Global Market Forecast 2000 - · PDF fileE. Passenger traffic forecast methodology 66 ... number of passenger aircraft in service will increase from some ... 400 > 400 freighter a

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GlobalMarket Forecast

2000 - 2019

July 2000

31707 Blagnac CedexFrance

Telephone +33/(0)5 61 93 33 33© Airbus Industrie 2000

All rights reserved

AI/CP 390.0031/00

The statements made herein do not constitute an offer.They are based on the assumptions shown and areexpressed in good faith. Where the supporting grounds forthese statements are not shown the Company will bepleased to explain the basis thereof.

Printed in France

The Airbus Global Market Forecastcan also be found on the Internet at

http://www.airbus.com

www.airbus.com

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Contents

1. Forecast highlights 4

2. Key forecast parameters 8

3. Introducing the GMF 9

4. Demand for air travel 125. Air transport operational evolution 15

6. Fleet renewal 21

7. World passenger fleet development 23

8. Demand for passenger aircraft deliveries: 27

- Regional jets 31

- Mainline single-aisles 32- 200/250-seaters 33

- Mid-sized & large twin-aisles 35

- Very large aircraft 36

9. Air cargo forecast 41

Appendices

A.Geographical regions & airlines analysed 58

B. Route network development 61

C. Passenger market segmentation 62

D.Seat supply analysis 64

E. Passenger traffic forecast methodology 66& results

F. Aircraft replacement methodology 70

G.Detailed passenger fleet results:

- Ten years: 2000 to 2009 72- Twenty years: 2000 to 2019 74

H.Cargo forecast methodology 76

I. Cargo forecast results 83

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During the last year since the issue of Airbus Industrie's previousGlobal Market Forecast (GMF), economic forecasters have becomesomewhat more cautious regarding the prospects for long-termeconomic growth. Nevertheless the results of the latest GMFconfirm Airbus' confidence in the continued strength of the civilaircraft market over the next twenty years, provided ways andmeans can be found to ease the problems caused by congestion.

A significant role in the development of the world fleet will beplayed by a new generation of aircraft larger and more economicalthan anything flying today, and designed to be compatible withexisting airport infrastructure.

Airbus' latest GMF covers the evolution year by year during theperiod 2000 - 2019 of the fleets of passenger and combi aircraftwith at least 70 seats, as well as dedicated freighters, operated bythe world's largest 228 airlines and 49 subsidiaries, together with187 additional cargo operators.

In response to widespread demand, this summary documentpresents the results for the ten-year period to 2009 as well as for thefull twenty years covered by the forecast.

The major predictions are that:

l Driven mainly by continuing economic (GDP) growth andreduced fares, passenger traffic (revenue passenger-kilometres) willgrow at an average annual rate of 5.2 per cent during the next tenyears. Growth will slow as markets mature, to average 4.6 per centthrough the following decade, resulting in twenty-year averageannual RPK growth of 4.9 per cent through 2019, when the airlineswill be generating 160 per cent more RPKs than today.

l Cargo traffic will be stimulated by the development of globale-commerce and manufacturing trends, and freight tonne-kilometreswill grow more rapidly than passenger traffic. FTKs will increase atan average annual rate of 6.1 per cent through 2009, slowing to 5.3per cent annually during the following ten years. Twenty-yearannual FTK growth will average 5.7 per cent through 2019.

l Modest increases in speed, load factor and utilisation will resultin improvements in productivity. The number of annual RPKsproduced by each seat installed in passenger aircraft will increasefrom about 1.66 million in 1999 to 1.8 million in 2009 and morethan 1.9 million in 2019. Similarly, the number of annual FTKsproduced by each tonne of capacity in freighters will increase fromjust under 1 million in 1999 to 1.14 million in 2009 and 1.27 millionin 2019.

l Consequently, to accommodate growing demand, the number ofseats in passenger service will increase from 1.85 million today to

1. Forecast highlights2000 Global Market Forecast

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2.8 million in 2009 and nearly 4.2 million in 2019. At the same timethe capacity of the dedicated freighter fleet will grow from nearly69,000 tonnes to 113,000 tonnes in 2009 and 184,000 in 2019.

l As passenger airlines increase frequencies on existing routes andoperate additional routes, the number of departures will increasemore rapidly than in the past. Annual departures will increase at anaverage 3.8 per cent per year through 2009. Limited infrastructurecapacity will constrain further growth in departures to just 2.7 percent per year through the next decade, resulting in a twenty-yearaverage annual growth in departures of 3.3 per cent through 2019,when the airlines will be making 90 per cent more daily departuresthan today.

l Since the number of departures will be unable to keep pace withthe growth of traffic, the airlines will have to offer more seats perdeparture. From the current average of 158, seats per departure willreach 168 in 2009 and 190 in 2019; an overall increase of 32.

l Smaller aircraft tend to make more flights than larger ones, so theaverage number of seats per aircraft will need to grow more rapidlythan seats per departure. From the current 179 seats, average aircraftsize will increase at an accelerating rate to 191 in 2009 and 217 in2019; an increase of 38. Thus, over the next twenty years, seats peraircraft will increase by 19 per cent more than seats per departure.

l As a result, to provide the required increase in capacity, thenumber of passenger aircraft in service will increase from some10,350 in 1999 to 14,820 in 2009 and 19,170 in 2019.

Forecast highlights

l By 2009, some 4,520 of the passenger aircraft currently in servicewill have been replaced by their current operators as they seek to

The world jetliner fleet will grow by nearly11,000 aircraft

PassengerPassengerPassengerFleetFleetFleet

FreighterFreighterFreighterFleetFleetFleet

New15,364(7,608)

Retired4,601

(2,408)

Recycled3,174(1,644)

Converted2,389(1,166)

1,153(703)

3,448(1,705)

703(271)

14,661(7,337)

World fleet change 2000 - 2019 (2000 - 2009 in brackets)

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2000 Global Market Forecast

maintain a youthful fleet. Of these, 1,640 will be recycled back intothe world fleet, leaving a need for delivery through 2009 of a totalof about 7,340 new passenger aircraft.

l During the following ten years another 4,500 aircraft will bereplaced, of which 1,530 will be recycled, leaving a need foranother 7,320 new aircraft for growth and fleet renewal. So over thetwenty years through 2019 the airlines will take delivery of a totalof about 14,660 new passenger aircraft. And of the 9,000 aircraftreplaced during this period, almost 2,400 will be converted tofreighters and enter dedicated cargo operations.

l The average delivery rate of 733 new passenger aircraft per yearprojected through the first ten years of the forecast will be sustainedthrough the second decade in terms of units. However theprogressive trend towards larger aircraft means that the dollar valueof deliveries in the second decade will be greater.

l The biggest share (35 per cent) of deliveries of passenger aircraftwill go to airlines in North America. European airlines will take 30per cent, and Asia-Pacific airlines 24 per cent, leaving just 11 percent for airlines in Latin America, the Middle East and Africa.

l Higher growth in air travel markets outside the USA means thatthe percentage of the world passenger fleet operated by airlinesbased in North America will decline from its current 43 per cent to36 per cent in 2019, while the share of airlines in Europe and Asia-Pacific rises. In terms of capacity, the most spectacular gain will bemade by the Asia-Pacific airlines, whose share of world seats willgrow from 24 to 29 per cent.

Nearly 15,400 new aircraft will be delivered ...

200/250-seaters like the AirbusA300, A310 and smaller model A330s 1,127 3,046

Larger twin-aisles like the AirbusA330-300 and A340 1,083 2,118

Very large and economical aircraftlike the Airbus A3XX 360 1,235

Mainline single-aisle types like theAirbus A318, A319, A320 and A321 4,330 7,570

70- & 85-seater regional jets 437* 692*

2000 - 2009 2000 - 2019

* many more of these aircraft will be needed by smallerairlines and current turboprop operators not covered by the GMF

7,608 15,364

Freighters 271 703

7,337 14,661Total passenger aircraft

Passenger + freighter aircraft

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Forecast highlights

l The world freighter fleet will grow from 1,510 aircraft with anaverage capacity of 45.5 tonnes in 1999 to 2,240 aircraft with anaverage capacity of 50.5 tonnes in 2009. During this period some700 freighters, having reached the end of their economic lives, willbe retired, creating the need for acquisition of a total of 1,440aircraft, including 1,170 passenger-to-freighter conversions and 270new aircraft.

l From 2009 to 2019 the freighter fleet will grow to 3,450 aircraftwith an average capacity of 53.3 tonnes, while another 450 oldaircraft will be retired. Of the 1,650 aircraft delivered, 1,220 will beconversions and 430 new freighters. Thus a total of some 700 newdedicated freighters will be delivered during the next twenty years.

l The new 7,610 passenger and cargo aircraft delivered during thenext ten years will be worth approximately $560 billion (2000catalogue prices) and the 7,750 aircraft delivered during thefollowing decade will be worth another $750 billion, giving a totaltwenty-year business volume of $1.31 trillion.

327.4

280.7

319.3

281.8

96.0

177.0

105.0

161.4

77.4

34.08.45.2

0

50

100

150

200

250

300

350

70&85 100 to 175 210 & 250 300, 350 &400

> 400 freighter

… a business worth $1.3 trillion

2000 $ (billion)

1% 32% 19% 29% 14%

2000 - 2019

2000 - 2009 1% 25% 21% 24% 22%

6%

7%

8

The numbers of aircraft and seats needed at any point in time togenerate the forecast number of revenue passenger-kilometres at theprojected levels of service frequency will flow directly from theassumptions made regarding the evolution of such concreteoperational parameters as speed, aircraft utilisation, load factor andaverage flight distance.

To facilitate understanding of the GMF results and comparison withother forecasts, the table below presents the actual and forecastvalues at the beginning, middle and end of the twenty-year forecastperiod of eight key parameters, from which the correspondingvalues of a range of other operational parameters (such as speed)can be easily derived.

These values, and the relationships between them, also provide auseful test of reasonableness of the forecast's results.

2. Key forecast parameters2000 Global Market Forecast

Key forecast parameters

Number of aircraft 10,349 14,815

Number of installed seats 1,852,641 2,834,332

Block hours per aircraft per year 3,502 3,636

Number of departures (000) 16,156.0 23,464.6

Seats per departure 158 168

World ASKs (billion) 4,378.5 7,076.9

World RPKs (billion) 3,080.1 5,100.2

Average flight distance (km) 1,370 1,414

End 1999 End 2009

Each of these numbers is a result, not an input !

19,173

4,168,701

3,736

30,738.8

190

10,864.2

7,985.7

1,444

End 2019Passenger aircraft only

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The millennial edition of Airbus Industrie's annual GMF predictsthe numbers of passenger and combi aircraft with at least 70 seats,as well as dedicated freighters, that will be required during thetwenty years from 2000 to 2019 to accommodate traffic growth andto allow fleet renewal by a total of 228 individual passenger airlinesplus 49 subsidiaries, outside the Commonwealth of IndependentStates, which altogether account for 98 per cent of scheduledpassenger operations, as well as 187 additional cargo carriers. Theairlines studied, grouped into seven consolidated geographicalregions, as well as the criteria for inclusion in the GMF, are listed inAppendix A.

3. Introducing the GMF

The GMF covers 228 passenger airlines ...

Europe78 airlines

2,789 aircraft

Asia-Pacific32 airlines

1,430 aircraft

Latin America36 airlines687 aircraft

North America29 airlines

4,418 aircraft

Africa23 airlines273 aircraft

Middle East11 airlines

261 aircraft

P.R. China19 airlines491 aircraft

… and 187 freighter operators

Europe37 operators168 freighters

Asia-Pacific19 operators97 freighters

Latin America31 operators75 freighters

North America47 operators

1,055 freighters

Africa34 operators63 freighters

Middle East15 operators37 freighters

P.R. China4 operators

15 freighters

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Airbus recognises the great potential that exists for growth inpassenger and cargo traffic carried by airlines based in theCommonwealth of Independent States. Currently, however, the lackof a consistent statistical base and reliable economic projectionsdoes not allow the application to these airlines of the forecastingtechniques used in the GMF. Consequently Airbus makes a separateforecast of the evolution of the fleets of the airlines in the CIS,based on plausible assumptions, which is contained in a separatedocument.

The GMF is a “bottom-up” forecast, projecting the year-by-yearevolution of passenger traffic, flight frequencies and aircraftcapacity on a total of 10,013 individual airport-pair route sectorslinking 1,896 airports in 82 distinct domestic and international sub-markets. This avoids the errors inherent in “top-down” forecastsderived from aggregations of averages.

The route-by-route projections are then consolidated so as toforecast the evolution of the individual fleets of each of the airlines,and then further consolidated into the regional fleet forecasts shownin this summary document. Appendix B explains how the GMFsimulates the impact of new route development.

Unlike many forecasts, the GMF uses a very rigorous method ofproduct segmentation into 15 “neutral” seating categories.Depending on its particular seating layout, any individual passengeraircraft will fall between two categories and contribute seats toeach. This ensures that at any time the number of aircraft (andhence flight frequencies) and seats in each individual airline fleetmatch exactly the forecast demand. Appendix C describes this

Demand is forecast in 19 categories

Passenger aircraft Cargo aircraft

Q 70 & 85-seaters *

Q 100,125,150 & 175-seaters

Q 210 & 250-seaters

Q 300, 350 & 400-seaters

Q 500, 600, 800 & 1000-seaters

Q < 30 tonnes capacity

Q 30 to 50 tonnes capacity

Q 50 to 80 tonnes capacity

Q > 80 tonnes capacity

* the GMF does not predict total demand for aircraft in this category,because many more will be needed by smaller airlines and currentnon-jet operators

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Introducing the GMF

approach in more detail, while Appendix D illustrates theapplication of the GMF methodology to a typical route. Cargoaircraft are segmented into four capacity categories.

The passenger traffic forecast methodology and results aredescribed in Appendix E.

The GMF is a pure demand forecast. The extent to which anyavailable aircraft type will satisfy the predicted future demand forseats (or - for freighters - tonnes of lift) at projected levels offrequency will depend largely on its competitiveness, and a versatilepassenger aircraft type, in service in a wide variety of seatinglayouts, will contribute seats to a number of different “neutral” seatcategories.

Moreover, the GMF recognises that many airlines replace passengeraircraft in their fleets long before the aircraft are converted tofreighters or definitively withdrawn from airline service. Aproportion of these aircraft are then “recycled” back into the fleetsof other airlines through the used aircraft or operating lease markets.At the level of individual airline fleets, the GMF identifies thecorresponding opportunities to introduce new aircraft before theexisting aircraft reach the end of their economic lives. Thissummary shows the extent to which overall forecast demand foraircraft deliveries will be satisfied by used aircraft, as described inAppendix F.

The detailed results of the GMF passenger fleet forecast through2009 and 2019 are presented in Appendix G.

A significant proportion of airfreight continues to be transported bydedicated freighters on a non-scheduled basis, rendering theavailable flight schedule databases non-comprehensive. Until acomprehensive database becomes available, the GMF freighteranalysis will continue to deduce pertinent information about thenature of the markets served and the type of service offered fromavailable aircraft-by-aircraft operational data.

The freighter and passenger aircraft forecasts are presentedseparately due to the inevitable differences between themethodologies. However the two forecasts are to some extentinterdependent because passenger aircraft operations play a crucialrole in global airfreight by making available significant freightcapacity in the belly-holds of passenger and combi aircraft, and byproviding significant dedicated freighter lift capacity throughpassenger-to-freighter conversions.

The freighter forecast methodology and results are shown inAppendices H and I.

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4. Demand for air travel2000 Global Market Forecast

Demand for air travel will continue to be driven primarily byeconomic (GDP) growth, though as markets mature demand tendsto become more sensitive to changes in real fares. Initially, when airtravel can be afforded by only a tiny percentage of the population,the fare level is largely irrelevant and the convenience of thejourney paramount. But as air travel becomes generally affordable,more and more passengers - paying for their own tickets - will, ifnecessary, go to considerable inconvenience if this enables them toobtain a cheaper fare.

To maintain the growth in their business, airlines will have to findways to continue to reduce fares in real terms. Airbus forecasterspredict that in future the availability of still more efficient andproductive aircraft will make a major contribution to this.

Airbus anticipates that high-speed rail systems will continue to takea share of some highly-travelled short-haul travel markets, and thisis reflected in the GMF's growth rate projections. However theenormous investment required, together with environmentalconcerns, will severely limit the proliferation of such systems.Further, Airbus predicts that advanced telecommunications willhave an overall neutral impact on demand for air travel, any directsubstitution being counterbalanced by the stimulus they will provideto economic growth.

Airbus does not expect that a new-generation supersonic aircraftwill achieve any significant penetration of the market during thenext twenty years. It also assumes that during this period thedevelopment of subsonic air transport will not be significantly

World annual traffic - trillion RPK

Air travel will continue to grow strongly

0

1

2

3

4

5

6

7

8

9

1969 1979 1989 1999 2009 2019

ICAO traffic history

Airbus projection+ 4.88 % per annum

(11.2% p.a.)

(6.9% p.a.)

(4.5% p.a.)

(5.2% p.a.)

(4.6% p.a.)

13

Demand for air travel

affected by a lack of availability of conventional hydrocarbon fuels,although their increasing price as well as intensifying environmentalpressures will continue to provide strong incentives to improve fuelefficiency.

Overall, Airbus predicts that during the ten years to 2009 scheduledrevenue passenger-kilometres (RPKs) carried by the GMF airlineswill grow at an average annual rate of 5.2 per cent, declining to anaverage annual rate of 4.6 per cent as markets progressively matureduring the following decade. This results in a forecast average RPKgrowth rate of 4.9 per cent per year through 2019. Thus during thenext twenty years world annual RPKs will grow to eight trillioncompared with the current level of three trillion.

Compared with the 1999 GMF, Airbus forecasters have increasedtheir estimate of annual traffic growth for the first decade by 0.1percentage points, and reduced that for the following ten years by0.3 percentage points. This reflects a change, following the faster-than-expected recovery of the economies of several Asian nations,in the long-term outlook of the independent economic forecastsused by Airbus as an input to its forecasting models. The result is amodest reduction by one-tenth of a percentage point of the averageannual growth in RPKs projected over the next twenty years.

Travel growth will vary widely betweendifferent markets

0

1

2

3

4

5

6

7

8

9

Average annual growth rate (% p.a.)1999 - 2019

% of world2019 RPK

Do

m.

