE EFFICIENCY: ECONOMICS AND OUTLOOK FOR ASIA AND THE PACIFIC Key messages: KEY MESSAGES AND HIGHLIGHTS Global sustainability depends on the creation and implementation of effective policies to support

More information

Financial Information

Financial Information Financial Information Solid results with in all key financial metrics of 23.6 bn, up 0.4% like-for like Adjusted EBITA margin up 0.3 pt on organic basis Net profit up +4% to 1.9 bn Record Free Cash Flow

More information

Global Steel Market Outlook

Global Steel Market Outlook Global Steel Market Outlook OECD Steel Committee Meeting Paris, 11-12 May 215 This document is for worldsteel member companies only. Please do not distribute it to third parties. 2 1 Steel Demand Forecast

More information

Alliances. Compete. Re-evaluation

Alliances. Compete. Re-evaluation STRATEGIC OVERVIEW ANA ANNUAL REPORT 1998 Domestic Air Transportation Attract Load factor is critical to ANA s earnings. In fiscal 1998, this figure was 63.4 percent in Japan. If fares remain constant,

More information

ACE: Leader in the European Automotive Components Market

ACE: Leader in the European Automotive Components Market ACE: Leader in the European Automotive Components Market ACE 2012-2015 Strategy 21/12/2011 Following on from our Current Report in December 2010, ACE s management herein presents its 2011 update on the

More information

NATURAL GAS DEMAND AND SUPPLY Long Term Outlook to 2030

NATURAL GAS DEMAND AND SUPPLY Long Term Outlook to 2030 1. Background On different occasions, Eurogas is asked to present its views on the future of the European gas industry. The forecasts are mainly needed for conferences and bilateral discussions with European

More information

SEMICONDUCTOR INDUSTRY ASSOCIATION FACTBOOK

SEMICONDUCTOR INDUSTRY ASSOCIATION FACTBOOK 2015 SEMICONDUCTOR INDUSTRY ASSOCIATION FACTBOOK INTRODUCTION The data included in the 2015 SIA Factbook helps demonstrate the strength and promise of the U.S. semiconductor industry and why it is critical

More information

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 For the past few years LNG has experienced high levels of activity and investment in

More information

Luis Pinto, CFO, NetJets Europe. NetJets Europe - Flying the fractional flag

Luis Pinto, CFO, NetJets Europe. NetJets Europe - Flying the fractional flag Luis Pinto, CFO, NetJets Europe NetJets Europe - Flying the fractional flag NetJets Europe history and mission NetJets Europe was founded in 1996, financial backing from Berkshire Hathaway Founded to meet

More information

Turkish real estate market outlook. Ozkan Yildirim Partner Audit Deloitte

Turkish real estate market outlook. Ozkan Yildirim Partner Audit Deloitte Turkish real estate market outlook Ozkan Yildirim Partner Audit Deloitte The re-opening of recent agreements and chapter negotiations with the European Union (EU) can be seen as positive developments for

More information

Raymond James Global Airline and Transportation Conference

Raymond James Global Airline and Transportation Conference Raymond James Global Airline and Transportation Conference United Continental Holdings, Inc. November 6, 2014 Jim Compton Vice Chairman and Chief Revenue Officer Safe Harbor Statement Certain statements

More information

Finnair Group. Financial Statement 1 January 31 December 2007

Finnair Group. Financial Statement 1 January 31 December 2007 Finnair Group Financial Statement 1 January 31 December 2007 Finnair clearly above European level European network airlines grew five per cent, Finnair s scheduled traffic 18.5 per cent Finnair fastest

More information

www.pwc.co.uk/economics Global wage projections to 2030 September 2013

www.pwc.co.uk/economics Global wage projections to 2030 September 2013 www.pwc.co.uk/economics Global wage projections to 2030 Summary: Wage gap between emerging and advanced economies will shrink significantly by 2030 By 2030, our projections in this report suggest that

More information

Monetary Policy and Shifting Economic Risks. Thomas Hoenig President Federal Reserve Bank of Kansas City

