Japan Aircraft Development Corporation · 2018-01-01 · business plans andproduct strategies. In this document, Japan Aircraft Development Corporation (JADC) specifically show demand

Worldwide Market Forecast

2019-2038

March 2019

Japan Aircraft Development Corporation

Intentionally Blank

Worldwide Market Forecast

2019 – 2038

March 2019


Worldwide Market Forecast 2019-2038

Intentionally Blank


Foreword

The aircraft industry is expertise-intensive, and it has a spillover effect leading to

advancement of the country’s industrial structure. Therefore, the industry is essential for

Japan to be a scientific and technological powerhouse, and makes a great effort to develop

and progress.

It is essential to continuously collect and analyze data relating to the world commercial

aircraft market so that Japan’s aircraft industry can further develop in the future. In this

document, we show demand forecasts for air transport and aircraft of passenger and cargo

for the next 20 years from 2019 to 2038, based on results obtained by collecting and analyzing

data relating to the global commercial aircraft market involving air transport, aircraft, airlines,

aircraft makers, etc.

This document summarizing such forecasts is widely distributed not only to those who are

involved within and around the aviation industry, but also to the general public through our

website (http://www.jadc.jp/en/).

March 2019


YGR-5095

i


ii

Intentionally Blank


iii

Contents

1. Executive Summary ........................................................................... 1

2. Introduction ....................................................................................... 3

3. Market Environments ........................................................................ 5

4. Market Drivers ................................................................................... 15

5. Air Passenger Market ........................................................................ 25

6. Passenger Airplane Demand .............................................................. 35

7. Air Cargo Market ............................................................................... 51

8. Jet Freighter Demand ......................................................................... 59

9. Airplane Sales .................................................................................... 69

10. Regional Overview ............................................................................ 73

11. Aero Engine Demand ........................................................................ 97

12. Methodology ...................................................................................... 99

Abbreviations ........................................................................................................... 101

Glossary of Terms .................................................................................................... 102

Appendix A Definitions of Airplane Categories .................................................. 103

Appendix B Definitions of Aero Engine Categories ............................................ 104

Appendix C Air Passenger Traffic ....................................................................... 105

Appendix D Air Cargo Traffic ............................................................................. 107

Appendix E Airplane Demand Forecast .............................................................. 108

Appendix F Effect of Crude Oil Price on RPK ................................................... 110

Appendix G Evaluation of Second Demand ........................................................ 111

Appendix H Changes in Cargo Transportation Results by Major Airlines .... ....... 112

Reference Materials ................................................................................................. 113


iv

Intentionally Blank


1

1. Executive Summary

Generally speaking, long-term demand forecast for the commercial air transport market

provides useful information for evaluating and reviewing market risk when doing business

associated with the commercial air transport sector, and for devising medium- and long-term

business plans and product strategies. In this document, Japan Aircraft Development

Corporation (JADC) specifically show demand forecasts for air passenger traffic, air cargo

traffic and airplanes (passenger jets, passenger turboprop airplanes and jet freighters), as well

as for aero engine demand, over the 20-year period covering 2019 to 2038.

For the forecast period, global economic growth, in terms of GDP, will be growing at an

average annual rate of 2.8%.

For the forecast period, global air passenger traffic demand, in terms of RPK, will grow at an

average annual rate of 4.4%, from 8.26×1012 passenger kilometers in 2018 to 19.4×1012 in

2038, which is 2.3 times larger than in 2018. During the period, the Asia-Pacific region will

show a growth rate of 5.3%, and its share will grow from 34% in 2018 to 40% in 2038.

The in-service passenger jet fleet will increase from 23,904 units at the end of 2018 to 40,301

units at the end of 2038. Demand for new airplanes over the next 20 years will be 35,312 units,

with a total value of 5.53 trillion U.S. dollars (at 2018 list prices). Among demand for passenger

jets, the largest demand will be for the 120-169 seat airplane class at 12,576 units. Regionally,

large demand will be generated in Europe (22% share), China (20%), and North America

(19%), and demand from these three regions will constitute 61% of the total demand in the

global market. The Asia-Pacific region will generate a demand of 14,384 units (41%).

2018 2038 Growth measures Sales (2018 US$billion)

World Economic Growrh (GDP) 2.8%p.a.

Passenger Demand (RPK ：×109 passenger km) 8,259 19,400 4.4%p.a.Passenger Jet Airplane Fleet 23,904 ＊ 40,301 2.6%p.a.New Passenger Jet Airplane Deliveries 35,312 5,531

Cargo Demand (RTK ：×109 ton km) 255 547 3.9%p.a.Jet Freighter Fleet 1,966 ＊ 3,010 2.2%p.a.New Jet Freighter Deliveries 1,039 354

Total New Jet Airplane Deliveries 36,351 5,885

Passenger Turboprop Airplane Fleet 3,673 ＊ 3,914 0.3%p.a.New Passenger Turboprop Airplane Deliveries 3,130 68

New Engine Deliveries 87,685 1,360（＊：This data is based on the database of Cirium. )


2

The in-service passenger turboprop airplane fleet will increase from 3,673 units in 2018 to

3,914 units in 2038. Demand for new airplanes will be 3,130 units with a total value of 68

billion U.S. dollars (at 2018 list prices). The largest demand will be for airplanes with the 60-

79 seat class, amounting to 1,066 units. There will be no particular region with outstandingly

large demand, and airplanes will be used widely throughout many regions. The Asia-Pacific

region will have demand for passenger turboprop airplanes at 1,302 units (42%).

For the forecast period, cargo traffic demand, in terms of RTK, will increase at an average

annual growth rate of 3.9%, from 255×109 ton kilometers in 2018 to 547×109 in

2038, 2.1 times the figure for 2018. The Asia-Pacific region will show a growth rate of 4.6%,

and its share will expand from 35% in 2018 to 40% in 2038. The region will become the world's

largest market, just as in the case of air passenger traffic.

The in-service jet freighter fleet will increase from 1,966 units in 2018 to 3,010 units in 2038.

Demand for new jet freighters will be 1,039 units (of which 1,524 units will be converted from

passenger airplanes), with a total value of 354.2 billion U.S. dollars (at 2018 list prices).

Among demand for production jet freighters, demand for large airplanes will be 577 units, and

demand for medium-wide body airplanes will be 462 units. Regionally, North America and the

Asia-Pacific region will have the largest demand.

Global aero engine demand (including spares) will be 87,685 units with a value of 1.36 trillion

U.S. dollars (at 2018 market prices). Among these, demand for jet engines will be 80,764 units,

with a value of 1.35 trillion U.S. dollars, and demand for turboprop engines will be 6,921 units,

with a value of 15 billion U.S. dollars.

WorldNew Deliveries

Economics (GDP) 2.8% 39,481Pax. Traffic (RPK) 4.4% Sales valueCargo Traffic (RTK) 3.9% 2018US$BAirline Fleet 2.4% 5,953

Growth measures

North AmericaNew Deliveries

Economics (GDP) 1.9% 7,679Pax. Traffic (RPK) 3.1% Sales valueCargo Traffic (RTK) 3.8% 2018US$BAirline Fleet 0.5% 997

Growth measures

EuropeNew Deliveries


Growth measures

Asia-PacificNew Deliveries


Growth measures

Latin AmericaNew Deliveries


Growth measures

Middle EastNew Deliveries


Growth measures

CISNew Deliveries


Growth measures

AfricaNew Deliveries


Growth measures

＊Airline fleet, new delivries and sales value are the aggregate for passenger jets, passenger turboprops and jet freighters.

(Terms and abbreviations used in the text are shown after P. 101.)


3

2. Introduction The development of an airplane requires a period of nearly 10 years with development costs of more than one billion U.S. dollars, from the planning phase to entry into service. Even more time is needed to recoup the investment. Then, the newly developed model continues to be manufactured for several decades while several derivatives are developed. Once the airplane is delivered, it will continue to be operated for at least 10 years or so, and some for more than 40 years. Because airplanes are such long-lived products, the aircraft industry is said to have a very high business risk. Airlines that purchase and operate such airplanes are highly susceptible to the economic and social circumstances of the time, such as competition with new entrants including LCCs resulting from privatization and deregulation, and increased costs due to soaring fuel prices. Airplanes are very expensive, ranging from billions of JPY to tens of billions of JPY per unit. While the airline industry is a capital-intensive industry because airlines need many such airplanes, airfares are becoming cheaper and cheaper, and air tickets are now said to be commodities. In such a business environment, in order to minimize business and market risks, it is important to continuously and carefully monitor market trends related to the economic and social environments surrounding the aircraft industry and the airline industry, which is their customer. JADC has continuously been gathering information, and undertaking research and analysis of information on the global commercial aircraft market including airplanes, air traffic and airlines. For the members of JADC and the aircraft industry in Japan, JADC has made long-term demand forecasts for air travel and airplanes since the late 1970s, in order for such data to be used as a source for creating long-term product strategies and business plans. The “Worldwide Market Forecast”, which is the long-term demand forecast by JADC, shows forecasts for air passenger and air cargo demand, as well as airplane demand for passenger turboprop airplanes with at least 15 seats, passenger jets with at least 20 seats, jet freighters and aero engines, over the 20-year period covering 2019 to 2038. These forecasts are widely released to the public including aircraft manufacturers, suppliers, airlines and financial institutions, etc., at home and abroad.


4

Intentionally Blank


5

3. Market Environments

Business overview

The global GDP growth rate in 2018 was 3.0%, a figure slightly lower than expected.

The World Bank's “Global Economic Prospects (GEP)” forecasts a moderate decline to 2.9% for 2019

in the global GDP growth rate. While the world trade and activities in the manufacturing industry are

slowing down, and trade disputes show no sign of settlement, downside risks to the global economy’s

growth rate are increasing due to a tighter monetary environment, the deceleration of the Chinese economy, Brexit, crude oil price fluctuations, political uncertainty, etc. The economic recovery of primary commodity export countries remains stagnant and has been slowing

down. Further tightening of borrowing costs may hinder capital inflows and lead to a slowdown in the

growth of many emerging and developing countries. It seems that public and private debts that have

been accumulated so far may only increase vulnerability to fluctuations in finance conditions and

market sentiments.


6

In this economic environment, according to IATA’s forecast of global air passenger traffic in 2018, air

passenger traffic in terms of RPK is expected to grow by 6.0%, and air traffic cargo in terms of FTK

is expected to expand by 3.5%.

Airlines in Japan saw a 1.3% year-on-year increase in the number of domestic air passengers and a

5.2% increase in international routes in 2018. The number of Japanese people traveling abroad

increased by 6.0% year-on-year, and that of foreign visitors entering Japan rose 8.7%. The growth rate

of the latter was reduced by half from the previous year (19.3%), but the actual number has been

increasing, making the inbound demand as important as before.

Looking at the financial situation in 2018, although sales for the global airline industry as a whole

were up 8.7% year-on-year, to $821 billion, net income was down 6.4% year on year, to $32.3 billion,

because airfare unit prices decreased and fuel prices moderately increased. Looking at the net profit

margin to sales by region, airlines in North America were the highest at 5.7%, followed by the Asia-

Pacific region at 3.8%, and Europe at 3.7%.

Airplane order and delivery

At the end of 2018, the global fleet was comprised of 23,904 passenger jets, 3,673 passenger turboprop

airplanes and 1,966 jet freighters in service.

The number of annual orders (net orders excluding cancellations) for passenger jets (including Combi and Quick Change jets) and airliner variants of jet freighters, etc., was 2,140 in 2018, a year-on-year decrease of 9.4%. It continues to be necessary to secure airplanes to meet demand for future air transport, as well as to fill demand for replacement by new models which comply with stricter environmental regulations; however, taking into consideration such matters as future global economic


7

instability and fuel price trends, airlines seem to even be wary of placing orders for airplanes. Details of the number of orders were as follows: 363 wide body airplanes (17%), 1,502 narrow body airplanes (69%) and 320 regional jets (15%). The number of orders for wide body airplanes increased by 123 from 2017, that for narrow body airplanes decreased by 474, and that for regional jets increased by 187. Among the wide body airplanes, the number of orders for jet freighter variants was 83 in 2018, a significant increase from 11 units in the previous year. In addition, the number of orders for major models of turboprop passenger planes in 2018 was 86, almost a half of the number

from the previous year. The number of jet airplanes delivered in 2018 reached 1,764, marking a record high topping 1,652

units in the previous year. Both Airbus and Boeing are trying hard to increase their production of

narrow body aircraft, and they delivered 626 units of the A320 family aircraft and 580 units of the 737

family aircraft in 2018. The number 1,764 includes 39 freighter jets.

There were 107 passenger turboprop airplanes delivered in 2018, which is slightly less than 123 units

delivered in the previous year.


8

The combined order backlog of passenger airplanes and jet freighter variants as of the end of 2018

stood at 15,007 units, or 1.84 times the amount at the end of 2008. Regionally, the Asia-Pacific regional

airlines were the biggest both in 2008 and 2018, but orders from undisclosed customers have recently

increased.

It is said that the delivery positions of narrow body aircraft for major manufacturers are almost

completely filled until 2020. Both Airbus and Boeing have produced monthly, at least 50 units of the

A320 family and of the 737 family respectively in 2019 so far. To ensure an early delivery of orders,

the manufacturers are considering further increases in production.

The order backlog for major models of turboprop airplanes was 364 units at the end of 2018.

Restructuring of the Airline Industry

In December 2013, American Airlines and US Airways merged. In the U.S., Northwest Airlines had

already merged with Delta Air Lines, Continental Airlines with United Airlines, and AirTran Airways

with Southwest Airlines. After the mergers, these four companies have had a capacity share, in terms

of ASK of 78% (as of September, 2018) of the U.S. domestic market. In December 2016, Alaska

Airlines acquired Virgin America. Similarly, industry restructuring is also proceeding in Europe and

Latin America.

Many airlines entered the U.S. market after the deregulation of the industry more than 30 years ago,

which drove down airfares through fierce competition. However, due in part to exogenous shocks such

as soaring fuel prices, terrorism and the financial crisis, the financial condition of airlines had been

worsening until a few years ago. To survive in this environment, companies have merged in order to

reduce costs and expand their market share. The greatest benefit from this restructuring by M&A is

the decrease in the number of competitors in the industry.

Even within the restructuring of the airline industry, cross-national mergers are still rare. Due to current

regulations, airlines cannot be funded with foreign capital in excess of 50%, although there are some


9

exceptions. While it is difficult for an investor in a foreign airline to carry out a complete takeover,

investments within the scope of the regulations can be made in pursuit of business objectives. Etihad

Airways has made a 49% investment in Alitalia, a 49% investment in Air Serbia, and a 25% investment

in Virgin Australia. Qatar Airways has made a 20% investment in IAG. This kind of action will

continue to expand, and it is believed that airlines will be regionally consolidated into a few companies

or groups.

Alliances

There are three major global airline alliances: Star Alliance, SkyTeam and oneworld. Using the number

of IATA members as a parameter, the airlines belonging to these three alliances account for 59% of

RPK and 64% of operating revenue. It is possible for an airline partnership within an alliance to obtain

antitrust immunity, which refers to the exemption from persecution under antitrust laws. Although

competition has mainly existed between individual airlines, it has been changing and the present

competition is between alliances.

The alliances are looking to expand membership so that they will be able to provide seamless service

through networks spanning the entire globe. To join an alliance, an airline must make sure that its level

of service is in line with the alliance’s standards, which is expensive. For small- to medium-sized

airlines, however, the cost is worthwhile, as it is becoming difficult for them to survive independently

outside of an alliance. However, airlines do not conduct all business within their respective alliances.

Cases of airlines entering into business partnerships with carriers in other alliances are increasing.

In addition, alliance network strategies are being affected by instances of airlines leaving one alliance

to join another, as was the case when US Airways merged with American Airlines and LAN merged

with TAM, and in 2014 the two new airlines left “Star Alliance” to join “oneworld”. Within alliances,

23%

20%

16%

41%

Air Passenger Traffic (RPK)

Others 23%

23%18%

36%

Operating Revenue

Others

Market Share of 3 Major Alliances (2016)


10

things like code-sharing, frequent flyer program integrations and joint purchasing of equipment are

already taking place, and the joint purchasing of airplanes is also being considered.

Even with these developments, some airlines such as Emirates Airlines and Hawaiian Airlines attach

importance to the demerits of alliance membership, and are attempting to expand their networks and

increase convenience independently. Airlines also exist which invest in other airlines and become

involved as equity partners, such as Etihad Airways. However, even for these airlines, it is difficult for

them to realize everything on their own, and there are increasing numbers of cases in which one airline

forms a business partnership with another that fits its strategy, for example Emirates and Qantas.

Infrastructure

Infrastructure development, such as airports and airspace, is important for the growth of air transport.

Currently, Europe, the U.S. and Japan are upgrading to next-generation air traffic control systems to

improve congestion and economic viability by making efficient use of airspace. However, there are

technical challenges and cost restraints that are making the change difficult in the short term, and as

such there is no choice but to

implement the new systems in phases,

over a period of time.

At major airports in each country,

congestion and a lack of landing slots

are resulting in delays, impeding the

opening of new routes and increases

in frequency. At many of the major

airports around the world, delays

from 30 minutes to one hour are

becoming regular occurrences during

peak travel times. Heathrow Airport in

London has already reached the limits of

its capacity, and it has become difficult

to secure slots for arrivals and departures

there.

New airport construction, as well as

upgrades to existing airports, such as

new or improved runways and aprons, as

well as terminal facility improvements


11

and expansions, require a very considerable investment of time and money.

In recent years, with a growing

awareness about the environment, the

understanding of nearby residents

must be obtained regarding the issues

of noise and air pollution around

airports.

Even in Asia, which is experiencing

remarkable growth, an improvement

of the infrastructure is urgently

needed, and some projects are already

under construction or in the planning

phase. China, where domestic airlines

are expanding rapidly, is also

planning to build about 100 airports by 2020.

According to Eurocontrol, the delayed time per flight in 28 EU countries will increase from 8.8

minutes in 2012 to 14.2 minutes in 2035, and the resulting total loss of time value is expected to

increase from €4 billion in 2012 to €13.4 billion in 2035.

Presently, infrastructure development such as airports and aerospace around the world is not keeping

pace with the air traffic growth.

Environmental challenges

Traditionally, environmental issues involving aviation were focused on the noise and air pollution

affecting the environment surrounding airports. Recently, the problem of global warming has taken

the spotlight, and attention is focusing on aircraft CO2 emission volumes. In 2016, greenhouse gas

emissions in the form of CO2 from international air traffic amounted to 558 million tons, an increase

of 5.2% from 2015, which was just 1.7% of total global emissions; however, this is expected to

increase along with the growth in air traffic.

ICAO, at its 37th Assembly in 2010, adopted a global reduction goal of improving fuel efficiency by

2% annually until 2050, and to prevent any increase in CO2 emissions from 2020 onwards, as goals

including both developed countries and emerging countries. (Against this backdrop, from 2012, the

EU began applying CO2 emission regulations and emissions trade obligations (EU Emissions Trading

System - EU-ETS) to aircraft. As this system is applied to all flights operated from or to Europe,

including flights by foreign carriers, the governments of the U.S., China, India, Japan, Russia and

other countries have expressed opposition to such a system. The EU, with regard to carriers which


12

operate from or to Europe from January 2014 to 2020, revised the regulations to be relevant only to

flights within Europe, which are covered by the EU-ETS).

Moreover, at the 38th Assembly of ICAO in 2013, it was confirmed that various countries will work

comprehensively by taking every measure available in order to achieve the reduction goals that were

set in 2010. It also set new goals to build an emissions reduction system using market mechanisms (so

called emissions trading) in 2016, and goals applicable from 2020.

At the 39th Assembly of ICAO in 2016, 191 nations agreed to the regulatory framework for

greenhouse gas emissions related to international aviation. This agreement compensates for the

increase of CO2 emissions from aircraft from 2020 onwards, and makes it mandatory for each airline

to offset any increase by purchasing emission units. The reduction of greenhouse gas emissions based

on the purchase of emission units under this scheme will begin in 2021, involving 64 nations that will

participate voluntarily. From 2027 onward, participation in this scheme will be mandatory for all

nations, excluding those whose emissions are below a specific level, etc.

In 2017, ICAO established the CORSIA (Carbon Offsetting and Reduction Scheme for International

Aviation), a scheme to promote the agreement made at the Assembly of ICAO in 2016. International

flights connecting participating countries are subject to this scheme. However, any international flight,

if either its departure port or arrival port is not in a participating country, is excluded; and any airline

whose international flight airplanes emit 10,000 tons of CO2 per year or less, and any airplane with a

maximum takeoff weight of 5.7 tons or less, are also excluded. An emission standard value, based on

which the CO2 emission units to be purchased after 2021, will be obtained by using an average value

of emissions in 2019 and those in 2020, and the CO2 emission units required to be purchased by each

airline will be a portion exceeding the average value.

The CO2 emission units required to be purchased are calculated by using a coefficient commonly


13

applied to all airlines for a period between 2021 and 2029, and by using an individual coefficient

reflecting the effort to reduce emissions by airlines for a period between 2030 and 2035. Each airline

is supposed to purchase emission units corresponding to the calculated CO2 emissions. According to

data by the Mini

stry of Land, Infrastructure, Transport and Tourism (or MLIT, Japan), the total emission units to be

purchased by Japanese airlines each year are expected to increase from one billion and several hundred

million JPY in 2021 to several tens of billion JPY in 2035.