US

A

Eu

rop

e -

US

A

Asi

a -

US

A

Intr

a E

uro

pe

Eu

rop

e -

Asi

a

Do

mes

tic

Eu

rop

e

Do

mes

tic

P.R

.Ch

ina

P.R

.Ch

ina

- A

sia

Afr

ica

- E

uro

pe

16.8% 13.3% 8.8% 7.6% 6.5% 3.9% 2.9% 2.4% 2.3% 2.2%

Intr

a A

sia

The individual sub-markets will grow at substantially differentrates. The mature US domestic air travel market is expected to growat just 2.9 per cent per year through 2009 and 2.3 per cent per yearthrough the following decade, resulting in a twenty-year averageannual growth rate of 2.6 per cent. In contrast, passenger trafficgrowth on domestic routes in the People's Republic of China

14


- driven largely by high GDP growth - is expected to average astunning 9.2 per cent annual growth through 2009, and 7.0 per centthrough the next decade. This means that during the next twentyyears domestic PRC traffic will increase nearly five-fold, at anaverage annual rate of 8.1 per cent per year. The lower-than-averagegrowth projected on US domestic routes will result in the share ofworld RPKs generated in this market declining to 17 per cent intwenty years' time from its current level of 26 per cent. During thesame period domestic routes in the PRC will double their share ofworld RPKs, increasing from 2.1 to almost four per cent. By 2019the top ten sub-markets alone will generate two-thirds of total worldRPKs, but despite this concentration Airbus believes that tounderstand the traffic growth potential for each individual airline itis necessary to study all the 82 sub-markets. These are listed inAppendix E together with the average annual RPK growth ratesprojected over the two ten-year periods covered by the GMF.

World totalat end 1999

3.08 trillion RPK


7.99 trillion RPK

US domestic26%

US domestic17%

US domestic share of world traffic will decline

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5. Air transport operational evolution

The results of the GMF flow directly from the assumptions maderegarding not just traffic growth but also such operationalparameters as speed, aircraft utilisation, load factor and averageflight distance. The values of these parameters also provide anexcellent “test of reasonableness” of the forecast results.

During the past twenty years the overall values of all these elementshave been increasing as route networks have evolved and airlineshave responded to global competition. Airbus forecasters predictthat during the next twenty years these historical trends willcontinue, within the constraints of airport and air trafficmanagement capacity. For the GMF passenger airlines, they expectthat:

ll Average flight distance will increase from 1,370 km in 1999 to1,414 in 2009 and 1,444 in 2019;

ll Average block speed, severely constrained by congestion, willincrease from 611 km/h in 1999 to just 616 in 2009 and 620 in2019;

ll Average passenger load factor will increase from 70.3 per centin 1999 to 72.1 in 2009 and 73.5 in 2019, and

ll Aircraft annual utilisation will increase from an average of3,502 block hours in 1999 to 3,636 in 2009 and 3,736 in 2019.

As is invariably the case, these average figures embrace a widerange of variations. Higher-than-average traffic growth on longerinternational routes flown by the airlines in Europe, the Americasand the Asia-Pacific region will serve to increase average flight

Increasing seat productivity will absorb partof traffic growth

-1 0 1 2 3 4 5

World traffic (RPKs) 4.9% 4.1%0.7%

RPKs per seat Seats in service

Passenger load factor 70.3 73.5

Utilisation (block hours/year) 3,502 3,736

Block speed (km/h) 611 620

1999 2019Elements of productivity

Average annual growth (% p.a.)

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distances and hence average speeds over the twenty-year forecastperiod. The most striking development will be among Asia-Pacificairlines, for which a 146 km growth in average distance will resultin a 16 km/h increase in average block speed. On the other hand,higher-than-average growth on local and domestic routes served bythe airlines of Africa, the Middle East and the PRC will lead to areduction in average flight distance and block speed.

The projected overall increases in speed, load factor and utilisationcombine to enable each seat in service to generate more RPKs eachyear. Average annual RPKs per installed seat are projected toincrease from 1.66 million in 1999 to 1.8 million in 2009 and 1.92million in 2019. This represents an average annual growth in seatproductivity of 0.8 per cent through 2009 and 0.7 per cent through2019.

Consequently, to provide the forecast increase in RPKs, the airlineswill have to increase the numbers of seats they operate byrespectively 4.3 per cent per year through 2009 and 4.1 per cent peryear through 2019. As a result, the capacity of the GMF passengerairline fleet will grow from its current 1,852,600 seats to 2,834,300in 2009 and 4,168,700 in 2019.

These global average figures embrace a considerable variationbetween airlines based in the different geographical regions. Annualaverage growth in seat productivity by as much as 1.1 per cent isexpected for the airlines of the Asia-Pacific region, where the GMFprojects a five-point increase in passenger load factor during thenext twenty years. On the other hand the highly productive butpredominantly short-haul airlines of North America are forecast to

-2 -1 0 1 2 3 4 5 6 7

RPK per seat Capacity (seats in service)

World traffic (RPKs) 4.9%

Asia-Pacific 5.6%

Middle East 4.3%

Europe 5.2%

Latin America 4.7%

Africa 4.4%

P.R. China 7.7%

0.7

0.6

1.1

0.6

0.9

0.7

0.7

4.1

7.1

4.5

3.7

4.5

3.2

3.4

3.7

N. America 3.8%

1.0

Seat productivity and capacity growth will varybetween the different airline regional groups

Average annual growth(%)

17

Air transport operational evolution

increase seat productivity by an average of just 0.6 per cent peryear.

During the next twenty years, to accommodate the projected 7.7 percent annual growth in RPKs, the airlines of the PRC will have toincrease the number of seats they operate four-fold, from 97,100 to380,600. At the other extreme, the airlines of North America willincrease capacity by less than 90 per cent, growing from almost700,000 seats in 1999 to just 1.3 million in 2019.

The seat productivity and fleet capacity growth rates shown on thechart are the average increases needed for the airlines based in eachgeographical region to accommodate the growth in air travelprojected in all the sub-markets they serve. They are not the growthin seats needed on routes to, from and within the different regions.

Similarly, these figures cover a substantial variation between thedifferent individual airlines based in each of the regions. Amongairlines based in Europe, for example, twenty-year annual capacitygrowth rates are forecast to range from a low of 0.6 per cent to ahigh of 8.6 per cent, while airlines based in North America willincrease capacity at annual rates ranging from 2.2 per cent to asmuch as 23.2 per cent in one extreme case.

The additional seats will be provided partly by an increase in thenumber of aircraft operated (very largely determined by the increasein numbers of flights), and partly by an increase in average aircraftcapacity. The method used by Airbus to determine the relativecontribution of these two variables is derived from a detailed studyof the actual distribution of flight frequencies between manythousands of airport-pairs as a function of stage distance. For

200 400 600 800 1000 2000 4000 6000 8000 10000 Distance (km)1

2

4

6

8

10

20

40

60

Daily flights

Satisfactoryregionalservice levels(Europe shown)

Maximumservice levels

The GMF assumes liberal frequencydevelopment

Frequencygrowth only

Capacity/frequency split

Capacitygrowth only

Frequencyshare

Capacityshare

18


virtually all routes the numbers of daily departures are no greaterthan those defined by the upper (blue) line. Rational behaviour bythe airlines means that this represents the maximum level offrequency beyond which a further increase will not in itselfstimulate any additional travel demand. The lower (red) line,specific to each region-to-region sub-market, represents theminimum level of service at which air travel becomes fullyattractive.

Thus within Europe, for example, on short routes of up to 500 km,the minimum satisfactory service level is seven daily flights eachway, and where demand exists the GMF allows daily service togrow to 60 flights each way. Corresponding frequency levels on a6,000 km flight range from a minimum of two to a maximum of 18daily flights, each way.

As traffic grows on a particular sector, additional capacity will berequired. As long as the minimum satisfactory level of service hasnot been reached, all additional capacity is provided by adding dailyflights, keeping the same aircraft size. Beyond this point bothfrequency and aircraft size will be increased. The transition fromfrequency to aircraft capacity is carefully tailored to favourincreasing frequency as demand grows, so as to simulate theopening of additional routes (this aspect is further discussed inAppendix B). Once frequency reaches the maximum level allfurther increase in demand is accommodated by an increase inaircraft size.

The overall result is a very liberal growth in frequencies. The GMFpredicts that in ten years' time the airlines will be making 45 percent more daily departures than today. This average annual increase

Aircraft size will have to increase

No. of seats(4.1%*)

Seats peraircraft (1.0 %*)

No. of flights(3.3%*)

Flights per aircraft (0.1%*)

No. ofaircraft (3.1%*)

*20-year average annual growth rate

19

Air transport operational evolution

of 3.8 per cent represents a faster growth in frequencies than hasbeen achieved during the past 25 years, despite the inevitableincrease in congestion and the assumed availability of largeraircraft. The projected 3.3 per cent per year growth in dailydepartures during the whole twenty year period of the forecastmeans that by 2019 the airlines will be making 90 per cent moreflights than today.

Despite the anticipated increase in average flight distance during thenext twenty years, the GMF predicts that airlines will be able toincrease the average number of annual flights made by each aircraftfrom 1,561 to 1,603, a gain of nearly three per cent. So to achievethe forecast 90 per cent increase in annual departures, the airlineswill have to increase the numbers of aircraft they operate by 85 percent (1.85 x 1.03 = 1.90). This represents an average annualincrease of 3.1 per cent in the number of aircraft operated. This inturn means that to achieve the projected annual 4.1 per cent increasein installed seats, they will have to increase average aircraftcapacity by 1.0 per cent per year, from 179 seats per aircraft at end1999 to 191 in 2009 and 217 in 2019, an increase of 38 seats peraircraft over the twenty-year period.

Once again, the global average covers a wide range of regionalvariations as well as differences within the different regions. Thusairlines in the Americas are expected to continue to carry below-average loads and remain well below the world average in terms ofseats per aircraft. Airlines in Africa and the Middle East, driven bythe need to increase frequencies, will increase aircraft size onlymarginally. But in contrast the Asia-Pacific airlines, already well

183

242

182

146

214

157

198

179191

307

215

170

224

189

217

243

140

160

180

200

220

240

260

280

300

The Asia-Pacific airlines will lead the way inaircraft size growth

2019

1999

Africa Europe Middle East P.R.China

Asia-Pacific Latin America North AmericaWorld average

Seats per aircraft

2009

20


above the world average, will have to increase the average size oftheir aircraft by no less than 65 seats - mostly during the seconddecade of the forecast - if they are to meet strongly growing demandin an increasingly congested environment. Small aircraft tend tomake more flights than large ones, so that any forecast growth inaverage seats per departure will generally require a more rapidincrease in average seats per aircraft. The GMF predicts thataverage seats per departure will increase by just 32 seats, from 158at end 1999 to 190 in 2019. Thus during the twenty-year forecastperiod, average seats per aircraft will need to increase by 19 percent more than average seats per departure.

21

6. Fleet renewal

Airline fleet forecasters commonly assume that, once introducedinto the passenger fleet, an aircraft will remain in passenger serviceuntil the end of its economic life. In fact many airlines tend tomaintain a “young” fleet, and replace their passenger aircraft muchearlier.

Each time an airline replaces a passenger aircraft, and whenever anoperating lease expires, this creates an opportunity to introduce anew aircraft into the airline's fleet, while the aircraft replaced -assuming sufficient economic life remains - becomes a candidateeither for conversion to a freighter or to be recycled back into theworld passenger fleet through the used aircraft or operating leasemarkets.

The methodology used in the GMF to determine the numbers ofaircraft replaced, recycled, converted to freighters or (ultimately)withdrawn from airline service, is described in Appendix F. Itreflects as far as possible each individual airline's approach to fleetrenewal. Where no clear pattern of behaviour is apparent, it assumesthat passenger aircraft are replaced by their first operator at aregional default age from new which varies from 20 years forairlines in Asia-Pacific to 29 years for airlines in Latin America.The overall result is an average replacement age from new of 24years.

Airlines will continue to replace passengeraircraft before the end of their economic life

0

5

10

15

20

25

30

Ea

ste

rn E

uro

pe

We

ste

rn E

uro

pe

Nor

th A

mer

ica

Asi

a-P

aci

fic

Ind

ian

Su

bco

ntin

en

t

P.R

.Chi

na

No

rth

Afr

ica

Re

st o

f Afr

ica

Mid

dle

Eas

t

La

tin A

me

rica

24 yearsworldaverage

Default replacement age

On this basis, the GMF predicts that by end 2019 only 1,338 (13 percent) of the 10,349 passenger aircraft with at least 70 seats inservice with the GMF airlines at end 1999 will still be in service

22


with their current operators.

Of the 4,515 passenger aircraft replaced by end 2009:

l 1,644 will be “recycled” back into passenger service with otheroperators;

l 1,166 will be converted to freighters (see Chapter 9), and;

l 1,705 will be definitively withdrawn from airline service, to bescrapped or to enter VIP, government or other non-airline use.

Another 4,496 passenger aircraft will be replaced during the period2010 - 2019. Of the total of 9,011 aircraft replaced by end 2019:

l 3,174 will be “recycled”;

l 2,389 will be converted to freighters, and;

l 3,448 will be withdrawn from airline service.

In the case of dedicated freighters, the GMF assumes they willremain in service until the end of their economic life, which isestimated to be 37 years since new for standardbody aircraft and 35years for widebodies. On this basis, a total of 703 freighters will beretired during the period 2000 - 2009, and another 450 during theperiod 2010 - 2019.

23

7. World passenger fleet development

At end 1999 the fleet of passenger jets with at least 70 seatsoperated by the airlines in the GMF included a total of 10,349aircraft with 1,852,600 installed seats. This will increase to 14,815aircraft with 2,834,300 seats at end 2009, and to 19,173 aircraft with4,168,700 seats at end 2019.

Over the whole twenty-year period, the PRC airline fleet will growthe fastest, more than tripling from a total of 490 aircraft at end1999 to nearly 1,600 at end 2019. At the other extreme, the airlines

0

5,000

10,000

15,000

20,000

1999 2009 2019

+ 3.7 % per annum

10,349@ 179

19,173 a/c@ 217 seats

The GMF passenger fleet will almost double

Number of aircraft

14,815@ 191

+ 2.6 % per annum

-2 -1 0 1 2 3 4 5 6 7

Avg. a/c size No. of aircraft in service

World capacity 4.1%

Asia-Pacific 4.5%

Middle East 3.4%

Europe 4.5%

Latin America 3.7%

Africa 3.7%

P.R. China 7.1%

1.0

1.0

1.2

0.9

0.2

0.8

0.2

3.1

6.0

3.7

2.9

3.2

2.3

3.2

3.5

N. America 3.2%

0.8

High aircraft size growth in Asia-Pacific; highfleet growth in the PRC

Average annual growth(%)

24


Higher growth in air travel markets outside the USA means that thepercentage of the world passenger fleet operated by airlines based inNorth America will decline from its current 43 per cent to 36 percent in 2019, while the shares of airlines in Europe and the Asia-Pacific region (including the PRC) rise to respectively 30 and 22 percent. In terms of capacity, the most spectacular gain will be made

of North America will grow their fleet by less than 60 per cent,from about 4,400 aircraft today to 6,900 in twenty years' time. Thepassenger fleets of the other regions will almost double, growing ataverage annual rates in the range 2.9 to 3.7 per cent.

Europe27%

Asia-Pacific19%

P.R.China5%


1.85 million seats


4.17 million seats

North America38%

Rest of World11%

Europe30%

Asia-Pacific20%

P.R.China9%

North America31%

Rest of World

10%

Airlines in Europe & Asia-Pacific* will operateas many seats as those in North America(* including PRC)

Asia-Pacific14%

Europe27%

P.R.China5%


10,349 aircraft


19, 173 aircraft

North America43%

Asia-Pacific14%

Europe30%

P.R.China8%

North America36%

Latin America6%

North American airlines’ share of the worldfleet will decrease

Middle East3%

Africa3%

Latin America

7%

Middle East3%

Africa3%

25

World passenger fleet development

by the Asia-Pacific and PRC airlines, whose share of world seatswill grow from 24 to 29 per cent. By 2019, airlines based in Europeand in Asia-Pacific will both be operating nearly as many seats asthose in North America. Only ten per cent of world seats will beoperated by airlines in Africa, the Middle East and Latin America.

As the average seat-count of aircraft in service continues to grow,the composition of the world passenger fleet will progressively shifttowards larger aircraft seating capacities. Currently, almost three-quarters of the jetliners with at least 70 seats in service with theGMF airlines have fewer than 210 seats. In twenty years' time thisshare will be down to 59 per cent.

210 & 25011%

100 to 17571%

300, 350 & 40015%


10,349 aircraft


19, 173 aircraft

70 & 852%

> 400 <1%

210 & 25019%

100 to 17555%

300, 350 & 40016%

70 & 854%

> 4006%

Widebodies will increase their share of theworld fleet

210 & 25015%

100 to 17555%

300, 350 & 40028%


1.85 million seats


4.17 million seats

70 & 851%

> 4001%

210 & 25020%

100 to 17536%

300, 350 & 40024%

70 & 851%> 400

18%

Very large aircraft will provide a significantshare of future world airline capacity

26


The contribution made by very large aircraft is best illustrated bythe distribution of seats among the different aircraft seat categories.The proportion of fleet capacity provided by aircraft in seatcategories above 400 seats will increase from under one per centtoday to 18 per cent in 2019. Nevertheless, the GMF predicts that intwenty years' time these very large aircraft will account for only 6.4per cent of the world passenger jet fleet; less than the 7.3 per cent ofthe current fleet which is represented by the 753 passenger andcombi 747s in service today.

Detailed results of the GMF passenger fleet forecast to end 2009and end 2019 are presented in Appendix G. This shows the numberof aircraft of different types in service and on firm order at end1999, together with the associated seat-counts, as well as thenumber of these aircraft and seats which are forecast to be replacedduring the forecast period. Projected deliveries beyond those in theend-1999 backlog are shown for each of the 15 “neutral” aircraftseat categories.

Care is needed in reading the results. The GMF does not, forexample, forecast delivery of just 43 A340-600s through 2019. Inaddition to the 43 aircraft on firm order at end 1999, the A430-600will compete to supply part of the demand forecast for more than1,900 aircraft in the 400-seat and adjacent “neutral” seat categories.

27

8. Demand for passenger aircraft deliveries

Global summaryDuring the next ten years the GMF airlines will need to add 4,466aircraft with 981,700 seats to accommodate traffic growth, and toacquire another 4,515 aircraft with 772,900 seats for fleet renewal.Thus during this period the airlines will need a total of 8,981passenger aircraft with 1,754,600 seats.

