Airbus lifts demand forecasts on Asian growth

Airbus lifts demand forecasts on Asian growth

London/Barcelona: Global airlines will buy $3.5 trillion of aircraft over the next 20 years to meet relentless demand for travel to and from Asia’s burgeoning “megacities" and renew ageing fleets in the West, Airbus said on Monday.

The world’s largest civil jetmaker raised its forecast for airplane deliveries over the next 20 years by around 8% to 27,800 aircraft as part of an annual market survey. The figure includes 900 freighters to keep up with a projected expansion in global trade.

The European company shrugged off turmoil in financial markets, saying population growth and urbanisation would continue to promote strong aviation demand. The industry has recovered more quickly than expected from the last recession but some are nervous over the short-term outlook.

“People need and want to fly more than ever before," Airbus said in a statement.

“Over the next 20 years the aviation sector is expected to remain as resilient to cyclical economic conditions as in the past."

Revenue passenger kilometres -- the number of people boarding planes adjusted for the distance flown -- will grow by an average 4.8% per year, which is equivalent to traffic more than doubling in the next 20 years, Airbus said.

Boeing is even more optimistic, with a recent June forecast of 5.1% a year.

The predictions underscore soaring demand for narrowbody or single-aisle jets like the Boeing 737 and Airbus A320, the backbone of many airlines.

Both planemakers have decided to refresh their best-selling models with new engines to cut fuel costs and see off newcomers such as Canada’s Bombardier or builders in China and Russia.

Airbus raised its demand forecast for these 100-200 seat aircraft by 7% to 19,200 airplanes worth $1.4 trillion between 2011 and 2030. Boeing sees a market worth $2 trillion, though its data includes airplanes from 90 seats upwards instead of 100.

Airbus and Boeing are increasing production rates to keep up with demand.

There is concern, however, over what the planemakers’ optimism means for airlines on the eve of a widely watched airline industry profit forecast from lobby group IATA.

The International Air Transport Association halved its forecast for 2011 airline profits in June and could trim it again in the light of Europe’s debt crisis and fears of a new US recession. Premium travel is where airlines make most of their profits and is seen as a sensitive guide to business confidence.

Many airlines are investing in new lightweight airplanes to lower their fuel costs.

Airbus sees strong demand for wide-bodied twinjets like the Boeing 787 Dreamliner, which is due to be delivered to its first Japanese customer next week after three years of delays, and smaller versions of its own A350. Airbus hiked its forecast for 250-300 seat jets by 11%.

The Airbus survey also acts as a signpost to the next big battle with Boeing over the future of mini-jumbos like the Boeing 777, which Airbus has countered with its planned A350-1000.

Boeing must decide in the next year or so whether to redesign the 777 or just commission a replacement for the world’s largest civil jet engines as it tries to keep its dominance of the 350-400 seat market. Airbus sees demand for 2,100 new aircraft in this category over the next 20 years.

However, Airbus and Boeing continue to disagree on the demand for the industry’s behemoths -- the Airbus A380, the world’s largest airliner, with 525 seats, and Boeing’s newly revamped 747 jumbo.

Airbus sees a $600 billion market for airplanes with 400 seats or more, representing 1,781 units. Boeing sees demand for less than half that, just 820 planes.

Boeing contends long-haul air travel will splinter into more and more direct routes taking people where they want to go, rather than changing planes at hubs, a system known as point-to-point travel. Airbus believes hubs, for which its A380 was designed, will remain essential and that many of these aerial crossroads will become destinations in their own right.

“By 2030, 60% of the world’s population or some 5 billion people will be urbanised, and the number of mega cities will have more than doubled to 87 from today’s 39. It is also forecast that over 90% of long-haul travellers will fly between these mega-city points," Airbus said.

So far, the market has voted mainly with Boeing, opting for the next generation of mid-sized jetliners like the 787 with its ability to fly further on less fuel. But Airbus maintains its signature A380 project will succeed due to demand for the double-decker in Asia and the Middle East. So far, it has sold 236.