However, while the aforementioned regulation relates to international aviation, CO2 emissions from

domestic flights in each country are allocated to the total emissions by country including emissions

from the other domestic industries in the country, and thus each country is supposed to seek to reduce

CO2 emissions with its government’s responsibility based on its reduction target according to the

Kyoto Protocol and the subsequent Paris Agreement. In addition, with regard to exhaust gas standards to be set based on aircraft size, a new aircraft CO2

emissions standard, which is contained in a new Volume III "Aeroplane CO2 Emissions" to Annex 16

of the Convention on International Civil Aviation (Chicago Convention), was adopted as a standard

required in such a manner that indicators based on aircraft fuel consumption rates shall be certain

values or below. The standard will apply to jet airplanes with a maximum takeoff weight of more than

5.7 ton and to propeller airplanes with that of more than 8.6 ton. Effective dates of the standard shall

be: January 1, 2020 for newly developed models to be applied for model certification by manufacturers

(January 1, 2023, however, for jet airplanes whose maximum takeoff weight is 60 tons or below with

a maximum number of fewer than 19 seats); January 1, 2023 for models already in-production to be

applied for model modification; and January 1, 2028 for airplanes other than the above which continue

to be manufactured. Accordingly, airplanes subject to regulation will not be able to be manufactured

after the effective dates if they do not meet the standard.

As the production of CO2 corresponds directly to fuel combustion, improving the fuel consumption

in aircraft would lead directly to lower CO2 emissions. However, as the examination of CO2 emissions

reduction progresses, it has become clear that it will be difficult to reach the goals simply by means of

technological innovations in aircraft and improving methods of operation, so the potential for

substitute fuels for fossil fuels, following the idea of carbon neutrality, has been considered, and

research is progressing on biofuels made with vegetables.

Regarding the problem of noise in the vicinity of airports, even now, with aircraft that are quieter than

those of the 1970s starting to make appearances, it continues to be a major concern as an environmental

issue. For the purpose of noise abatement, many of the world’s major airports are limiting the number

of departures and arrivals, and restricting nighttime flights, namely, putting a curfew in place. With

the growth of air traffic, increased frequency and the operation of larger airplanes have become


14

necessary. However, because this can also lead to a worsening of the environment around airports, it

is difficult to relax departure and arrival restrictions at existing airports or expand facilities. This also

makes new airport construction difficult. In such a situation, the ICAO adopted the application of

Noise Standards Chapter 14, which is stricter than the current standards, at the 38th ICAO Assembly

in August 2013. The application period and target for the new standard are aircraft obtaining model

certification from January 1, 2018 (or from the end of 2020 for aircraft with a maximum takeoff weight

of less than 55 tons).

Environmental standards will become increasingly stronger in the future. As a result, airlines will have

to promote such measures as the use of equipment with higher fuel efficiency, adoption of efficient

methods of operation that will lead to fuel conservation, and use of alternative fuels, regardless of fuel

price trends.


15

4. Market Drivers 4.1 World Economy The global economy has continued a moderate recovery centered on the U.S., and the real economic

growth rate for 2018 was 3.2%.

The global economy for the time being, while various countries are hurriedly trying to revitalize their

economies, is involved in large and small risks as follows: there are discontents on adjustment to the

distribution of profits among countries, discontents on foreign policies that underlie such discontents,

and other discontents in economic relations including national security; meanwhile, there are worries

about the U.S.-China trade negotiations, revision to trade relations between the U.S. and countries

concerned, and refugee/immigration issues and uncertain Brexit future in Europe; in Asia, China is

expanding its military presence and there is a sign of putting pressure on the freedom of the seas, or

trade freedom; and in addition, behind those scenes, there are an interest rate hike forecast by

normalization of monetary policies in the U.S. and a possibility of fluctuation in crude oil prices in

association with Iran and Saudi Arabia. In the long term, during the forecast period from 2019 to 2038,

the real global GDP (calculated in 2015 USD) is forecast to grow at an average rate of 2.83%. During

this time period, China, Southeast Asia (including ASEAN), and South Asia (including India) are

expected to continue to have high GDP growth rates.

Although the average annual growth rate for China is expected to drop to 4.7% in the next 20 years,

which is much lower compared to the rate of 8.8% that has been enjoyed over the past 20 years, its

huge size will continue to account for massive GDP growth. Furthermore, expected growth rates for

2.83%

4.07%

1.85%

1.57%

1.47%2.67%

0.91%

2.38%4.72%

1.94%

4.40%

5.73%

3.05%

2.88%3.65%

2.06%

3.09%

5.24%

2.20%

1.79%

1.69%3.28%

0.88%2.99%

8.83%4.19%

5.10%

6.58%

3.98%

2.25%3.99%

4.10%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

WorldAsia/Pacific

North AmericaEurope

Westen EuropeEastern Europe

JapanOceania

ChinaNorth-East AsiaSouth-East Asia

South Asia

Middle East

Latin AmericaAfrica

CIS

Real GDP Growth Rate per annum

Economic Forecast by Region

2019-2038

1999-2018Breakdown of Europe

Breakdown of Asia/Pacific


16

Southeast Asia and South Asia will be between 4.4% and 5.7%. In contrast, economic growth in

developed regions is expected to maintain the status quo or slow, and is forecast to be 1.9% in North

America, 1.6% in Europe, and 0.9% in Japan. As a result, global GDP will grow by a factor of 1.75,

from 82 trillion dollars in 2018 to 142 trillion dollars in 2038.

Looking at real GDP by region, the Asia-Oceania Region, which has already ranked first in the world

by overtaking North America, will increase its share from 34% in 2018 to 44% in 2038, and

specifically, China will be 24%, Southeast Asia 4.7%, and South Asia 7.1%.


17

4.2 Crude Oil Prices

In the airline industry, changing fuel prices have a direct effect on airline profits. Crude oil maintained

high prices until the first half of 2014, but the crude oil markets suffered an oversupply due to

decreased demand for crude oil attributable to the remarkable economic deceleration of China and

uncertainty over the future of the global economy, the U.S. government lifting the ban on exports of

crude oil for the first time in 40 years following the industrialization of shale oil, and Iran restarting

oil exports after it was released from economic sanctions. Moreover, based on the fact that OPEC has

postponed coordinated

production cuts and non-

OPEC countries are

increasing oil production,

crude oil prices have

dropped significantly in the

year and a half until early

2016. Spot prices of Brent

Crude, an international

index for oil prices, dropped

73%, from $111.8 per barrel

in June 2014 to $30.7 per

barrel in January 2016. Later, in February 2016, it turned upward. As of March 2018, the average

annual price increased 115% from the early 2016 level, to $66.0 per barrel, partly because the OPEC

countries agreed to production cuts at the Extraordinary Meeting of the OPEC Conference that was

held in September 2016. The price of jet fuel (U.S. spot price) also dropped by 68% due to the sudden

decrease in crude oil prices, falling from $2.88 per gallon in June 2014 to just $0.93 per gallon in

January 2016. However, as in crude oil prices, the price of jet fuel turned upward in February 2016.

As of March 2018, it stood at $1.86, up 100% from the early 2016 level. Looking at the average annual

price, it was $2.70 per gallon in 2014, $1.53 per gallon in 2015, and $1.25 per gallon in 2016.

Accordingly, many international airlines set their fuel surcharges at 0 (zero) in the middle of 2016, but

since around February 2017, many airlines have imposed fuel surcharges on passengers, reflecting the

subsequent rise in jet fuel prices.

Demand for crude oil prior to 2000 was mostly for the consumption in developed countries. After 2000,

the rapid economic development of Asian countries, especially China, as well as other BRICS

countries, was accompanied by major increases in demand for crude oil. Because of this, according to

the IEA, demand for crude oil from non-OECD countries, as a fraction of global demand, increased

from 37% in 2000 to 49% in 2013. After 2000, following strong global demand and soaring prices,


18

the amount of crude oil supplied grew from 77.3 million barrels per day to 91.4 million barrels per

day in 2013. Notably, the amount supplied from non-OPEC oil producing countries has increased

dramatically, rising 8.1 million barrels per day from 2000 to 2013. This is due to Russia and other CIS

countries enhancing their production capacity, development of deep sea oil fields in West Africa and

Brazil, and the development of shale oil fields in North America. In contrast, the amount supplied from

OPEC countries has risen 5.9 million barrels per day.


19

However, since later 2014, demand for crude oil has been oversupplied globally due to reasons such

as slowdown of the growth rate of emerging economies including China, introduction of fuel

efficiency improvement technologies developed by developed countries, and high-level production

of crude oil by major oil producers including members of the Organization of the Petroleum

Exporting Countries (OPEC).

The forecasts of future crude oil prices published by some specialized institutes indicate drops in the

short term due to oversupply and the economic standstill. According to many of these forecasts, in the

long term, it is expected that the oversupply will be resolved due to the rising demand for energy

accompanying economic development in emerging countries, and that crude oil prices will rise again,

although the proliferation of energy-saving technology as well as the transition to alternative energy

sources will reduce demand for crude oil.

For example, according to the median estimate (Reference Case) of the IEA (2018), the price of crude

oil will be around $73 per barrel around 2020, reaching the 2005 level. Although the increase will be

moderate thereafter, the price is expected to reach $90 per barrel around 2030, and $105 per barrel

around 2040.

Even though this price rise speed will be more moderate than before, airlines will be confronted with

soaring fuel prices again. According to the low estimate (Low Oil Price Case) of the same forecast,

the price of crude oil will be at about $48 per barrel in 2040. In this case, it will be easy to draw out

increased transportation demand accompanying economic recovery and development, because lower

fuel costs will keep the transportation costs and yield low. However, there will be the effects of slower

investment in fleet renewal for improving transportation efficiency.

4.3 World Population In emerging countries, including those in Asia, partly due to their high economic growth rate, middle-

0

50

100

150

200

250

1990 2000 2010 2020 2030 2040

Aver

age

Spot

Pric

e (2

018U

S$/b

bl.)

Transition and Forecast of Crude Oil Prices (Brent Crude Oil)EIA High Oil Price Case

EIA Low oil and gasresource and technologyEIA Reference Case

EIA High oil and gasresource and technologyEIA Low Oil Price Case

IEEJ Ref.

IEEJ Tech. Advanced

Source : EIA, IEEJ

Brent Crude Oil Price(Average Spot Price)


20

class income (annual household disposable income range between $5,000 and $35,000) has been

expanding rapidly. During the ten-year period from 2000 to 2010, the middle-class income population

increased at an average annual rate of 13.3%, reaching 2.1 billion. By 2020, the figure is expected to

reach 3.1 billion.

According to population estimates for 2017 by the United Nations, the world population will rise to

8.33 billion in 2027, up from 7.55 billion in 2017. It is estimated that the population in emerging

countries will grow from 6.29 billion in 2017 to 7.05 billion in 2027. As a result, the global middle

class population, which comprised 10% of the total global population in 2000, is expected to account

for 40% of the total global population in 2020. Regionally, Asia, containing both China and India, will,

as expected, have the largest middle class population, growing from 1.5 billion in 2010 to 2.3 billion

in 2020, and accounting for 76% of the middle class overall. The global population will grow from

7.55 billion in 2017 to 9.02 billion in 2037. 97.6% of this growth will be in emerging countries.

Urbanization has been taking place partly due to population expansion and economic growth. The urban population will rise from 51.6% of the world population in 2010, to 58.0% in 2025 and 61.7% in 2035. During that period, the urban population of emerging countries, with ever-expanding urbanization, will increase by about 10%, up from 46.0% to 55.8%, while that of the developed countries will increase by 4.6%, up from 77.5% to 82.1%. Urbanization in emerging countries will accelerate.


21

In addition, there were 29 cities globally with populations in excess of 10 million in 2015, and this

number will rise to 48 in 2035. Twenty three of these cities were in emerging countries in 2015, and

this number will increase to 41 by 2035, meaning these countries will be further urbanized. The

population of cities with more than 10 million inhabitants as a percentage of the global urban

population will increase from 11.6% in 2015 to 12.7% in 2020, and will further increase to 15.5% by

2035. From a regional point of view, the number of cities in Asia with populations in excess of 10

million will increase from 18 in 2015 to 32 in 2035, which means that about 60% of the cities with

populations over 10 million in the world will be in Asia.


22

4.4 Demand for Travel According to the UNWTO (United Nations World Tourism Organization), the number of international tourist arrivals (overnight visitors) in 2017 increased by 7.0% (86 million) from the previous year to 1.326 billion, despite conflict and economic hardship in some regions. This marked the highest increase since the 2009 global economic crisis, also it was exceeded the UNWTO's long-term forecast. This growth was driven by an upward trend of the global economy, and outbound demand from all source markets was strong. This was hugely contributed to by recovery of outbound demand from Brazil and Russia, whose economies had been stagnant, as well as inbound demand to economically growing India. From a regional perspective, Europe increased by 8% to 672 million, the U.S. increased by 5% to 211 million, the Asia-Pacific region increased by 6% to 323 million, and the Middle East increased by 5% to 58 million. Demand to the Southern/Mediterranean European and North African Mediterranean region drove such growth. Of these international tourists’ arrivals, about 80% were intra-regional movement, and conventionally, main outbound tourist markets in international tourism have been Europe, the U.S., and developed countries in the Asia-Pacific region. In the past several years, however, emerging economies in Asia, Central and Eastern Europe, the Middle East, Africa, and Latin America have shown rapid growth due to rising disposable income. Europe has generated almost half of the number of international tourists’ arrivals globally, and even now, it is the world’s largest outbound tourist market in the world tourism. Meanwhile, the share of the Asia-Pacific region in outbound tourism has been increasing rapidly, and currently, one out of 4 tourists originates in the Asia-Pacific region.


23

According to the same organization’s prediction for the number of international tourist arrivals

(overnight visitors) worldwide from 2010 to 2030, this number will reach 1.8 billion by 2030, growing

at an average rate of 3.3%. The average growth rate of arrivals in emerging countries will be 4.4%, or

double the rate of developed countries, so that in 2030 the share of international tourist arrivals is

estimated to reverse to 57% in emerging countries and 43% in developed countries. The annual growth

rate will be 4.9% in the Asia-Pacific region, which will expand the most, while growth is estimated to

be more moderate in Europe and the Americas. As for the share of international tourists in the global

market, it is estimated that

the Asia-Pacific region

(from 22% in 2010 to 30% in

2030), the Middle East (from

6% to 8% in the same time

period), and Africa (from

5% to 7% in the same time

period) will increase their

shares, while North America

(from 16% to 14% in the

same time period) and

Europe (from 51% to 41% in

the same time period) will

account for lower shares.

In the statistics for 2017, 57% of travelers with accommodations used airplanes, and airplanes are

increasing their share of transportation. Looking at the purpose of travel, we see that 55% of travel

was for leisure, 27% was to visit friends and relatives (VFR), undertake pilgrimages, or seek health

treatments, and 13% was for business.


24

Looking at the relationship between income level and the number of foreign trips, it is understood that

the more GDP per capita increases, the more demand for foreign travel increases. It is especially

apparent that in countries whose GDP per capita is still low and less than $10,000, demand for foreign

travel tends to increase rapidly with the increase of their GDP per capita. In comparison, such demand

in economically mature countries is less sensitive to GDP per capita.

It is expected that hereafter, if economic growth and rise of income level are followed by population

expansion in emerging countries, a massive new middle class will be created, and consequently,

demand for aviation will increase substantially.

0.01

0.10

1.00

10.00

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Num

ber o

f For

eign

Tra

vels

pe

r per

son

per y

ear

GDP per Capita （2015US$）

Relationship between Income Level and Number of Foreign Travels* (1) (2015)

Source ： UN, IBRD, IHS, JADC

USA

ItaliaRussia

China

Brazil

India

Switzerland

France

Japan

HungaryGerman

Canada

Australia

Netherland

UK

New Zealand

( * : including land and sea travels )

0.00

0.01

0.10

1.00

10.00

0 10000 20000 30000 40000 50000 60000 70000 80000 90000

Num

ber o

f For

eign

Tra

vels

per p

erso

n pe

r yea

r

Real GDP per Capita （2015US$）

Relationship between Income Level and Number of Foreign Travels* (2) (1995-2015)

China India

Russia S.Korea

Thailand Colombia

Czech Frnace

UK USA

Japan 系列12( * : including land and sea travels )


25

5. Air Passenger Market

5.1 Air Passenger Market Trend

Air passenger traffic

Entering the 21st century, global air transport based on RPK experienced a significant decline due to

the 2001 terrorist attacks in the U.S., the Iraq War and SARS in 2003, the U.S. financial crisis in 2008,

and the subsequent debt crises in Europe. Furthermore, the rise of fuel prices starting from 2005 lasted

until 2014, which weighed on airlines and pushed down passenger traffic demand. However, it appears

that in response to declining fuel prices since the autumn of 2014, the RPK started to recover, grew at

a fast pace of around 6.5% per year, and almost returned to the pre-2001 growth level by 2018. Thus,

air passenger traffic demand is affected by shocks due to external conditions, but whenever it happens,

such demand shows a tendency to resume growth and return toward its initial growth curve.

It is understood that air passenger traffic demand is affected by matters such as income level, airfare,

population, distance, frequency, seasonality and availability of alternative modes of transportation.

Above all, income levels and airfares are strongly related to demand. Recently, air travel demand has

tended to fluctuate markedly due to exogenous shocks, such as war, terrorism, disease, and financial

crisis. While any fluctuations in air travel demand caused by income or airfares are long-lasting and

structural, any effects of terrorism or war tend to instantly cause a huge drop in such demand which

can recover in a short time if the cause is removed.

For management of airlines, it has become more important than ever to take measures against the

fluctuations caused by such exogenous shocks (or event risks).

0

4

8

12

16

20

24

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

RPK (×1012 )

Transition of World Air Passenger Traffic (RPK)Actual Forecast 補間線

Source ： IATA, ICAO

1980-

1982

2001-

2003

　　　Growth Rate1988-1998 4.6%1998-2008 4.6%2008-2018 6.0%1998-2018 5.3%2018-2038 4.4%

2005-2014

2008-

20091991-

1993

The shaded portions indicate the air recession and the like.The orange frame shows the period of rising crude oil prices.

The shaded portions indicate the air recession and the like. The orange frame shows the period of rising crude oil prices.


26

Liberalization and LCC

LCCs (Low-cost carriers) were established by the airline liberalization in countries in North America,

Western Europe and other regions. In 2012, LCCs were established in Japan and Taiwan, which were

called blank areas for LCCs. Additionally, airline liberalization is in progress in emerging countries,

along with which, many LCCs have been established.

-8

-6

-4

-2

0

2

4

6

8

10

12

-16

-12

-8

-4

0

4

8

12

16

20

24

1988 1993 1998 2003 2008 2013 2018 GD

P G

row

th (%

)

RPK

Gro

wth

(%),

Yie

ld G

row

th (%

)

FinancialCrisis

Iraq WarSARS

Terror AttacksGulf War

Yield

RPKGDP

Crude Oil PriceDown


27

In 2018, 31.9% of available seats of intra-regional routes in the world were supplied by LCCs. Irish

LCC Ryanair had maintained the top position among international flights for at least five years in

terms of the number of passengers. In Southeast Asia, LCCs accounted for 56.4% of available seats

on intra-regional routes in 2018, and some forecasts predict that it will exceed 70% in 2020. In regional

lines in Africa and China, the shares accounted for by LCCs is about 11.6% and 9.7% respectively,

but their shares are also expected to increase further in these regions due to the expansion of aviation

liberalization.

In addition, LCCs are advancing into international markets as well as domestic and regional ones. This

seems to be viable in terms of cost if the flight distance is short enough for the crew and aircraft to

return without spending the night at the destination, which will enable operation in a daily cycle.

Forays into long-distance international routes that require crew lodgings and the replacement of

equipment and personnel are difficult in many cases because of the costs, and entries and withdrawals

were seen one after another in the past. In 2016 and thereafter, however, Norwegian and JetBlue began

to make an attempt at Atlantic routes, and in 2017, IAG launched LEVEL and Air France launched

JOON, both of which are medium- and long-haul LCCs, respectively (then, JOON terminated

operations in June, 2019). AirAsia X, Scoot, and other airlines have planned to revive long-distance

routes that have been suspended. Japan Airlines also established ZIPAIR Tokyo, a preparatory

company for a new medium- and long-haul LCC, in April, 2019 to open Narita-Seoul and Narita-

Bangkok routes in 2020, and the LCC plans to launch Pacific routes in the future. Future trends in

LCCs’ long-distance routes are now attracting interest.

According to “Research on the economic ripple effect regionally by the entry of LCCs” (2015) by the

Policy Research Institute for Land, Infrastructure, and Transport (or MLIT, Japan), 17% of LCC users

responded in the questionnaire, “Without LCCs, I would not have made this trip”. It could also be

said that LCCs create new air passenger traffic in Japan as well. The entry and expansion of LCCs into

the market will make airfares so low that it will drive further increases in air travel demand, and even

those who were previously unwilling to use airlines or did not use them often because of expensive

airfares will find it easier to use them.

It was said that LCCs had a 50% to 60% cost advantage over FSCs (full service carriers), but LCCs

have incurred rising labor-related costs against a strong performance backdrop. On the other hand,

FSCs have continued to streamline their business and reduce costs in order to survive, and the gap

between the two types of companies is getting smaller. Although the low cost makes LCCs’ business

viable despite cheap airfares, there are actually cases where impossibly cheap airfares are offered in a

price competition between LCCs. These LCCs are financially weak and vulnerable to big changes in

the economy and event risks. In Europe, there are some LCCs, such as Monarch Airlines (UK),

Primera Air (Denmark) and WOW air (Iceland), which suddenly ceased operations or went bankrupt.

In addition, it is observed that there were mergers between LCCs, like Southwest Airlines and AirTran


28

Airways in the U.S., and Peach Aviation and Vanilla Air in Japan. With the market maturing, further

consolidation will possibly continue.

At the end of 2018, in the Asia-Pacific Region LCC market, which was crowded with 59 companies,

some LCCs have experienced severe financial situations due to increased competition, and have

tended to change their strategy from the conventional expansion of networks to an emphasis on more

profitable routes.