During the following decade they will require a further 4,358aircraft with 1,334,400 seats for growth and 4,496 aircraft with839,000 seats for fleet renewal, leading to demand for delivery of atotal of 17,835 passenger aircraft with 3,928,000 seats through2019.

The biggest share (35 per cent) of deliveries will go to airlines inNorth America. European airlines will take 30 per cent, and Asia-Pacific (including PRC) airlines 24 per cent, leaving just 11 per centfor airlines in Latin America, Africa and the Middle East.

As described in Chapter 6, 1,644 of the aircraft required through2009 and 3,174 of those needed through 2019 will be “recycled”aircraft acquired through the used aircraft or operating lease market.Consequently the manufacturing industry can expect to deliver to orfor the GMF airlines a total of 7,337 new passenger and combiaircraft with at least 70 seats during the next ten years, and a total of14,661 new aircraft during the next twenty years.

The “recycled” aircraft will provide 307,200 seats through 2009 and636,000 seats through 2019, leaving respectively 1,447,400 seatsand 3,292,000 seats to be delivered in new aircraft. So the average

0

5,000

10,000

15,000

20,000

1999 2009 2019

Growth

Replaced

+ 3.7 % per annum

10,349 @ 179

19,173 @ 217

1,338 @ 180

9,011 @ 179

8,824 @ 262

Nearly 18,000 aircraft will be required for fleetrenewal and growth

17,835deliveries

Number of aircraft

+ 3.1 % per annum

14,815 @ 191

5,834 @ 185

4,515 @ 171

4,466 @ 220

28


capacity of new aircraft delivered during the first ten-year periodwill be 197 seats, increasing to an average 252 seats per aircraftduring the following decade.

Of the new passenger aircraft delivered through 2009, 61 per centwith 68 per cent of the seats will be acquired for growth and 39 percent with 32 per cent of the seats for fleet renewal. For the wholetwenty-year period, 60 per cent of the new aircraft delivered, with70 per cent of the seats, will be for growth, and 40 per cent of theaircraft with 30 per cent of the seats for fleet renewal.

Most small jetliners will be needed in NorthAmerica & Europe; most very large aircraft inAsia-Pacific

0%

20%

40%

60%

80%

100%

North America 35%

Europe 30%

Asia-Pacific 15%

P.R.China 9%Latin America 6%

Middle East 2%

70 & 85 100 to 175 210 & 250 300, 350 & 400 > 400

Seat category

Per cent of aircraft delivered

Africa 3%

0

5,000

10,000

15,000

20,000

1999 2009 2019

Growth

Replaced

+ 3.7 % per annum

10,349 @ 179

19,173 @ 217

1,338 @ 180

5,837 @ 167

8,824 @ 262

Almost 14,700 new passenger aircraft will bedelivered

3,174 @ 200

Recycled

14,661new aircraft

Number of aircraft

+ 3.1 % per annum

14,815 @ 191

5,834 @ 185

1,644 @ 187

2,871 @ 162

4,466 @ 220

29

Demand for passenger aircraft deliveries

The new aircraft will be distributed among the different seatcategories as follows:

ll 437 (through 2009) and 692 (through 2019) aircraft in the 70and 85-seater categories. The GMF makes no attempt at acomprehensive forecast of demand for these small aircraft. Manymore will be needed for regional operations and by smaller airlinesand current turboprop operators not covered in this study. Howeveroperations by these aircraft in the fleets of major airlines have to bestudied in order to define the lower bound of operations by 100-seaters;

ll 4,330 (through 2009) and 7,570 (through 2019) aircraft in the100, 125, 150 and 175-seater categories, where the outstandingsales success of the A318, A319, A320 and A321 reflects airlines'recognition of the tangible cost and revenue benefits offered bythese advanced and efficient aircraft;

ll 1,127 (through 2009) and 3,046 (through 2019) aircraft in the210 and 250-seater categories. A300s and A310s have sold well inthe past, but in recent years sales of all aircraft types in this categoryhave slowed down. The A330-200 has now made a strong start, andAirbus foresees great potential for this and other A330 familymembers;

ll 1,083 (through 2009) and 2,118 (through 2019) aircraft in the300, 350 and 400-seater categories, where the larger A330-300and the A340 family have progressively built a dominant share ofannual orders, likely to be reinforced once the stretched A340-500and -600 enter service in 2002;

ll 360 (through 2009) and 1,235 (through 2019) aircraft in seatcategories above 400 seats. The GMF confirms that if the airlines

692

7,570

2,118

1,235

437

4,330

1,127 1,083360

3,046

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

70 & 85 100 to 175 210 & 250 300, 350 & 400 > 400

Seat category

Number of aircraft (total demand - recycled)

New passenger aircraft deliveries will average733 per year ...

2010 - 2019 7,324

2000 - 2009 7,337

30


are to continue profitably to meet growing demand for low-cost airtravel in the face of intensifying global competition and increasingcongestion, they will need substantial numbers of a new generationof aircraft like the A3XX, larger and more economical thananything flying today. Despite a small reduction in projectedtwenty-year RPK growth compared with last year's forecast, thisyear's GMF identifies a need for slightly more very large aircraft.This suggests that demand for aircraft in this category will prove tobe robust in the face of changing market conditions.

Based on the current catalogue flyaway prices (2000 $) of currentaircraft types, this business will be worth a total of $526 billionthrough 2009 and $1.22 trillion through 2019.

The greatest business volume will be provided by the 100, 125, 150and 175-seater category of the A318/A319/A320/A321. This will beclosely followed by the 300, 350 and 400-seater category of theA330-300 and A340 family, which will account for 31 per cent ofthe total during the first decade and 26 per cent over the full twenty-year forecast period. An outstanding 23 per cent of the twenty-yearbusiness volume will be accounted for by very large aircraft in seatcategories above 400 seats, a market now targetted by Airbus withthe all-new A3XX. At the other end of the scale, the GMFunderstates demand for 70 and 85-seaters because many more ofthese small regional jetliners will be needed by airlines outside theGMF's domain.

The operation of the GMF airlines' passenger jet fleet will continueto be highly concentrated. By 2019, flights from just the Top 20 outof 1,896 airports served worldwide - led by Chicago O'Hare and

327.4

280.7

319.3

281.8

177.0

105.0

161.4

77.4

8.45.20

50

100

150

200

250

300

350

70 & 85 100 to 175 210 & 250 300, 350 & 400 > 400 Seat category

… a business worth $1.2 trillion

2000 $ (billion)

1% 34% 20% 31% 15%

2000 - 2019

2000 - 2009 1% 27% 23% 26% 23%

31


Los Angeles International - will absorb the utilisation of 25 per centof the aircraft, and half the aircraft will be used on flights from theTop 62 airports.

The table shows the Top Ten airports ranked by the numbers ofdaily departures, aircraft used and seats offered by the GMF fleet:

Results by “mega” seat category

- Regional jetsThe GMF does not attempt a comprehensive forecast of demand forregional jets. Many more of these small aircraft will certainly beneeded for operations not covered here. However regionaloperations of 70 and 85-seaters by major carriers have to be studiedin order to define the lower bound of operations by 100-seaters. Thenumber of regional jets concerned will triple during the forecastperiod, growing from 254 at end 1999 to 763 at end 2019; anincrease of 509. During the same period almost the whole of thecurrent fleet of these aircraft will be replaced, leaving just eight stillin service with their current operators in twenty years' time. Of the246 aircraft replaced, 63 will be recycled back into the worldpassenger fleet through the used aircraft or operating lease markets.This will create a need for delivery through 2019 of 692 newaircraft (380 70-seaters and 312 85-seaters) to potential users in theGMF.

Rankings of Top Ten airports in 2019

Daily departures

1. Atlanta

2. Chicago O’Hare

3. Dallas

4. London Heathrow

5. Frankfurt

6. Paris CDG

7. Los Angeles

8. Amsterdam

9. Detroit

10. St. Louis

Number of aircraft

1. Chicago O’Hare

2. Los Angeles

3. London Heathrow

4. Atlanta

5. Dallas

6. Frankfurt

7. Paris CDG

8. Amsterdam

9. New York JFK

10. Newark

Number of seats

1. London Heathrow

2. Los Angeles

3. Tokyo Narita

4. Frankfurt

5. New York JFK

6. Chicago O’Hare

8. Atlanta

9. Singapore

10. San Francisco

7. Paris CDG

32


- Mainline single-aislesThe GMF airlines' fleet of 100, 125, 150 and 175-seaters will growfrom some 7,330 aircraft at end 1999 to 10,490 at end 2019. Duringthe period, 6,350 aircraft (87 per cent of the current fleet) will bereplaced, with some 1,930 aircraft being subsequently recycled backinto the passenger fleet and 4,420 withdrawn from passengerservice. This will create a need for delivery during the next twentyyears of a total of 7,570 new aircraft in this category.

40 per cent of these will be 100 and 125-seaters, and 60 per cent

The GMF covers only a portion of globalregional jet operators

0

100

200

300

400

500

600

700

800

900

1999 2019

Growth

Repl.

+ 5.7 %per annum

763 @ 77

8

183

254 @ 73

63Rec.

692 new aircraft

509

Fleet development

312

380

0

50

100

150

200

250

300

350

400

70 85

Number of new aircraft

Seat category

Mainline single-aisles will grow less rapidly ...

2,0771,943

2,496

1,054

0

500

1,000

1,500

2,000

2,500

3,000

100 125 150 175


Seat category

0

2,000

4,000

6,000

8,000

10,000

12,000

1999 2019

Growth

Repl.

+ 1.8 %per annum

10,486 @ 144

983

4,417

1,933Rec.

7,570 new aircraft

3,153

Fleet development

7,333@ 140

33


150 and 175-seaters. As a result, the average capacity of the sub-fleet will increase slightly, from 140 to 144 seats per aircraft.

Operation of these aircraft will be widely dispersed. By 2019, noless than 1,586 of the 1,896 airports served by the GMF airlines willbe served by aircraft in this category, with flights from the Top 20airports using a quarter of the aircraft, and half the fleet being usedon flights from 73 airports, led by Dallas and Chicago O’Hare. 44per cent of these aircraft will be in operation in the large fleets(averaging 170 aircraft) of the North American airlines and 27 percent will be used by European airlines (34 per cent of the operators).The remaining 28 per cent will be spread in the other regions.

- 200/250-seatersThe GMF airlines' fleet of these aircraft is expected to grow at anaverage annual rate of 5.9 per cent during the next twenty years,from fewer than 1,200 aircraft at end 1999 to nearly 3,700 at end2019. With almost 90 per cent of their current fleet being replaced,and only some 500 aircraft being recycled back into passengerservice, the GMF airlines will need delivery of some 3,000 newaircraft in this category during the next twenty years.

About 60 per cent of these will be 210-seaters, and 40 per cent 250-seaters. As a result, the average capacity of this sub-fleet willdecline slightly, from 234 seats per aircraft to 229. Much of thisdemand is likely to be supplied by versatile aircraft such as A321sand smaller members of the A330 family.

221 airlines 10,486 aircraft

… with more than 40% flown by airlines inNorth America

Asia-Pacific14%

Europe34%P.R.China

8%

North America12%

Latin America16%

Middle East5%

Africa10%

Asia-Pacific7%

Europe27%

P.R.China8%

North America44%

Latin America8%

Middle East2%

Africa3%

GMF mainline single-aisle fleet in 2019

34


Operation of these aircraft will be relatively concentrated. By 2019,they will be serving just 735 of the airports served by the GMFairlines. Flights from the Top 20 airports will use one-third of theaircraft, and half the fleet will be used on flights from 44 airports,led by Chicago O'Hare and Los Angeles International.

In 2019, 180 airlines will be operating 200/250-seaters. Almost 70per cent of the aircraft will be in service with airlines in Europe andNorth America. 35 per cent of operators, flying 38 per cent of theaircraft, will be in Europe. Only 12 per cent of operators will be inNorth America, but their large fleets (averaging 50 aircraft perairline) mean that they will be operating 30 per cent of the aircraft.

The fleet of 200/250-seaters will more thantriple ...

1,282

1,764

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

210 250


Seat category

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1999 2019

Growth

Repl.

+ 5.9 %per annum

3,668 @ 229

126

546

496Rec.

3,046 new aircraft

2,500

Fleet development

1,168@ 234


… with airlines in Europe the largest users

Asia-Pacific17%

Europe35%

P.R.China9%

North America12%

Latin America12%

Middle East6%

Africa9%

Asia-Pacific13%

Europe38%

P.R.China8%

North America30%

Latin America5%

Middle East3%

Africa3%

GMF 200/250-seater fleet in 2019

35


- Mid-sized & large twin-aislesThe GMF fleet of 300, 350 and 400-seaters will nearly doubleduring the next twenty years, from nearly 1,600 aircraft at end 1999to more than 3,000 at end 2019. With 86 per cent of the current fleetbeing replaced, and fewer than 700 aircraft re-entering passengerservice with other operators, there will be a need for delivery of atotal of about 2,100 new aircraft in this category.

Half of these will be 300-seaters, with the rest split evenly between350 and 400-seaters. Consequently, the average capacity of thecurrent in-service fleet will grow from 331 to 336 seats per aircraft.

2,100 new mid-sized & large twin-aisles willbe needed ...

576506

1,036

0

200

400

600

800

1,000

1,200

300 350 400


Seat category

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1999 2019

Growth

Repl.

+ 3.4 %per annum

3,021 @ 336

221

655

682Rec.

2,118 new aircraft

1,463

Fleet development

1,558@ 331


… with Asia-Pacific & the PRC the largestregional market

Asia-Pacific20%

Europe33%

P.R.China11%

North America14%

Latin America8%

Middle East6%

Africa7%

Asia-Pacific24%

Europe32%

P.R.China9%

North America25%

Latin America3%

Middle East5%

Africa2%

GMF mid-sized & large twin-aisle fleet in 2019

36


Operation of these large aircraft will be highly concentrated. By2019 they will be serving only 490 (a quarter) of all the airportsserved by the GMF fleet. Flights from the Top 20 airports will use42 per cent of the aircraft, and half the fleet will be used on flightsfrom just 27 airports, led by London Heathrow and Frankfurt.

In 2019, one-third of the world fleet of these aircraft will be inservice with airlines in Asia-Pacific, and another third with airlinesin Europe, compared with just a quarter with airlines in NorthAmerica.

- Very large aircraftBy definition, the market for aircraft larger than anything flyingtoday is driven by growth. Currently only 36 high-density aircraftare in service with more than 500 seats, with an average capacity of551 seats each. By 2019 all of these aircraft will have beenwithdrawn from passenger service. At the same time the airlineswill need a total of 1,235 very large and economical aircraft toaccommodate traffic growth on highly-travelled routes at projectedlevels of frequency, and to meet intensifying global competition.The need for very large aircraft builds progressively throughout theforecast period; 360 will be needed in ten years' time.

Despite the fact that Airbus forecasters have reduced theirprojections of long-term passenger traffic growth by one-tenth of apercentage point, the 575 500-seaters, 404 600-seaters, 223 800-seaters and 33 1,000-seaters for which a need is forecast in twentyyears' time represent a slight increase compared with last year'sGMF. (Note that the maximum exit-limited seat count in a nine-door A3XX is 990 seats.)

Demand will develop for more than 1,200 verylarge aircraft ...

33

404

223

575

0

100

200

300

400

500

600

700

500 600 800 1000


Seat category

0

200

400

600

800

1,000

1,200

1,400

1999 2019

Growth

Repl.

(+ 19.3 %per annum)

1,235 @ 600

36

1,235 new aircraft

1,199

Fleet development

36 @ 551

37


By 2019 58 airlines will be operating very large and economicalaircraft. 28 of these, or almost half the total, will be based in theAsia-Pacific region (including the PRC), making this geographicalgroup by far the biggest users of these aircraft. Operators in Europeand North America will together represent only 37 per cent of themarket.

The average of 21 very large aircraft per airline covers a widespread, from 108 aircraft in the fleet of the largest user to just asingle aircraft at the bottom. And, as always, the world fleet of these

Demand for very large aircraft is highlyconcentrated

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 10 20 30 40 50 60

700

600

Cumulatedaverageseats

10 airlines need59% of aircraft61% of seats

20 airlines need 79% of aircraft81% of seats

Number of airlines

Percent of total demand for aircraft larger than 400 seats


… with Asia-Pacific dominating demand

Asia-Pacific31%

Europe19%

P.R.China17%

North America16%Latin America

7%

Middle East5%Africa

5%

Asia-Pacific44%

Europe20%

P.R.China13%

North America17%

Latin America2%

Middle East1%

Africa1%

GMF very large aircraft fleet in 2019

38


The large aircraft will be distributed similarlyto today’s passenger 747s

0

20

40

60

80

100

> 400 seater in 2019

747 in 1999

Airlines

Aircraft per airline

20 40 60

aircraft will be highly concentrated. Almost 60 per cent of theaircraft will be with just the ten largest users, each of which willneed at least 50 aircraft, and three-quarters with the 19 airlineswhich will need more than 20 aircraft each.

The distribution by individual fleet size is actually very similar tothe distribution of the world's current passenger 747 fleet. A total of753 passenger 747s are today operated by 47 airlines, with fleetsranging in size from 76 aircraft to just one. This should ensure theeventual development of an active secondary market for these largeaircraft.

The operation of very large aircraft will also be highly concentrated.Out of the 10,013 route sectors studied in the GMF, just 230 will by2019 absorb the utilisation of at least one very large aircraft, andhalf the capacity of the entire fleet of these aircraft will be used onroute sectors linking just 56 airport-pairs. Out of the Top Ten routesserved by these very large aircraft, as measured by aircraft usage,only the routes from London Heathrow to New York Kennedy andLos Angeles do not serve the Asia-Pacific region, which once againemerges clearly as the main driver behind demand for these aircraft.Five of the Top Ten routes serve Heathrow, and four serve LosAngeles and Tokyo Narita. By 2019 these Top Ten routes alone willuse the capacity of about 170 very large aircraft.