Monetary Policy and Shifting Economic Risks. Thomas Hoenig President Federal Reserve Bank of Kansas City Monetary Policy and Shifting Economic Risks Thomas Hoenig President Federal Reserve Bank of Kansas City London School of Economics London, United Kingdom March 30, 2011 Introduction The past three year

More information

Oliver Wyman Analysis Of The Global Construction Equipment Market Chinese Companies Set the Pace

Oliver Wyman Analysis Of The Global Construction Equipment Market Chinese Companies Set the Pace M A N A G E M E N T S U M M A RY Oliver Wyman Analysis Of The Global Construction Equipment Market Chinese Companies Set the Pace The global construction equipment market is mainly growing along the equator

More information

PREMIUM TRAFFIC MONITOR APRIL 2014 KEY POINTS

PREMIUM TRAFFIC MONITOR APRIL 2014 KEY POINTS PREMIUM TRAFFIC MONITOR APRIL 2014 KEY POINTS Growth in the number of passengers traveling in premium seats on international markets increased by a solid 3.8% in April compared to a year ago, which is

More information

Growth opportunities of Airlines in the CIS Conference: Aircraft Finance and Lease Russia & CIS. 15 March, Moscow

Growth opportunities of Airlines in the CIS Conference: Aircraft Finance and Lease Russia & CIS. 15 March, Moscow Growth opportunities of Airlines in the CIS Conference: Aircraft Finance and Lease Russia & CIS 15 March, Moscow Contents 1.Lufthansa Consulting 2.Factors underpinning growth 3.Economy 4.Traffic 5.Competition/

More information

PREPARING FOR TAKEOFF: AIR TRAVEL OUTLOOK FOR 2016 Mining 2015 data to understand when to buy, expected ticket prices, and fare differentials

PREPARING FOR TAKEOFF: AIR TRAVEL OUTLOOK FOR 2016 Mining 2015 data to understand when to buy, expected ticket prices, and fare differentials PREPARING FOR TAKEOFF: AIR TRAVEL OUTLOOK FOR 2016 Mining 2015 data to understand when to buy, expected ticket prices, and fare differentials It s a good time to explore the world by plane. Across the

More information

THE COLUMBIA METROPOLITAN AIRPORT EXAMPLE

THE COLUMBIA METROPOLITAN AIRPORT EXAMPLE Statement of Dan Mann, AAE Executive Director, Columbia Metropolitan Airport Before the Committee on Transportation and Infrastructure Subcommittee on Aviation U.S. House of Representatives April 30, 2014

More information

China's Aviation Sector - Overview, Current Trends & Opportunities for European Suppliers

China's Aviation Sector - Overview, Current Trends & Opportunities for European Suppliers China's Aviation Sector - Overview, Current Trends & Opportunities for European Suppliers China Civil Aviation Report Uniworld, LLC/Francis Chao September 6, 2005. Dublin, Ireland Before 1978, It was a

More information

Medium Term Outlook for coal. Laszlo Varro Head of Gas, Coal and Power Markets

Medium Term Outlook for coal. Laszlo Varro Head of Gas, Coal and Power Markets Medium Term Outlook for coal Laszlo Varro Head of Gas, Coal and Power Markets Two key numbers 500 000 tonnes is the increase in annual global coal consumption every day for the next five years 100% of

More information

Annual Energy Outlook 2015

Annual Energy Outlook 2015 For Columbia University New York, NY By Adam Sieminski U.S. Energy Information Administration U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov Key results from (AEO215)

More information

Social Housing Policy in Hungary. (a summary)

Social Housing Policy in Hungary. (a summary) Social Housing Policy in Hungary (a summary) Prepared by József Hegedüs Metropolitan Research Institute 2003 May 1. The state of the public housing sector Social housing has been a neglected area of the

More information

III. Companies in America Must Venture Abroad To Sell to New Customers

III. Companies in America Must Venture Abroad To Sell to New Customers III. Companies in America Must Venture Abroad To Sell to New Customers Increasingly, successful companies in America are deeply global as well. To remain dynamic and innovative, they must engage with the

More information

MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan

MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan Stronger Data Lead to Upward Revisions in Purchase Originations Forecast for 2015 and 2016 MBA Economic and Mortgage Finance Commentary: July

More information

China s experiences in domestic agricultural support. Tian Weiming China Agricultural University