High-speed rail

Partly due to an issue related to greenhouse gas emissions, such countries as Brazil, India, the U.S.,

and Indonesia have announced new plans for high-speed railroad construction. However, since such

construction and maintenance of a railroad line infrastructure require a lot of time and money, and

recovering those costs stretches into the long term, long-term demand forecasts and careful

management decisions are required in order to execute such plans. In that regard, airplanes can be

flown as long as airports are built, so air routes can be established with relatively lower infrastructure

construction costs, making entry to the business easy.

An airplane can travel at nearly three times the speed of a high-speed train, and the longer the travel

distance, the greater the advantage becomes for the former. Accordingly, competition between these

two means of transportation occurs mainly in short-haul routes. Competition between air transport and

railway transport has already occurred in Japan, Europe, China, South Korea, and Taiwan, which have

high-speed railway networks. Above all, the competition is fierce at routes where it takes one to two

hours to complete travel by airplane. It is said that a high-speed railway has the advantage on routes


29

which a high-speed train can complete by traveling within four hours.

Not only do high-speed railroads connecting major cities with a large population have large number

of passengers, they are also used for business travel. Such routes are important for airlines as well.

Railroads can provide direct access between city centers, are less influenced by weather, do not require

passengers to set aside time for security checks, and have no restrictions on the use of mobile phones

and the Internet. They can also have meals even if passengers do not use first-class cars. As such, many

people feel trains are safer, surer, and far more comfortable than airplanes, and use high-speed trains.

LCCs have also flown their airplanes on such routes so lower airfares have been available. Recently,

high-speed rail fares have also dropped and even train fares that cost about 50% of regular airfares or

even lower than LCC fares have become available in Europe. There are several instances in which it

is believed that high-speed railways caused the closure of LCC routes. In addition, the operating speed

of high-speed rail trains is increasing every year, resulting in shorter travel times, and such a situation

is becoming harder and harder for airlines to handle.

Passenger load factor

The global passenger load factor reached 81.9% on average in 2018. It increased by about 13% over

the past 20 years, from 68.7% in 1998. In North America and Europe, the annual average passenger

load factor reached 83.8% and 84.5% in 2018 respectively, and the U.S. exceeded a passenger load

factor of 85% during the busy season of 2018. Passenger load factors in other regions also have been

rising every year, with many exceeding 80% on average.

0

10

20

30

40

50

60

70

80

90

100

N.AMERICA EUROPE ASIA-PACIFIC M.EAST L.AMERICA AFRICA CIS WORLD

Load Factor by Region1998

2018

2038

Load Factor (%)


30

This high passenger load factor is the result of striving to improve RASK (revenue per ASK). while

making the increase of ASK lower than that of RPK, in order for airlines to secure their profits in

response to the significant rise in the break-even load factor due to a decrease in revenue resulting

from lower airfares due to competition between airlines including LCCs, and an increase in

operating costs resulting from soaring fuel prices.

Crude oil prices, which had soared for nearly 10 years, have fallen sharply since the autumn of 2014.

However, forecasts about future crude oil price trends, while they differ in matters of degree, have

predicted rising prices due to increased demand for oil due to economic recovery and economic

development. In addition, in an environment where every country should be required to achieve

significantly lower CO2 output towards 2050, it will be difficult to carelessly increase consumption of

fuel. Since passenger fares are also not expected to rise significantly, due in part to competition among

airlines, the global passenger load factor is believed to be maintained at a high level considering that

airlines will precisely adjust demand and supply in the future, and it is estimated to rise from 81.9%

in 2018 to 83.4% in 2038.

Passenger yield

The world average real passenger yield fell 2.2% per year over the past 20 years, between 1998 and

2018. Major factors that reduced the real yield over that period were airlines’ efforts to reduce

operating costs by introducing new models of airplane with better operational economy, and their

streamlined operation. Recently, the advent of LCCs and their competition with existing airlines have

been added to these factors.

Going forward, there would be room for airfares to be further lowered due to further improvement of

airplane operational economy and corporate efforts by airlines, competitiveness among airlines

including LCCs, the falling of fuel prices that continued to soar for about a decade, and others.

However, even cost reductions through restructuring and mergers/acquisitions by airlines seem to

almost reach their limit, which means the trend will have a more moderate decline in airfares than ever

before.

60

65

70

75

80

85

90

2003 2005 2007 2009 2011 2013 2015 2017 2019

US Airline Passenger Load Factor

Monthly Average

Annual average

%

( Fuel price soaring period )


31

5

10

15

20

25

30

1988 1993 1998 2003 2008 2013 2018

Trend of Real Yield by Region2015 US cent/RPK

World

source: AEA, A4A, ICAO, IATA, CIRIUM

North America

Western Europe


32

5.2 Air Passenger Traffic Forecast

For the 20-year period covering 2019 to 2038, the global RPK will grow at 4.4% per year, from

8.259×1012 passenger kilometers in 2018 to 19.40×1012 in 2038, approximately 2.3 times the figure

for 2018. For the forecast period, the real passenger yield is set to fall 0.8% per year due to effects

including competition among airlines and fluctuations in fuel prices.

0

4

8

12

16

20

1998 2003 2008 2013 2018 2023 2028 2033 2038

2.3 times

ForecastActual

5.3% p.a.

World Air Passenger Traffic ForecastRPK （×1012 ）

4.4% p.a.

2.8 times

0 1 2 3 4 5 6 7 8

Africa

CIS

Latin America

Middle East

North America

（East Europe）

（West Europe）

Europe

（Japan）

（Northeast Asia）

（Oceania）

（South Asia）

（Southeast Asia）

（China）

Asia-Pacific

Traffic in 2018

Increase from 2019 to 2038

RPK (×1012)

World Air Passenger Traffic Forecast by Region

5.7%

6.5%3.1%3.1%

3.0%4.3%

3.9%8.4%

4.7%3.6%

3.1%

2.4%3.8%

5.7%

5.3%

Breakdown of Europe

Breakdown of Asia/Pacific


33

Looking at air passenger traffic by region, North America and Europe (Western Europe and Eastern

Europe) will have a lower average growth rate over 20 years than the other regions in the world due

to the maturation of their markets, at 3.1% and 4.3% respectively. Because of this, the RPK of North

American airlines will increase from 1.856×1012 passenger kilometers in 2018 to 3.442×1012

passenger kilometers in 2038, while the RPK of European airlines will increase from 1.974×1012

passenger kilometers to 4.559×1012 passenger kilometers in the same period, and the global market

share will contract from 22% and 24% respectively in 2018 to 18% and 23% respectively in 2038.

Asia-Pacific and Middle East airlines will increase their share in place of European and North

American airlines. Asia-Pacific Airlines have experienced a growth of 7.4% per year in RPK over the

past 20 years, and this region has grown to be the largest market in the world. In the future, China,

ASEAN countries and India will take center stage and continue a growth of 5.3% per year in RPK,

expanding from 2.781×1012 passenger kilometers in 2018 to 7.784×1012 passenger kilometers in 2038,

2.8 times higher. The share will grow from 34% to 40%.

Looking at the annual growth rate of airline passenger demand by region, Chinese airlines have

enjoyed growth at an average rate of 12.3% for the past 20 years. Although this will slow to 5.7% over

the next 20 years due to recent economic uncertainty and the maturation of the market, it will retain

strong growth potential, and the RPK in 2038 will be three times that in 2018, growing from

1.251×1012 passenger kilometers in 2018 to 3.768×1012 passenger kilometers in 2038.

Major growth is expected also in South Asian airlines, mainly India, at an annual growth rate of 6.5%,

and Southeast Asian airlines at an annual growth rate of 5.7%.

World Air Passenger Traffic Share by Region (RPK）

18%

21%

3%

2%10%5%

2%

19%

2%

10%

2%4% 2%

2038 Share

North America

Europe

East Europe

Northeast Asia

Oceania

China

Japan

Middle East

Africa

Latin America

(23%)

West Europe

Asia-Pacific(40%)

Others(19%)

CIS

Southeast AsiaSouth Asia

23%

23%

1%3%8%3%

2%

15%

2%

9%

2%5% 4%

2018 Share

North America

Europe

East Europe

Northeast Asia

Oceania

China

Japan

Middle East

Africa

Latin America

(24%) West Europe

Asia-Pacific(34%)

Others(20%)

CIS

Southeast Asia

South Asia


34

Middle East airlines took in a lot of transfer passenger demand, and showed an annual average growth

of around 11%, but since 2017, it has gradually slowed down. It is expected that they will show an

annual average growth of 4.7%, increasing from 0.753×1012 passenger kilometers in 2018 to

1.903×1012 passenger kilometers in 2038, and their market share is expected to increase from 9% to

10% in the same period.

Based on such an RPK and load factor, the total global ASK is estimated to grow at an annual average

of 4.3% over the next 20 years, reaching 23.25×1012 seat kilometers in 2038, which is 2.3 times what

it was in 2018.

5.3

2.8

5.7

4.1

9.3

5.1

11.7

3.8

1.2

12.3

5.5

6.9

9.17.9

4.4

3.13.6 3.9

8.4

3.84.7

3.1 3.0

5.7

3.1

5.76.5

2.4

0

5

10

15

20

World NorthAmerica

LatinAmerica

WestEurope

EastEurope

Africa MiddleEast

Oceania Japan China NortheastAsia

SoutheastAsia

SouthAsia

CIS

1999-2018

2019-2038

World Air Passenger Traffic Growth by RegionRPK Growth per Year (%)


35

6. Passenger Airplane Demand

6.1 Passenger Airplane Analysis ASK distribution by route distance

Passenger airplanes are chosen on the basis of their suitable route distance by airlines. According to

ASK distribution by route distance for scheduled nonstop services, passenger turboprop airplanes are

mainly operated within a range of 900 km, and the peak distance ranges from 400 to 600 km.

Regional jets are mainly operated on routes ranging from 400 to 1,500 km in regions other than North

America, but in North America, which is a main market for them, their routes extend to about 2,000

km.

Narrow body jets can cover 500 to 5,000 km, and they are mainly operated on routes ranging from

1,000 to 2,500 km. Routes within 3,500 km account for 91% of ASK. For routes of 4,500 km or less,

they account for 80% of total ASK worldwide, and looking at all distance groups, they account for

52% of total ASK worldwide.

Wide body jets are operated in a wide range of routes from short distance to long distance, mainly

covering 6,000 to 9,500 km, and routes from 4,500 to 13,000 km account for 79% of total ASK of

wide body jets.

0

200

400

600

800

1000

1200

TurbopropRegional JetNarrowbody JetWidebody Jet

Range (km)

Range Category and ASK DistributionASK (×10 9 )

Long RangeMediumRange

ShortRange

Regional

source: OAG September 2018


36

ASK distribution by airplane seating capacity

According to ASK distribution by airplane seating capacity in accordance with route distance

categories, in the route distance category of 1 to 1,000 km, you can find a small peak of 40-99 seats in

passenger turboprop airplanes and regional jets, and a large peak of 120-169 seats (A320, 737-700/800,

etc.) in narrow body jets, which means airplanes with a 120-169 seat capacity are mainly used.

Even within the range of 1,001 to 2,000 km, 120-169 seat airplanes are the largest, and 170-229 seat

narrow body jets (A321, 737-900ER, 757, etc.) and 230-399 seat wide body jets are also operated.

In the range of 2,001 to 4,500 km, 120-169 seat airplanes are also mainly used, and 170-229 seat

narrow body jets and 230-399 wide body jets (A330, 767/787, etc.) are operated. In this range, partly

because the route distance is longer, relatively large airplanes such as 170-229 seat narrow body and

230-399 wide body jets are used more actively than for over 1,001-2,000 km.

In the range of 4,501 km or more, 310-399 seat jets (A340, 777, etc.) are mainly operated, followed

by 230-309 seat jets (A330, 787, etc.), 500-800 seat jets (A380), and 400-499 seat jets (747). 400-499

seat airplanes have declined in number due to the recent decrease in the number of 747 jets.

Increase of average seat numbers / Upgage of airplanes

Comparing 2004 with 2013 with regard to the relationship between the number of arrivals/departures

and the number of passengers at the top 50 airports in the world, the number of arrivals/departures did

not change much, while the number of passengers increased. While the average number of passengers

per departure/arrival in 2004 was 87, it increased 1.3 times, to 113 in 2013. During this period, the

1-10001001-2000

2001-45004501-

0

200

400

600

800

1000

1200

1400

1600

1800

001-019 020-

039 040-059 060-

079 080-099 100-

119 120-169 170-

229 230-309 310-

399 400-499 500-

800

Route ASK Distribution - World

Aircraft Size （Seats）

Range (km)

ASK (×10 9 )

Source : OAG September 2018Wide Body

Narrow Body

Regional,

Turbo Prpo


37

global load factor increased

by 6.7%, from 73.1% to

79.8%, and even without this

increase, it can be seen that

the average number of seats

per airplane increased. This

suggests that airlines are

responding to the increased

passenger numbers by

increasing the number of seats

or upgaging their airplanes.

Due to the advent of regional

jets, the introduction of twin-engine airplanes capable of long-distance operation, and widespread use

of smaller jets with high frequency in operation, the average number of seats per airplane had

decreased by the mid-2000s. However, since the late 2000s, with the emergence of LCCs, rising fuel

prices, slot limitations due to airport congestion, reorganization of redundant routes and reduction in

the number of flights due to airline mergers, the average number of seats per airplane on routes of

2,000 km or shorter has first shown an increase. Then, since 2012, when the passenger load factor

went up to its limit and a considerable number of large four-engine airplanes had been retired, the

average seat number even on medium- and long-distance routes exceeding 2,000 km has shown an

increase. There have been more seats available on airplanes, and airplanes within the same family have

been enlarged.

90

95

100

105

110

115

120

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Inde

x (2

001=

100)

Trend of Average Seats per Airplane

Source: OAG

1,000-2,000km

<1,000km

2,000-4,500km>4,500km


38

Airplane retirement

The retirement age (or replacement age) of passenger airplane depends on changes in economic conditions (demand for transport), changes in fuel prices, compliance with noise regulations or the like, advent of new models of airplanes with new technologies, etc.

20182016201420122010200820062004

2002

2000

1998020

4060

80

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50

Year

No.

of R

etire

d Ai

rpla

nes

Age of retirement

Trend of Passenger Jets Retirement

Western Build Passenger Jets OnlySource ： CIRIUM

201820162014201220102008200620042002200019980

10

20

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54

Year

No.

of R

etire

d Ai

rpla

nes

Age of Retirement

Trend or Passenger Turboprop Retirement

Western Build Passenger Turboprops OnlySource ： CIRIUM


39

Looking at recent years, the retirement of aging airplanes to which the Chapter 2 Noise Standard

of ICAO Noise Standards applies (those aged around 30 years) took place intensively until 2002. The

several years following the retirement of aging airplanes was relatively calm, when airplanes aged

around 25 years constituted the majority of retired planes each year (the average retirement age of

airplanes was around 27 years). However, since fuel prices began to rise in 2005, airlines were forced

to replace even relatively young airplanes, not to mention aging ones with high maintenance costs,

with even more fuel-efficient ones. As a result, especially since 2009, the retirement age of airplanes

has rapidly been getting younger, with those aged around 22 to 25 years constituting the majority of

retired airplanes and even those aged around 18 years being retired. Thereafter, the stabilization of fuel

prices since 2015 seems to have calmed down a temporary rush for retirement/replacement of

airplanes; yet, the average retirement age of airplanes dropped to approx. 23 years, which still remains. While the pressure for retirement has been eased due to fuel prices stabilized at a low level, it is believed the current level of service life will be maintained for a while, partly because of the huge back-order. In addition, in recent years, there have been an increasing number of airplanes which are frequently

operated due to the growth of LCCs, and as a result of being overused, these airplanes may be retired

at an earlier age than the average retirement age for existing ones. Since LCCs are still newcomers to

the industry, it seems that there are a small number of airplanes that have actually reached their service

lives; however, it is believed that in the future, this type of earlier retirement will become apparent and

result in lowering the average retirement age for airplanes, especially narrow body jets.

Looking at passenger jets from Western manufacturers, in 2005, 306 airplanes were retired, with an

average retirement age of 27.5 years. Since 2008, over 400 airplanes were retired each year; since

2011, almost every year experienced the retirement of over 500 airplanes; and in 2017, 483 airplanes

were retired. Furthermore, during this period, the average age of retired airplanes declined from 27-

28 years to approx. 23 years. In 2017, it was 23.3 years. At present, the majority of retired airplanes

are ones that were delivered from the mid-1980s to the mid-1990s.

Looking at passenger turboprop airplanes manufactured in the West, 100 airplanes were retired in 2005

with an average retirement age of 25.8 years, but 123 were retired in 2012 (average age of 26.1 years),

and 93 were retired in 2017 (average age of 26.0 years). The number of turboprop passenger airplanes

retired yearly has grown smaller than before, similar to the trend of passenger jet airplanes. However,

the average age of retired turboprop passenger airplanes has gradually increased over the past 50 years

or so, in contrast to that of passenger jet airplanes, and in recent years the level has reached 26 to 28

years. Partly because turboprop passenger planes have been reappreciated due to their superior fuel

efficiency in the face of soaring fuel prices, and suitable substitute airplanes with certain capacities in

terms of number of seats are not in production, turboprop passenger airplanes now tend to experience

longer use than passenger jets.


40

Fuel prices

Crude oil prices, or fuel prices, greatly affect air transport economy. Soaring crude oil prices make the

global economy (GDP) cower, and such soaring fuel prices, together with rising airfares (yield), will

prevent the growth of demand for air transport (RPK). The recent soaring crude oil prices came to an

end after about 10 years. However, there is always a possibility that crude oil prices would rise again

due to a future change in the balance of supply and demand, or an incidental or external factor. Many

forecasts by specialized institutes indicate that crude oil prices will be on a rising trend; yet, relatively

lower prices are set by some forecasts.

The idea that crude oil prices will be maintained as they are and that they will rise has strong arguments

from contradictory perspectives such as expansion and shrinkage of demand for crude oil due to global

economic growth and promotion of alternatives to fossil fuel, production adjustment by OPEC, and

increasing production by non-OPEC countries. The JADC believes that supply will not be tightened

for a while, but predicts that it will moderately increase, considering increasing production by non-

OPEC countries, decreasing demand for conventional crude oil due to commercialization of shale oil,

the idea that there are many oil-producing countries whose primary balance is still negative at the

current level of crude oil prices, and other factors. The graph below shows the pricing used by the

JADC. For the forecast period, crude oil prices will rise at 0.2% on average per year, and will be

included in changes in RPK through the changes in yield (please refer to Appendix F as well).

In-service fleet

Globally, there were 5,523 passenger turboprop airplanes and 12,687 passenger jets in service in 1998,

while in 2018, there were 3,673 passenger turboprop airplanes and 23,904 passenger jets. During this

period, the number of the former decreased by 1,850 units, and that of the latter increased by 11,217

units.

0

50

100

150

200

250

1990 2000 2010 2020 2030 2040Aver

age

Spot

Pric

e (2

018U

S$/b

bl.)

Changes and forecasts in crude oil prices (Brent Crude Oil)EIA High Oil PriceCase

EIA Low oil and gasresource andtechnologyEIA Reference Case

EIA High oil and gasresource andtechnologyIHS reference ( BrentBase )

JADC

EIA Low Oil PriceCase

Source : EIA, IHS Markit



41

The number of airplanes in service has been increasing with the rise in income level thanks to

economic growth, and the accompanying increase in the travel demand. There is evidently a positive

correlation between the number of airplanes in service per population of one million and GDP per

capita, although there may be differences of varying degrees depending on the size of national territory,

the development of ground transportation networks, etc.

At the end of 2018, there was an order backlog for 15,007 jet airplanes (passenger jets and jet

freighters), of which 31% were orders from airlines in the Asia-Pacific region. In Asia, especially in

China, South Asia and Southeast Asia, a large number of airplanes have been ordered with the strong

air travel demand.

In those regions, GDP per capita (USD as of 2015) is expected to be about 24.1 thousand dollars in

China, 4.7 thousand dollars in South Asia (mainly India), and 8.8 thousand dollars in Southeast Asia

in 2038. These figures are 2 to 2.5 times the level of 2018. Since an increase in income along with

economic growth and growth in travel demand along with increase in income are expected, these

regions will have strong demand for airplanes in the days ahead.

GDP per Capita vs. Passenger Jet Airplanes per Capita

0.01

0.1

1

10

100

100 1,000 10,000 100,000

GDP per Capita (2010US$)

No.

of A

irpla

nes

per 1

mill

ion

pers

ons

Passenger jet airplane in service only.Asia-Pacific includes China, Japan, Other Asia, South Asia and Oceania.source: Ascend, UN

North America

Europe

Middle East

Asia-Pacific

Africa

Latin America Japan

China

Oceania

South Asia

Other Asia


42

6.2 Passenger Jet Airplane Demand Demand for transport is expected to increase (RPK: an annual average of 4.4%) due to global

economic growth (real GDP: an annual average of 2.8%) even though it is in a downward trend, and

thus, the fleet size required in 2038 to meet a required ASK will increase 1.69 times, from 23,904

airplanes in 2018 to 40,301 airplanes in 2038, despite some factors suppressing the increase of required

airplanes, including rising load factors, introduction of airplanes with more seats available, and the

extension of annual flight hours of airplanes by more efficient maintenance. The number of delivered

passenger jets in the 20 year period from 2019 to 2038 will be 35,312 airplanes. Among these, 18,915

airplanes will replace current airplanes, accounting for 54% of total new deliveries. The remaining

16,397 airplanes will be due to new demand in response to growing air passenger demand.

At the end of 2018, 3,445 regional jets with 100 or fewer seats were in service. The number of

passenger jets in service will remain almost unchanged at 3,452 in 2038, but the share of airplanes in

service will decrease from 14.4% to 8.6%. Between 2019 and 2038, 3,104 jets will be retired, and

3,111 new jets will be delivered, an 8.8% share of new deliveries.