The very large aircraft will have to be extremely versatile. Thedistribution by stage length of the 2019 fleet clearly shows that theywill be used on a wide spread of applications, including a number ofhigh-density domestic and local routes - primarily in Asia; several

39


As a final measure of concentration, the GMF predicts that by 2019flights from just 94 of the 1,896 airports served by the GMF airlineswill absorb the utilisation of at least one very large aircraft, while the capacity of more than half the fleet will be used on flights fromjust the Top Ten airports. High traffic flows on international routesfrom congested Tokyo will make Narita the largest user of verylarge aircraft, with these routes utilising the capacity of 116 of these

Very large aircraft will be used across theentire range spectrum

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

500 2000 3500 5000 6500 8000 9500 11000 12500

Percent of aircraft operated at range

Range band (500 km steps)

Eight of the Top Ten large aircraftroutes will serve the Asia-Pacific region

LAX

In 2019, the Top Ten airport-pairs alone will use 168 out of 1,235 verylarge aircraft

In 2019, the Top Ten airport-pairs alone will use 168 out of 1,235 verylarge aircraft

NRTJFK

LHR

SIN

TPE

SYD

HKG

15

Number of aircraft

20

1518

16

16

17

16

20

ORD15

major intra-Asian and transatlantic routes; and a variety ofintercontinental routes largely serving the Asia-Pacific region.

40


Six of the Top Ten large aircraft airports willbe in Asia-Pacific

1NRT(116)

10SYD(35)

3HKG(83)

5SIN(56)

2LHR(96)

8FRA(44)

7BKK(47)

4LAX(74)

6JFK(50)

9TPE(38)

RankAirport

(no. of VLAs)

In 2019, more than half of the world’s fleet of 1,235 very large aircraft willbe used on flights from just the top ten airports

In 2019, more than half of the world’s fleet of 1,235 very large aircraft willbe used on flights from just the top ten airports

aircraft in 2019. Narita will be closely followed by slot-constrainedLondon Heathrow, which will need the capacity of 96 very largeaircraft to handle the growth in traffic projected over the nexttwenty years.

41

9. Air cargo forecast

Global SummaryOver the next twenty years participants in the world air cargoindustry, including the 187 operators of today's 1,510 dedicatedfreighters, will face the enormous opportunities and challengespresented by an increasingly integrated and fiercely competitiveglobal economic environment. These trends, as well as continuingdevelopments in manufacturing systems and in the emerging newinformation economy, will create robust growth in airfreightdemand. In response, the world freighter fleet will grow to 3,449aircraft by 2019. At the same time, intense competition will meanthat operators will need to be significantly more efficient both in theair and on the ground.

During the twenty-year period of the GMF, 1,153 freighters will beretired from service as they reach the end of their economic lives.The need to replace them, together with the acquisition of 1,939additional aircraft to accommodate airfreight growth, will combineto create demand for a total of 3,092 freighters. Three quarters ofthis demand will be satisfied by lift capacity drawn from thepassenger fleet through passenger-to-freighter conversions, leavinga requirement for delivery of 703 factory-built freighters worthapproximately $96 billion (2000 $).

Compared with the 1999 GMF, the 2000 edition is slightly moreoptimistic about long-term demand for factory-built freighters in theupper mid-sized (50-80 tonne) and largest (>80 tonne) aircraftsegments. But there is a significant reduction in anticipated demandin the small (<30 tonne) and lower mid-sized (30-50 tonne) aircraft

807

357

639

937

271 703

527

1,452

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1999 2009 2019

1,510

3,449

The world freighter fleet will more than double

Number of aircraft

2,244

New freighter potential

Conversionsfor replacement

Conversionsfor growth

Retained inservice

42


segments, reflecting the difficulty operators will experiencejustifying the high acquisition costs of new aircraft in the face ofmodest production levels. The overall result is a slight decrease intotal demand for new freighters.

Interestingly, the increase in size of the world freighter fleetaccelerates slightly in the second half of the forecast period. This isthe result of a reduction in the rate of growth of both averageaircraft capacity and productivity, which more than offsets thedeceleration in traffic growth as markets progressively mature.Faster aircraft capacity growth in the decade through 2009 reflectsthe tendency of operators to reduce unit costs by increasing aircraftcapacity when they replace the large numbers of small and mid-sized freighters which will be retired during this period, while thesuperior performance characteristics of current-generation dedicatedfreighters, especially factory-built aircraft, result in a substantialincrease in productivity coinciding with the same replacementwave. Overall, therefore, the world freighter fleet grows at anaverage 4 per cent per year to 2009 and at an average 4.4 per centper year to 2019.

More information about the cargo forecast methodology, togetherwith the relevant data sources used, can be found in Appendix H.Tables summarising the airfreight and capacity forecast results canbe found in Appendix I.

Airfreight traffic forecastGlobalisation and its resulting economic growth will continue todrive airfreight demand in the long term. The accession of Chinainto the World Trade Organisation represents a continuation of thistrend, with virtually all nations now embracing trade and investmentas vehicles for long-term growth. Paradoxically, while growth willdrive airfreight, airfreight will also drive growth. Advancedmanufacturing systems, which depend on global procurement andrely heavily on fast efficient airfreight as well as advancedcommunication systems, have been contributing to productivity-ledeconomic growth. Moreover, it is widely recognized that thepresence of an efficient air transport infrastructure offers a stronginducement for companies contemplating investment in productivecapacity in a particular location.

This edition of the GMF analyses 120 directional airfreight markets,significantly more than the 36 studied in 1999. Detailed results areavailable upon request in a separate comprehensive study. Overall,the GMF predicts that airfreight, driven by growth in time-sensitiveservices in particular, will triple over the next twenty years, growingat a robust average annual rate of 5.7 per cent. Traffic will grow at afaster average 6.1 per cent per year through 2009, and then mature

43

Air cargo forecast

to an average 5.3 per cent per year growth through the followingdecade.

The largest and fastest growing airfreight markets are, and willremain, those linking Europe and North America to the Asia-Pacificregion. Together, these markets are expected to represent over 40per cent of global airfreight in twenty years' time, generating themain demand for long-range large widebody freighters. The globalshare of shorter-range more mature markets like the domestic USwill gradually erode to about 11 per cent in 2019 from 15 per centtoday, dragging down demand for, and the global share of, shorter-range smaller freighters.

Introduction of a new generation of fast ships on the North Atlanticcargo market is not expected to have a significant impact onairfreight growth, but rather to erode the share of freight carried bydirect ocean liner service. While new fast ship services are expectedto narrow the very wide service gap between the standard airfreightproduct and the top ocean service in terms of speed, security andreliability, an overwhelming percentage of North Atlantic airfreightis currently, and will continue to be, handled by very competitiveand efficient point-to-point belly/combi service.

Belly/combi & dedicated freighter traffic forecastIn general, passenger baggage boarding priorities limit the amountof useable space available for cargo on passenger aircraft.Nevertheless in 1999 the passenger aircraft system carried 84.2billion FTKs, representing 55 per cent of global airfreight traffic,and playing a crucial role in the transport of high-value

Global air freight will more than triple

0

100

200

300

400

500

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

FTKs (billion)

Europe -Asia-Pacific

North America - Asia-Pacific

US domestic

Eur . - Lat.Am.

NA - Lat.Am.

Intra Asia.

Other flows

Europe -North America

7.0% p.a 6.1%

5.3%

5.7% p.a

44


manufactured and semi-processed goods to market locations aroundthe world. The GMF assumes that, largely because of thecompelling economics, airlines will continue aggressively to pursuethe incremental profit potential from their available airfreightcapacity in passenger aircraft. The extent to which capacity in thepassenger aircraft system can grow will be defined by the futuredevelopment of the passenger aircraft fleet. As a result the GMFpredicts that airfreight handled by passenger and combi aircraft willgrow at an average 5.4 per cent per year to 2019. Reflecting theprogressive introduction of more cargo-capable passenger aircraftover the forecast period, this represents slightly faster growth thanthe forecast average 4.9 per cent increase in passenger traffic but isslower than overall global airfreight growth.

The extent to which belly capacity is available on any particularairfreight market has a significant impact on overall yields paid byshippers. Despite differences in the levels of service, the abundanceof marginally-priced belly capacity on the North Atlantic, forinstance, tends to push overall yields lower, whereas the shortage ofbelly capacity out of Asia tends to push yields upwards. In anyevent the portion of airfreight not handled by passenger aircraft, aswell as airfreight demanding a level of service superior to thatoffered by belly/combi capacity, will need to be served by dedicatedfreighters.

Consequently, airfreight traffic handled by dedicated freighters willneed to grow faster than the global average. The growth gapbetween overall airfreight growth and the portion handled by thepassenger aircraft system means that dedicated freighter services

Passenger aircraft will continue to play acrucial role in airfreight transport

0

50

100

150

200

250

300

350

400

450

500

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

FTKs (billion)

Airbus projectiontotal cargo traffic

5.7% p.a.

Belly freight5.4% p.a.

Dedicated freightersanticipated traffic

6.1% p.a.

Total cargotraffic history

7.0% p.a.

6.3%

6.0%

6.1%

5.3%

6.0%

4.8%

45

Air cargo forecast

will need to grow at an average 6.1 per cent per year over the nexttwenty years, from 68.2 billion FTKs in 1999 to 223.5 billion in2019. As a result of a widening growth gap, traffic growth attributedto dedicated freighters will experience more gradual maturationthan overall growth. So, over the next ten years dedicated freightertraffic will grow at an average 6.3 per cent, slowing slightly to anaverage 6.0 per cent in the ten-year period thereafter.

The GMF freighter forecast does not distinguish between integratedand non-integrated service growth, but nevertheless anticipates thatfuture airfreight growth will overwhelmingly accrue to time-sensitive service. Generally, integrators offer the premium level ofservice and can therefore command the highest yields, but aresomewhat less flexible in their operations than are forwarders.Nevertheless, recent trends in the structure of the industry suggestthat the boundaries between these conventional groups are graduallyeroding, with both demonstrating the product development andoperational skills needed to capture the emerging growthopportunities, whether all the elements in the logistics chain areowned or whether they are assembled together and offeredseamlessly by a contractor.

Freighter fleet retirementsIn future, additional lift capacity will also be needed to replacecapacity currently in service as it reaches the end of its economiclife. Based on the demographics of the current freighter fleet, twodistinct retirement peaks can be anticipated over the forecast period.The first will take place from 2003-2007, coinciding with the need

Air freight industry structure is converging

ShippersOrigin

Integrator

Agent

Airline

Forwarder

ConsigneesDestination

Customer - transportinterface

TransportMode(s)

Transport - consigneeinterface

Integratedcarriers Forwarders

46


to replace large numbers of small freighters like converted 727s andlower mid-sized freighters like DC-8s and 707s. The secondretirement peak will occur in the second half of the forecast period,coinciding with the need to replace first generations of factory-builtlarge dedicated freighters.

Financing the cost of acquiring replacement capacity will prove tobe a major challenge for some operators, particularly those whosehistorical orientation towards slower-growing opportunistic charterservices means that they are able to achieve only marginal assetutilisation. Some operators will be forced to change strategy,focussing resources on faster-growing time-sensitive services withhighly reliable and performance-enhanced newer equipment. A fewothers will be forced to close down or merge with other weakerplayers in efforts to achieve meaningful economies of scale andimproved asset utilisation. This will provoke a wave ofconsolidation.

Key operational parametersWhile additional lift capacity will be needed to accommodate trafficgrowth and to allow for fleet renewal, future freighters will alsoneed to work harder to assure profitable operations in the face ofpricing and competitive pressures. The GMF predicts that in twentyyears' time each tonne of freighter capacity in service will generateapproximately 1.21 million FTKs annually, compared with 0.99million today, an increase of 22 per cent. Most of this productivityimprovement will be achieved through an increase in the averagenumber of annual flight hours* per aircraft from 1,542 in 1999 to

Small freighters will be retired first

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

< 30 tonnes 30 - 50 tonnes

50 - 80 tonnes > 80 tonnes

Based on retirement age• 37 years for standardbodies• 35 years for widebodies

Tonnes retired

47

Air cargo forecast

1,814 in 2019. Part of the increase in utilisation will result from theattrition of less efficient first-generation jets, many of which are stilldeployed in marginal operations today. In addition, faster-than-average capacity growth in the larger aircraft segments willcontribute to an overall improvement in utilisation because suchcapacity is generally deployed on long-range services that are betterable to accumulate high annual flight hours.

More, larger, more productive freighters willbe needed*20-year average annual growth rate

22% higher FTK per tonne (1.0%*)

18% more tonnes per aircraft (0.8%*)

128% more aircraft (4.2%*)

228%more traffic

FTK(6.1%*)

Unlike in passenger services where operators are more inclined toincrease frequencies in order to improve the quality of service,freighter operators have less incentive to increase frequencies. Evenwith time-sensitive services driving airfreight growth, there isalmost no incentive on the part of freighter operators to offer morethan once daily service. While airfreight players can differentiatetheir products in terms of speed and reliability, by and largeairfreight is and will remain a commodity business so that thefundamental strategy is to be a low cost producer. Generally thismeans achieving very high economies of scale with the largestaircraft that the market will support, thereby minimising unit costswithout major disruption to yields.

Overall, in contrast to the past ten years when the average capacityof freighter aircraft has remained virtually constant, the GMFpredicts that over the next twenty years the capacity of the averagefreighter will increase by 18 per cent; growing to 53.3 tonnes peraircraft on average from 45.5 tonnes today.

*) The GMF freighter forecast is based on ACAS flight data which reportflight hours, whereas the passenger forecast is based on OAG data whichreport block hours.

48


The combination of a 22 per cent increase in FTKs per tonne (anaverage annual increase of 1.0 per cent) and a 18 per cent increasein tonnes per aircraft (0.8 per cent per year) means that to providethe forecast 6.1 per cent annual growth in FTKs the world freighterfleet will have to grow at an average 4.2 per cent per year, from1,510 aircraft at the end of 1999 to 3,449 at end 2019.

Twenty-year open productionIn order to accommodate the forecast 6.1 per cent per year growthin airfreight carried on dedicated freighters, the GMF predicts thatoverall production measured in available tonne-kilometres (ATKs)will need to grow at the slightly slower rate of 5.9 per cent per year,reflecting a gradual improvement in weight load factors from 65 percent in 1999 to 67.5 per cent in 2019. This improvement will comelargely from the progressive implementation of more sophisticatedrevenue management systems and through efforts at restructuringnetworks to help alleviate directional imbalances, which will morethan compensate for declining airfreight densities.

Observation of the production profile of the world freighter fleetreveals that the largest aircraft segment produces the lion’s share ofglobal ATKs, generating 67.1 billion, or 65% of the world total, in1999. The performance and economic characteristics of largefreighters, particularly new aircraft, make them the most appropriatefor deployment on the fastest-growing longer-range emergingmarkets. Production growth required by the largest aircraft segment,therefore, needs to keep pace with faster-than-average trafficgrowth. Hence, the GMF predicts that the largest aircraft segment

Large freighters will increasingly dominateworld production

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

< 30 tonnes

30-50 tonnes

50-80 tonnes

> 80 tonnes

ATKs (million)

5.9 % per annum

additionalcurrent

49

Air cargo forecast

will increasingly dominate world production, with total ATKsgrowing at an average annual rate of 6.3 per cent to reach 229.8billion or 69% of the world total by 2019.

The decision whether to invest in factory-built capacity or inconverted capacity continues to depend largely on the performancecapabilities and operating economics required, which in turn dependon the operator’s market strategy. Higher production levels can beachieved reliably and economically with factory-built aircraftdesigned specifically for freight applications. However, theirsignificantly higher acquisition costs can be supported only byamortisation over high levels of production.

More high utilisation capacity is and will befound in the larger aircraft segments

1999 2019 1999 2019 1999 2019 1999 2019

< 30 tonnes 30-50 tonnes 50-80 tonnes > 80 tonnes

Per cent of tonnes

100%

50%

Lowutilisation

Intermediateutilisation

Highutilisation

Lowutilisation


Highutilisation

Lowutilisation


Highutilisation

Lowutilisation


Highutilisation

0%

Moreover, a given operator’s average yield depends largely on thetype of service offered. The highest yields are obtained for the mostreliable, secure and contractually guaranteed service levels, wherethe costs of a missed delivery can be very significant. Generally, thelower the average yield captured by the operator, the higher theaircraft production needs to be to support the business case forinvestment in new aircraft.

Consequently the GMF assumes that demand for factory-builtfreighters will emerge largely from high-utilisation operations, witha progressively higher proportion of new freighter capacity in thelarger aircraft segments. The upper mid-sized aircraft segment,however, is unusual in that even at relatively low utilisations theoperating costs of new freighters are competitive against many ofthe available passenger-to-freighter conversions.

50


Freighter capacity development- Under 30 tonnesOperators will be hard-pressed to extract meaningful assetutilisation in the short-range operating environment of smallfreighters. This, combined with an abundance of low-cost reliablelift capacity available from the passenger aircraft system, meansthat future capacity required will be provided largely by conversionsof passenger aircraft.

In fact the GMF predicts that nearly all small freighters will beconverted passenger aircraft. Over the next twenty years the totalcapacity in service in this segment will grow at an average 3.8 percent per year, from 12,457 tonnes of lift today to 26,277 tonnes in2019. Only 1,719 tonnes of factory-built lift will be required from afew exceptionally well-exploited aircraft providing increasedservice levels on the same network.

5,748787

6,709

11,001

791 1,719

4,919

12,770

0

5,000

10,000

15,000

20,000

25,000

30,000

1999 2009 2019

12,457

26,277

Most small freighter demand will come fromconverted aircraftTonnes

18,167




Retained inservice

The prospects for long-term capacity growth in this market segmentare relatively modest. Nevertheless, the need to replace almost 95per cent of the current fleet of small freighters by 2019 will assure arobust and low-risk secondary market for converted versions oftoday’s passenger aircraft. In the long term the A320 aircraft familyappears to be an extremely attractive candidate for passenger-to-freighter conversion.

- 30-50 tonnesOver the next twenty years, 15,940 tonnes of lift from the lowermid-sized freighter segment will be retired from service as theaircraft reach the end of their economic lives. More than 85 per cent

51

Air cargo forecast

of this total will be retired in the next ten years in the form ofsignificant numbers of DC-8s and 707s. The need to replace thiscapacity as well as to accommodate growth will combine to createdemand for a total 41,187 tonnes of lift. Just over one-eighth ofopen capacity demand will be for newly-built highly-utilisedfreighters; the bulk of required lift capacity will come fromconversions of passenger aircraft.

