burgeoning passenger traffic on domestic and international routes,
airlines across the world are engaged in the expansion of their
fleets. Record orders for new airplanes placed in 2005 have almost
doubled the total orders of aircraft manufacturers such as Boeing
and Airbus and most aircraft deliveries are likely to take place
over the next five years.
"The record orders of 2005 placed by airlines worldwide indicate
rapidly increasing seating capacity in the following years," notes
Ms. Kamila Zlobinska, Research Analyst at Frost & Sullivan.
"A significant number of deliveries will be devoted to fleet
renewal as many airplanes are in need of replacements.
New-generation airplanes will increase efficiency and help reduce
operating expenses, particularly fuel costs."
With 33.9 per cent share of the total orders, North America will
continue to be the biggest customer in the world airline market. At
the same time, lured by developing economies particularly in China
and India, the Asia Pacific airline market is rapidly investing in
aviation infrastructure improvements. Further, as European airlines
hold over 500 options and purchase rights, which are likely to be
realised in the future, the European airline market will contribute
to further market growth.
Current orders for
airplanes are likely to provide an additional capacity of about 1.0
million seats and further growth is likely to take place due to the
exercised options and purchase rights of future aircraft deliveries
as well as new orders that airlines will place in the near future.
In particular, 2007 is likely to mark significant growth with
deliveries of the new Airbus A380.
At present, the world fleet includes a seating capacity of over
3.1 million seats and is expected to grow by 20.3 per cent by the
end of 2010. The North American aviation industry accounts for 37.4
per cent of the total world fleet and is likely to witness an
increase in aircraft deliveries, with a significant number of
airplanes requiring replacements.
Europe - the second largest market in terms of the number of
aircraft in use - will witness increasing long-haul traffic driven
by the liberalisation of immigration rules on inter-continental
travel. Further, the current fleet in Asia Pacific will witness a
rise with an increase in the number of leased aircraft as well as
the deliveries of additional orders that are likely to be placed by
several airlines in the region.
Single-aisle jets, which are utilised in regional and domestic
short-haul flights, dominate the air traffic in most countries.
Hub-and-spoke networks of international air traffic will also
continue to accelerate the need for small-sized airplanes.
Additionally, growing emphasis on international mobility is
likely to boost demand for twin-aisle airplanes, which are used on
long-haul international and inter-continental routes. In
comparison, very large jets will be used only between major
international hubs in Asia Pacific, Europe and North America.
Soaring fuel prices, reducing profit margins and intensifying
competition, especially from low-cost carriers are compelling
traditional airlines to reduce costs and improve efficiency to gain
a competitive edge.
"The worldwide emergence of low-cost carriers is a challenge for
traditional airlines and this is augmented by growing customer
awareness of the product-value relation, fuelled by reduced fares
of low-cost airlines," explains Ms. Zlobinska.
"As a result, airlines
will need to focus on fleet renewal that will help them to lower
operating costs, as new-generation aircraft can be up to 30% more
efficient. Early fleet renewal will allow airlines worldwide to
benefit from cost advantages associated with improved fleet
As efficient economic models will play a pivotal role for
growth, airlines will need to create efficiencies in fleet
modernisation to augment their revenue potential. "Hence, all
airlines should adopt improved fleet management, restructure their
fleets as well as operate young aircraft to lower maintenance and
fuel costs to remain competitive", states Ms. Zlobinska.