China s experiences in domestic agricultural support. Tian Weiming China Agricultural University China s experiences in domestic agricultural support Tian Weiming China Agricultural University Contents Background The policy system Major measures and their implementation Empirical assessment of the

More information

World Energy Outlook 2013. Dr. Fatih Birol Chief Economist, International Energy Agency

World Energy Outlook 2013. Dr. Fatih Birol Chief Economist, International Energy Agency World Energy Outlook 2013 Dr. Fatih Birol Chief Economist, International Energy Agency World Energy Outlook 2013 Dr. Fatih Birol IEA Chief Economist Copenhagen, November 26th The world energy scene today

More information

GENERAL FUND REVENUE REPORT & ECONOMIC OUTLOOK. January 2013 Barry Boardman, Ph.D. Fiscal Research Division North Carolina General Assembly

GENERAL FUND REVENUE REPORT & ECONOMIC OUTLOOK. January 2013 Barry Boardman, Ph.D. Fiscal Research Division North Carolina General Assembly GENERAL FUND REVENUE REPORT & ECONOMIC OUTLOOK January 2013 Barry Boardman, Ph.D. Fiscal Research Division North Carolina General Assembly Highlights General Fund revenue through December is $6.5 million

More information

Interim announcement. 1 st Quarter

Interim announcement. 1 st Quarter Interim announcement 1 st Quarter 2015 www.danfoss.com Danfoss at a glance Danfoss engineers technologies that enable the world of tomorrow to do more with less. We meet the growing need for infrastructure,

More information

Air Arabia. Investor Presentation FY 2015

Air Arabia. Investor Presentation FY 2015 Air Arabia Investor Presentation FY 2015 Disclaimer Information contained in this presentation is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information

More information

European Rail Industry

European Rail Industry European Rail Industry POCKET GUIDE FACTS ON THE RAIL SUPPLY INDUSTRY A driver for EU competitiveness and sustainable mobility worldwide Prepared by UNIFE, the European Rail Industry Association Table

More information

Polyester Fibres in Europe: Developments and Trends

Polyester Fibres in Europe: Developments and Trends Polyester Fibres in Europe: Developments and Trends 9th China International Polyester and Intermediates Forum Frédéric VAN HOUTE Director General, CIRFS Shanghai, P.R. China, November 8 9, 2012 1. Background

More information

Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations

Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations Chapter 24 Measuring the Wealth of Nations 2014 by McGraw-Hill Education 1 What will you learn in this chapter? How to calculate gross domestic product (GDP). Why each component of GDP is important. What

More information

Disclaimer. This presentation is strictly not to be distributed without the explicit consent of Company management under any circumstance.

Disclaimer. This presentation is strictly not to be distributed without the explicit consent of Company management under any circumstance. Air Arabia Investor Presentation 3 rd Quarter 2015 Disclaimer Information contained in this presentation is subject to change without notice, its accuracy is not guaranteed and it may not contain all material

More information

By Magnus Ericsson, Anton Löf and Olle Östensson

By Magnus Ericsson, Anton Löf and Olle Östensson By Magnus Ericsson, Anton Löf and Olle Östensson The world iron ore market in 2010 was dominated by a resurgence after the stimuli packages, put in place in 2009 following the global financial crisis,

More information

Boeing Capital Corporation. Current Aircraft Finance Market Outlook 2016. Copyright 2015 Boeing. All rights reserved.

Boeing Capital Corporation. Current Aircraft Finance Market Outlook 2016. Copyright 2015 Boeing. All rights reserved. Boeing Capital Corporation Current Aircraft Finance Market Outlook 2016 The 2016 Current Aircraft Finance Market Outlook forecasts continued strength in the primary aircraft finance sectors, with a growing

More information

Fleet and funding strategy Solid foundation for growth

Fleet and funding strategy Solid foundation for growth Fleet and funding strategy Solid foundation for growth Erno Hildén, CFO Finnair Capital Markets Day, 22 May 2014 1 Disclaimer This document includes forward-looking statements. These forward-looking statements