7,4853,829

12,28414,128

2,830 5,368

7,650

21,691

0

10,000

20,000

30,000

40,000

50,000

1999 2009 2019

19,769

45,016

13% of the required 30 - 50 tonnes capacitywill be newTonnes

30,249




Retained inservice

The expected surge in demand for replacement capacity, combinedwith a general shortage of available factory-built products and ofsimilarly-sized passenger-to-freighter conversions, will contributeto sustain values of passenger aircraft like A310s and A300s that aresuitable for conversion. It also means that some of the required lift,new or converted, will need to come from the next freighter sizesegment up.

- 50-80 tonnesStarting from a relatively low base of 9,801 tonnes of lift in 1999,the GMF predicts that capacity in service in the upper mid-sizedfreighter segment will grow to 28,769 tonnes in twenty years' time,representing average growth at 5.5 per cent per year. Nearly half ofthe requirement for upper mid-sized freighters will be for factory-built capacity. Combined with the anticipated demand for newly-built lift for the next freighter size segment below, this willcontribute to sustain long-term demand for newly-built freighterslike the A300-600F.

The expected spillover of demand from the next size segment downfor passenger-to-freighter converted aircraft in lower-utilisationapplications will also serve to enhance demand for conversions ofpassenger aircraft similar to the A300-600.

52


- > 80 tonnesThe GMF predicts that the bulk of capacity demand at the top endof the market, driven by growth in time-sensitive long-rangeservices, will be supplied by the largest available factory-builtfreighters. Capacity in service in this segment will grow at anaverage 5.9 per cent per year to reach 83,913 tonnes in twenty years'time from 26,675 tonnes today. Out of the total 70,824 tonnes of liftrequired over the next twenty years, more than half will be newly-built. The current relatively young age of highly-utilised capacity inthe largest aircraft segment means that, as such aircraft are retired

8,222

4,596

1,579

2,846

4,14011,423

3,199

9,904

0

5,000

10,000

15,000

20,000

25,000

30,000

1999 2009 2019

9,801

28,769

Nearly half of additional 50 - 80 tonnesfreighters will be newTonnes

17,140




Retained inservice

22,87913,089

3,796

8,327

12,335

37,8388,782

24,659

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1999 2009 2019

26,675

83,913

More than half of additional >80 tonnes liftcapacity will be newTonnes

47,792




Retained inservice

53

Air cargo forecast

and replaced later on, demand for new large freighters will morethan double in the second half of forecast period.

The substantial demand projected for the largest category of aircraftwill support development of a new product like the highly efficientand productive A3XX Freighter, to provide cargo carriers with achoice of equipment in this important sector and to assure thecontinuing competitiveness and crucial role of the air freightindustry in tomorrow’s more global economy.

Total fleet capacity forecast

The total capacity of the cargo fleet will grow at an overall annualaverage rate of 5.0 per cent, to reach 183,975 tonnes by 2019 from68,702 tonnes in 1999; an increase of 115,273 tonnes.

Of the lift capacity in service in 1999, 22,301 tonnes will still be inservice at the end of the forecast period. Over half of this will be inthe largest aircraft segment, reflecting the current relative youth ofthese aircraft. This will create a need for 46,401 tonnes ofreplacement capacity.

The total lift capacity required during the next twenty years willtherefore amount to 161,674 tonnes. Passenger aircraft conversionswill provide 105,326 tonnes, or 65 per cent of the lift required,leaving demand for 56,348 tonnes of capacity in new factory-builtfreighters. Just over two-thirds of total new capacity demand will besupplied by aircraft with more than 80 tonnes lift capacity.

44,33422,301

24,369

36,301

20,09656,348

24,549

69,025

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1999 2009 2019

68,702

183,975

One third of future capacity demand will befor new freightersTonnes

113,348




Retained inservice

54

Cargo fleet evolutionLarge freighters will increasingly dominate the dedicated freighterfleet. The share of the world freighter fleet capacity provided byaircraft with payload capabilities of more than 80 tonnes willincrease from 39 per cent at the end of 1999 to 46 per cent at end2019. At the same time, the capacity share of the two smallestaircraft size segments will gradually decline.

In terms of numbers of aircraft, the world freighter fleet willcontinue to be dominated by smaller aircraft. But this predominance


199968,702 tonnes

2019183,975 tonnes

The capacity of large freighters willpredominate ...

30 - 50 tonnes29%

< 30 tonnes18%

50 - 80 tonnes14%

> 80 tonnes39%

30 - 50 tonnes24%

< 30 tonnes14%

50 - 80 tonnes16%

> 80 tonnes46%

19991,510 aircraft

20193,449 aircraft

… while the fleet share of smaller freighterswill decline

30 - 50 tonnes30%

< 30 tonnes41%

50 - 80 tonnes11%

> 80 tonnes18%

30 - 50 tonnes29%

< 30 tonnes35%

50 - 80 tonnes14%

> 80 tonnes22%

55

will decline. The share held by aircraft with up to 50 tonnescapacity will gradually decrease from just under three-quarterstoday to two-thirds in twenty years’ time, while the number of largefreighters in service with more than 80 tonnes capacity will almosttriple, increasing from its current level of 18 per cent of the fleet to22 per cent in 2019.

Cargo aircraft deliveriesOf the total 3,092 freighters delivered during the twenty-yearforecast period, some 67 per cent will have less than 50 tonnes oflift and 20 per cent will have more than 80 tonnes. While over 90per cent of freighter deliveries in the smallest aircraft size category(<30 tonnes) will be accounted for by passenger-to-freighterconversions, more than half the aircraft delivered in the largest sizecategory will be new. Overall, three quarters of all aircraft deliveredwill be converted from passenger configuration. Of the 703 newfreighters to be delivered, 45 per cent will be in the largest sizecategory of the 747 and the A3XX.

The number of new aircraft deliveries will accelerate in the secondhalf of the forecast period, coinciding with the retirement andreplacement of most of the relatively young highly-utilised capacitythat is currently in the world freighter fleet.

Freighter business volumeBased on current flyaway prices (2000 $), sales of factory-builtfreighters during the next twenty years will represent business worth

Air cargo forecast

1,080

796

300213

315

190

119

79

0

200

400

600

800

1,000

1,200

1,400

< 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes

New aircraft

Converted from pax configuration

1,159

915

403

Capacity

Number of aircraft

615

Total new a/c 271Total converted a/c 1,166Total a/c 1,437

More than 3,000 freighters will be delivered

7032,389

3,092

- 2009 -2019

529443

11480

10369

6336

56

some $96 billion. Almost two-thirds of this business ($61 billion) isexpected to result from sales of very large aircraft, underscoring theneed to introduce competition for the first time in this marketsegment. Robust business of $21 billion is forecast in the 50-80tonne freighter segment, largely to serve the requirements ofoperators for exceptional aircraft reliability with the lowestoperating costs. The remaining $14 billion of new freighter businessvolume will be shared between smaller < 30 tonne and 30-50 tonneaircraft segments, with only about $4 billion of the businessexpected for newly-built small freighters.

Over the next ten years, the value of new freighter sales is expectedto reach $ 34 billion, just over one-third the twenty-year total. Thisis because at the end of 1999 most highly-utilised freighters wererelatively new, so that most of the need for factory-built freightersto replace them does not occur before the second decade of theforecast.

Airbus also estimates that the forecast conversion of 2,389passenger aircraft to freighters will generate an additional businessvolume of approximately $17 billion during the next twenty years,exclusive of aircraft acquisition costs.


4

10

21

61

5 8

20

10

10

20

30

40

50

60

70

< 30 tonnes 30 - 50 tonnes 50 - 80 tonnes > 80 tonnes

$96 billion worth of new freighters will be delivered

2000 $ billion

Capacity

2010 - 2019

2000 - 2009

$62 billion

$34 billion

57

Appendices

58

78 European airlines with 23 subsidiaries

ADH Air OneADR Adria AirwaysAEA Air EuropaAEF Aero LloydAEL Air Europe SPAAFR Air FranceAIH AirtoursAMC Air MaltaAMM Air 2000AOM AOM French Airlines.ARP L'Aeropostale AFRAUA Austrian AirlinesAXX Interimpex-AvioimpexAZA AlitaliaBAG Deutsche BA BAWBAL Britannia AirlinesBAW British AirwaysBCM IberworldBER Air BerlinBMA British MidlandBRA Braathens

Braathens Sverige BRAC4R Cronus AirlinesCFE CityFlyer Express BAWCFG Condor FlugdienstCKT Caledonian Airways JMCCLH Lufthansa Cityline DLHCRL CorsairCRX Crossair SWRCSA Czech AirlinesCTN Croatia AirlinesCYP Cyprus AirwaysDAN Maersk AirDAT DAT - Belgian Reg. SAB

DLH LufthansaE3A Estonian AirECA Eurocypria CYPEDW Edelweiss AirEEZ Eurofly SPAEIN Aer Lingus

Aer Lingus Commuter EINELY El Al Israel AirlinesEWG EurowingsEZY EasyjetFCL Flying Colours JMCFIN FinnairFTI Fly FTiFUA Futura InternationalGBL GB Airways BAWGMI GermaniaGOE GO Airlines BAWHLF Hapag LloydIBE IBERIAICE IcelandairISS Meridiana SpaIST Istanbul AirlinesJEA Jersey European AirwaysJMC JMC AirKLC KLM Cityhopper KLMKLM KLM Royal Dutch AirlinesKYV Kibris Turkish AirlinesLAZ BalkanLDA Lauda Air

Lauda Air Italy LDALFA Air AlfaLGL LuxairLIB Air Liberte BAWLIL Lithuanian Airlines

LIT Air LittoralLOT LOT - Polish AirlinesLTE LTE Int’l Airways LTULTU LTUMAH MALEVMAK Macedonian AirlinesMON Monarch AirlinesMPH Martinair HollandMSK Maersk Air Ltd BAWOAL Olympic AirwaysOHY Onur AirOYC Premiair AIHPGA PortugaliaPGT Pegasus AirlinesROT TAROMRYR RyanairSAB SABENASAS SASSAW Sterling European AirlinesSCW Malmo Aviation BRASEU Star AirlinesSLR Sobelair SABSPP SpanairSWR SwissairSXS Sun ExpressTAP TAP Air PortugalTHY THY - Turkish AirlinesTRA Transavia AirlinesTYR Tyrolean AirwaysUKA KLM UK KLMVEX Virgin Express VIRVIR Virgin AtlanticVLE Volare

A. Geographical regions & airlines analysed

The GMF is the product of a “bottom-up” micro analysis that covers228 airlines with 49 subsidiaries/associates (airlines for which eitheroperations and/or fleets cannot be separated from their associatecompanies; these are marked in italics in the list below) in sevengeographical regions (see map in Chapter 2). For inclusion in theGMF a passenger airline must satisfy the following criteria:

l To be ranked in order among the airlines which account for98 per cent of scheduled passenger ASKs in its region;

l To be ranked in order among the airlines which operate atleast 95% of the fleet of active jets with at least 65 seats.

l To operate (including announced orders) more than 5 jetswith more than 65 seats.


11 Middle East airlines

GFA Gulf AirIRA Iran AirIYE YemeniaKAC Kuwait Airways

MEA Middle East AirlinesOAS Oman AirQTR Qatar AirwaysRJA Royal Jordanian

SVA SaudiaSYR Syrian Arab AirlinesUAE Emirates

59

29 North American airlines with 8 subsidiaries AAH Aloha AirlinesAAL American AirlinesABL Air BC ACAACA Air CanadaAMT American Trans AirARN Air Nova ACAASA Alaska AirlinesASE Atlantic Southeast DALAWE America West AirlinesAWI Air Wisconsin UALCDN Canadian Airlines Int’lCDR Can. Regional Airlines CDNCMM Canada 3000 Airlines

COA Continental AirlinesDAL Delta Air LinesFLA Midwest ExpressFRL FrontierHAL Hawaiian AirJ3K JetBlueMDW Midway AirlinesMES Mesaba Airlines NWMTE AirTran AirwaysNWA Northwest AirlinesQXE Horizon Air ASAROY Royal AviationRYN Ryan International Airlines

SCX Sun Country AirlinesSSV SkyserviceSWA Southwest AirlinesTOW Tower AirTSC Air TransatTWA TWAUAL United AirlinesUSA US AirwaysUSS USAir Shuttle USAVGD Vanguard AirlinesWJW Westjet Airlines

19 airlines in the People’s Republic of China with 1 subsidiary

AMU Air MacauC3K Swan Airlines CBFCBF China Northern AirlinesCCA Air ChinaCES China Eastern AirlinesCHH Hainan AirlinesCJG Zhejiang Airlines

CNW China Northwest AirlinesCPA Cathay Pacific AirwaysCSC Sichuan AirlinesCSH Shanghai AirlinesCSN China Southern AirlinesCSZ Shenzhen AirlinesCXA Xiamen Airlines

CXH China Xinhua AirlinesCXJ Xinjiang AirwaysCXN China SouthwestCYH China Yunnan AirlinesHDA DragonairS3D Shandong Airlines

Geographical regions & airlines analysed

23 African airlinesAGN Air GabonAMV AMC AviationATC Air TanzaniaAZW Air ZimbabweBLV Bellview AirlinesDAH Air AlgerieETH Ethiopian AirlinesGHA Ghana Airways

KQA Kenya AirwaysLAM LAM MocambiqueLBT Nouvelair TunisieMAU Air MauritiusMDG Air MadagascarMSR EgyptairNMB Air NamibiaRAM Royal Air Maroc

REU Air AustralRKA Air AfriqueSAA South African AirwaysSUD Sudan AirwaysTAR Tunis AirTAS Lotus AirUYC Cameroon Airlines

32 Asia-Pacific airlines with 9 subsidiaries AAA Ansett AustraliaAAR Asiana AirlinesAIC Air IndiaALK Srilankan AirlinesANA All Nippon AirwaysANG Air NiuginiANK Air Nippon ANAANZ Air New Zealand

Ansett New Zealand ANZBBC Biman Bangladesh AirlinesCAL China AirlinesCPI Cebu Pacific AirEVA EVA AirwaysFEA Far Eastern Air Transport

FJI Air PacificFWQ Flight West Airlines AAAGIA Garuda IndonesiaHVN Vietnam AirlinesIAC Indian AirlinesJAA Japan Asia Airways JALJAI Jet AirwaysJAL Japan AirlinesJAS Japan Air SystemJTA Japan TransOcean Air JALKAL Korean AirLLR Alliance Air IACMAS Malaysia AirlinesMDA Mandarin Airlines CAL

MKG UNI AirwaysMNA Merpati Nusantara AirlinesPAL Philippine AirlinesPIA Pakistan Int’l AirlinesQFA Qantas AirwaysQFL Airlink QFARBA Royal Brunei AirlinesRNA Royal Nepal AirlinesS3N Sahara Airlines (India)SIA Singapore AirlinesSLK Silk Air SIATHA Thai Airways Int’lTNA TransAsia Airways

36 Latin American airlines with 8 subsidiaries

A3K Aerolineas lnternacionalesA3U AerosurA4V AVIACSAACN Aero ContinenteAES ACESAJM Air JamaicaALM ALMAMX AeromexicoARG Aerolineas ArgentinasARU Air ArubaAUT Austral ARGAVA AVIANCAAVE AVENSABHS BahamasairBLC Transp.Aereos Merid. TAM

BWA BWIA West Indies AirwaysCAY Cayman AirwaysCMP COPAEEA EcuatorianaGUG AVIATECA TAILAN LAN ChileLAV AeropostalLCO LadecoLLB Lloyd Aereo BolivianoLPR LAPA LRC LACSA TAIMXA Mexicana

Aerocaribe MXANES NordesteNIS Nica TAI

PUA PLUNARDN Dinar Lineas AereasRO2 Avant National AirlineRPB AeroRepublicaRSL Rio SulSER Aero CaliforniaSET SAETASVV Servivensa AVETAI Grupo TACA

TACA Peru TAITAM TAMTBA TransbrasilVRG VARIGVSP VASP

60


Largest 50 freighter operatorsAAR Asiana Airlines AsiaABX Airborne Express North AmericaAFR Air France EuropeAHK Air Hong Kong PRCAJT Amerijet International North AmericaAPW Arrow Air North AmericaATI Air Transport International North AmericaAZA Alitalia EuropeBCS European Air Transport EuropeCAL China Airlines AsiaCCA Air China P.R. ChinaCLX Cargolux EuropeCPA Cathay Pacific Airways PRCCWC Challenge Air Cargo North AmericaDHL DHL Airways North AmericaDSR DAS Air EuropeEIA Evergreen International Airlines North AmericaELY El Al Middle EastEVA EVA Air AsiaEWW Emery Worldwide Airlines North AmericaFBF Fine Air North AmericaFDX FedEx North AmericaFST Fast Air Latin AmericaGCO Gemini Air Cargo North AmericaGEC Lufthansa Cargo Airlines Europe

GTI Atlas Air North AmericaIRZ Saha Air Middle EastJAL Japan Airlines AsiaKAL Korean Air AsiaKFA Kelowna Flightcraft North AmericaKHA Kitty Hawk Air Cargo North AmericaKLM KLM Royal Dutch Airlines EuropeLHN Express One International North AmericaMAS Malaysia Airlines AsiaMKA MK Airlines AfricaMPH Martinair Holland EuropeNCA Nippon Cargo Airlines AsiaNWA Northwest Airlines North AmericaPAC Polar Air Cargo North AmericaRYN Ryan International Airlines North AmericaSIA Singapore Airlines AsiaSNB Sterling European Airlines EuropeSVA Saudi Arabian Airlines Middle EastTCN Trans Continental Airlines North AmericaTLX Cargo Lion EuropeTMA TMA Middle EastTOW Tower Air North AmericaUAL United Airlines North AmericaUPS United Parcel Service North AmericaVRG VARIG Latin America

In addition the GMF covers a total of 187 cargo carriers, of whichthe Top 50 are listed below:

61

The increase in departures forecast by the GMF will be providedboth by increasing frequencies on existing routes and by flights onadditional routes. The development of new routes will be driven byincreasing worldwide air service liberalisation, changes in alliancepartnerships, and in some cases by enhanced aircraft performancecapabilities. Airlines will exploit a new generation of ultra-long-range aircraft like the A340-500, able to link the most distant citieswith direct flights over inhospitable regions and mountainousterrain, to provide direct point-to-point flights for a relatively smallnumber of high-yield fare-inelastic passengers prepared to pay forthe convenience.At the same time, the bulk of demand for air travel will continue tobe generated by the concentrations of population in and around themajor cities, and the great majority of low-price, fare-elastic leisurepassengers will, as now, be carried over and through the major hubs.This will create demand for a new type of aircraft like the A3XX,larger and more economical than anything flying today.In recent years some 85 per cent of new routes opened have been inthe US domestic and intra-European markets. During the past 25years the number of routes operated across the North Atlantic hasgrown from about 100 to nearly 250; those between Europe andAsia from ten to about 125; and those between North America andAsia from ten to about 70. This gives a total increase of about 13routes per year in these markets out of the total of more than 10,000operated by the GMF airlines.