With the advent of new, more economically efficient regional jets, from the latter part of the 1990s

through to the early 2000s, the number of regional jets with 50 or fewer seats increased, taking away

demand from passenger turboprop airplanes, opening new routes, and taking mainline low-demand

routes away. However, thereafter, under such circumstances as aviation industry recessions after the

September 11 attacks in the U.S. and rising fuel prices, airplanes in this class whose CASK was high

due to their small size were so high cost ones that they hastily needed to be changed to larger ones,

and because of this reason as well as their shorter service life due to their structure based on bizjets

0

10,000

20,000

30,000

40,000

2018 2038

No. o

f Airp

lane

s

Fleet Developments of Passenger Jet40,301

23,904

16,397

18,915

4,989

35,312 Replacement

Growth

Retained

46%

54%

New Deliveries


43

that were their prototype, they were reduced in number. The production of regional jets with 50 or

fewer seats such as CRJ100/200 and ERJ135/145 jets has already ceased.

Recently, in many cases, even a regional jet has been equipped with first- or business-class seats, or

constituted by two classes, so slightly larger airplanes are required. Because the restriction by the

scope clause for regional jets has been relaxed to 76 seats, major U.S. airlines have settled on

introducing 76 seat airplanes as replacements for 50 seat or smaller airplanes, and have placed orders

for the CRJ900, ERJ175, and MRJ90. These airplanes are rather large with the standard number of 86

to 90 seats in mono class, but the total seats can be reduced to 76 with the installation of a first class

section. Along with the seat number, the scope clause imposes a limitation on the maximum takeoff

weight of 86,000 lbs. While certain measures must be taken for airplanes exceeding this weight

limitation, such airplanes will be the staple airplanes in service from now on.

The types of airplanes in the 90-seat class that are in service or being developed include CRJ1000,

ERJ190/190E2, MRJ90, ARJ21, and Superjet100. In order to increase demand for such airplanes,

especially in the U.S., it is necessary to liberalize the scope clause to increase the number of seats to

80 or 90. With that in mind, regional jets with 60 to 99 seats, which are the main staple of regional

jets, will increase from 2,369 in service in 2018 to 3,333 in 2038. The number of airplanes delivered

in this class will be 2,992 units throughout the 20-year period.

At the end of 2018, 15,947 narrow body jets with 100 to 229 seats were operated, but they will increase

to 25,853 in 2038, and the share of in-service airplanes will be 64.1%. Between 2019 and 2038, 12,602

jets will be retired and 22,508 new jets will be delivered to airlines. The share of new deliveries will

be 63.7%.

3,445 3,452 3,111

15,947 25,853 22,508

4,512 10,996 9,693

0%

20%

40%

60%

80%

100%

2018 Fleet 2038 Fleet New Deliveries 2019-2038

Shar

e

Fleet and New DeliveriesRegional Jet Narrowbody Widebody


44

One recent trend has been the popularity of such larger airplanes, such as the A320/A321 and the 737-

800/-900ER/MAX-8, rather than the A319 and the 737-700 from the viewpoint of soaring fuel prices,

airport congestion, etc. There is also a trend toward a higher average number of seats. For example,

the average number of seats on 737-800 belonging to European airlines is already 180. Some airlines

require the 757 successor or airplanes of the class with superior high-temperature and high-altitude

performance, and the ability to cross the Atlantic Ocean with some 200 seats.

While LCCs are mainly operating on short- and medium-haul routes up to 4 or 5 hours flights which

the A320 and 737 jets currently in use can fly, they also seem to operate longer flight ranges along

with the maturing of that transport market. The demand for airplanes that are bigger than mainstay

airplanes and can fly longer distance is likely to increase in the future. While narrow body airplanes

with a lower CASK compared with wide body airplane are preferred by airlines that greatly pay

attention to cost-performance, they seem to be approaching their limits as single-aisle airplanes due to

their seat capacity, and there is a possibility that they will be replaced by twin-aisle airplane.

Nonetheless, as far as the number of airplanes is concerned, over the next 20 years, the demand for

narrow body jets will remain the highest among all types of jets, and the forecast shows that among

narrow body jets, the largest deliveries will be those with 120 to 169 seats, totaling 12,576 units and

the number of airplanes in service in this class will be 15,346 in 2038. With the need for airplanes with

larger capacity or longer flight ranges, there will be large deliveries of airplanes with 170-229 seats,

amounting to 8,686 units. The demand for narrow body jets with 100 to 119 seats will be mainly for

the A220-100 and ERJ 195, amounting to 1,748 units.

1,076 0

2,369

341 592 73

12,689

2,770 2,666

502 1,750

568

2,356

613 406 122 119

2,992

1,748

12,576

8,184

5,534 4,129

30 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2018 2038 2018 2038 2018 2038 2018 2038 2018 2038 2018 2038 2018 2038 2018 2038

Total 2018 Year-End: 23,904 2038 Year-End: 40,301 2019-2038 New Deliveries:

35,312

1,076

119

2,369 3,333

592

1,821

12,689

15,346

2,666

8,686

1,750

6,102

2,356

4,742

406 152

20-59 Seats

60-99 Seats

100-119 Seats

120-169 Seats

170-229 Seats

230-309 Seats

310-399 Seats

Over 400 Seats

Wide body Jet Narrow body JetRegional Jet

No. of Airplanes Passenger Jet Fleet and Delivery Forecast by Seat Category

2018 2038

ExistingRetained

New Delivery


45

On the other hand, it is convenient for some to segment the narrow body jets by 150 seats. For the

sake of convenience, looking at the demand for narrow body jets in two categories, the 101-150 seat

class and the 151-200 seat class, over the next 20 years, there will be deliveries of 10,588 units in the

101-150 seat class, and 11,920 units in the 151-200 seat class.

The number of wide body jets with 230 or more seats will increase from 4,512 at the end of 2018 to

10,996 in 2038, with the share increasing from 18.9% to 27.3%. 3,209 jets will be retired and 9,693

new jets will be delivered to airlines between 2019 and 2038. The share of new deliveries will be

24.1%.

The main markets for wide body jets are medium- and long-haul international routes, and domestic

routes with a high demand. With the introduction of highly fuel-efficient, mid-sized airplanes excellent

in operational range performance, such as the 787, it is possible to enter the long-haul market where

airlines have found it difficult to profit from larger airplanes such as the 747 and the 777. Among wide

body airplanes, deliveries of jets with 230 to 309 seats are expected to be the most numerous at 5,534

units, and the number of jets in service will be 6,102 in 2038. Deliveries of jets with 310 to 399 seats

will be 4,129 units, and the number of jets in service will be 4,742 in 2038.

Due in part to airlines’ recent preference for medium-size airplane, sales of wide body airplane,

especially of large jets with 400 or more seats, have not been going well. In the long run, some quarters

believe that there will exist demand for large jets mainly flying on high-passenger traffic routes

connecting major cities mainly because of limitations of the number of flights caused by airport

congestion, long-term increase of fuel prices, and increasing concentration of population into urban

6640

817

4949

969

7546

2193591 99

3691

1392546 162

1511329 682109 525 102

1370374

1492274 802137

1105225

6857

7625

14384

660

7041

638

3570

1781694

2156 21711001 1118

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

Passenger Jet Fleet and Delivery Forecast by Region

2018 Year End: 2038 Year End: 2019-2038 Deliveries:

Total Fleet23,90440,30135,312

Retained

N.of Airplanes

New Delivery

7,674

NorthAmerica Europe Asia

PacificMiddleEast

8,594

16,577

2,530

LatinAmerica Africa CIS

2,445 1,138 1,343

Japan OceaniaSouthAsia

SoutheastAsia

NortheastAsia

China


46

areas with population growth and an advance in urbanization, but it is expected that there will be some

demand for replacement of airplane currently in service, considering actual orders that airplane

manufacturers have received. The number of airplanes in service with 400 or more seats will decrease

from 406 in 2018 to 152 in 2038, and after ceasing the production of the A380, only 30 units will be

delivered in the next 20 years.

By region, North America has a large number of airplanes in service, and 6,640 airplanes are in service

at the end of 2018, which will increase to 7,674 by 2038. However, because there will be a large

number of new deliveries in Europe and China during this period, North America will be ranked third

and its share of airplane in service by region will decrease from 28% to 19%. There will be 6,857 units

delivered during that period, making an 19% share of new deliveries.

In Europe, the number of airplanes in service, which was 4,949 at the end of 2018, will increase to

8,594 by 2038, and its share will expand from 21% to 24% during this period. The number of new

deliveries during these two decades will be 7,625, with the share being 22%, which will be the largest

in the world.

In China, the number of airplanes in service was 3,691 at the end of 2018, which was the third largest

in the world. However, the number will increase to 8,433 by 2038, and China will surpass North

America as the second largest market in the world. The number of new deliveries during these 20 years

will be 7,041, with a 20% share. In addition, 2,286 of the newly-delivered airplanes will be wide body

jets (with a 24% share of the number of newly-delivered wide body jets in the world). China will thus

be a huge market for wide body jets surpassing the Middle East (1,139 new deliveries with a 12%

share) and Europe (2,101 new deliveries with a 22% share).

In Latin America, Southeast Asia (mainly ASEAN countries), the Middle East, and South Asia (mainly

India), the passenger traffic demand is expected to grow at higher rates than the global average, and

the number of passenger airplanes in service will also increase. In these four areas, the number of

airplanes in service will be 2,445, 3,899, 2,530 and 1,881 respectively in 2038. Units delivered will be

2,171, 3,570, 2,156 and 1,781 respectively. The Middle East, especially, will see 1,139 new deliveries

of wide body jets, which will account for 53% of all new deliveries that will take place in this region.

In the CIS, 1,118 units will be delivered, with a total of 1,343 jets in service in 2038. The share of new

deliveries will be 3.2%.


47

6.3 Passenger Turboprop Airplane Demand Passenger turboprop airplanes with 15 or more seats were operated by airlines worldwide peaked at

5,908 units in 1994, but with the expanding popularity of regional jets, those airplanes declined in

number thereafter, and it was 3,673 at the end of 2018.

Currently, passenger turboprop airplanes are almost exclusively being operated on routes of 1,000 km

or less. For this distance range, some routes require a minimum of transportation services societally

and some routes are difficult to switch over to jets technologically. Therefore, even if airlines reduce

the amount of flights or withdraw from unprofitable routes, it is expected that a certain transportation

capacity will be maintained. Additionally, due to the rise of fuel prices that lasted for a long period,

fuel-efficient turboprop airplanes are revaluated, and orders began rising again in 2005.

Actually, in addition to the continued competition between 60 to 79 seat turboprop airplanes and

regional jets, since there are few models in production suitable for new procurement for turboprop

airplanes in the 80-99 and 20-39 seat class, it will be difficult to make more units even if they are more

highly evaluated. Turboprop airplanes in service will slightly increase from 3,673 at the end of 2018

to 3,914 at the end of 2038. During this period, 2,889 of these airplanes will be retired, and 3,130 new

airplanes will be delivered.

By region, the number of passenger turboprop airplanes in service is large in North America and

Europe, as in the case of passenger jet airplanes. However, 300 to 450 passenger turboprop airplanes

are used in each of the other regions, such as Latin America, Africa, Oceania, and Southeast Asia. It

can be said that this type of airplane is used widely throughout many regions, and not eccentrically

located.

0

50

100

150

200

250

300

350

0

100

200

300

400

500

600

1998 2003 2008 2013 2018

Jet F

uel P

rice

*(US

￠/G

allo

n)

No. o

f Ord

ered

Airp

lane

s

Trend of Orders for Passenger Turboprop

＊Jet Fuel Refiner Price to End Users source ： EIA, CIRIUM

Regional Jet

Jet Fuel Price *

Passenger Turboprop


48

Routes which require a minimum level of aviation services or geographically specific routes (e.g.,

routes to isolated islands) will continue to require turboprops, even if they are low in demand. It is

expected that airplanes with 15 to 19 seats will continue to be operated on such routes, and 346 units

will be delivered during the next 20 years. However, the number of such airplanes in service will

decrease from 1,291 in 2018 to 461 in 2038, and the airplanes out of service will be replaced by

3,673

784

2,889

241

0

1,000

2,000

3,000

4,000

5,000

2018 2038

No. o

f Airp

lane

s

Fleet Developments of Passenger Turboprop

3,914

Replacement

Retained

3,130

New Deliveries

Growth 8%

92%

714

95

585

136

1080

347

5622 7733 4318

315

142

223

65

366

67 4717

459

73

526

72

262

44

374451

1302

29 116 16

478360 303

32

412

377 182

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

2018

2038

Total Fleet 2018 Year End： 3,673 2038 Year End： 3,914 2019-2038 Deliveries：

3,130

Retained

N.of Airplanes

New Delivery

469

North America Europe Asia

PacificMiddle East

587

1649

49

485449

226

Latin America Africa CISJapan China OceaniaSouth

AsiaSoutheastAsia

NortheastAsia

Passenger Turboprop Fleet and Delivery Forecast by Region


49

airplanes with 20 to 39 seats as described below.

In 2018, 521 airplanes with 20 to 39 seats were in service. Since, among them, the economic lifespan

of some airplanes such as the DHC8-200 and Saab340 will end in the early 2020s, North American

airlines are especially calling for replacement airplanes. However, no suitable replacement airplanes

in this class have currently been in production. For that reason, some airlines take measures such as

refurbishment to extend the service life of airplanes.

The JADC, making a calculation based on high-speed cruise type turboprop airplanes with 30 seats in

this class, forecasts that demand for new airplanes will be 1,131 units for the next 20 years, and 1,139

units will be in service in 2038. However, since there has been no actual supply of new airplanes, an

averaged age of existing airplanes in service is 25.8 at the end of 2018 and it is increasing over the

years. Therefore, it has been hoped for some new models of airplanes to start their production.

Airlines operating on short distance routes with comparatively high demand for transport have an

interest in turboprop airplanes with 90 to 100 seats. Bombardier, in order to respond to this interest, is

developing the DHC8-400 with 86 seats as an option, and ATR is hoping to develop airplanes with 90

seats. Since no new airplanes in this class have currently been supplied, the JADC, making a

calculation based on high-speed cruise type turboprop airplanes with 90 seats, forecasts that demand

for new airplanes will be 438 units for the next 20 years. Although turboprop airplanes in this class

seem to compete with regional jets, the disadvantage of turboprop airplanes in their long flight hours

due to lower flight speed of them are small on shorter distance routes and moreover can be diluted by

the effect of time spent on the ground of airports.

1,291

115

521

8

626

73

1,235

588

0 0

346

1,131

149

1,066

438

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2018 2038 2018 2038 2018 2038 2018 2038 2018 2038

Total2018 Year-End: 3,6732038 Year-End: 3,9142019-2038 New Deliveries

3,130

1,139

222

20-39 Seats 40-59 Seats

No. of Airplanes

1,654

60-79 Seats15-19 Seats

461

New Delivery

Retained

438

80-99 Seats

Passenger Turboprop Fleet and Delivery Forecast by Seat Category


50

Since 2000, demand in the turboprop market has shifted to larger airplanes partly because there have

been no suitable small airplanes in production due to the exit of turboprop manufacturers from the

market, and other reasons. and with regard to passenger turboprops in service, the number of 60 to 79

seat turboprop airplanes in service including ATR72 and DHC8-400 was 1,235 (a share of 34%), the

largest part of the passenger turboprop airplane market, at the end of 2018, and it is expected that the

number will be 1,654 (a share of 42%) in 2038. The number of new deliveries in this period will be

1,066, which will constitute 34% of all new deliveries. The market is expected to grow in the next 20

years even by absorbing currently existing transport demand for 40 to 59 class airplanes.

In this class, newly manufactured airplanes have been supplied, and existing airplanes in service were

still young at the age of 7.8 on average at the end of 2018. On the other hand, the average age of 15－

19 seat class airplanes was 27.6, that of 20 to 39 seat class airplanes was 25.8, and that of 40 to 59 seat

class airplanes was 24.9, respectively, and it seems that airplanes that meet conditions including

economic efficiency which airlines hope for, have not been supplied even in a class in which airplanes

are still in production.


51

7. Air Cargo Market

7.1 Air Cargo Market Trend

Air cargo traffic

Global air cargo traffic, in terms of RTK, grew at an average rate of 3.4% per annum during the 20-

year period from 1999 to 2018. Compared to the passenger business, the cargo business is more

susceptible to economic changes, and in the last ten years, due in part to the effects of the U.S. financial

crisis and credit concerns in Europe, its average growth rate was 4.5% per annum, recovering to almost

the same level as the ten-year period between 1999 and 2008, which saw an average annual growth

rate of 2.3%.

In the early economic recovery phase, the degree to which air transport has been used from the

inventory cycle has increased, and RTK recovered from the downturn that had continued from 2008

to 2017. The global economy in 2017 was significantly improved by being driven by major advanced

economies, though there were many political events and geopolitical risks such as elections in major

Western countries including the US. In 2018, the global economy was on a downward trend due to

effects such as the US-China trade war and preparation for dealing with Brexit, and even in 2019, it is

expected to be on a similar trend, though there are some bright topics such as effectuation of mega

trade agreements including the TPP11 and the EPA.

According to IHS (Global Insight), the global real GDP growth rate was 3.3% in 2017 or 3.2% in 2018,

and it will be 2.9% in 2019.


52

Meanwhile, the global air cargo traffic growth rate in 2018 published by the IATA (International Air

Transport Association) dropped to 4.1% year-on-year in terms of RTK, compared to 9.7% in 2017;

however, the average growth rate of air cargo traffic over the last 5 years from 2014 to 2018 published

by the IATA continued at a slightly lower rate than 4.7%.


53

For air cargo traffic growth rate by region, though South American airlines slightly increased year-on

year (5.8%), African airlines decreased year-on-year (-1.3%), and other regions, that is, North

American airlines (6.8%), Middle East airlines (3.9%), European airlines (3.2%) and Asian-Pacific

airlines (1.7%) remained stagnant year-on-year.

Recently, there have been active movements, such as the manufacture of value-added products in

emerging countries, and companies from emerging countries expanding their business to other

emerging countries, which differ from conventional methods such as shifting manufacturing bases for

low-value-added products from developed countries to emerging countries. In recent years, in many

cases, air cargo products have been shifting from end products such as mobile phones and audio-video

equipment to electronic components, lenses, etc., because final assembly has been carried out in low-

labor-cost countries or in places close to consumer regions. In addition, with advances in packaging

technology, cargo volume has become smaller than before. Since air cargo goods have become smaller

and lighter, air cargo capacity as a whole is overcapacity.

Airlines face circumstances including declining cargo yields and worsening profit due to soaring fuel

costs. They also see an increasing number of passenger jets, which have a large-volume lower hold

that can accommodate a relatively large amount of cargo, such as the A330 and the 777-300ER. To

increase revenues other than those from passenger transport, airlines have been reducing freighter

transportation and increasingly using such lower holds in their passenger jets. LCCs have also been

entering the cargo business as a source of revenue other than their passenger business.

Although the global economy has continued upturn for a while, there remains uncertainty in the

economies of emerging countries, the US/Europe and China, and there are also downturn risks caused

by conflicts and terrorist attacks in the Middle East and Europe. In the long run, however, with the

continuing globalization of companies, inventory reductions, and economic growth in emerging

countries, and consequently the expansion of the middle class with increased purchasing power, it

seems that the movement of people and goods will become more active, and air cargo demand will

increase further.

Cargo load factor

The system cargo load factor, when seen from the combination of transportation by freighters and

transportation by lower holds in passenger airplanes rose from 47.7% in 1998 to 48.9% in 2018,

meaning it slightly increased, even though it was affected by demand fluctuation.

The freighter load factor slightly increased from 62.3% in 1998 to 67.7% in 2018, which showed

strong cargo traffic. The freighter load factor had already reached a high level.

During the same period, the lower hold cargo load factor slightly increased from 37.9% to 39.2%,

which likewise showed strong cargo transportation.

It seems that because of things like the entry of LCCs into the cargo business, smaller and lighter cargo


54

goods, and the advent of wide body passenger airplanes that can carry a large amount of payload,

cargo traffic in the lower holds of passenger airplanes will increase, and the load factor will rise further

in the future.

Cargo yield

The real global cargo yield, an indicator of cargo revenue, decreased by an annual average of 4.5% in

the decade from 1989 to 1998, and it decreased by an annual average of 2.2% in the 20- year period

from 1999 to 2018.


55

In the 1980s, the real cargo yield showed a significant decline due in part to the introduction of large

freighters such as the 747F to the market. Yet, since 1990, with the expansion of international trade

due to the globalization of the world economy, demand for air cargo transport has grown, and the yield

has not much decreased. However, from now on, while there is a requirement for reducing cargo

charges due to competition from other modes of transportation and reduced logistics costs by

companies, it is conceivable that the yield is likely to modestly decrease due in part to a shortage of

supply generated by increased demand for air cargo created by e-commerce and other businesses, and

also to a shortage of pilots and some other reasons.

7.2 Air Cargo Traffic Forecast

Global air cargo traffic, in terms of RTK, will grow at an average rate of 3.9% per annum from 2019

to 2038, increasing 2.1 times, from 255.3 billion ton kilometers in 2018 to 546.5 billion ton

kilometers in 2038. The real cargo yield during this period is estimated to decrease at an average rate

of 0.3% per annum.

Routes between the Asia-Pacific region and North America will be the largest market, and the

average annual growth rate is expected to be 4.0%. The routes of 50.1 billion ton kilometers in 2018

will grow to 109.2 billion ton kilometers in 2038. The growth rate may be higher than the global

average (3.9%), so the share will be 20.0%. These routes are expected to be the largest market over

the next 20 years.

