Airbus estimates that Brazil is going to need more than 1,300 new civil aviation aircraft by 2032 in its effort to cover the country’s increased domestic and international air travel requirements. The estimation proves the leading of the international aircraft industry in global economic growth efforts:
According to the latest Airbus Global Market Forecast (GMF) the Brazilian air travel market will need 1,324 aircraft by 2032 to address the country’s rising international and domestic air travel requirements. The 896 single-aisle, 353 twin-aisle and 75 very large aircraft (VLA) are forecast to help meet the rising demand from domestic and foreign carriers in Brazil almost tripling the in-service fleet from today’s 480 to more than 1320 aircraft by 2032. With a GDP forecast to grow at 4 percent annually, above the world average of 3.1 percent, socioeconomic trends suggest Brazil’s economy will more than double over the next 20 years. Brazil’s air traffic is expected to follow suit, growing at an annual rate of 6.8 percent by 2032, far exceeding the world average of 4.7 percent. Driven by a growing middle class, increased consumer spending as well as a booming tourism sector, Brazil represents 35 percent of all Latin America’s air traffic, making it the region’s largest and amongst the fastest growing markets, having more than doubled since 2000. Since then, international traffic alone has increased at an impressive 87 percent. As the market has grown, carriers from Brazil have been unable to benefit at the same pace as foreign carriers such as those from Europe and North America. More than 40 percent of South America’s long-haul traffic arrives through three Brazilian airports, including Guarulhos International Airport in Sao Paulo which is the number one international airport for long-haul traffic in Latin America. Very large aircraft such as the A380, would be ideal aircraft for these cities with their high density traffic including Rio. VLAs can carry more passengers with fewer flights, while meeting the international air traffic requirements needed to serve long-haul flights to Europe and North America.
The European aircraft maker also aims at strengthening its cooperation with the Middle East given its dynamic present at this year’s Dubai Air Show:
Airbus’ commitment to cooperating with developing aerospace markets around the world is highlighted this week at the Dubai Airshow, as the Middle East industry is playing a growing role in the company’s jetliners. This includes partnerships with two United Arab Emirates-based companies: Strata, a Mubadala company; and Tawazun Precision Industries (TPI), a Tawazun subsidiary. Strata is supplying components for Airbus’ A330 widebody aircraft and its 21st century flagship A380 jetliner, while TPI is supplying parts for the A320 and A330. Via this relationship, Airbus is supporting Abu Dhabi in its agenda to diversify the economy and create exciting opportunities for Emiratis in the aerospace industry, explained Paul Mohammed, Airbus’ Head of International Cooperation – Middle East and North Africa. ”Airbus places a strong emphasis on working alongside these two companies in the United Arab Emirates. Our partnership enables them to increase their knowledge, expertise and skills, and contributes to the region’s continued impressive growth in the aerospace industry,” he said. “This is a win-win relationship, as such partnerships support Airbus in expanding its global industrial footprint and help to secure our position in this important market for new aircraft.” Located in Abu Dhabi’s inland city of Al Ain, Strata is a key Tier 1 partner for Airbus in the Middle East. The company handles composite work packages – providing ailerons, flap track fairings and spoilers for the widebody A330 Family, in addition to flap track fairings for A380 aircraft.
IATA on its part, is hopeful about the overall revenues in the global airline industry mainly by supporting international business development efforts:
IATA raises profit forecasts – the world’s airlines can now upgrade …
Speaking at IATA’s AGM in Cape Town in early Jun-2013, IAG CEO Willie Walsh expressed his optimism about the airline industry: “Anybody who looks historically at what has happened to try to forecast what’s going to happen in the future should forget about it and start with a blank sheet of paper. I genuinely think we’re an industry that for the first time will start exceeding our cost of capital” (Bloomberg 3-Jun-2013). At the same time, IATA raised its 2013 industry net profit forecast from USD10.6 billion to USD12.7 billion, an increase of 67% on 2012, but still only 1.8% of revenues. As IATA CEO Tony Tyler put it, 2013 airline profits will be around USD4 per passenger, “less than the price of a sandwich in most parts of the world”. Moreover, IATA’s forecast represents a return on capital of 4.8%, well below the 7%-8% cost of capital (the return expected by investors). At least this year’s sandwich should be more than the espresso coffee covered by last year’s profits. But it’s not yet time to break out the champagne.
IATA also predicts that China and India (despite recent problems) will continue to lead the global aviation industry growth:
India, China and Latin America would continue to lead the growth next year in the global aviation industry which would improve its profit from USD 6.7 billion to an estimated USD 8.4 billion, IATA said on Thursday. While Chinese domestic market continues to expand “very strongly” despite a slowdown earlier this year, the Indian market by contrast went into a “sharp reverse” in 2012 following the problems faced by Kingfisher Airlines and the slowdown in the Indian economy. IATA officials were critical of India on issues relating to the privatisation of airports in Delhi leading to high airport charges as well as taxation. ”India, for example, developed Delhi into a first class hub airport with the participation of private partners. The facilities are great. But the structure of the concession agreement requires the concessionaire to return 46 per cent of topline revenue to the government,” IATA Director General and CEO Tony Tyler said, adding that the airport regulator AERA approved a hike of 346 per cent in airport charges. ”That is unacceptable for the industry. And a more realistic concession agreement might have prevented it,” he said in reply to questions.
Finally, global aviation industry and the most relevant international aircraft industry offers positive indicators for global economic growth efforts at all levels of economic development. Airbus is here.