The populations of Asian nations tend to be much moreconcentrated than those of Europe or the USA, and the rate ofurbanisation is growing. As a result there are fewer secondarydestinations in Asia that will generate sufficient traffic to supportdirect intercontinental air services. Moreover, it is striking that lessthan half of all the routes opened in a given year are still beingflown ten years later. This trend appears likely to continue as thestructures of airline alliances evolve; changes in route networks arenow being driven by changes in alliance partnerships as well as by aneed to respond to perceived passenger demand.

Airbus' conclusion is that in future significant numbers of newroutes will continue to be opened - and many of them subsequentlydropped. The great majority of new routes opened will be in local ordomestic markets, and overall - while candidate cities for new airservice can be readily identified - it is impossible to determinewhich will actually be served. Consequently the GMF adopts amethodology which allows frequencies on existing routes to grow inexcess of anticipated requirements, so as to simulate the impact ofadditional routes on the numbers of aircraft needed in the differentseat categories.

B. Route network development

62

C. Passenger market segmentation2000 Global Market Forecast

Equivalence of 727 passenger fleet in GMF

Seat capacity

374.0

4.1

42.5 37.7

2.7

100 125 150 1750.5

1

5

10

50

100

Number of aircraft727 passenger fleet : 461 aircraft727 fleet seat distribution in GMF

210

Three 727s@

111 seats=

1.68 100-seater1.32 125-seater

One 727@

187 seats

Airbus forecasters maintain a rigorous distinction between demandfor aircraft in different categories (as forecast in the GMF) and howthis demand is fulfilled by the various types of aircraft available(the delivery forecast used by Airbus for its own industrial andbusiness planning purposes).

It is obviously vital to ensure that at all times the numbers ofaircraft and seats in service match precisely the need predicted inthe GMF for frequency and capacity. So the GMF defines a set of“neutral” seat categories which may be thought of as “buckets” ofseats. Any given aircraft type, with the seating arrangement chosenby each particular operator, will fall between two categories andcontribute seats to each on a basis inversely proportional to itsdistance from that category.

In contrast, many other forecasters arbitrarily assign a type ofaircraft to a wide-band seat category such as “200 to 400 seats”.Such a forecast typically predicts, for example, that an airline willneed N aircraft in this category to provide the required capacity andfrequency. But if the airline fills this need with 250-seater A330-200s, the resultant number of seats will be much lower than if itchooses 380-seater A340-600s. The result is a lack of precision anda good deal of ambiguity.

The first step in the GMF methodology is to allocate the seats inexisting in-service aircraft into the “neutral” seat categories. Forexample, at end-1999 the GMF airlines were operating a fleet of461 727s with a total of 68,987 seats. Individual seat-counts rangedfrom 111 to 187. The GMF algorithm allocates the seats in each

63

Passenger market segmentation

The equivalent GMF fleet thus provides a full description of theactual 727 fleet listed in the detailed results of Appendix G.

This process is repeated for the entire 1999 GMF passenger andcombi fleet. Forecast changes in frequencies, flights per aircraft,seats per aircraft and seat productivity (RPKs per seat) are thenapplied in order to determine the need at any future point in time forcapacity in each of the “neutral” aircraft seat categories. Thefollowing simplistic example illustrates the process.

Consider an airline operating 12 140-seater MD-80s and 10 160-seater 727s; a total of 22 aircraft and 3,280 seats. The GMFalgorithm assigns 40 per cent {(150 - 140) ÷ (150 - 125)} of theMD-80s to the “neutral” 125-seater category and 60 per cent to the“neutral” 150-seater category. Similarly, 60 per cent of the 727s areassigned to the 150-seater category and 40 per cent to the 175-seatercategory. Overall, this gives 4.8 125-seaters, 13.2 150-seaters and 4175-seaters, strictly maintaining the correct totals of aircraft andseats.

Suppose the GMF predicts that over time demand for both flightsand seats will double. At this point the airline will have a theoreticalneed for 9.6 aircraft in the “neutral” 125-seat category, 26.4“neutral” 150-seaters, and 8 “neutral” 175-seaters: a total of 44aircraft and 6,560 seats. Suppose now that the airline plans to meetthis need with a combination of 130-seater A319s and 170-seaterA320s. How many of each aircraft type will be required? Simplealgebra allows the solution of two equations for two unknowns,giving a fleet composition of 23 A319s (2,990 seats) and 21 A320s(3,570 seats).

Of course, with another airline an A319 might have 140 seats, andan A320 165. In this case, the required combination would be 28A319s (3,920 seats) and 16 A320s (2,640 seats). Whatever the seatcount with any particular airline, the approach used by Airbusensures that the numbers of aircraft (hence frequencies) and seats(hence capacity) exactly match the forecast demand.

Seating range 111-124 125-149 150-174 175-187 All

Distribution of 727s 13 265 165 18 461

GMF contribution 100-seaters 4.1 - - - 4.1 125-seaters 8.9 33.6 - - 42.5 150-seaters - 231.4 142.6 - 374.0 175-seaters - - 22.4 15.3 37.7 210-seaters - - - 2.7 2.7

Total seats 1,523 38,910 25,310 3,244 68,987

aircraft to the appropriate “neutral” seat categories, giving thefollowing aggregated results:

64

D. Seat supply analysis

The base status of world airline passenger operations is derivedfrom the September 1999 Official Airline Guide flight schedules.For those charter airlines that do not have their flight plans in theOAG, a quasi-schedule is made up from other sources (reportedoperations and ASKs, average flight time and utilisation of theiraircraft, etc.)

A model for flight frequency/capacity development defines for allregional sub-markets the minimum and maximum frequency levels(see also figure on page 17). These are a function of distance,reflecting journey time, departure and/or arrival time preferences,etc… To a certain extent the impact of new route development isalso simulated in the model.

The entry frequency is the service level of ALL airlines operatingthat sector, but capacities start from the current equipment of eachindividual airline. The steepness with which the transitionfrom frequency to capacity is effectuated is an important parameterin the simulation of route dispersion.

The (depersonalised) computer listing shows the year-by-yearevolution of the flight frequency and seating capacity offered byAirline XXX on one typical airport-pair route out of the 10,013studied in the GMF.

The September 1999 OAG shows that the scheduled airlinescompeting on the 2,719 km great circle flight from AP1 in regionRG1 to AP2 in region RG2 were providing a total of 159 monthlyflights - more than five per day. Of these, Airline XXX was makingone daily flight with a 188-seat 757. Using the GMF aircraftcapacity segmentation, Airline XXX's 30 monthly flights with 5,640seats convert into 18.9 flights with a nominal 175-seater and 11.1with a nominal 210-seater.

Analysis of Airline XXX's block times and aircraft utilisationsshows that this absorbs the capacity of 0.345 aircraft, sharedbetween the 175- and 210-seater categories as shown.

The GMF projects a year-by-year traffic growth on all flightslinking region RG1 to region RG2. Taking into account the annualrate of improvement in seat productivity estimated for Airline XXX,this then determines the rate at which Airline XXX will have toincrease the number of seats it operates in order to maintain itsmarket share on this route.

The GMF also projects, as a function of flight distance, thresholdsfor minimum and maximum levels of frequency. On this route theminimum “satisfactory” level of frequency to be provided by allcompetitors on the route is 238 flights per month, almost 8 per day.

In 1999 the route was not receiving this minimum level of service -


65

Seat supply analysis

1999 OAG baseline:• AP1 in RG1 to AP2 in RG2, great circle distance 2,719 km

• Airline XXX provides 30 monthly flights out of a total of 159, using a 757 with188 seats

Year of A/c A/C Model Seats Year of A/c A/C Model Seatsstudy size Nb Airline Total used study size Nb Airline Total used

1999 SM175 0.217 18.9 159 L 188 2010 SM175 0.295 26.3 267.8 M 192SM210 0.128 11.1 SM210 0.273 24.4

2000 SM175 0.228 19.9 167.2 L 188 2011 SM175 0.271 24.2 275.6 M 194SM210 0.135 11.7 SM210 0.312 27.9

2001 SM175 0.239 20.9 175.5 L 188 2012 SM175 0.238 21.4 283.8 M 196SM210 0.141 12.3 SM210 0.36 32.3

2002 SM175 0.251 22 185 L 188 2013 SM175 0.198 17.8 292.3 M 199SM210 0.149 13 SM210 0.418 37.5

2003 SM175 0.266 23.3 196 L 188 2014 SM175 0.149 13.4 300.8 M 202SM210 0.157 13.8 SM210 0.483 43.5

2004 SM175 0.279 24.6 206.5 L 188 2015 SM175 0.096 8.7 308.7 M 205SM210 0.165 14.5 SM210 0.551 49.7

2005 SM175 0.293 25.9 217.4 L 188 2016 SM175 0.044 4 315.7 M 208SM210 0.173 15.3 SM210 0.616 55.7

2006 SM175 0.307 27.1 228.1 L 188 2017 SM210 0.66 59.9 322.7 M 211SM210 0.181 16 SM250 0.013 1.2

2007 SM175 0.319 28.3 238.8 M 188.1 2018 SM210 0.616 56 329.7 M 214SM210 0.191 16.9 SM250 0.07 6.4

2008 SM175 0.331 29.4 250.1 M 188.3 2019 SM210 0.566 51.6 336.7 M 218SM210 0.202 17.9 SM250 0.133 12.1

2009 SM175 0.316 28.2 258.9 M 190SM210 0.234 20.8

Frequency Frequency

as indicated by the code L. So as traffic grows, the aircraft size isheld constant until the total frequency reaches the lower threshold.This is achieved in 2007, at which point Airline XXX is providing45 monthly flights. Thereafter - as indicated by the code M - theGMF algorithm allows aircraft size to increase as traffic continuesto grow, so that the additional capacity is provided partly by anincrease in aircraft size and partly by a further increase infrequency.

By 2017 the aircraft size has grown beyond the GMF nominal 210-seater category, so from now on the route demands some seats outof the 250-seater category. By 2019 Airline XXX is providing alittle more than two flights per day out of a total of more than ten,absorbing the productive capacity of 0.566 210-seaters and 0.133250-seaters, for an average aircraft capacity of 218 seats; the 757has become too small.

The projected fleet build-up for Airline XXX is the sum of itscapacity needs projected like this on all the routes it flies.

66

E. Passenger traffic forecast methodology& results

The twenty-year average traffic growth rate is derived from year-over-year growth projections for 82 independently studied sub-markets (see table). Such growth projections can differ significantlydepending on the relative maturity and other characteristics of eachsub-market, yet they are also among the more significant inputsrequired for the GMF. Hence, the availability of many sub-marketforecasts improves the ability of the GMF to predict the overallgrowth in traffic carried by each individual airline, based on theextent of its participation in each of the sub-markets it serves.

Traffic sub-market definitions have been preserved in an effort tomaintain the year-over-year consistency of the GMF. However, theAfrica - Canada and Africa - Central America traffic flows havebeen added to accommodate newly published flight schedules thathave been added to the OAG database. Hence, there are now 82traffic flows in the GMF compared to last year’s 80.

There are several causal relationships and factors that affectpassenger traffic. The 2000 GMF is based on the assumption thatthe long-term demand for air travel is driven by economicdevelopments, notably the growth of world and regional incomelevels as measured by changes in real GDP, and the cost of airtravel as measured by yields. Demographic trends as measured bycivilian populations have also been considered where this variablehas demonstrated a statistical significance.

The traffic forecasting methodology adopted in the 2000 GMF isbased on an econometric approach. The selection between linear orlogarithmic functional forms, and the inclusion or omission of


Annual traffic - billion RPK

USA - Asia traffic forecast

0

100

200

300

400

500

600

700

800

1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017

Traffic history

Projection

Log model (6.3% p.a.)f{log(US GDP), log(Asia GDP)}

Linear model (4.6% p.a.)

Log model (7% p.a.)f{log(US GDP + Asia GDP)}

67

particular independent variables, follows testing and evaluation ofnumerous combinations. Generally, the statistical model that bestfits historical traffic data is deemed to provide the best explanationof future trends unless otherwise suggested by analysis.As an example, the above traffic model predicts average annual airtraffic growth of 6.3% on Asia - USA routes over the next twentyyears. The model is a log-linear function with USA and Asia realGDP as independent variables. This model gives a better fit than thelinear one that has also been studied.

Special emphasis has been placed on monitoring and evaluating theimpact on air travel demand resulting from economic developmentsaround the world. For instance, initial (controversial) Airbuspredictions about the short-term nature of the impact on air traveldemand of the recent Asian currency crisis proved in the event quiteaccurate. The results of such special ad hoc studies are reflected inthe traffic forecast and the GMF results.

The GMF assumes that the world political and general economicclimates remain conducive to growth. No assumptions are madeabout possible alternative political and economic scenarios, beyondbasic GDP growth as adjusted by experts to incorporate knowndevelopments such as the Asian currency crisis.

One of the challenges faced when preparing traffic forecasts fornumerous sub-markets involves the limited availability of reliableand consistently prepared sources of historical traffic and yield data.The collection of data and the improvement of the traffic statisticsdatabase are a continual process at Airbus Industrie. The GMFdraws on various data sources including those which are availablefrom ICAO, IATA, the AEA, the AAPA, national aviationauthorities, and international tourism agencies. While attempts aremade to reconcile any material differences between the sources ofdata, only one source is used on any particular traffic sub-market. Ina very few cases where no data are otherwise available for aparticular traffic flow, data from the OAG with assumptions aboutload factors have been used to estimate actual traffic.

Historical and forecast data relating to independent variables aredrawn from expert and/or official sources including Standard &Poor’s DRI, WEFA Group and the IMF. Where yields have beenincluded in forecasting models, projections have been made basedon best judgement, supported by analyses of the relative maturity ofthe particular sub-market as well as regulatory and other relevanttrends.

Passenger traffic forecast methodology & results

68

Domestic USA 25.65 2.9 2.3 2.6Europe - USA 13.00 5.3 4.5 4.9Intra Europe 6.97 5.5 5.0 5.3Asia - USA 6.56 6.5 6.2 6.3Europe - Asia 4.63 6.5 6.6 6.5Domestic Europe 2.85 5.1 4.6 4.8Africa - Europe 2.72 4.4 4.0 4.2Domestic P.R. China 2.12 9.2 7.0 8.1Intra Asia 2.11 5.4 4.7 5.1Domestic Japan 2.09 2.1 2.8 2.5USA -Central America 2.00 5.3 4.2 4.8South America -Europe 1.98 5.1 5.1 5.1USA - South America 1.71 4.6 4.5 4.5Canada - Europe 1.64 5.3 4.5 4.9Europe - Pacific 1.51 4.7 4.3 4.5Pacific - Asia 1.50 6.2 6.3 6.3P.R. China - Asia 1.34 8.8 6.4 7.6Central America - Europe 1.33 6.8 5.3 6.0Europe - P.R. China 1.21 6.5 6.6 6.5Domestic South America 1.19 4.0 4.2 4.1Domestic Pacific 1.11 3.8 3.2 3.5USA - Canada 1.07 3.9 3.4 3.6P.R. China - USA 1.03 8.1 6.6 7.3Europe - Middle East 1.02 3.2 3.1 3.2Domestic Canada 1.02 3.7 3.3 3.5Domestic Asia .86 5.6 5.6 5.6Middle East - Indian subcontinent .81 5.3 4.3 4.8Pacific - USA .81 7.1 5.7 6.4Europe - Indian subcontinent .77 6.5 6.6 6.5Canada - Asia .62 6.5 6.2 6.3Domestic Indian subcontinent .46 5.2 5.1 5.2Middle East - Asia .46 4.6 3.8 4.2Domestic Central America .43 3.5 2.6 3.1Pacific - P.R. China .37 8.8 6.8 7.8Indian subcontinent - USA .35 5.0 5.0 5.0Indian subcontinent - Asia .35 6.8 5.4 6.1Intra South America .32 4.6 4.6 4.6Domestic Middle East .32 5.4 4.6 5.0Africa - Middle East .30 4.5 4.7 4.6CIS - Europe .29 4.6 5.0 4.8Domestic Africa .29 4.1 4.0 4.1Intra Pacific .28 5.6 5.6 5.6Intra Africa .26 4.1 4.0 4.1South America - Asia .25 5.4 4.4 4.9Africa - USA .23 5.0 4.3 4.7Canada - P.R. China .21 8.1 6.6 7.3Intra Middle East .21 5.4 4.6 5.0South America - Central America .18 5.4 4.4 4.9

continued ...

Sub-market % of world Avg. annual growth (%)RPK 1999 2009 1999

(1999) -2009 -2019 -2019

RPK growth rates for 82 submarkets


69

Middle East - USA .15 5.4 4.4 4.9Africa - Asia .14 4.7 3.4 4.0Middle East - P.R. China .11 4.6 3.8 4.2Africa - Pacific .10 6.7 5.1 5.9Middle East - Pacific .08 4.7 5.1 4.9Central America - Canada .07 5.3 4.2 4.8Intra Central America .06 5.4 4.4 4.9South America - Canada .06 6.8 5.3 6.0Africa - Indian subcontinent .05 4.3 4.7 4.5Africa - P.R. China .05 6.7 5.1 5.9South America - Pacific .05 5.3 5.3 5.3Central America - Asia .04 5.4 4.4 4.9Pacific - Indian subcontinent .04 5.4 4.4 4.9Intra Indian subcontinent .03 6.1 4.4 5.3CIS - USA .03 4.6 5.0 4.8P.R. China - Indian subcontinent .03 6.8 5.4 6.1Indian subcontinent - Canada .03 5.0 5.0 5.0Africa - Canada .02 5.0 4.3 4.7Canada - Pacific .02 7.1 5.7 6.4South America - Africa .02 5.4 4.4 4.9CIS - P.R. China .02 4.6 5.0 4.8CIS - Asia .01 4.6 5.0 4.8CIS - Middle East < 0.01 4.6 5.0 4.8CIS - Indian subcontinent < 0.01 4.6 5.0 4.8CIS - Africa < 0.01 4.6 5.0 4.8CIS - South America < 0.01 4.6 5.0 4.8Domestic CIS < 0.01 5.4 5.6 5.5Canada - Middle East < 0.01 5.4 4.4 4.9Canada - CIS < 0.01 4.6 5.0 4.8Intra CIS < 0.01 5.0 5.3 5.2CIS - Central America < 0.01 4.6 5.0 4.8South America - Middle East < 0.01 5.4 4.4 4.9Africa - Central America < 0.01 5.4 4.4 4.9

Charter (not in OAG) *) 5.7 3.7 4.7

Sub-market % of world Avg. annual growth (%)RPK 1999 2009 1999

(1999) -2009 -2019 -2019

Total world 5.2 4.6 4.9

Passenger traffic forecast methodology & results

*) to give a percentage for the charter would be misleading since an increasing amount is treated as quasi-scheduled, and hence included in the OAG

70

The statistics show that the great majority of jetliners aredefinitively retired from passenger service before they reach thirtyyears of age. So far, the earlier generation of widebodied aircrafthave tended to be retired earlier than single-aisle types.