Intra-Asia-Pacific routes will grow at an average annual rate of 4.7%, increasing from 38.7 billion ton

kilometers in 2018 to 97.7 billion ton kilometers in 2038, and their share will be 17.7%. In Asia, the


56

capacity of truck shipping and other forms of land transportation will increase significantly along with

progress in the development of the land transport infrastructure. However, air shipping will also

increase significantly at the same time.

Asia-Pacific to Europe routes will show an average annual growth rate of 3.9%, growing from 45.2

billion ton kilometers in 2018 to 96.2 billion ton kilometers in 2038, and the share will be 17.6%.

Routes between the Asia-Pacific region and the Middle East will show an average annual growth rate

of 6.7%, growing from 13.4 billion ton kilometers in 2018 to 48.5 billion ton kilometers in 2038, and

the share will be 8.9%.

Routes between Europe and the Middle East will show a growth rate of 3.3%, growing from 12.3

billion ton kilometers in 2018 to 23.4 billion ton kilometers in 2038, and the share will be 4.3%. These

routes will also absorb the routes to Africa and Latin America through the Middle East.

Looking at growth rates, routes between the Asia-Pacific region and the Middle East will grow at

6.7%, routes between Africa and the Middle East at 6.3%, and intra-Middle East routes at 5.7%. This

suggests that more cargo will be shipped east to west or south to north via the Middle East. In general, rapid growth is expected for routes within emerging countries such as in the Middle East

and the Asia-Pacific region, and inter-regional routes. Especially, routes connecting the Middle East

and the Asia-Pacific region will take the lead in growth.

Routes between Europe and North America and routes within North America, which are mature

markets, will grow at low growth rate of approx. 2%.

Regionally, airlines in the Asia-Pacific region will have the largest amount of air cargo traffic, and

reflecting the geographical spread and high economic growth rate, the 89.1 billion ton kilometers total


57

in 2018 will grow by a factor of 2.5 to reach 218.6 billion ton kilometers in 2038. Airlines in North

America will grow from 61.4 billion ton kilometers to 130.5 billion ton kilometers. Airlines in the

Middle East will exploit their geographic superiority to multiply 2.6 times, from 34.5 billion ton

kilometers to 89.1 billion ton kilometers, surpassing those in Europe to take third place. Airlines in

Europe will grow from 50.3 billion ton kilometers to 72.5 billion ton kilometers, coming short of those

in the Middle East, which will show major growth.


58

The growth rate of airlines in North America will be 3.8%, which is equal to the global average (3.9%),

and their share will be 24%, which has been unchanged. On the other hand, airlines in Europe, which

already have a mature market, will grow at a low rate of 1.8%, and their share will drop from 20.0%

to 14.0%. The Asia-Pacific region, the world's largest market, will grow at a rate of 4.6%, and its share

will expand from 35.0% to 39.0%.

The Middle East has a geographical advantage, and will see the highest growth of 4.9%. Africa and

the CIS, despite suffering recently from economic uncertainty, will see growth rates of 4.1% and 3.4%,

respectively, over the long term with their high economic growth trajectories.

As with passenger traffic, air cargo growth will be driven by emerging countries in the Asia-Pacific

region, the Middle East and Africa.

World Air Cargo Traffic Share by Region (RTK Base)

The scale will increase by 2.1 times


59

8. Jet Freighter Demand

8.1 Fleet Analysis

In-service fleet

The in-service jet freighter fleet gradually decreased from 1,933 in 2008 to 1673 in 2013 globally;

however, after then, the number continued to increase to 1,966 in 2018, of which 720 were narrow

body airplanes, 651 were medium wide body airplanes, and 595 were large airplanes.

In regards to their shares from 2008 to 2013, the share of narrow body airplanes was in a downward

trend while that of large airplanes was in an upward trend, and since then, the shares of narrow body

and medium wide body airplanes have recovered.

Planes converted to freighters

In the jet freighter market, many freighters converted from passenger airplanes have been used, and

about 54% of the in-service freighters used were converted freighters in 2018. Passenger airplanes

start to be converted to freighters once they pass 10 years of age, and conversions reach a peak once

the planes are about 15 to 20 years old.


60

As long as there is no major change in the environment, conversion freighters will be used for about

15 years after conversion before they are retired.


61

Looking at the delivery history of production freighters and converted freighters since 1998, excluding

757 freighters manufactured in the 1990s, no new freighters were manufactured in the West. For that

reason, this market is a converted aircraft market, with a relatively stable demand for converted aircraft.

737-300/400s and 757s have especially been converted in large numbers.

Recently, regional jets such as CRJ200 and ERJ 145 converted into freighters, have come into being. In regards to wide-body jets, in the 1990s A300/A310s and DC-10s, and in the 2000s 747s, 767s, and

MD-11s, were converted into freighters for the converted market. Since 2008, however, given a

downturn in the air cargo market and skyrocketing fuel prices, 3- and 4-engine aircraft have been

shunned for their poor fuel economy, and demand for these aircraft to be converted has fallen

dramatically. In addition, an increasing number of production freighters have also been delivered due

to the fact that there is a shortage of aircraft suitable for conversion, as well as the facts that a

conversion program for the A330 has been just launched and freighter-converted A330s only started

coming into service in 2018, while a conversion program for the 777 has not yet been launched.


62

Trend of payload

In the past ten years, many 707F, 727F, 737-200F, 747-100F/200F/300F, DC-8F, and DC-9F have been

retired, and many A300-600, MD-11, 747-400, 757, and 767-300ER passenger jets have been

converted and introduced to the freighter market. Additionally, new A330-200F, 777F, and 747-8F

freighters have also been introduced.

Further, in the past 5 years, partly because the shares of narrow body and medium wide body airplanes

have increased, the average payload per jet freighter decreased since 2017, and it was 59.7 tons in

2018, which was the first time it fell below 60 tons since 2010.

Jet freighter retirements

A jet freighters' service life is longer than 30 years, which is quite long, because many jet freighters

are converted from passenger airplanes, and each freighter flies for a lesser number of hours each year

than a passenger airplane.

Since 2010, partly because fuel prices have been soaring and cost-cutting has been taking place, the

retirement of aging, fuel-inefficient airplanes (especially those 35-years old or older) with high

maintenance costs has accelerated. Meanwhile, some relatively younger jet freighters whose service

life is between 16 and 30 years have recently been retired partly because of the emergence of jet

freighters with high fuel efficiency.


63

In 2008, 88 jet freighters were retired after an average service life of 37.4 years. The number of jet

freighters retired in 2013 was greater at 95, resulting in a shorter average service life at 34.5 years.

This was followed by slight fluctuations, and in 2017, 65 jet freighters were retired, resulting in an

average service life of 33.5 years. The average service life became younger after hitting a peak around

2010, although it has been fluctuating somewhat.


64

8.2 Jet Freighter Demand

Over the period between 1998 and 2018, freighter cargo traffic in terms of RTK increased at an average

rate of 3.9% per annum, while dropping from 52% of the total cargo traffic in 1998 to 47% in 2018.

Following increasing demand for e-commerce, etc., by companies dedicated to cargo shipping services,

such as FedEx and DHL, the freighter RTK from 2019 to 2038 will increase at average rate of 4.3%

per annum, and is expected to increase from 125.2 billion ton kilometers in 2018 to 291 billion ton

kilometers in 2038, which is about 2.3 times larger than in 2018.

In addition, when 2006 and 2017 are compared, major airlines with large cargo traffic have different

strategies, and the RTK of major airlines excluding Emirates, Qatar, and Cathay -- that is, that of

Singapore, Lufthansa, and Korean Air -- has been decreasing.

During this period, the overall RTK of lower hold cargo for major airlines with large cargo traffic

either remained flat or increased slightly while the RTK of freighters decreased. This indicates that air

cargo transportation has been shifting from transportation by freighters to the lower holds in passenger

airplanes. While Emirates and Qatar Airways are deploying more freighters, they are also greatly

increasing their cargo traffic through the deployment of wide body airplanes with large lower-hold

cargo, such that capacity has increased 2 to 3 times in the past 10 years.

In the future, due to the increasing number of passenger wide-body airplanes, such as the A330 or the

777-300ER, with lower-hold cargo areas that have sufficient space, and expanded use of the lower-

hold cargo of passenger airplanes by airlines trying to secure revenue not related to passenger revenues,

cargo traffic carried in the lower-hold cargo of passenger airplanes will increase. On the other hand,

companies dedicated to cargo shipping services, such as FedEx and DHL, have been increasing their


65

capacity of freight transport (ATK) in response to the increase of global demand for e-commerce and

healthcare-related products. It is therefore conceivable that the share of freighter transport will increase

gradually.

The world jet freighter fleet will increase from 1,966 in 2018 to 3,010 in 2038. It is expected that of

these, demand for replacements will comprise 1,519 units with a share of 59%, and demand for new

freighters will comprise 1,044 units with a share of 41%.

In regards to the number of in-service jet freighters by size and share, although in 2018, narrow body


66

airplanes were the greatest in number, being 720 units with a share of 37%, they are expected to

increase to 1114 units in 2038 with their share unchanged at 37%. In comparison, large freighters

will increase in number from 595 units to 1,077 units, and their share from 30% to 36%,

respectively, during the same period. Meanwhile, 1,519 freighters will retire, and only 447 units out

of the freighters in service in 2018 will still be in service in 2038. In the next 20 years, 2,563

freighters will be delivered.

Deliveries of jet freighters by size will be 1,112 narrow bodies, 653 medium-wide bodies and 798

large freighters, totaling 2,563 units. Their shares will be 43%, 25%, and 32% respectively. Of these,

1039 deliveries will be production aircraft. The breakdown of production aircraft will be 462 medium-

wide bodies and 577 large aircraft, which will comprise the majority with a share of 56%.

As there are no suitable production narrow body freighters, the majority of new demand will be

conversions from A320/321, MD80, 737, and 757 passenger jets. Even freighters converted from

regional jets such as the CRJ100/200 and the ERJ145 have appeared.

Wide body jets, mainly the A330 and the 777, can be expected to be converted to freighters. The A330-

200F, 777F and 747-8F are production freighters. In the future, freighters converted from the A350

and 787 will also probably appear.


67

Regionally, over the period from 2018 to 2038, the number of units in service in North America will

increase from 908 units to 936 units; the Asia-Pacific region from 354 units to 843 units; Europe from

301 units to 448 units; the Middle East from 86 units to 252 units; Latin America from 96 units to 185

units; Africa from 70 units to 104 units; and the CIS from 151 units to 242 units. As a market for

freighters, North America will remain the largest throughout this period. Emerging countries in the

Middle East and Latin America will have more units in service, and especially those in the Asia-Pacific

region will be second to the amount in North America in 2038.

The number of new deliveries (production freighters and converted freighters) will be the greatest in

North America with 757 units, followed by the Asia-Pacific region with 744 units, Europe with 382

units, the CIS with 210 units, the Middle East with 199 units, Latin America with 176 units, and Africa

with 95 units. In Europe, Africa, Latin America, and the CIS, these will mainly be converted freighters,

but in North America, the Asia-Pacific region, and the Middle East, the ratio of new freighters will

also be relatively high.

Demand for production jet freighters in North America will be 448 units, followed by the Asia-Pacific

region with 264 units, the Middle East with 148 units, Europe with 75 units, and the CIS with 47 units.

The North America and the Asia-Pacific region have the largest new freighter markets.


68

Ramp cargo door type freighters, which are principally a commercial version of the old Soviet-era

military freighters such as the An-124 and Il-76TD, are operating in the HOM (Heavy and Oversize

air cargo Market) to transport heavy and oversize cargo. The market share of HOM is very small in

terms of RTK, at only about 0.5% of total air cargo traffic, but that market is expected to grow faster

than average for global air cargo traffic due to growing demand in aerospace, machines and the mining

industry, as well as humanitarian operations and disaster relief. As no replacements for current

freighters such as the An-124, An-225, Il-76TD and Il-90VD exist at the moment, these airplanes

should be continuously operating over the forecast period. Recently, a commercial version of the

military freighters in operation is under consideration in Western countries.


69

9. Airplane Sales

9.1 Jet Airplane Sales During the period from 2019 to 2038, the number of deliveries of production airplanes comprising

passenger jets and jet freighters will be 36,351 units, worth 5.89 trillion U.S. dollars in sales (at 2018

list prices).

By region, the world’s greatest amount

is in the Asia/Pacific region, where the

total number of jet airplanes delivered

will be 14,648, with a value of 2.52

trillion U.S. dollars and a share of

sales at 43%.

This is followed by Europe and North

America, with 1.22 trillion U.S.

dollars (share of sales: approx. 21%)

and 0.99 trillion U.S. dollars (17%),

respectively. Sales in the Middle East

will be as large as 0.57 trillion U.S.

dollars compared to the demand at

2,304 units, partly because of the high

demand for wide body jets, with a share of sales at 9.7%.

7,305 7,700

14,648

2,304 2,199

1,030 1,165

990 1,217

2,522

569

274 153 161

0

1,000

2,000

3,000

0

5,000

10,000

15,000

North America Europe Asia-Pacific Middle East Latin America Africa CIS

No. of Airplanes


36,351 Airplanes5,885 US$ billion

Total

2018 PriceUS$ billion

＊Total of passenger jets and jet freighters

Jet Airplane Sales Forecast by Region

North America

17%

Europe21%Asia/

Pacific43%

Middle East10%

Latin America

4%

Africa2%

CIS3%

Share of Jet Airplane Sales

5885 US$ billion


70

Among the above, new deliveries of passenger

jets will be 35,312 units, worth 5.53 trillion U.S.

dollars in sales. Of these, 3,111 units will be

regional jets, worth a total of 115.1 billion U.S.

dollars and a 2.1% share of sales. New deliveries

of narrow body airplanes will be 22,508 units,

worth 2.58 trillion U.S. dollars and a 47% share

of sales. New deliveries of wide body airplanes

will be 9,693 units, worth 2.84 trillion U.S.

dollars and a 51% share of sales.

Sales will be highest for airplanes with 310 to

399 seats, constituting 12% of all airplanes

delivered and generating the largest sales of 1.54

trillion U.S. dollars with a sales share of 28%

(4,129 units, 12%), followed by airplanes with

120 to 169 seats with 1.38 trillion U.S. dollars and a sales share of 25% (12,576 units, 36%).

In addition, new deliveries of jet freighters will be 1,039 units, worth 354.3 billion U.S. dollars in

sales. Large airplanes, which have the greatest demand, will generate 237 billion U.S. dollars in sales.

Medium-wide bodies will generate 117.3 billion U.S. dollars in sales.

119

2,992

1,748

12,576

8,184

5,534

4,129

30 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

20-59 60-99 100-119 120-169 170-229 230-309 310-399 400 over

Passenger Jet Sales Forecast No. of Airplanes2018 PriceUS$ billion

0

1,000

200

400

600

111 122

1,375

1,079

1,288 1,540

13

SIZE (SEATS)

Narrow body Wide body

800

3

1,200Total

35,312 Units5,531 US$ billion

Regional Jet

1,400

1,600

20-590%

60-992%

100-1192%

120-16925%

170-22920%

230-30923%

310-39928%

400 over0%

Share of Passenger Jet Sales

5,531

NarrowbodyWidebody

US$ billion

(SEATS)

51% 47%


71

9.2 Passenger Turboprop Airplane Sales In the passenger turboprop airplane sales forecast from 2019 to 2038, the total number of units sold

will be 3,130, and the sales value (at 2018 list prices) will be 68 billion dollars U.S. dollars. The

number of these units accounts for 8.8%, with the amount of units sold no more than 1.2% of that of

the jet market. The sales value of passenger turboprops with 60 to 79 seats will be 27.7 billion U.S.

dollars, accounting for about 41% of the amount of all turboprops sold.

Regionally, the Asia-Pacific region has the strongest demand with 1,302 units*, worth 30.1 billion

U.S. dollars, with a sales share at 44%. This is followed by North America, Europe, and Latin

America, with demand worth 7.4 billion, 10.6 billion and 7.7 billion U.S. dollars, respectively. (* Southeast Asia has the strongest demand, followed by South Asia and Oceania. See Page 48 as well).

346

1,131

149

1,066

438

0

500

1,000

1,500

2,000

15-19 20-39 40-59 60-79 80-99

Total3,130 Units

68 US$ billion

SIZE (SEATS)

Passenger Turboprop Airplane Sales ForecastNo. of Airplanes


3

20

3

28

0

10

20

30

14

40

374 451

1,302

32

412 377

182

7

11

30

0.8

8 7

4

0

5

10

15

20

25

30

35

40

0

200

400

600

800

1000

1200

1400

1600


Passenger Turboprop Sales Forecast by RegionNo. of Airplane


3,130 Airplanes68 US$ billion

Total



72

9.3 Airplane Sales (total) The total number of global deliveries of passenger jets, passenger turboprop airplanes, and jet freighters (production airplanes) for the next 20 years, from 2019 to 2038, will be 39,481, and the total sales (at 2018 list prices) will be 5.95 trillion U.S. dollars.

Regionally, total sales in the Asia-Pacific region, which will have the highest deliveries with 15,950

airplanes, will be 2.55 trillion U.S. dollars, and the region will be the world's largest market with

sales value accounting for about 43% of the world's total sales.

This will be followed by 1.23 trillion U.S. dollars in Europe and 1.00 trillion U.S. dollars in North

America, with these regions together accounting for about 37% of total global sales. Although the

Middle East has almost no demand for passenger turboprop airplanes, the total sales will be 569.9

billion U.S. dollars, accounting for 9.6% of the market, because of the strong demand for passenger

jets, especially wide body jets.

7,679 8,151

15,950

2,336 2,611 1,407 1,347

997 1,228

2,552

570

282 160 165

0

1,000

2,000

3,000

4,000

0

5,000

10,000

15,000

20,000


No. of Airplanes


39,481 Airplanes5,953 US$ billion

Total

2018 PriceUS$ Billion

＊Total of passenger jets, passenger turboprops and jet freighters

Airplane Sales Forecast by Region

Market Share of Airplane Demand and Sales by Region 2019-2038

North America

19%

Europe

21%

Asia-Pacific

40%

Middle East6%

Latin America

7%

Africa

4%

CIS3%

New Deliveries Units

North America

17%

Europe

20%

Asia-Pacific

43%

Middle East9%

Latin America

5%

Africa

3%

CIS3%

Total Sales : US$ billion5,953.5 39,481


73

10. Regional Overview

For the past 20 years (from 1999 to 2018), global GDP has grown at an average rate of 2.8% per year,

passenger traffic at 5.3%, and cargo traffic at 3.4%. In the meantime, airline liberalization has

progressed across the world, many state-owned airlines have become privatized, and many LCCs have

entered the market. Airlines have been shifting their business strategy from forming individual

networks on their own, to forming their networks by putting together a group of airlines called

“alliances.” Previously, airlines from the U.S. and Western Europe drove the growth of the airline

industry. In recent years, however, airlines from the Asia-Pacific region and the Middle East have

grown and are now leading forces. In this way, airline business models and network strategies have

been changing with the times; airlines growing faster and their playing regions have also been replaced

by other airlines and regions.

In addition, requirements for airplanes vary depending on the region. Airlines in the Middle East,

because of their regional requirements, have been demanding wide body jets that can fly long distances,

while airlines in Europe have been using wide body jets with a range of 10,000 km or less. In North

America, narrow body jets are operated on all routes ranging from Regional Range to Trans-

continental haul. Many LCCs with remarkable expansion also use narrow body jets. Circumstances

characterizing airlines differ depending on business models and regions to which these airlines belong,

and their demand for airplanes also differs.

Passenger demand, cargo demand and airplane demand shown here by region are the sum of the

demand for passengers and cargo transported, as well as number of airplanes in service and airplanes

delivered to airlines belonging to the region. Every country is contained in its region geographically,

and every airline belongs to the region through its country where it has its head office and is registered

as a corporation.

(In the following description, “Regional Range” means less than 1,000 km, “Short Range” means

1,000 to less than 2,000 km, “Medium Range” means 2,000 to less than 4,500 km, and “Long Range”

means 4,500 km or longer).

North America

Latin America Africa

Middle East

CIS

Asia-Pacific

Europe


74

10.1 North America

The U.S. economy is surrounded by a mixture of expectation and confusion concerning new economic

policies, trade and tariff/customs policies, immigration control, etc., as emphasized for job security

under the administration of President Trump. Combined with the political trends in Europe, the open

globalism adopted by the U.S. may change and affect movement of passengers and cargo. In autumn

2017, the U.S. Department of Commerce made a preliminary decision to impose a 292% tariff on

Bombardier (a Canadian aircraft manufacturer) C series passenger aircraft to be imported to the U.S.

While this decision was rejected by the U.S. International Trade Commission in January, 2018, this

fuss at once led to realization of a partnership between Bombardier and Airbus, and C Series aircraft

are going to be produced at an Airbus factory in the U.S. Such an outcome is “an unexpected turn of

events,” which may change the balance of sales force in a long-term and strategic fashion.

Airlines in North America were greatly damaged by the 9/11 terrorist attacks in 2001. Since then, they

have proceeded with the streamlining of their organizations, mergers with other companies, and other

initiatives. As a result, major airlines in the U.S. have been nearly consolidated into three companies:

American Airlines, Delta Air Lines, and United Airlines; and regional airlines also into three

companies: SkyWest Airlines, Republic Airlines, and Trans States Airlines. Currently, four companies

(American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines) account for nearly 70%

of the U.S. domestic market on an RPK basis, and these airlines are becoming increasingly dominant.

Now, airlines in North America are the most profitable in the world, resulting from the improved

financial situation due to restructuring and precise demand/supply adjustments. In 2018, airlines in

North America, responding to soaring fuel prices, reduced personnel costs in an emergency manner

8,262

1,091

0

7,171

0

817

0

2,000

4,000

6,000

8,000

10,000

2018 2038

No.

of A

irpla

nes

Fleet Developments of North America Airlines

Replacement

Growth

Retained

New Deliveries

ｄｆ

7,988

9,079

90%

10%


75

from around 2004 to around 2006, and since

2015, after nearly 10 years had passed, their

distribution to personnel costs was recovered

to a previous level in the wake of decreased

fuel prices after 2015. Nevertheless, in 2018,

their personnel costs accounted for

approximately 45% (approximately 22% in

terms of RPK) of net profits earned by airlines

worldwide.

