Surprise... Company Sees Need For Lots Of Jets

Brazilian planemaker Embraer took the opportunity at this week's Singapore Air Show to release its projections for commercial air traffic demand in the Asia Pacific region and China over the next 20 years. The company expects the Asia Pacific region to grow at an annual rate of 5.3 percent and, particularly, China at 7.5 percent, which are well above the projected world average of 4.9 percent -- the result of a positive economic environment, and more accessibility to the market by new carriers.

"Embraer’s production, training and service investments show its deep involvement in the Asia Pacific region, where the Company has three decades of experience," said Orlando José Ferreira Neto, Managing Director – Embraer Asia Pacific. "The burgeoning and highly competitive aviation markets of the region pose a challenge that we take very seriously and sharpens the focus of our strategic planning."

Increasing openness in some countries of the region encourages more airline expansion and start-ups, which are resulting in stronger air transportation growth. However, Embraer notes, the Asian fleet still concentrates on high-capacity narrowbody aircraft... preventing the implementation of adequate air transportation services to medium-sized cities.

Embraer expects this fact, in conjunction with an ever-growing need to integrate secondary cities, plus new public policies, will motivate the development of regional transportation, thus creating major opportunities for regional aviation in the coming years.

In China, the economy is growing at a fast pace and, together with the heavy infrastructure investments, is stimulating the creation of privately-owned airlines, resulting in greater competition. But the fleets are centered, mainly, on high-capacity aircraft, which are unable to efficiently serve most medium-demand secondary markets.

Embraer foresees a demand for 1,270 jets in the 30 to 120-seat segment, over the next 20 years, in the Asia Pacific region and China, or an estimated total market value of US$ 42 billion. The forecast, broken down into ten-year periods, shows the delivery of 610 aircraft in 2008-2017 and 660 in 2018-2027.

Embraer’s current forecast indicates that the aircraft demand in the region will be 25 percent higher than the previous estimates. The Asia Pacific region and China will represent 17 percent of worldwide aircraft deliveries over the next 20 years. The studies also indicate the 30 to 90-seat segment will be the mainstay of regional aviation development in Asia. The 91 to 120-seat segment will support airlines to right-size aircraft capacity to market demand with improved service levels on low load factor narrowbody flights and to expand into mid-sized markets.

The carbon emissions issue is becoming one of the main drivers of airline fleet decisions and early retirement of older aircraft. Around 50 percent of the 61 to 120-seat jets currently in service in the Asia Pacific region are over 20 years old and should be replaced in the near future, resulting in substantial environmental and economic benefits.

In light of the data of the 20-year outlook, Embraer believes its commercial aircraft families -- the ERJ 145 (with four models, ranging from 37 to 50 seats) and the E-Jets (four models, from 70 to 122 seats) -- are very well positioned to capture an important share of the present and future air transportation needs in the Asia Pacific region and China.

FMI: www.embraer.com, www.singaporeairshow.com.sg