But many airlines choose to replace their aircraft much earlier. Thiscreates opportunities to place new aircraft, which the GMF - unlikemany other forecasts - aims to identify. Where an airline is knownto have adopted a policy - for strategic, tax or any other reasons - tomaintain a young fleet, the early replacement of its aircraft, longbefore they are retired from passenger service, is reflected in theforecast. A similar opportunity arises whenever an operating leaseexpires. So the GMF does not simply assume that aircraft remain inservice until retirement; it recognises that many airlines will belooking to replace their aircraft much earlier, and that these

Until quite recently, the great majority of jetliners have beenpurchased to accommodate traffic growth. But now the need toreplace older aircraft has become a much more importantconsideration for the airlines; whether as part of a competitivestrategy to maintain a youthful and up-to-date fleet; to meet new,more stringent noise rules; or simply because existing aircraft havereached an age at which they are becoming no longer economic tooperate.

Airbus Industrie has analysed the aircraft replacement/fleet renewalprocess in considerable detail, and developed a methodology whichreflects real airline practices.

F. Aircraft replacement methodology2000 Global Market Forecast

0%

20%

40%

60%

80%

100%

0 5 10 15 20 25 30 35

Single-aisleWide-bodyAll jetliners

80% of all jetliners are withdrawn from airlinepassenger service before they are 30 years old

Age

% in airline service

71

prematurely replaced aircraft will then compete with new aircraftfor the business of airlines which are prepared to acquire them(these aircraft are referred to as the pool of recycled aircraft).

The overall prediction is that by end 2019 87 per cent of the 10,349aircraft in service with the airlines in the GMF at end 1999 willhave been replaced. These aircraft account for a total of 1,611,900seats. The recycle pool includes 3,174 aircraft with a total of636,000 seats.

Aircraft replacement methodology

Many airlines deliberately maintain a youngfleet

0

2

4

6

8

10

12

14

16

1969 1974 1979 1984 1989 1994 1999

South AmericaAfricaNorth AmericaEuropeAsia

Fleet age

72

G. Detailed passenger fleet results2000 Global Market Forecast

Aircraft 1999 2009 Replace Delive Aircraft 1999 2009 Replace Delive Type in service ments ries Type in service ments ries70 181 181 210 723 723 Avro 70 4 4 767-200 102 12 90

Do 728Jet 60 60 767-200ER 102 47 65 10

ERJ-170 30 30 A310-200 32 3 29

F28 99 1 98 A310-300 113 71 43 1

F70 42 39 3 250 544 54485 157 157 767-300 102 66 37 1

Avro 85 65 40 32 7 767-300ER 381 352 90 61

BAC1-11 4 4 767-400ER 48 48

DC-9 40 40 A300 75 7 68

ERJ-190 30 30 A300-600 44 13 31

100 608 608 A300-600R 146 102 44

717 8 126 118 A330-200 52 100 18 66

737-100 1 1 A340-200 19 17 2

737-200 613 25 588 300 385 385 737-500 380 300 80 747SP 11 11

737-600 32 107 1 76 777-200ER 156 305 8 157

A318-100 120 120 A330-300 78 126 17 65

Avro 100 44 47 3 A340-300 144 176 26 58

BAe 146 141 48 93 A340-500 21 21

Concorde 13 13 DC-10 177 8 169

DC-9-30 349 2 347 L1011 66 1 65

DC-9-40 39 39 MD-11 108 74 34

F100 249 174 75 MD-11C 9 9

MD-80-87 68 56 12 350 201 201125 702 702 747-200 180 6 174

737-300 1,003 655 348 747-300 54 17 37

737-700 171 485 26 340 777-200 69 87 3 21

A319-100 204 551 18 365 IL-86 3 3

DC-9-50 74 74 400 301 301 Yak-42 6 6 747-100 20 20

150 1,205 1,205 747-400 452 430 62 40

707 3 3 777-300 31 40 2 11

727 461 9 452 A340-600 43 43

737-400 436 352 87 3 500 302 302 737-800 185 603 15 433 747HD 33 18 15

A320-100 18 11 7 747SR 3 3

A320-200 737 1,082 150 495 600 56 56 MD-80 624 315 309 800 2 2 MD-80-83 268 163 105

MD-80-88 157 117 40 Open Market 2,514 MD-90 107 108 2 3 Backlog 603

Tu-154 33 15 19 1 Total WB 2,762 4,716 1,163 3,117175 637 637 737-900 45 45

757-200 758 585 242 69

757-300 7 15 8

A321-100 83 95 10 22

A321-200 61 188 19 146 Aircraft 1999 2019 Replace Delive Type in service ments riesOpen Market 3,490 Open Market 6,004Backlog 2,374 Backlog 2,977

Total SA 7,587 10,099 3,352 5,864 Total 10,349 14,815 4,515 8,981

Aircraft 1999-2009 (numbers at year end)

73

Seats 1999-2009 (numbers at year end)

Detailed passenger fleet results

Aircraft 1999 2009 Replace Delive Aircraft 1999 2009 Replace Delive Type in service ments ries Type in service ments ries70 12,670 12,670 210 151,830 151,830 Avro 70 316 316 767-200 21,120 2,928 18,192 Do 728Jet 4,200 4,200 767-200ER 19,279 8,658 12,381 1,760

ERJ-170 2,100 2,100 A310-200 6,939 676 6,263 F28 6,468 68 6,400 A310-300 22,598 14,353 8,441 196 F70 3,267 3,035 232 250 136,000 136,00085 13,345 13,345 767-300 26,502 17,021 9,744 263 Avro 85 4,932 3,141 2,274 483 767-300ER 87,988 82,252 20,733 14,997 BAC1-11 356 356 767-400ER 12,030 12,030

DC-9 3,121 3,121 A300 20,115 1,719 18,396 ERJ-190 2,940 2,940 A300-600 11,174 3,397 7,777

100 60,800 60,800 A300-600R 38,529 27,615 10,914 717 936 14,000 13,064 A330-200 14,201 26,385 4,966 17,150 737-100 109 109 A340-200 4,614 4,058 556

737-200 69,324 2,802 66,522 300 115,500 115,500 737-500 42,823 33,214 9,609 747SP 3,284 3,284

737-600 3,742 11,472 116 7,846 777-200ER 43,625 85,922 2,388 44,685 A318-100 12,917 12,917 A330-300 24,068 38,427 5,222 19,581 Avro 100 4,386 4,716 330 A340-300 38,314 46,719 6,970 15,375

BAe 146 12,832 4,574 8,258 A340-500 6,406 6,406 Concorde 1,300 1,300 DC-10 49,321 2,239 47,082 DC-9-30 35,246 204 35,042 L1011 19,854 238 19,616

DC-9-40 4,180 4,180 MD-11 29,825 20,621 9,204 F100 25,048 17,261 7,787 MD-11C 2,492 2,492

MD-80-87 7,814 6,361 1,453 350 70,350 70,350125 87,750 87,750 747-200 68,077 2,093 65,984 737-300 132,491 87,014 45,477 747-300 20,533 6,545 13,988

737-700 22,858 63,872 3,500 44,514 777-200 23,057 29,695 997 7,635 A319-100 25,379 69,586 2,312 46,519 IL-86 1,040 1,040

DC-9-50 9,357 9,357 400 120,400 120,400 Yak-42 720 720 747-100 8,119 8,119 150 180,750 180,750 747-400 172,063 163,890 23,442 15,269

707 476 476 777-300 12,468 15,792 824 4,148727 68,987 1,376 67,611 A340-600 15,336 15,336 737-400 64,085 51,333 13,187 435 500 151,000 151,000 737-800 29,867 95,491 2,535 68,159 747HD 18,185 10,181 8,004 A320-100 2,890 1,771 1,119 747SR 1,659 1,659

A320-200 112,843 164,056 23,529 74,742 600 33,600 33,600 MD-80 89,246 44,770 44,476 800 1,600 1,600 MD-80-83 39,236 23,708 15,528

MD-80-88 22,518 16,714 5,804 Open Market 780,280 MD-90 15,730 15,797 296 363 Backlog 174,831

Tu-154 5,237 2,383 3,011 157 Total WB 809,043 1,429,008 335,146 955,111175 111,475 111,475 737-900 7,754 7,754

757-200 145,978 111,427 47,138 12,587 757-300 1,764 3,732 1,968 A321-100 15,667 17,979 1,892 4,204

A321-200 12,069 35,730 3,757 27,418 Aircraft 1999 2019 Replace Delive Type in service ments riesOpen Market 466,790 Open Market 1,247,070Backlog 332,700 Backlog 507,531Total SA 1,043,598 1,405,324 437,764 799,490 Total 1,852,641 2,834,332 772,910 1,754,601

74

Aircraft 1999-2019 (numbers at year end)


Aircraft 1999 2019 Replace Delive Aircraft 1999 2019 Replace Delive Type in service ments ries Type in service ments ries70 314 314 210 1,894 1,894 Avro 70 4 4 767-200 102 102

Do 728Jet 60 60 767-200ER 102 12 100 10

ERJ-170 30 30 A310-200 32 32

F28 99 99 A310-300 113 6 108 1

F70 42 6 36 250 1,461 1,46185 314 314 767-300 102 3 100 1

Avro 85 65 9 63 7 767-300ER 381 136 306 61

BAC1-11 4 4 767-400ER 48 48

DC-9 40 40 A300 75 75

ERJ-190 30 30 A300-600 44 44

100 1,026 1,026 A300-600R 146 2 144

717 8 126 118 A330-200 52 99 19 66

737-100 1 1 A340-200 19 7 12

737-200 613 613 300 1,032 1,032 737-500 380 52 328 747SP 11 11

737-600 32 106 2 76 777-200ER 156 260 53 157

A318-100 120 120 A330-300 78 67 76 65

Avro 100 44 21 26 3 A340-300 144 96 106 58

BAe 146 141 141 A340-500 21 21

Concorde 13 13 DC-10 177 177

DC-9-30 349 349 L1011 66 66

DC-9-40 39 39 MD-11 108 14 94

F100 249 16 233 MD-11C 9 9

MD-80-87 68 68 350 625 625125 1,653 1,653 747-200 180 180

737-300 1,003 106 897 747-300 54 54

737-700 171 459 52 340 777-200 69 33 57 21

A319-100 204 488 81 365 IL-86 3 3

DC-9-50 74 74 400 727 727 Yak-42 6 1 5 747-100 20 20

150 2,474 2,474 747-400 452 92 400 40

707 3 3 777-300 31 11 31 11

727 461 461 A340-600 43 43

737-400 436 21 418 3 500 575 575 737-800 185 585 33 433 747HD 33 33

A320-100 18 18 747SR 3 3

A320-200 737 618 614 495 600 404 404 MD-80 624 2 622 800 223 223 MD-80-83 268 8 260 1000 33 33 MD-80-88 157 5 152

MD-90 107 49 61 3 Open Market 6,974 Tu-154 33 1 33 1 Backlog 603

175 2,103 2,103 Total WB 2,762 7,924 2,415 7,577 737-900 45 45

757-200 758 178 649 69

757-300 7 15 8

A321-100 83 30 75 22

A321-200 61 178 29 146 Aircraft 1999 2019 Replace Delive

Type in service ments riesOpen Market 7,884 Open Market 14,858Backlog 2,374 Backlog 2,977

Total SA 7,587 11,249 6,596 10,258 Total 10,349 19,173 9,011 17,835

75

Seats 1999-2019 (numbers at year end)

Detailed passenger fleet results

Aircraft 1999 2019 Replace Delive Aircraft 1999 2019 Replace Delive Type in service ments ries Type in service ments ries70 21,980 21,980 210 397,740 397,740 Avro 70 316 316 767-200 21,120 21,120 Do 728Jet 4,200 4,200 767-200ER 19,279 2,149 18,890 1,760

ERJ-170 2,100 2,100 A310-200 6,939 6,939 F28 6,468 6,468 A310-300 22,598 1,228 21,566 196 F70 3,267 426 2,841 250 365,250 365,25085 26,690 26,690 767-300 26,502 699 26,066 263 Avro 85 4,932 621 4,794 483 767-300ER 87,988 32,053 70,932 14,997 BAC1-11 356 356 767-400ER 12,030 12,030

DC-9 3,121 3,121 A300 20,115 20,115 ERJ-190 2,940 2,940 A300-600 11,174 11,174

100 102,600 102,600 A300-600R 38,529 428 38,101 717 936 14,000 13,064 A330-200 14,201 26,120 5,231 17,150 737-100 109 109 A340-200 4,614 1,740 2,874

737-200 69,324 69,324 300 309,600 309,600 737-500 42,823 5,513 37,310 747SP 3,284 3,284

737-600 3,742 11,356 232 7,846 777-200ER 43,625 73,014 15,296 44,685 A318-100 12,917 12,917 A330-300 24,068 20,125 23,524 19,581 Avro 100 4,386 2,137 2,579 330 A340-300 38,314 25,721 27,968 15,375

BAe 146 12,832 12,832 A340-500 6,406 6,406 Concorde 1,300 1,300 DC-10 49,321 49,321 DC-9-30 35,246 35,246 L1011 19,854 19,854

DC-9-40 4,180 4,180 MD-11 29,825 4,069 25,756 F100 25,048 1,663 23,385 MD-11C 2,492 2,492

MD-80-87 7,814 7,814 350 218,750 218,750125 206,625 206,625 747-200 68,077 68,077 737-300 132,491 14,390 118,101 747-300 20,533 20,533

737-700 22,858 60,215 7,157 44,514 777-200 23,057 11,172 19,520 7,635 A319-100 25,379 61,746 10,152 46,519 IL-86 1,040 1,040

DC-9-50 9,357 9,357 400 290,800 290,800 Yak-42 720 120 600 747-100 8,119 8,119 150 371,100 371,100 747-400 172,063 35,451 151,881 15,269

707 476 476 777-300 12,468 4,148 12,468 4,148 727 68,987 68,987 A340-600 15,336 15,336 737-400 64,085 2,984 61,536 435 500 287,500 287,500 737-800 29,867 92,675 5,351 68,159 747HD 18,185 18,185 A320-100 2,890 2,890 747SR 1,659 1,659

A320-200 112,843 93,442 94,143 74,742 600 242,400 242,400 MD-80 89,246 320 88,926 800 178,400 178,400 MD-80-83 39,236 1,120 38,116 1000 33,000 33,000 MD-80-88 22,518 715 21,803 MD-90 15,730 6,570 9,523 363 Open Market 2,323,440 Tu-154 5,237 164 5,230 157 Backlog 174,831175 368,025 368,025 Total WB 809,043 2,595,329 711,985 2,498,271 737-900 7,754 7,754

757-200 145,978 33,083 125,482 12,587 757-300 1,764 3,732 1,968 A321-100 15,667 5,685 14,186 4,204

A321-200 12,069 33,764 5,723 27,418 Aircraft 1999 2019 Replace Delive Type in service ments riesOpen Market 1,097,020 Open Market 3,420,460Backlog 332,700 Backlog 507,531Total SA 1,043,598 1,573,372 899,946 1,429,720 Total 1,852,641 4,168,701 1,611,931 3,927,991

76

H. Cargo forecast methodology2000 Global Market Forecast

World freighter fleet and capacity segmentationAirbus' prediction of future freighter demand begins with a detailedanalysis of the current world freighter fleet. Initial operationalparameters and production levels (ATKs) are established andreconciled with estimated traffic levels using actual aircraft-by-aircraft utilisation data and by making reasonable assumptionsregarding aircraft speeds and weight load factors.

All existing or projected western jet aircraft in cargo configuration

Cargo forecast methodology

Global FTKgrowth forecast

Belly/Combi FTKgrowth forecast

Freighter FTKgrowth forecast

Freighter ATKgrowth forecast

ATKs offeredby 1999 fleet

Retirement/productivityassumptions

ATKs requiredin year n

ATKs offeredby 1999 fleet

in year n

Open ATKsin year n

Open capacityin year n

P to F capacityneeded

in year n

P to F aircraftneeded

in year n

New capacityneeded

in year n

New aircraftneeded

in year n

Freighter fleet at end 1999Source: Airclaims

Available Freight Tonne Kilometres at end-1999: 104.90 billion

707 56 A300-600 38727-100 212 A300-B4 46727-200 261 A310 39737-100/200 24 737-300/400/500 3 DC-10-10 35757 77 DC-10-30/40 45

MD-11 59DC-8-50/60 128DC-8-70 101 L-1011 11DC-9-14/15 21DC-9-30/40 80 767-200 9

767-300 33BAC One-Eleven 1 747-100 37BAe 146 22 747-200 136

747-400 36

Total standardbodies 986 Total widebodies 524

77

are then grouped into four different size categories, each of whichhas been defined broadly to capture the capability of current andfuture freighter types. The base for the forecast is provided by thenumber of tonnes of lift capacity actually in service, so each aircraftin the 1999 fleet is converted into its equivalent tonnes of lift andthe results aggregated into the respective size categories.

Within each size segment, capacity in service is further segmentedinto a set of homogeneous market and operational categories, whichare deduced from the current freighter fleet's aircraft-by-aircraftcapacity profile as determined by statistically-established thresholdsfor each aircraft size segment. Market categories are identified byanalysis of individual aircraft average flight hours per cycle, whileoperational categories are based on aggregate aircraft flight hoursper year. The identification of the amount of capacity deployed onhigh-utilisation operations also facilitates the evaluation of demandfor new freighters as opposed to passenger-to-freighter conversions.