In recent years, replacement of aircrafts has

been progressing partly as a result of

responding to declining funding costs

following the zero interest policy and the

quantitative easing policy, and to soaring fuel

costs continuing for a long time. Aircraft have

gradually been being replaced by those with

more seats not only because of economic

efficiency but also because major airports have

been approaching their slot limits. Main

regional jets with 50 seats have been being

replaced by those with 76 seats due in part to

easing of the Scope Clause. Similarly, there

has also been increasing demand for narrow

body jets in the 170-229 seat class, such as the

A321 and the 737-900ER, slightly larger than those in the 120-169 seat class, such as the A319/320

and the 737-700/800, which are still main ones. In addition, some quarters hope for replacement

aircraft for the 757, which may reach the limit of seating capacity as a narrow body airplane.

Since there is also fierce competition from LCCs over domestic routes, major airlines in North

America have tried hard to further expand their business in international routes. Then there has been

increasing demand for wide body jets such as the A350 and the 777/787.

In North America, over the past 20-year period from 1999 to 2018, GDP grew at an average annual

rate of 2.2%, passenger demand at 2.8%, and cargo demand at 2.1%. As for the growth rate forecast

from 2019 to 2038, GDP will grow at 1.9%, passenger demand at 3.1% and cargo demand at 3.8%.

The average growth rate of the transport demand in the mature North American market is considered

to be slightly lower than the global average. In addition, 90% of the airplanes to be delivered in the

forecast period will be replacements for the existing airplanes.

The number of airplanes in service in the North American market will increase from 8,262 in 2018 to

Growth Measures (2019-2038) North AmericaGDP 1.9 ％

RPK 3.1 ％

RTK 3.8 ％

Fleet 0.5 ％

Sales (2018 List Price) 997 US$ billion

New Deliveries2018 2038 2019-2038

Passenger Turboprop 15-39 seats 439 246 235 40-59 seats 106 23 20 More than 60 seats 169 200 119 Total 714 469 374

Passenger Jet 20-59 seats 745 0 0 60-99 seats 1,196 1,553 1,392 Regional Jet 1,941 1,553 1,392 100-119 seats 150 612 602 120-169 seats 2,833 2,626 2,308 170-229 seats 1,048 1,543 1,361 Narrowbody 4,031 4,781 4,271 230-309 seats 397 925 833 310-399 seats 267 415 361 More than 400 seats 4 0 0 Widebody 668 1,340 1,194 Total 6,640 7,674 6,857

Jet Freighter (New+Converted) Narrow Body 267 197 195 Medium Widebody 380 408 303 Large 261 331 259 Total 908 936 757

Total Fleet 8,262 9,079 7,988

Fleet


76

9,079 in 2038. Over this period, the demand and the sales value (at 2018 list prices) are expected to

be 7,988 units and 1.00 trillion U.S. dollars, respectively. Narrow body aircraft will account for 53%

of all deliveries and airplanes with 100 or fewer seats, including turboprop airplanes, will account for

22%.

RPK in North America in 2018 was 1,856×109 passenger kilometers, of which the Long Range (4,500

km or longer), Medium Range (2,000 to 4,500 km), and Short Range (1,000 to 2,000 km) markets

appear to account for 27%, 35% and 26%, respectively.

In addition, average growth rates in the aforementioned ranges from the next 20 years, in terms of

RPK, are expected to be 3.3%, 3.6% and 3.2%, respectively, and as of 2038, Medium Range routes in

North America is expected to continue to attract the largest transport demand.

However, although 4,500 km is almost the same as the North American transcontinental haul, regional

jets and narrow body airplanes are mostly used up to this haul in the North American market, and the

number of wide body airplanes used is quite small. The largest number of regional jets are used in a

Regional Range mostly around a route haul of 600 km, and while the number is gradually decreasing

corresponding to longer haul, they are used up to a Short Range (2,000 km or less). Passenger

turboprops are used in a Regional Range, and small airplanes with less than 40 seats are mainly used

in a Regional Range of 600 km or less, mostly around a route haul of 200 to 300 km. Although medium

and large airplanes with 40 seats or more are used in a wide range of Regional Range up to 1,000 km,

mainly they are used for around 300 km.

LR 3.3%MR 3.6%SR 3.2%RR 1.0%

LR : Long RangeMR : Medium RangeSR : Short RangeRR : Regional Range

2018-2038Ave. Growth Rate

13% 9%

26%26%

35% 38%

27% 28%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -North America

LR

MR

SR

RR


77

10.2 Europe It is difficult to be optimistic about the future of Europe’s politics and economy, due to movement to

the Brexit, changes and confusion in economic relationships expected to take place as a result of the

decision, anti-EU trend concerning problems such as terrorism and immigrants/refugees, and

government debt problems of some countries, although they are not high-profile; however, Europe is

one of the three major markets including North America and China, which shore up global demand

for air transport.

Europe, where most countries in Western Europe, Eastern Europe and Northern Europe are EU

members, is a single aviation market with a continental scale, in which the member states are opened

to one another even for respective domestic operations under aviation agreements. Over the past 20

years, passenger demand basically showed a steady growth. Major airlines in Western Europe have

already been consolidated almost into three groups: Air France-KLM, IAG (BA, among others), and

Lufthansa. In addition, since 2010, LCCs have contributed to this growth. Europe’s LCCs have rapidly

developed after the 1997 liberalization and have now come to account for about 38% of the available

seat capacity in Europe.

In Europe, as high-speed rail networks have improved, the existing full-service airlines are exposed to

severe competition with LCCs and/or high-speed rail over domestic and intra-regional routes. Recently,

there has also been competition between LCCs and high-speed rail. LCCs are also reported to be

struggling on some routes. Under these circumstances, major airlines have been trying to find their

way into inter-regional routes. Yet, the tough competition has continued, since airlines in the Middle

East also have been advancing into European routes recently.

5,835

1,171

0

4,664

0

3,794

0

2,000

4,000

6,000

8,000

10,000

2018 2038

No.

of A

irpla

nes

Fleet Developments of European Airlines

Replacement

Growth

Retained

NewDeliveries

55%

9,629

8,458

45%

42%


78

As in the U.S., the replacement of airplanes has

been progressing in Europe. Because fuel

prices soared at one time and slot limits at

major airports will soon be reached, there has

been increasing demand for slightly larger

airplanes in the 170-229 seat class, such as the

A321 and the 737MAX-10. The number of

seats on the A320 and 737-800 has also

increased from about 150 to about 180 with

higher density, and recently there is not much

difference between major airlines and LCCs.

In Europe, over the past 20 years from 1999 to

2018, GDP grew at an average annual rate of

1.8%, passenger traffic demand at 4.3%, and

cargo at 2.1%. As for the growth rate forecast

from 2019 to 2038, GDP will grow at an

average annual rate of 1.6%, passenger traffic

demand at 4.3% and cargo demand at 1.8%.

Although growth in demand for air transport in

Europe is slightly lower than the global

average since Western Europe, like the U.S., is

a mature market, the growth rate in Europe as

a whole is expected to be nearly the same as

the global average since the growth rate of

passengers in Eastern Europe in particular is high.

The total number of airplanes in service will increase from 5,835 in 2018 to 9,629 in 2038. Over this

period, the demand and the sales value (at 2018 list prices) are expected to be 8,458 units and 1.23

trillion U.S. dollars, respectively. Of the units to be delivered, 55% will be replacements for existing

airplanes. Narrow body airplanes will constitute 60% of units delivered.

RPK in Europe (Western Europe and Eastern Europe) in 2018 was 1,974×109 passenger kilometers,

of which the Long Range (4,500 km or longer) market accounts for the largest share of 42%; yet,

average growth rates in the next 20 years are expected to be 5.6% and 5.5% in the Medium Range and

Short Range markets respectively compared with 3.3% in the Long Range market, and in 2038, in

terms of RPK, while the Long Range market will increase to 34%, the Short Range and Medium Range

markets are expected to increase to 30% and 26%, respectively.

Airplanes used in the Western European region are wide body airplanes which are used in a Long

Range, and narrow body airplanes which are mainly used in a Medium Range and shorter-haul range.

Growth Measures (2019-2038) EuropeGDP 1.6 ％

RPK 4.3 ％

RTK 1.8 ％

Fleet 2.5 ％


New Deliveries2018 2038 2019-2038


Passenger Jet 20-59 seats 66 28 28 60-99 seats 385 517 447 Regional Jet 451 545 475 100-119 seats 138 461 430 120-169 seats 2,902 3,367 2,756 170-229 seats 511 1,899 1,863 Narrowbody 3,551 5,727 5,049 230-309 seats 330 1,357 1,247 310-399 seats 486 938 851 More than 400 seats 131 27 3 Widebody 947 2,322 2,101 Total 4,949 8,594 7,625


Total Fleet 5,835 9,629 8,458

Fleet


79

The largest number of narrow airplanes are used in a route range of around 500 km, and the number

is gradually decreasing as theroute haul is increasing toward around 3,500 km. Although in the

Regional Range market, regional jets are also used mostly in a route range of around 600 km, the

number is fewer than in the North American region, and the number used is much fewer than in the

Short Range market. In a Regional Range, passenger turboprop airplanes are also used along with

regional jets, and they are mostly used in a route range of around 300 km, and operated in shorter haul

than regional jets are. Many medium and large passenger turboprop airplanes with 40 seats or more

are used.

The majority of airplanes used in the Eastern European region are narrow body airplanes. Particularly,

they are mainly used in a Short Range of 900 to 1,900 km*, and while the number is gradually

decreasing at a haul equal to or farther than that, they are used in a haul range of up to around 4,000

km. In a Regional Range, passenger turboprop airplanes with 40 seats or more are used in a haul range

of 300 to 700 km, mainly around 400 km. (* In Eastern Europe, Wizz Air, an LCC, is performing well).

The outcome of the Brexit Referendum of June, 2016 was received with a shock. If the Brexit is

actually carried out, the EU will impose tariffs on components such as wings of Airbus aircraft

manufactured in the UK, which will reduce the competitiveness of European companies themselves.

Some UK-flag airlines have been considering transferring to another country within the EU for fear

of effects by aviation agreements. However, election results in various countries in Europe after the

Brexit Referendum indicated that the British people’s complaint is no longer peculiar to other peoples

in Europe. Although Brexit will probably not to be decided even by the time this document is published,

the JADC, assuming that a soft landing will be made, does not specifically adjust sales capacity to be

set for Airbus aircraft for the next 20 years in this forecast.

LR 3.3%MR 5.5%SR 5.5%RR 2.4%



14% 10%

24% 30%

20%26%

42% 34%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Europe

LR

MR

SR

RR


80

10.3 Asia-Pacific The Asia-Pacific region is expected to see

strong economic growth in the coming

decades, given the expanding middle-class

income associated with the region’s large

population and an impressive economic

growth rate. Currently, China is exercising

strong economic traction globally with its

capacity based on both its population and

economic growth rate. It has also created

massive demand for air travel.

China’s demographic bonus ended by about

2015, and although its total population will begin to decline after passing its peak about 2030, and the

aging of Chinese society will progress rapidly, its economic growth is expected to continue through

this forecast period (2019 to 2038). Moreover, the Southeast Asia region, that is ASEAN (Association

of South-East Asian Nations) countries, which includes Thailand, Vietnam, and Indonesia, will have

economic growth and expanded demand for air travel, and the RPK growth of Southeast Asia and the

number of production passenger airplanes to be delivered thereto are expected to increase to about

twice those of South Asia (mainly India) during this forecast period.

Airline deregulation has been in progress in this region as well. LCCs have been established in Japan

and Taiwan, where no LCCs had existed before, and open skies in the ASEAN (full liberalization

Japan

Northeast Asia

SoutheastAsia

South Asia

Oceania

China

8,980

2,639

0

6,341

0

10,089

0

5,000

10,000

15,000

20,000

2018 2038

No.

of A

irpla

nes

Fleet Developments of Asia-Pacific Airlines

Replacement

Growth

Retained

NewDeliveries

%

16,430

19,069

39%

61%


81

within the region) began to emerge from 2016

in turn with the launch of the AEC (ASEAN

Economic Community).

While the Asia-Pacific region covers a

geographically large area, its ground

transportation networks have not yet been fully

improved, and therefore, air transportation is

more suitable for the region. However,

infrastructure improvement, such as airports

and air traffic control, has been left behind,

with certain exceptions, and is now

indispensable for further development.

In the Asia-Pacific region, over the past 20-year period from 1999 to 2018, GDP grew at an average annual rate of 5.2%, passenger demand at 7.4%, and cargo demand at 3.6%. In this period, the region shored up the growth of the world air transport. In the period from 2019 to

2038, this region is expected to continue

growing significantly; GDP will grow at an

average annual rate of 4.1%, passenger

demand at 5.3%, and cargo demand at 4.6%. It

is a growth market where 61% of airplanes to be delivered during the forecast period will be new

demand.

The number of airplanes in service in the Asia-Pacific region will increase from 8,980 in 2018 to

19,069 in 2038. Over this period, the new deliveries and the sales value (at 2018 list prices) are

expected to be 16,430 units and 2.55 trillion U.S. dollars, respectively. Massive domestic (Regional-

and Short Range) markets also exist in India and China, and there is great demand for aircraft from

LCCs, so narrow body airplanes will account for 65% of new deliveries.

Growth Measures (2019-2038) ASIA-PACIFICGDP 4.1 ％

RPK 5.3 ％

RTK 4.6 ％

Fleet 3.8 ％

Sales (2018 List Price) 2,552 US$ billion

New Deliveries2018 2038 2019-2038

Passenger Turboprop 15-39 seats 435 548 500 40-59 seats 156 104 62 More than 60 seats 489 997 740 Total 1,080 1,649 1,302

Passenger Jet 20-59 seats 11 3 3 60-99 seats 319 562 532 Regional Jet 330 565 535 100-119 seats 71 413 396 120-169 seats 4,637 6,351 4,971 170-229 seats 797 4,212 3,988 Narrowbody 5,505 10,976 9,355 230-309 seats 563 2,797 2,586 310-399 seats 1,036 2,194 1,897 More than 400 seats 112 45 11 Widebody 1,711 5,036 4,494 Total 7,546 16,577 14,384


Total Fleet 8,980 19,069 16,430

Fleet


82

[China]

China is a continental market with a vast territory, and transport demand is mainly for Regional- and

Short Range domestic routes. China, along with Europe and North America, will be one of the three

major markets leading the global air passenger traffic demand in terms of RPK at the end of the

forecast period (2038). RPK in the Chinese region in 2018 was 1,251×109 passenger kilometers, of

which the Short Range (1,000 to 2,000 km) market is the largest accounting for 44%, and together

with the Regional Range market accounting for 59%. They are expected to grow at an annual average

rate of 5.7% or 6.0% in the next 20 years, and of these, the Short Range market is expected to account

for 47%, and together with the Regional Range market 62% as of 2038. Among current airplanes,

narrow body airplanes are used in a Medium Range or shorter range (4,500 km or less), especially

used mainly in a haul range from 400 to 2,200 km, and most airplanes used in this range are narrow

body airplanes. Wide body airplanes are used across the region from Long Range to Regional Range

(around 800 km), although they are fewer than narrow body airplanes. A small number of passenger

turboprop airplanes are used.

Demand for air transport in China is mainly for Regional Range routes and Short Range routes up to 2,000 km, of which 90% are for domestic routes (together with Medium Range routes, 80% is for domestic routes). The airplanes used in these routes are narrow body airplanes, and China’s domestic-made C919 aircraft is applicable for these ranges, in addition to the 737 and A320 families. Even if it is not feasible to export the C919 due to issues such as type approval, it is conceivable to nurture domestic production aircraft and the aviation industry even with only by the domestic market in view of approval by the Civil Aviation Administration of China and China’s vast territory, since there is sufficient demand for narrow body airplanes in domestic routes as just described. China, while currently using the 737 and A320, will adopt an import substitution policy in order to have superiority in the industry, and it is expected to shift to mainly procure domestic production aircraft while absorbing these foreign technologies. In that case, even though transport demand is large, China’s

LR 4.9%MR 5.7%SR 6.0%RR 5.7%



15% 15%

44% 47%

17% 17%

24% 21%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -China

LR

MR

SR

RR


83

market size might rapidly shrink in the next 20 years from the viewpoint of the U.S./European manufacturers.

[Southeast Asia] RPK in Southeast Asia in 2018 was 634×109 passenger kilometers, of which the Long Range (4,500 km or longer) market is the largest accounting for 32%, followed by the Medium Range (2,000 to 4,500 km) market accounting for 30%. Average growth rates of various haul markets in the next 20 years are 6.6% in the Medium Range market and 7.7% to 7.8% in the Short- and Regional Range markets, and it is expected that the markets will account for 33%, 24% and 27% as of 2038 in that order. As a result of the growth of the Regional Range and Short Range markets, a haul range of 2,000 km or shorter will account for 52% in total, and a haul range of 4,500 km or shorter will account for 84% in total. Among current airplanes, many medium and large passenger turboprop airplanes with 40 seats or more are used in a Regional Range of 700 km or less, mostly around 300 km. Narrow body airplanes are mainly used in a haul range from 500 to 3,500 km, especially in a range up to 2,000 km, and mostly around 700 km. Although there are not many wide body airplanes, they are used in a range from Long Range to Short Range.

[South Asia] RPK in South Asia in 2018 was 258×109 passenger kilometers, of which the Short Range (1,000 to 2,000 km) market is the largest accounting for 35%, followed by the Medium Range (2,000 to 4,500 km) market accounting for 28%. Average growth rates of various haul markets in the next 20 years are expected to be 7.2% to 7.5% in the Medium Range and Short Range markets respectively, and 6.7% in the Regional Range market, of which as of 2038, the Medium Range and Short Range are expected to account for 32% and 42% respectively. Thus, routes in the Short Range together with those in the Regional Range will attract large demand. Among current airplanes, many passenger turboprop airplanes are used in a Regional Range. In a haul

LR 2.4%MR 6.6%SR 7.7%RR 7.8%



20% 27%

18%

24%

30%

33%

32%16%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Southeast Asia

LR

MR

SR

RR


84

range exceeding 500 km, especially up to 2000 km, many narrow body airplanes are used. While the number of aircraft gradually decreases until reaching up to 4,000 km after the flight distance exceeds 2,000 km., they are used as main airplanes. Wide body airplanes begin to be used in a haul range exceeding 2,000 km, but up to around 4,000 km, they are used along with narrow body airplanes, and beyond 4,000 km, only wide body airplanes are used. There are also some wide body airplanes which are used in a haul range of around 5,000 to 8,000 km.

[Northeast Asia]

RPK in Northeast Asia in 2018 was 239×109 passenger kilometers, of which the Long Range (4,500 km or longer) market is the largest accounting for 49%, followed by the Medium Range (2,000 to 4,500 km), Short Range (1,000 to 2,000 km) and Regional range (up to 1000km) markets accounting

LR 1.2%MR 7.2%SR 7.5%RR 6.7%



19% 19%

35%42%

28%32%

18%7%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -South Asia

LR

MR

SR

RR

LR 2.0%MR 4.4%SR 5.5%RR 0.7%



12% 8%

10% 16%

29%37%

49%39%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Northeast Asia

LR

MR

SR

RR


85

for 29%, 10% and 12% respectively. Average growth rates of various haul markets in the next 20 years are expected to be 5.5% and 4.4% in the Short Range and Medium Range markets respectively, and with increases in Short and Medium Ranges, as of 2038, the Long Range and Medium Range markets are expected to account for 39% and 37% respectively. Among current airplanes, passenger turboprop airplanes are also used in a Regional Range up to 300 km, and in a range from 300 to 3,800 km, many narrow body airplanes are used. The use of wide body airplanes also starts in a range of 600 km or farther, and the number in use is almost the same as that of narrow body airplanes in use in the Ranges. In a haul range of 4,000 km or longer, only wide body airplanes are used.

[Japan] RPK in Japan in 2018 was 198×109 passenger kilometers, of which the Long Range (4,500 km or longer) market is the largest accounting for 38%, followed by the Regional Range (1,000 km or shorter), Short Range (1,000 to 2,000 km) and Medium Range (2,000 to 4,500 km) markets which account for 34%, 17% and 10% respectively. Regarding various haul markets in the next 20 years, average growth rates are expected to be 4.4% and 4.0% in the Medium Range and Short Range markets respectively. As of 2038, the markets are expected to account for 37%, 14%, 22% and 26% in order from the Long Range market, and the Short Range to Medium Range markets will grow more than currently. The only destinations which airplanes can reach from Japan on a Short Range up to 2,000 km are places such as Shanghai and Northern Taiwan. The only Southeast Asian countries, thought to be “close” to Japan that can be reached from Tokyo by medium-range airplanes (covering up to 4,500 km), are Thailand (Bangkok), the Philippines, Myanmar (Naypyidaw), etc., while Malaysia, Singapore and Indonesia are more than 4,500 km far away from Tokyo, and are covered by long-range airplanes.

Among current airplanes, narrow body airplanes are mainly used in a haul range from 500 to 2000 km, and many are used in a range of around 1,300 km. Wide body airplanes are used in ranges from Long

LR 2.7%MR 4.4%SR 4.0%RR 1.5%



34% 26%

17%22%

10% 14%

38% 37%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Japan

LR

MR

SR

RR


86

Range to Regional Range routes. Regional jets and passenger turboprop airplanes are used in a Regional Range; both are used in almost the same number in a range from 500 to 1,000 km; and the latter are used in a range of less than 500 km.