More information

EASYJET TRADING STATEMENT FOR THE QUARTER ENDED 31 DECEMBER 2015

EASYJET TRADING STATEMENT FOR THE QUARTER ENDED 31 DECEMBER 2015 26 January 2016 easyjet Trading Statement Page 1 of 6 EASYJET TRADING STATEMENT FOR THE QUARTER ENDED 31 DECEMBER 2015 Continued robust commercial performance and strong management action on cost delivers

More information

Executive summary. Global Wage Report 2014 / 15 Wages and income inequality

Executive summary. Global Wage Report 2014 / 15 Wages and income inequality Executive summary Global Wage Report 2014 / 15 Wages and income inequality Global Wage Report 2014/15 Wages and income inequality Executive summary INTERNATIONAL LABOUR OFFICE GENEVA Copyright International

More information

Discussion Paper 01: Aviation Demand Forecasting

Discussion Paper 01: Aviation Demand Forecasting Airports Commission Discussion Paper 01: Aviation Demand Forecasting Response from Kent County Council and Medway Council Q1: To what extent do you consider that the DfT forecasts support or challenge

More information

Private Equity in Asia

Private Equity in Asia Private Equity in Asia October 21 Asia private equity, in particular China, has increasingly attracted attention from institutional investors due to the region s faster economic recovery, greater growth

More information

Economic Environment. Taking Up. Space. The Rising Relevance of Self-storage Facilities. istockphoto/thinkstock. March 2012 The RMA Journal

Economic Environment. Taking Up. Space. The Rising Relevance of Self-storage Facilities. istockphoto/thinkstock. March 2012 The RMA Journal Economic Environment Taking Up Space The Rising Relevance of Self-storage Facilities istockphoto/thinkstock The self-storage industry is poised for growth and offers opportunities for lending. by Nikoleta

More information

El Al, Israel s national airline, minimizes losses and significantly improves its cash flow

El Al, Israel s national airline, minimizes losses and significantly improves its cash flow El Al, Israel s national airline, minimizes losses and significantly improves its cash flow During the first quarter, El Al reduced losses by 59%, from $39.8 million in the first quarter of 2009, to $16.5

More information

PRESS RELEASE. Nine Month 2015 Financial Results. Net earnings of 81.9m Consolidated revenue up 8% 17% rise in traffic to more than 9m passengers

PRESS RELEASE. Nine Month 2015 Financial Results. Net earnings of 81.9m Consolidated revenue up 8% 17% rise in traffic to more than 9m passengers PRESS RELEASE Nine Month 2015 Financial Results Net earnings of 81.9m Consolidated revenue up 8% 17% rise in traffic to more than 9m passengers Kifissia, 26 November 2015 AEGEAN announces Nine Month 2015

More information

2013 2014e 2015f. www.economics.gov.nl.ca. Real GDP Growth (%)

2013 2014e 2015f. www.economics.gov.nl.ca. Real GDP Growth (%) The global economy recorded modest growth in 2014. Real GDP rose by 3.4%, however, economic performance varied by country and region (see table). Several regions turned in a lackluster performance. The

More information

Airline Fleet Planning Models. 16.75J/1.234J Airline Management Dr. Peter P. Belobaba April 10, 2006

Airline Fleet Planning Models. 16.75J/1.234J Airline Management Dr. Peter P. Belobaba April 10, 2006 Airline Fleet Planning Models 16.75J/1.234J Airline Management Dr. Peter P. Belobaba April 10, 2006 Lecture Outline Fleet Planning as part of Strategic Planning Process Airline Evaluation Process Approaches

More information

What s Wrong with the Airline Industry? Diagnosis and Possible Cures. Statement of

What s Wrong with the Airline Industry? Diagnosis and Possible Cures. Statement of What s Wrong with the Airline Industry? Diagnosis and Possible Cures Statement of Steven A. Morrison Professor and Chair, Department of Economics Northeastern University Boston, MA 02115 617-373-2873 s.morrison@neu.edu

More information

Historical U.S. Debt

Historical U.S. Debt Q&A: Everything You Need to Know About the National Debt CHAIRMEN MICHAEL BLOOMBERG JUDD GREGG EDWARD RENDELL How big is the debt? Currently, the national debt held by the public is about $14 trillion,

More information