Traffic forecastAirbus' forecast of global airfreight traffic (measured in FTKs) isderived from econometric analyses of 120 directional airfreightflow sub-markets. This involves identifying independent variablesdriving airfreight demand in each market studied, and developingfunctional relationships between such independent variables andhistorical airfreight traffic. Models strive to capture elements thatpush airfreight from the exporting region to the importing region aswell as elements that pull airfreight into the importing region fromthe exporting region. Typical air freight drivers include economicgrowth, international trade, airfreight yields, industrial production

Freighter market segmentation

< 30 tonnesBAC One-Elevens,BAe 146s, DC-9s,

737s, 727s

22 tonnes nominal

30 - 50tonnes

707s, DC-8s, 757s,A310s, A300B4s

45 tonnesnominal

50 - 80tonnes

767s, DC-10s,A300-600s,

L-1011s

60 tonnesnominal

Payload Existingaircraft types

Openmarket size

Segment 1

Segment 2

Segment 3

> 80 tonnes MD-11s, 747s120/110 tonnes

(new/used)nominal

Segment 4

78

and other independent variables. Detailed results by airfreight sub-market are summarised in Appendix I.

The extent to which airfreight carried in the bellies of passengeraircraft will grow depends largely on the future development andcargo capabilities of the passenger aircraft fleet. The forecasttherefore draws on the results of the GMF passenger fleet forecastto quantify the freight capacity offered and airfreight carried bypassenger aircraft. The cargo capacity assumed for each neutralpassenger aircraft size category is based on that provided by thecurrent production Airbus model in the category.


A340-600 underfloor cargo capacity

containersor

pallets

695ft19.7m

bulk hold33

96" 96" 96" 96" 96"96" 96" 96" 96" 96" 96" 96" 96" 96"

LD3 LD3 LD3 LD3LD3LD3LD3 LD3 LD3 LD3LD3LD3 LD3LD3 LD3 LD3 LD3LD3 LD3LD3 LD3

Forward hold

8 x 96” palletsor

24 LD3 containers

Aft hold

6 x 96” palletsor

18 LD3 containers

Forward available volume

3256 ft3

or3792 ft3

Aft available volume

2442 ft3

or2844 ft3

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

North America-EuropeEurope-North America

Typical directional airfreight forecast model

5.3%

4.8%

5.7%

4.8%

7.7%

4.3%

Fastest growing sectors (share of total freight):( 10.2% Electrical Components (3.5%)( 8% Printing and Publishing (2.9%)

( 7.1% Telecom Equipment (2.5%)

Slowest growing sectors (share of total freight):( -0.5% Apparel and Footwear (1.8%)( 1.4% Perishables (4.9%)

( 1.9% Texti les (2.2%)

Fastest growing sectors (share of total freight):

( 11.5% Electrical Industrial Apparatus (3.8%)( 11.5% Telecom Equipment (1.6%)( 9.7% Computers and Peripherals (2.9%)

Slowest growing sectors (share of total freight):

( 5.5% Apparel and Footwear (6.5%)( 5.8% Industrial Chemicals (3.7%)( 5.9% Miscellaneous Products (7.6%)

Airfreight tonnes

Source: MergeGlobal

ForecastHistory

79

Elasticities of the cargo market

Very slowgrowth

Slowgrowth

Moderategrowth

Slowgrowth

Moderategrowth

Fastgrowth

Moderategrowth

Fastgrowth

Rapidgrowth

Shortrange

Mediumrange

Longrange

Lowutilisation


Highutilisation

Mature EmergingMarket

Operation

Oppor-tunistic

Reliable High owner-ship costs

Low owner-ship costs


The results of the belly traffic forecast are deducted from the totalforecast FTKs, leaving the portion of future airfreight demand to betransported by dedicated freight aircraft. The so-called “growthgap” between forecast total airfreight and belly service means thattraffic carried by dedicated freighters will have to grow faster thanoverall airfreight.

Production forecastAnalysis of global airfreight traffic shows that long-range emergingmarkets grow faster than short-range more mature markets.Moreover, research indicates that well-known international freightcontractors, as well as passenger airline cargo managers and thelargest integrators running higher-utilisation freighter operations,possess superior product development, sales, marketing andoperational capabilities, and are therefore better positioned tostimulate and to capture market growth opportunities than are themore marginal operations.

To simulate these aspects in the absence of a comprehensivefreighter schedule database, an algorithm has been developed todistribute traffic growth by detailed market and operationalcategory. Production growth (measured in ATKs) over the forecastperiod is distributed in a similar fashion, except that everycombination of market and operational category is assumed to growat a marginally slower rate than traffic growth, reflecting a slightimprovement in weight load factor.

Relevant production growth is applied to capacity in service, whichis also segregated into identical market and operational categories inorder to allow the application of a more appropriate growth rate torelevant capacity in service.

80


RetirementsUnlike in the passenger fleet section of the GMF, where the notionof replacement reflects the end of the first major phase of typicalaircraft life-cycles, the freighter forecast assumes that aircraft arekept in service until the end of their useful economic lives. Aircraftlife-cycle analyses have demonstrated that the economic lives ofstandardbody aircraft are slightly longer than those of widebodies,reflecting the greater accumulation of flight hours by widebodiesdeployed on longer-range operations. The freighter forecasttherefore assumes that standardbody aircraft survive an average 37years in service, whereas widebodies will survive an average 35years. The freighter forecast also assumes that utilisation levelsdeteriorate towards the end of aircraft useful economic lives.

Forecasting open demandIn order to derive the level of open production (ATKs) to beperformed by new freighters or passenger-to-cargo conversions, theproduction of the 1999 freighter fleet over the forecast period isremoved from the aggregate production forecast results. Theforecast methodology defines at least three combinations of neutralaircraft size and utilisation levels within each aircraft size segment,which may be thought of as “buckets” of structural payload withdiffering performance levels that absorb the open productionrequirement.

Unlike passenger services, where airlines are under pressure toimprove service levels by increasing frequencies, freight operatorsare more likely to accommodate traffic growth by increasingaircraft size in order to achieve lower operating costs through scale.While time-sensitive products are increasingly demanded in themarket place, there is little incentive for the typical freighteroperator to increase frequencies beyond once-daily service. This isreflected in the forecast model by setting nominal aircraft size at acapacity level moderately above the current average size in serviceunless the profile and magnitude of potential conversion capacitydeems otherwise (see segmentation table above). Moreover, themodel recognises that the capabilities of newer generations offreight aircraft, whether new or converted from passenger service,as well as continuing competitive pressures, mean that futureaircraft will operate at slightly higher utilisation levels thanachieved today.

New aircraft vs. passenger aircraft conversionsThe choice between new aircraft or passenger aircraft conversionshinges largely on the cost of aircraft acquisition. It will, of course,depend also on the availability of suitable capacity leavingpassenger service for conversion into freighters, and on the type ofoperation for which the capacity is intended.

81

The demand for passenger-to-freight conversions is largely forintermediate and low-utilisation applications, which make up thelion's share of current world freighter operations. The freighterforecast model ensures that wherever demand is forecast forconverted capacity, sufficient capacity will indeed - according to theGMF passenger fleet results - be potentially available. New aircraftdemand, however, is principally derived from high-utilisationoperations, which present more stringent requirements for reliableaircraft that can support the higher acquisition costs.


Constraints and data sourcesThe inadequacy of currently available freighter schedule data makesthe development of a freighter forecast model particularlychallenging. The availability of such data would enhance theforecaster's ability to identify the nature of capacity and the marketson which such capacity is deployed, thus facilitating the applicationof appropriate traffic growth projections to capacity in service. Itwould also permit the development of a more refinedfrequency/capacity algorithm.

Under the circumstances, any meaningful forecast must deduce thispertinent information from alternative sources of data. The GMFcargo forecast therefore relies on aircraft-by-aircraft utilisation data(hours and cycles) as available from ACAS. This source hasallowed the forecast model to identify the nature of the markets aswell as the types of operation on which the aircraft are deployed.The freight aircraft inventory in service at year-end, however, hasbeen derived from Airclaims; hence, the independent sources arelinked via aircraft serial numbers.

High utilisation operators are more likely topurchase or lease new aircraft

69% 75%

24%10%

4%

0%

50%

100%

1999 Fleet Forecast 1999 Fleet Forecast 1999 Fleet Forecast

new capacity

converted capacity

High Utilisation Intermediate Utilisation Low Utilisation

Per cent tonnes deployed in > 80 tonne segment

High UtilisationNew a/c operators :Air France AlitaliaAsiana Airlines AtlasCargolux Cathay PacificChina Airlines Air ChinaChina Eastern A. E l Al

EVA FedexJAL KoreanLufthansa MartinairNippon Cargo Saudia

Singapore

Intermediate UtilisationNew a /c operators:Air France Air ChinaAsiana Ailines AtlasCargolux EVAFedex JALLufthansa Saudia

Low UtilisationNew a/c operators:Polar Air Cargo

82

Historical country-to-country airfreight data used for traffic forecastmodelling is from MergeGlobal. Historical and forecast datarelating to independent variables driving airfreight are largely fromStandard & Poor's DRI.


83

I. Cargo forecast results

Africa to Asia 0.09 5.5 6.2 5.9Africa to Central America 0.01 5.5 5.5 5.5Africa to China 0.03 7.8 5.7 6.7Africa to CIS 0.01 5.5 5.5 5.5Africa to Europe 0.89 7.8 5.5 6.6Africa to Indian Subcontinent 0.01 5.5 5.5 5.5Africa to Middle East 0.03 5.5 5.5 5.5Africa to North America 0.20 5.5 5.5 5.5Africa to Pacific 0.02 5.5 5.5 5.5Asia to Africa 0.27 4.2 2.6 3.4Asia to Central America 0.63 9.5 6.5 8.0Asia to China 0.82 7.7 5.7 6.7Asia to CIS 0.06 7.6 2.8 5.2Asia to Europe 6.21 7.7 6.1 6.9Asia to Indian Subcontinent 0.22 6.9 5.4 6.2Asia to South America 0.63 9.0 6.2 7.6Asia to Middle East 0.38 4.1 2.5 3.3Asia to North America 7.31 7.4 6.1 6.7Asia to Pacific 0.33 6.0 5.2 5.6Africa to South America 0.01 7.0 4.2 5.6Central America to Africa 0.01 5.5 5.5 5.5Central America to Asia 0.09 9.4 6.5 8.0Central America to China 0.01 9.3 6.2 7.7Central America to CIS 0.00 5.5 5.5 5.5Central America to Europe 0.56 4.7 3.6 4.1Central America to Indian Subcontinent 0.01 5.5 5.5 5.5Central America to Middle East 0.01 5.5 5.5 5.5Central America to North America 0.57 5.4 4.9 5.2Central America to Pacific 0.01 5.5 5.5 5.5Central America to South America 0.09 7.7 4.5 6.1China to Africa 0.21 10.1 6.3 8.2China to Asia 0.78 5.4 4.8 5.1China to Central America 0.20 4.2 3.0 3.6China to CIS 0.08 4.1 2.6 3.3China to Europe 2.85 7.3 5.4 6.4China to Indian Subcontinent 0.06 7.8 5.8 6.8China to Middle East 0.17 8.7 6.6 7.6China to North America 2.94 7.6 6.6 7.1China to Pacific 0.19 7.7 6.9 7.3China to South America 0.41 8.8 6.1 7.4CIS to Africa 0.01 5.5 5.5 5.5CIS to Asia 0.03 4.5 4.3 4.4CIS to Central America 0.01 5.5 5.5 5.5CIS to China 0.06 5.7 4.0 4.9

continued ...

Sub-market % of world Avg. annual growth (%)(directional) FTK 1999 2009 1999

(1999) -2009 -2019 -2019

Freight growth rates for 120 directional submarkets

84


CIS to Europe 0.03 4.4 4.2 4.3CIS to Indian Subcontinent 0.01 5.5 5.5 5.5CIS to Middle East 0.00 5.5 5.5 5.5CIS to North America 0.04 7.2 4.3 5.7CIS to Pacific 0.00 5.5 5.5 5.5CIS to South America 0.01 6.2 3.8 5.0Domestic US 15.05 4.8 4.0 4.4Europe to Africa 1.02 6.1 5.7 5.9Europe to Asia 3.20 6.7 6.5 6.6Europe to Central America 0.69 7.4 5.5 6.4Europe to China 1.11 7.2 5.5 6.3Europe to CIS 0.04 7.1 3.5 5.3Europe to Indian Subcontinent 0.28 6.3 5.1 5.7Europe to Middle East 0.61 6.4 5.9 6.1Europe to North America 6.07 5.7 4.8 5.2Europe to Pacific 1.03 4.7 3.6 4.2Europe to South America 1.61 7.6 4.4 6.0Indian Subcontinent to Africa 0.04 5.5 5.5 5.5Indian Subcontinent to Asia 0.17 5.9 5.0 5.5Indian Subcontinent to Central America 0.02 5.5 5.5 5.5Indian Subcontinent to China 0.07 7.9 5.7 6.8Indian Subcontinent to CIS 0.02 5.5 5.5 5.5Indian Subcontinent to Europe 0.87 7.3 5.4 6.3Indian Subcontinent to South America 0.06 9.1 4.1 6.5Indian Subcontinent to Middle East 0.04 5.5 5.5 5.5Indian Subcontinent to North America 1.04 6.1 4.8 5.4Indian Subcontinent to Pacific 0.06 5.5 5.5 5.5Intra Africa 0.11 8.2 4.7 6.5Intra Asia 2.53 7.0 8.1 7.5Intra Central America 0.02 6.3 5.3 5.8Intra Europe 0.79 6.2 5.5 5.8Intra Indian Subcontinent 0.01 6.2 4.5 5.3Intra Middle East 0.02 4.4 2.7 3.6Intra North America 0.69 4.7 4.0 4.4Intra Pacific 0.11 6.0 5.1 5.6Intra South America 0.16 9.4 6.4 7.9Middle East to Africa 0.03 5.5 5.5 5.5Middle East to Asia 0.09 7.2 6.0 6.6Middle East to Central America 0.01 5.5 5.5 5.5Middle East to China 0.02 7.6 5.7 6.7Middle East to CIS 0.01 5.5 5.5 5.5Middle East to Europe 0.36 5.9 4.8 5.4Middle East to Indian Subcontinent 0.01 5.5 5.5 5.5Middle East to North America 0.41 7.1 5.6 6.4Middle East to Pacific 0.02 5.5 5.5 5.5Middle East to South America 0.04 6.3 3.6 4.9North America to Africa 0.34 5.5 5.5 5.5North America to Asia 5.42 6.4 7.3 6.8North America to Central America 0.61 7.6 5.8 6.7

continued ...


(1999) -2009 -2019 -2019

85

Key freighter forecast parameters

Number of aircraft in service 1,510 2,243

Capacity in service (tonnes) 68,702.3 113,347.6

Flight hours per aircraft per year 1,541.9 1,690.7

ATKs (million ) 104,898.7 188,440.8

FTKs (million ) 68,184.1 124,815.9

End 1999 End 2009

Each of these numbers is a result, not an input !

3,449

183,974.8

1,814.0

331,077.6

223,469.9

End 2019

Cargo forecast results

North America to China 0.97 7.5 5.8 6.6North America to CIS 0.08 7.2 4.3 5.7North America to Europe 5.80 5.3 4.8 5.1North America to Indian Subcontinent 0.24 5.9 4.9 5.4North America to Middle East 0.62 5.5 5.5 5.5North America to Pacific 0.83 4.6 4.0 4.3North America to South America 1.99 5.6 4.7 5.1Pacific to Africa 0.05 5.5 5.5 5.5Pacific to Asia 0.65 5.0 5.5 5.3Pacific to Central America 0.03 5.5 5.5 5.5Pacific to China 0.26 7.1 5.4 6.3Pacific to CIS 0.01 5.5 5.5 5.5Pacific to Europe 0.83 4.7 3.6 4.2Pacific to Indian Subcontinent 0.06 5.5 5.5 5.5Pacific to Middle East 0.06 5.5 5.5 5.5Pacific to North America 0.34 4.4 3.7 4.1Pacific to South America 0.04 7.2 4.3 5.7South America to Africa 0.04 4.3 3.0 3.6South America to Asia 0.37 7.1 5.6 6.3South America to Central America 0.07 3.6 2.6 3.1South America to China 0.12 8.6 6.0 7.3South America to CIS 0.08 7.1 3.8 5.4South America to Europe 1.37 6.1 4.8 5.5South America to Indian Subcontinent 0.02 7.2 5.5 6.3South America to Middle East 0.07 6.3 3.6 4.9South America to North America 2.85 5.6 4.7 5.1South America to Pacific 0.02 7.2 4.3 5.7

Other 9.60 4.0 4.0 4.0


(1999) -2009 -2019 -2019

Total world 6.1 5.3 5.7

86


Ten-year cargo forecast results

Aircraft In service Deliveries Retire- In servicesize segment 1999 New converted ments 2009

< 30 tonnes 12,457 791 11,628 6,709 18,16730 - 50 tonnes 19,769 2,830 19,934 12,284 30,24950 - 80 tonnes 9,801 4,140 4,778 1,579 17,140> 80 tonnes 26,675 12,335 12,578 3,796 47,792Total 68,702 20,096 48,918 24,368 113,348

Aircraft In service Deliveries Retire- In servicesize segment 1999 New Converted ments 2009

< 30 tonnes 624 36 529 367 82230 - 50 tonnes 456 63 443 273 68950 - 80 tonnes 162 69 80 25 286> 80 tonnes 268 103 114 38 447Total 1,510 271 1,166 703 2,244

Numbers of aircraft

Capacity (tonnes)

Twenty-year cargo forecast results


< 30 tonnes 12,457 1,719 23,771 11,670 26,27730 - 50 tonnes 19,769 5,368 35,819 15,940 45,01650 - 80 tonnes 9,801 11,423 12,750 5,205 28,769> 80 tonnes 26,675 37,838 32,986 13,586 83,913Total 68,702 56,348 105,326 46,401 183,975


< 30 tonnes 624 79 1,080 578 1,20530 - 50 tonnes 456 119 796 358 1,01350 - 80 tonnes 162 190 213 81 484> 80 tonnes 268 315 300 136 747Total 1,510 703 2,389 1,153 3,449

Numbers of aircraft

Capacity (tonnes)

Documents

Global Market Forecast 2000 - · PDF fileE. Passenger traffic forecast methodology 66 ... number of passenger aircraft in service will increase from some ... 400 > 400 freighter a