[Oceania] RPK in Southeast Asia in 2018 was 201×109 passenger kilometers, of which reflecting its geographical features, the Long Range (4,500 or longer) market is largest accounting for 45%. Average growth rates of various haul markets in the next 20 years are expected to be 4.4% and 4.5% in the Medium Range and Short Range markets respectively, and with increases in Short Range to Medium Ranges, as of 2038, the Long Range market (35% share) and the Medium Range market (34% share) are expected to expand. Among current airplanes, many small and medium or large passenger turboprop airplanes are used in a Regional Range of 800 km or less, mostly around 400 km. Narrow body airplanes are mainly used in a haul range from 700 to 4,500 km, especially in a range from 500 to 2,700 km. Although there are not many wide body airplanes, they are used in a range from Long Range to Short Range.

LR 1.7%MR 4.4%SR 4.5%RR 2.7%



14% 13%

14% 18%

26%34%

45%35%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Oceania

LR

MR

SR

RR


87

10.4 Middle East Countries in the Middle East are planning to develop new industries in preparation for the post-oil era, and are focusing on the development of airlines as part thereof. Airlines in the Middle East have taken advantage of the region’s geographical features to attract global Long Range air transport demand in the form of the sixth freedom of the air. Over the past 20 years, both passenger demand and cargo demand saw double-digit growth. In particular, Emirates Airlines, Etihad Airways, and Qatar Airways, which are called super connectors, have extended networks of routes from Dubai, Abu Dhabi, and Doha as their respective hubs throughout the world, and have attained a lot of transit demand. These airlines need large wide body airplanes with an excellent load capacity as well as a long flight range, and also their purchasing power allows them to exert huge influence on airplane manufacturers. Accordingly, development of the 777X started after the reception of purchasing orders from airlines in the Middle East, while the A380 came to an end due to order cancellation.

Regarding alliances, these airlines have adopted the following strategies to suit the nature of their

respective companies. Emirates Airlines has partnerships with suitable airlines from region to region

or from route to route. Etihad Airways has invested in other companies to form equity partnerships.

Qatar Airways has joined oneworld, one of the alliances.

Airline liberalization has even started in the Middle East. In Saudi Arabia, Flynas (formerly Nas Air),

the only private airline in the country and an LCC, was founded in 2010 and operates domestic and

Regional Range international flights. In the UAE, flydubai was founded as an LCC in 2008. The airline,

in cooperation with Emirates Airlines, has expanded their routes including the opening of direct flights

from Dubai to Helsinki (with 737MAX8), and in 2017, it booked and placed orders for 175 units of

the 737.

1,503

444

0

1,059

0

1,328

0

1,000

2,000

3,000

2018 2038

No.

of A

irpla

nes

Fleet Developments of Middle East Airlines

Replacement

Growth

Retained

NewDeliveries

%

44%

2,831

2,387

56%


88

Four countries including Saudi Arabia cut off

their diplomatic relations with Qatar in June,

2017, and even decided to refuse to allow

aircraft from Qatar to fly over their territories.

This stopped Qatar from transporting daily

commodities by land, and Qatar has relied on

transportation by sea and air. In addition, after

flight routes between Qatar and the countries

that cut off their diplomatic relations with it

were blocked, the number of aircraft which

operated in the Middle East in autumn 2017

decreased by about 60% from the previous

autumn. In addition, since flight routes to

Africa were forced to take great detours

because of these countries’ blockage, the

number of aircraft to Africa decreased by 20%

from around the same time of the previous

year.

In the Middle East, over the past 20 years from

1999 to 2018, GDP grew at an average annual

rate of 4.0%, passenger traffic demand at

11.7%, and cargo demand at 11.8%. Significant

growth continues to be expected for the period

from 2019 to 2038, with GDP set to grow at an average annual rate of 3.1%, passenger traffic demand

at 4.7%, and cargo demand at 4.9%.

The number of airplanes in service will increase from 1,503 in 2018 to 2,831 in 2038. Over this period,

the units delivered and the sales value (at 2018 list prices) are expected to be 2,387 units, worth 570

billion U.S. dollars, respectively. Of the units delivered, 56% will be new demand. In addition, wide

body airplanes will account for 48% of new deliveries for passenger airplanes.

RPK in this region in 2018 was 753×109 passenger kilometers, of which the Long Range (4,500 km or longer) market accounted for 63%, which is remarkable, and over these past 20 years, this market has shown an annual average growth rate of 14% to drive growth in the air transport of this region. Since 2015, however, the pace of growth has slowed. This is likely to be due to the end of the increase in transport demand due to the opening of new routes and the end of the re-splitting of transport share of other airlines. In this forecast, the average growth rate, in terms of RPK, in a Long Range for the next 20 years is expected to be 4.5%. Although growth rate will be slow compared with its best period, it will stand comparison with a growth rate worldwide of 4.4%. Furthermore, it is expected that the Medium Range and Short Range markets will show growth rates of 5.6% and 4.8% respectively, and

Growth Measures (2019-2038) Middle EastGDP 3.1 ％

RPK 4.7 ％

RTK 4.9 ％

Fleet 3.2 ％


New Deliveries2018 2038 2019-2038


Passenger Jet 20-59 seats 14 6 6 60-99 seats 57 66 64 Regional Jet 71 72 70 100-119 seats 9 67 65 120-169 seats 496 716 604 170-229 seats 64 283 278 Narrowbody 569 1,066 947 230-309 seats 195 446 376 310-399 seats 391 866 747 More than 400 seats 144 80 16 Widebody 730 1,392 1,139 Total 1,370 2,530 2,156


Total Fleet 1,503 2,831 2,387

Fleet


89

even if growth of the Long Range market calms down, transport demand in this region is expected to continue growing.

Major airlines in this region have proactively carried out air freight transport “belly cargo” business using vacant spaces of lower holds in their large wide body passenger airplanes, and realized remarkable growth, while global major airlines have been struggling to grow or maintain their air freight transport business (also, refer to Appendix H). This air freight transport business, in

terms of RTK, in the next 20 years, is expected to grow at an annual average rate of 4.7%, compared with 11.8% over the past 20 years. This level-off of cargo traffic will be almost comparable with that (from 11.7% to 4.7%) of passenger traffic by passenger airplanes that provide vacant spaces in lower holds therein. Emirates Airlines has increased its RTK focusing on belly cargo so far, and in addition, it has begun strengthening transport by freighter jets since 2013, although the growth of RTK in total has slightly stagnated. Qatar Airways has increased its RTK by belly cargo and freighter jets at almost the same growth rate, and it continued growing in 2017. The airline is expected to grow in terms of RTK for a while, considering the disruption of land transport since June 2017, caused by the break of diplomatic relations and the blocking of border roads.

LR 4.5%MR 5.6%SR 4.8%RR 3.2%

LR 14.0%MR 10.4%SR 8.5%RR 6.6%



14% 7% 6% 4%

14%10% 8% 8%

30%

28%23% 28%

42%55%

63% 60%

0%

20%

40%

60%

80%

100%

1998 2008 2018 2038

RPK share by distance range -Middle East

LR

MR

SR

RR

12 20 42 79 12 29 59 152 25 77

176

523

34 153

475

1146

0

400

800

1200

1600

2000

1998 2008 2018 2038

( ×109 ) RPK by distance range - Middle East

RR SR MR LR


90

10.5 Latin America

Latin America showed significant growth along with Asia over the past several years. With a surge in

direct investment in Latin America thanks to the development of resources and the Free Trade

Agreement, nominal GDP has more than doubled during over the ten-year period since 2000, and real

GDP growth rate from 2003 to 2008 was 5.1%. However, recently, there has been deceleration in the

economies of developed countries and China, and as prices of resources, including oil, have fallen and

exports have declined, the domestic demand that supported the Latin American economy has also

declined, so the economies of Argentina, Brazil, Venezuela, and other Latin American countries is

rapidly decelerating. While according to an analytical institution, real GDP will grow at an average

rate of 2.9% in the next 20 years, the total of real GDP in the region will have been in a “level-off”

state since 2013, and it is likely that the economic growth rate will continue to fall in the mid-term as

well.

Airline mergers took place in Latin America as in the U.S. and Western Europe. Among major airlines,

cross-border mergers have taken place between AVIANCA in Colombia and TACA in El Salvador,

and between LAN Airlines in Chile and TAM Airlines in Brazil, respectively. As a result, airlines in

this region have been consolidated into two major companies. In fact, airline restructuring made

progress in Brazil as there were also domestic mergers.

In addition, in this region too, airline liberalization has been progressing. LCCs such as GOL in Brazil,

Interjet and Volaris in Mexico, and Viva Colombia in Colombia were founded. With regard to available

seat capacity for intra-regional routes, the share of LCCs rose by about 12 times, to 35% in 2017, while

it was about 3% in 2001. In addition, in order to attract domestic demand in countries other than their

own, LCCs have established subsidiaries in those countries necessary for handling the matter.

2,047

356

0

1,691

0

1,068

0

1,000

2,000

3,000

4,000

2018 2038

No. o

f A

irpl

anes

Fleet Developments of Latin America Airlines

Replacement

Growth

Retained

NewDeliveries

%

3,115

2,759

61%

39%


91

In Latin America, over the past 20 years from

1999 to 2018, GDP grew at an average annual

rate of 2.3%, passenger demand at 5.7%, and

cargo demand at 0.4%. As for the growth rate

forecast from 2019 to 2038, GDP will grow at an

average annual rate of 2.9%, which will be

almost the same as that worldwide, but

passenger demand will decrease to 3.6%. Cargo

demand is expected to grow at 1.2%.

The total number of airplanes in service will

increase from 2,047 in 2018 to 3,115 in 2038.

Over this period, the units delivered and the sales

value (at 2018 list prices) are expected to be

2,759 units and 282 billion U.S. dollars,

respectively. Of the units delivered, 39% will be

new demand.

RPK in this region in 2018 was 423×109

passenger kilometers, of which the Long Range

market was the largest accounting for 40%,

followed by the Short Range market accounting

for 26%. In the next 20 years, while the Short

Range market will grow at an average rate of

4.4%, the other haul markets will grow at an

average rate ranging from 3.5% to 3.9%. The share in 2038 will be almost the same as those in 2018.

LR 3.5%MR 3.7%SR 4.4%RR 3.9%



0%

20%

40%

60%

80%

100%

2018 2038

RPKの距離帯別シェア－**

短距離近距離中距離長距離

23% 23%

26% 29%

11% 11%

40% 38%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Latin America

LR

MR

SR

RR


92

10.6 Africa

Since Africa has abundant underground resources such as oil and minerals, in recent years it has been

growing rapidly mainly due to the development of these resources.

Growth potential is especially so high in Sub-Saharan Africa that the middle class will emerge and

their population will exceed 500 million by the year 2030. Some take the view that air transport

demand will grow because of the increase of middle class peoples as a carrier of consumption.

However, there are many problems such as poverty, regional conflicts and infectious disease, which

are yet to be solved.

In the African market, airlines in Europe used to be strong, however, airlines in the Middle East have

been extending their operations into Africa. Recently, airlines in the U.S. also have strengthened their

African routes, paying attention to high economic growth in Africa. Although the routes connecting

Africa and other regions have begun to be strengthened, non-stop flights operated within the African

continent are very few. Thus, when moving within Africa region, for instance, passengers or cargo

should be transported via a Middle East country. Therefore, RPK of intra-Africa routes, including

domestic flights, accounts for only around 1% of the global RPK.

Establishment of an infrastructure is necessary for the aviation industry to grow. However,

infrastructure improvement in Africa is being kept behind with a lower priority, although protectionist

measures with regard to the aviation business being taken.

Although airlines in Africa used to operate used airplanes which came from Europe, the U.S., etc., it

has been easier to have newly built airplanes in recent years, because it is relatively simple for them

to raise purchase funds compared to before, and operating leases has also been available.

1,398

218

0

1,180

0

293

0

1,000

2,000

2018 2038

No. o

f Airp

lane

s

Fleet Developments of Africa Airlines

Replacement

Growth

Retained

NewDeliveries

%

1,473

1,691

80%

20%


93

In Africa, over the past 20 years from 1999 to

2018, GDP grew at an average annual rate of

4.0%, passenger demand at 5.1%, and cargo

demand at 4.9%. As for the growth rate

forecast from 2019 to 2038, GDP will grow at

an average annual rate of 3.7%, passenger

demand at 3.8%, and cargo demand at 4.1%.

The number of airplanes in service will


Over this period, the units delivered and the

sales value (at 2018 list prices) are expected to

be 1,473 units and 160 billion U.S. dollars,

respectively. 80% of units delivered will be to

meet demand for replacement of existing

airplanes, advancing the updates of old

equipment.

RPK by African airlines in 2018 was 169×109

kilometers, of which the Long Range (4,500

km or longer) market accounted for 38%,

which was the largest. In this forecast, the

Medium Range market in the next 20 years is

expected to grow at an average rate of 5.6%,

followed by the Short Range market at 4,1%.

RPK in 2038 is expected to be 361×109 passenger kilometers, of which the Medium Range market

will be the largest accounting for 38%.

Growth Measures (2019-2038) AFRICAGDP 3.7 ％

RPK 3.8 ％

RTK 4.1 ％

Fleet 1.0 ％


New Deliveries2018 2038 2019-2038


Passenger Jet 20-59 seats 116 24 24 60-99 seats 74 131 123 Regional Jet 190 155 147 100-119 seats 46 35 34 120-169 seats 396 491 420 170-229 seats 6 173 173 Narrowbody 448 699 627 230-309 seats 81 156 125 310-399 seats 77 128 102 More than 400 seats 6 0 0 Widebody 164 284 227 Total 802 1,138 1,001


Total Fleet 1,398 1,691 1,473

Fleet

LR 2.7%MR 5.6%SR 4.1%RR 2.0%



14% 9%

21% 22%

27% 38%

38% 31%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -Africa

LR

MR

SR

RR


94

10.7 CIS

The economies of CIS member countries have been growing significantly. Russia has overcome the

destructive economic crisis after the dissolution of the former Soviet Union and recorded economic

growth for 8 consecutive years since 2000. Ukraine* has tried to promote a transparent market-

oriented economy. Kazakhstan and Turkmenistan have shown steady economic development due to

their rich resources. In Russia, the average wage rose from 2,200 rubles in 2000 to 12,500 rubles in

2007, and the number of people with middle-class income increased significantly, but instability has

continued in recent years, due to falling crude oil prices and Western economic sanctions over the

Ukraine situation.

(* JADC keep Ukraine to be included in CIS in this report to retain continuity of statistics).

Air transport is important for movement within the region including domestic travel because the CIS

has a vast land area, and thus distances between cities are long. Accordingly, there has been strong air

transport demand. Above all, during the ten-year period from 2004 to 2014, when economic growth

in this region was stable, the average annual growth rate of RPK reached 8.9%. Although it has stopped

growing since then due to the economic slowdown in emerging countries, RPK seems to have been

303×109 passenger kilometers, with a passenger load factor at about 81%, in 2018.

Among the airplanes operated in the CIS, those manufactured during the former Soviet era have been

decreasing, with a shift to airplanes manufactured in the U.S. and Western Europe. As of the end of

2016, 72% of airplanes in service being operated by airlines in the CIS and 82% of the backlog are

airplanes by Western manufacturers including Airbus and Boeing.

In the CIS, over the past 20 years from 1999 to 2018, GDP grew at an average annual rate of 4.1%,

1,518

301

0

1,217

0

293

0

1,000

2,000

2018 2038

No. o

f Airp

lane

s

Fleet Developments of CIS Airlines

Replacement

Growth

Retained

NewDeliveries

%

1,811

1,510 81%

19%


95

passenger demand at 7.9%, and cargo demand

at 7.3%. As for the growth rate forecast from

2019 to 2038, GDP will grow at an average

annual rate of 2.1%, passenger demand at 2.4%

and cargo demand at 3.4%.

The number of airplanes in service will


Over this period, the demand and the sales

value (at 2018 list prices) are expected to be

1,510 units and 165 billion U.S. dollars,

respectively. 81% of units delivered will be to

meet demand for replacements, as the updating

of old models in progress.

Of RPK, the Medium Range (2,000 to 4,500

km) market will account for 44%, followed by

the Short Range (1,000 to 2,000 km)

accounting for 26%. For 2038, it is expected

that the average growth rate of Regional Range

and Short Range markets will be 2.9% each,

which is relatively high, and the rate of

Medium Range and Long Range markets will

be 2.1 and 2.2% respectively. The intra-

regional share of RPK in 2038 is expected to be

almost the same as that in 2018.

LR 2.2%MR 2.1%SR 2.9%RR 2.9%



8% 9%

26% 29%

44% 41%

22% 21%

0%

20%

40%

60%

80%

100%

2018 2038

RPK share by distance range -CIS

LR

MR

SR

RR

Growth Measures (2019-2038) CISGDP 2.1 ％

RPK 2.4 ％

RTK 3.4 ％

Fleet 0.9 ％


New Deliveries2018 2038 2019-2038


Passenger Jet 20-59 seats 80 25 25 60-99 seats 164 218 170 Regional Jet 244 243 195 100-119 seats 80 58 55 120-169 seats 506 586 473 170-229 seats 143 179 145 Narrowbody 729 823 673 230-309 seats 59 177 168 310-399 seats 64 100 82 More than 400 seats 9 0 0 Widebody 132 277 250 Total 1,105 1,343 1,118


Total Fleet 1,518 1,811 1,510

Fleet


96

( Intentionally blank )


97

11. Aero Engine Demand

Aero engine demand is comprised of two segments: engines installed on airplanes at the time of

delivery, and spares. The former is the result of multiplying the number of airplanes sold by the number

of engines mounted on the airplanes, and the latter is the result of multiplying the number of engines

mounted on airplanes at the time of delivery by a spare ratio of 10%. An engine is the most expensive

equipment to purchase among components of an airplane, and engine prices account for about 20% of

the amount of airplanes sold.

The total number of engines sold over the 2019 to 2038 period will be 87,685 of which 80,764 will be

jet engines for both passenger jets and freighter jets, and 6,921 will be turboprop engines for passenger

turboprop airplanes. Their total sales value will amount to 1.36 trillion U.S. dollars (2018 market

prices). Of that amount, jet engines will account for 1.35 trillion U.S. dollars, and turboprop engines

will make up the remaining 15 billion U.S. dollars.

The jet engine with the largest share of the market at 61%, or 48,929 units is the 12,000 to 35,000 lbs.

thrust class used in narrow body jets such as the 737 and the A320 series. This is followed by the

65,000 to 115,000 lbs. thrust class engine installed on wide body jets such as the 777/787 and the

A330/A350/A380, whose value is 18,608 units (23% share), then by jet engines with less than 12,000

lbs. of thrust used on regional jets, at 7,569 units (9.4% share), and finally by the 35,000 to 65,000 lbs.

thrust class of engine mounted on airplanes such as the 747/767 etc. at 5,658 units (7.0% share).

Looking at jet engine sales values, given higher unit prices, the 65,000 to 115,000 lbs. class, which are

6,921 7,569

48,929

5,658

18,608

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

TurboProp <12 12-35 35-65 65-115

No.of Engines Value(US$billion)

Turboprop 6,921 15Jet 80,764 1,345

Total 87,685 1,360

CRJ700~1000EMB170~190

ARJ21

ATR42/72DHC-8L410

Aero Engine Delivery and Sales ForecastNo. of Engines

0

100

15 53

558

106

628

200

300

2018 Market Price(US$ billion)

Thrust(×1000 lbs)

400

500

600

A319,A320,A321737

MRJ M90/M100A220-100/-300

747,767FNMA

A380A350,A330

777,787

*Including 10% of total number of engines installed on airplanes as spare engines.

700


98

no more than 23% of total units sold, will account for the largest share of the market, at 6,283 billion

U.S. dollars, which is 47% of total sales value. This is followed by the 12,000 to 35,000 lbs. thrust

class, which will sell the most units, with a value of 558.1 billion U.S. dollars (41% share). The 35,000

to 65,000 lbs. thrust class will be worth 1,056 billion U.S. dollars (7.9% share), and the smallest jet

engine, the 12,000 lbs. or less thrust class, will be worth 53.1 billion U.S. dollars (4% share).

By region, the Asia-Pacific region, which has the highest demand for airplanes, is the biggest market.

The number of engines sold in the region will be 35,343, with a 40% share of engines sold, and the

sales value will be 578.9 billion dollars, with a 41% share of sales. This will be followed by 18,005

units (21% share) and 279.7 billion U.S. dollars (20% share) in Europe, and 17,147 units (20% share)

and 256.2 billion U.S. dollars (18% share) in North America. In the Middle East, the number of sales

will be around 30% of the level in the U.S. and Western Europe, at 5,236 units; however, since there

is strong demand for wide body jets, the sales value will be 133.3 billion U.S. dollars, which is around

50% of the level of the U.S. and Europe.

17,147 18,005

35,343

5,236 5,788 3,196 3,021

256280

579

133

6740 41

0

100

200

300

400

500

600

700

800

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000


Aero Engine Delivery and Sales Forecast by RegionNo. of Engines


Total87,685 units

1,360 US$ billion

2018 Market PriceUS$ billion

*Including 10% of total number of engines installed on airplanes as spare engines.


99

12. Methodology

Passenger Forecast Methodology

The demand forecasting flow is divided into three sections (air trafic, open ASK, and aircraft sales

forecast) as shown below:

Forecast for air traffic demand or RPK: Forecasted air traffic demand (RPK) is calculated by

econometric method as a function of GDP and yields, because it is strongly affected by the correlation

with income and fares. However, RPK significantly changes due to effects of various events, such as

a major shift in aviation policies (e.g. liberalization of air transport), new entry of LCCs, and

development of other transportation modes (e.g. high-speed railways). Therefore, it is so difficult to

forecast a future demand only based on the correlation with GDP and yields that JADC forecasts RPK

by considering the impact of possible future events as well as by conducting an analysis based on

causal models using GDP and passenger yields. The RPK forecast is categorized by region (13 regions)

and distance (4 segments).

Forecast for open ASK: The available transportation capacity to be delivered in the future (open ASK)

is calculated by the retirement forecast of existing aircrafts as well as the forecast of the available

transportation capacity necessary to transport the air traffic demand which is calculated by macro

analysis. The forecast is categorized by region (13 regions) and distance (4 segments), as well as seat

size (15 segments).

Forecast for aircraft sales: The number of aircrafts which will be deliverd in the future are calculated

based on the open ASK, aircraft performance (number of seats per aircraft, cruise range etc.) and sales

force of each manufacturer, and aggregated by category.


100

Cargo Forecast Methodology

The demand forecasting flow is divided into three sections (traffic forecast, capacity forecast and

freighter forecast) as shown below:

Forecast for air cargo: Air cargo demand is known to have a correlation with GDP and cargo yields

as is the case with the passenger aircraft demand. JADC forecasts the air cargo demand by analyzing

past data based on causal models using GDP and real cargo yields and by evaluating various factors

that affect the air cargo demand considering the present and future trends. After consolidating the

global flight routes into 33 markets, the air cargo demand is forecasted by market.

Forecast for supplied transportation capacity of cargo freighters: A forecast is calculated by the

macroeconomic forecasting method (top-down analysis), in which the forecast is categorized by region

(7 regions) and payload (3 segments). Air cargo is transported by cargo freighters or in the lower deck

hold of passenger aircrafts. The forecasts of the cargo transport demand (as RTK) and supplied

transportation capacity (as ATK) of cargo freighters can be calculated by deducting them of those

passenger aircrafts from the results of the forecasted air cargo demand. The RTK and ATK of those

passenger aircrafts are estimated based on the results of the forecasted passenger aircraft demand.

Air cargo transport volume = Cargo transport volume carried in the lower deck hold of passenger

aircrafts + Cargo transport volume carried by freighters

By analyzing the aircraft type composition and flight routes and simulating the service life of freighters,

the supplied transportation capacity needed in the future is forecasted by category.

Forecast for sale of aircrafts: The forecasted number of aircrafts to be sold is calculated by allocating

the supplied transportation capacity needed in the future to specific aircrafts in view of aircraft

performance, including payloads and cruising distance, and the ratio of newly-built aircrafts and

converted freighters.

Cargo Demand

Economic Forecast

(GDP)

YieldForecast

Cargo Capacityneeded

FreighterCapacityneeded

FreighterDemand

Production Freighter Deliveries

Lower HoldCapacity

PassengerForecast

Retirement

Converted Freighter

Network Analysis

FleetAnalysis

Traffic Forecast Capacity Forecast Freighter Forecast

Freighter Demand Forecast Flow Chart


101

Abbreviations

A4A Airlines for America

AAPA Association of Asia Pacific Airlines

AEA Association of European Airlines

ASEAN Association of South-East Asian Nations

ASK Available Seat Kilometers

ATK Available Ton Kilometers

BRICs Brazil, Russia, India, China,

BTS Bureau of Transport Statistics, U.S. Department of Transportation

CAPA Centre for Asia Pacific Aviation

CASK Cost per ASK

CIS Commonwealth of Independent States

EIA Energy Information Administration

ETS Emission Trading Scheme

EU European Union

FFP Frequent Flyer Program

FSC Full Service Carrier

FTA Free Trade Agreement

GDP Gross Domestic Product

HOM Heavy and Oversize air cargo Market

IATA International Air Transport Association

ICAO International Civil Aviation Organization

IEA International Energy Agency

JADC Japan Aircraft Development Corporation

JICA Japan International Cooperation Agency

LCC Low Cost Carrier

MLIT Ministry of Land, Infrastructure, Transport and Tourism

OPEC Organization of Petroleum Exporting Countries

RASK Revenue per ASK

RPK Revenue Passenger Kilometers

RTK Revenue Ton Kilometers

SARS Severe Acute Respiratory Syndrome

TEU Twenty-Foot Equivalent unit

UIC International Union of Railways

UN United Nations

UNWTO UN World Tourism Organization


102

Glossary of Terms

ASK or Available Seat Kilometers

Passenger transport capacity

The number of seats × Transportation distance (kilometers)

RPK or Revenue Passenger Kilometers

Transportation performance with revenue passengers on board and flown

The number of revenue passengers × Transportation distance (kilometers)

Passenger Load Factor

A numerical value indicating the ratio of the number of revenue passengers on board to the

total number of seats, that is, an indicator for measuring seat sales

Revenue passenger kilometers (RPK) ÷ Available seat kilometers (ASK)

Different from a boarding rate which does not include non-revenue passengers

Yield

Revenue per kilometer (or per mile) for one passenger

Obtained by “Passenger revenue ÷ Revenue passenger kilometers”

In the case of cargo, revenue per kilometer (or per mile) for one ton of cargo

Obtained by “Cargo revenue ÷ Revenue ton kilometers”

CASK or Cost per ASK

unit cost

An indicator for cost per unit passenger transport capacity

Obtained as cost per seat kilometer (ASK)

ATK or Available Ton Kilometers

Air cargo capacity

Payload capacity (tons) × Transportation distance (kilometers)

RTK or Revenue Ton Kilometers

Transportation performance with revenue cargo on board and flown

Revenue Cargo (tons) × Transportation distance (kilometers)

Cargo load factor

Revenue ton kilometers (RTK) ÷ Available ton kilometers (ATK)


103

Appendix A : Definitions of Airplane Segments

Passenger Turboprops

　　15－19 seats DHC6-400, Do228, BE1900, L410

　　20－39 seats DHC8-200, Saab 340, Do328, Su-80

　　40－59 seats ATR42, DHC8-300, An-140, MA60/600

　　60－79 seats ATR72, DHC8-400, Il-114

　　80－99 seats (ATR92)

Passenger Jets

Regional Jets

　　20－39 seats ERJ135, Do328JET

　　40－59 seats CRJ100/200, ERJ140/145

　　60－79 seats CRJ700, EMBRAER170/175/175E2, MRJ70, An-148,

　　80－99 seats CRJ900/1000, EMBRAER190/E2, MRJ90, ARJ21, Superjet100

　Narrowbody

　　100－119 seats A220-100, EMBRAER195/E2, A318, 717, 737-600,

　　120－169 seats A319ceo/neo, A320ceo/neo, 737-700/-800, 737MAX-7/-8,

A220-300, 727, C919-200, MS21-200/-300, Tu234

　　170－229 seats A321ceo/neo, 737-900ER, 737MAX-9/-10, 757, C919-300, MS21-400, Tu-204

　Widebody

　　230－309 seats 787-8/-9, A330ceo/neo, 767, A300, A310, Il-96

　　310－399 seats A350-900/-1000, 787-10, 777X-8, 777, A340, MD-11

　　400－499 seats 747, 777X-9

　　　>500 seats A380

Jet Freighters

　　Narrowbody (< 50 ton) A320, A321, BAe146, CRJ100/200, DC-8, DC-9, ERJ 145,

MD-80, 707, 727, 737, 757, Tu-204

　　Medium Widebody (40-70 ton) A300, A310, A330, DC-10-10, L-1011, 767, 787, Il-76

　　Large (>70 ton) A350, DC-10-30/-40, MD-11, 747, 777, An-124, An-225

Note: Aircraft are segmented according to number of seats based on 1-class seat configuration for 99 seats or less, 2-class seat configuration for 100–229 seats, and 3-class seat configuration for 230 seats or more.


104

Appendix B : Definitions of Aero Engine Segments

Engine ManufacturerThrust

(x1000 lb)Aircraft Type (No. of Engines)

CF6-80E1 GE/SNECMA 67～72 A330(2)

GEnx GE 67～73 B787(2), B747-8(4)

GE90 GE/SNECMA 75～115 B777(2)

GP7000 GE/PW 76～82 A380(4)

PW4000-100 PW 64～70 A330(2)

PW4000-112 PW 74～98 B777(2)

TRENT 700 RR 67～71 A330(2)

TRENT 800 RR 75～95 B777(2)

TRENT 900 RR 68～84 A380(4)

TRENT 1000 RR 64～74 B787(2)

TRENT 7000 RR 68～72 A330neo(2)

TRENT XWB RR 83～92 A350XWB(2)

CF6-50 GE/SNECMA 46～54 B747(4), A300(2)

CF6-80A GE/SNECMA 48～50 B767(2), A310(2)

CF6-80C2 GE/SNECMA 52～62 B747(4), B767(2), A300-600(2), A310(2)

MD-11(3)

JT9D PW 43～56 B747(4), B767(2), A300(2), A310(2)

PW4000-94 PW 52～68 B747(4), B767(2), A300-600(2), A310(2)

MD-11(3)

RB211-524G/H RR 58～61 B747-400(4), B767-300(2)

TRENT 500 RR 56 A340-500/600(4)

PW2000 PW 38～42 B757(2)

RB211-535C/E4 RR 37～43 B757(2)

V2500 IAE 22～30 A319(2), A320(2), A321(2), MD-90(2)

CFM56 CFM INT'L 18～34 B737-300/400/500(2),

B737-600/700/800/900(2)

A318(2), A319(2), A320(2), A321(2),

A340-200/300(4)

LEAP-1 CFM INT'L 18～33 A319neo(2), A320neo(2), A321neo(2),

737MAX(2), C919(2)

PW1000G PW 15～35 MRJ70/90(2), A220-100/300(2), MS-21(2)

A319neo(2), A320neo(2), A321neo(2)

EMBRAER 175E2/190E2/195E2(2)

JT8D-200 PW 18～21 MD-80(2)

PW6000 PW 20～23 A318(2)

BR700 BMW/RR 18～22 717(2)

SMI46 SNECMA/NPO 17.4 SSJ100(2)

CF34 GE 8.6～20 CRJ100/200(2), CRJ700(2), CRJ900(2), CRJ1000(2)

EMBRAER 170/175(2), EMBRAER 190/195(2),

ARJ21(2)

AE3007 ALLISON 7.2～12 ERJ 135(2), ERJ 140(2), ERJ 145(2)

PW300 PWC 4.2～5.7 328JET(2)

CT7 GE 1700～1940 SHP CN235(2), SAAB340(2), L610(2)

PW100 PWC 2000～5000 SHP ATR42(2), ATR72(2),

DHC8-100(2)/300(2)/400(2), Do328(2)

EMB120(2)

PT6A PWC 700～1300 SHP DHC-6-400(2), BEECH1900

TPE 331 GARRETT 700～1100 SHP CASA212(2), Metro(2), Do228(2)

Turboprop

ThrustCategory(x1000 lb)

65～115

35～65

12～35

～12


105

Appendix C1 : Air Passenger Traffic ( by Region )

Average Growth

Region 1998 2018 2038 2019-2038

North America 1,060 1,856 3,443 3.1%

Europe 858 1,974 4,559 4.3%

Western Europe 840 1,862 3,994 3.9%Eastern Europe 19 112 564 8.4%

Asia/Pacific 672 2,781 7,784 5.3%

Japan 157 198 357 3.0%China 123 1,251 3,768 5.7%North-East Asia 83 239 441 3.1%South-East Asia 167 634 1,935 5.7%South Asia 46 258 913 6.5%Oceania 96 201 370 3.1%

Middle East 82 753 1,903 4.7%

Latin America 140 423 864 3.6%

Africa 62 169 359 3.8%

CIS 67 303 489 2.4%

World 2,942 8,259 19,400 4.4%

　　RPK ( ×10 9 )


106

Appendix C2 : Air Passenger Traffic ( by Route )

Average Growth

Region 1998 2018 2038 2019-2038

Within Africa 17 71 198 5.3%

Within Asia Pacific 356 1,358 3,866 5.4%

Within China 62 820 2,540 5.8%

Within Europe 374 965 2,243 4.3%

Within Latin America 77 280 665 4.4%

Within Middle East 24 83 195 4.4%

Within North America 771 1,300 2,313 2.9%

Within CIS 37 146 275 3.2%

CIS International 44 217 622 5.4%

Africa - Asia Pacific 4 5 7 2.3%

Africa - Europe 78 190 337 2.9%

Africa - Middle East 8 72 232 6.0%

Africa - North America 4 13 38 5.6%

Asia Pacific - Europe 198 454 824 3.0%

Asia Pacific - Middle East 45 255 808 5.9%

Asia Pacific - North America 188 415 837 3.6%

Europe - Middle East 54 300 870 5.5%

Europe - Latin America 102 226 463 3.7%

Europe - North America 347 546 859 2.3%

North America - Latin America 125 231 455 3.4%

North America - Middle East 12 109 326 5.6%

Rest of World 16 227 425 3.2%

World 2,942 8,259 19,400 4.4%

　　RPK ( ×10 9 )


107

Appendix D : Air Cargo Traffic

Market Average Growth

RTKs in billions 1998 2018 2038 2019-2038

Intra Africa 0.3 0.8 1.5 3.2%

Intra Asia Pacific 15.7 38.7 97.7 4.7%

Intra Europe 3.8 6.2 11.6 3.2%

Intra Latin America 1.7 2.1 5.3 4.7%

Intra Middle East 0.5 1.3 4.0 5.7%

Intra North America 20.3 24.1 41.7 2.8%

Africa - Asia Pacific 0.3 1.3 3.4 2.6%

Africa - Europe 3.5 5.4 9.5 2.9%

Africa - Middle East 0.3 2.8 9.5 6.3%

Asia Pacific - Europe 23.2 38.7 89.8 3.9%

Asia Pacific - Middle East 1.7 13.4 48.5 6.7%

Asia Pacific - North America 20.9 50.1 109.2 4.0%

Europe - Middle East 3.1 12.3 23.4 3.3%

Europe - Latin America 5.8 6.9 12.8 3.1%

Europe - North America 23.3 23.0 36.3 2.3%

Latin America - North America 4.3 6.6 13.9 3.8%

Rest of World 2.1 14.2 21.9 2.2%

World 131.8 255.3 546.5 3.9%


108

Appendix E : Airplane Demand

Changes in Airplanes and Sales by Region

Changes in Airplanes and Sales by Airplane Capacity

Region 2018 Fleet Removed New Deliveries 2038 Fleet Value (US$B)

North America Total 8,262 7,171 7,679 9,079 997 Passenger Turboprop 714 619 374 469 7

Passenger Jet 6,640 5,823 6,857 7,674 844

Jet Freighter 908 729 448 936 145

Europe Total 5,835 4,664 8,151 9,629 1,228 Passenger Turboprop 585 449 451 587 11 Passenger Jet 4,949 3,980 7,625 8,594 1,193 Jet Freighter 301 235 75 448 24

Asia-Pacific Total 8,980 6,341 15,950 19,069 2,552 Passenger Turboprop 1,080 733 1,302 1,649 30 Passenger Jet 7,546 5,353 14,384 16,577 2,426 Jet Freighter 354 255 264 843 97

Middle East Total 1,503 1,059 2,336 2,831 570 Passenger Turboprop 47 30 32 49 1 Passenger Jet 1,370 996 2,156 2,530 514 Jet Freighter 86 33 148 252 55

Latin America Total 2,047 1,691 2,611 3,115 282 Passenger Turboprop 459 386 412 485 8 Passenger Jet 1,492 1,218 2,171 2,445 265 Jet Freighter 96 87 28 185 9

Africa Total 1,398 1,180 1,407 1,691 160

Passenger Turboprop 526 454 377 449 7

Passenger Jet 802 665 1,001 1,138 142

Jet Freighter 70 61 29 104 11CIS Total 1,518 1,217 1,347 1,811 165

Passenger Turboprop 262 218 182 226 4 Passenger Jet 1,105 880 1,118 1,343 148 Jet Freighter 151 119 47 242 13

World Total 29,543 23,323 39,481 47,225 5,953 Passenger Turboprop 3,673 2,889 3,130 3,914 68 Passenger Jet 23,904 18,915 35,312 40,301 5,531 Jet Freighter 1,966 1,519 1,039 3,010 354

(Jet Freighter contains newly built only)

Airplane Category 2018 Fleet Removed New Deliveries 2038 Fleet Value (US$B)

Passenger Turboprop 15-39 seats 1,812 1,689 1,477 1,600 23 40-59 seats 626 553 149 222 3 More than 60 seats 1,235 647 1,504 2,092 42 Total 3,673 2,889 3,130 3,914 68

Passenger Jet 20-59 seats 1,076 1,076 119 119 3 60-99 seats 2,369 2,028 2,992 3,333 111 Regional Jet 3,445 3,104 3,111 3,452 115 100-119 seats 592 519 1,748 1,821 122 120-169 seats 12,689 9,919 12,576 15,346 1,375 170-229 seats 2,666 2,164 8,184 8,686 1,079 Narrowbody 15,947 12,602 22,508 25,853 2,576 230-309 seats 1,750 1,182 5,534 6,102 1,288

310-399 seats 2,356 1,743 4,129 4,742 1,540

More than 400 seats 406 284 30 152 13

Widebody 4,512 3,209 9,693 10,996 2,840 Total 23,904 18,915 35,312 40,301 5,531

Jet Freighter

Narrow Body 720 718 0 1,114 0

Medium Widebody 651 485 462 819 117

Large 595 316 577 1,077 237 Total 1,966 1,519 1,039 3,010 354

(Jet Freighter contains newly built only)


109

Fleet by Reg ion

2018 Fleet

North America Europe Asia-Pacific Middle East Latin America Africa CIS World

Passenger Turboprop 15-39 seats 439 194 435 11 293 329 111 1,812 40-59 seats 106 69 156 9 75 85 126 626 More than 60 seats 169 322 489 27 91 112 25 1,235Total 714 585 1,080 47 459 526 262 3,673

Passenger Jet 20-59 seats 745 66 11 14 44 116 80 1,076 60-99 seats 1,196 385 319 57 174 74 164 2,369 Regional Jet 1,941 451 330 71 218 190 244 3,445 100-119 seats 150 138 71 9 98 46 80 592 120-169 seats 2,833 2,902 4,637 496 919 396 506 12,689 170-229 seats 1,048 511 797 64 97 6 143 2,666 Narrowbody 4,031 3,551 5,505 569 1,114 448 729 15,947 230-309 seats 397 330 563 195 125 81 59 1,750 310-399 seats 267 486 1,036 391 35 77 64 2,356 More than 400 seats 4 131 112 144 0 6 9 406 Widebody 668 947 1,711 730 160 164 132 4,512Total 6,640 4,949 7,546 1,370 1,492 802 1,105 23,904

Jet Freighter Narrow Body 267 142 170 6 72 40 23 720 Medium Widebody 380 78 53 28 23 17 72 651 Large 261 81 131 52 1 13 56 595Total 908 301 354 86 96 70 151 1,966

2038 Fleet


Passenger Turboprop15-19席 79 34 128 2 87 74 57 461 40-59 seats 23 18 104 1 38 27 11 222 More than 60 seats 200 405 997 37 177 183 93 2,092Total 469 587 1,649 49 485 449 226 3,914

Passenger Jet 20-59 seats 0 28 3 6 33 24 25 119 60-99 seats 1,553 517 562 66 286 131 218 3,333 Regional Jet 1,553 545 565 72 319 155 243 3,452 100-119 seats 612 461 413 67 175 35 58 1,821 120-169 seats 2,626 3,367 6,351 716 1,209 491 586 15,346 100-169 seats 3,238 3,828 6,764 783 1,384 526 644 17,167 Narrowbody 4,781 5,727 10,976 1,066 1,781 699 823 25,853 230-309 seats 925 1,357 2,797 446 244 156 177 6,102 310-399 seats 415 938 2,194 866 101 128 100 4,742 More than 400 seats 0 27 45 80 0 0 0 152 Widebody 1,340 2,322 5,036 1,392 345 284 277 10,996Total 7,674 8,594 16,577 2,530 2,445 1,138 1,343 40,301

Jet Freighter Narrow Body 197 228 423 39 148 60 19 1,114 Medium Widebody 408 118 131 44 35 15 68 819 Large 331 102 289 169 2 29 155 1,077Total 936 448 843 252 185 104 242 3,010

2019-2038 New Deliveries


Passenger Turboprop15-19席 71 26 81 1 81 60 26 34620-39席 164 129 419 9 183 162 65 1,131 More than 60 seats 119 282 740 21 126 134 82 1,504Total 374 451 1,302 32 412 377 182 3,130

Passenger Jet 20-59 seats 0 28 3 6 33 24 25 119 60-99 seats 1,392 447 532 64 264 123 170 2,992 Regional Jet 1,392 475 535 70 297 147 195 3,111 100-119 seats 602 430 396 65 166 34 55 1,748 120-169 seats 2,308 2,756 4,971 604 1,044 420 473 12,576 100-169 seats 2,910 3,186 5,367 669 1,210 454 528 14,324 170-229 seats 1,361 1,863 3,988 278 376 173 145 8,184 230-309 seats 833 1,247 2,586 376 199 125 168 5,534 310-399 seats 361 851 1,897 747 89 102 82 4,129 More than 400 seats 0 3 11 16 0 0 0 30 Widebody 1,194 2,101 4,494 1,139 288 227 250 9,693Total 6,857 7,625 14,384 2,156 2,171 1,001 1,118 35,312

Jet Freighter (New Build) Narrow Body 0 0 0 0 0 0 0 0 Medium Widebody 239 45 73 29 26 9 41 462 Large 209 30 191 119 2 20 6 577Total 448 75 264 148 28 29 47 1,039

Jet Freighter (Converted) Narrow Body 195 228 423 39 148 60 19 1,112 Medium Widebody 64 52 45 5 0 6 19 191 Large 50 27 12 7 0 0 125 221Total 309 307 480 51 148 66 163 1,524


110

Appendix F : Effect of Crude Oil Price on RPK (via passenger yield only)

Since transport demand (RPK) has a strong correlation with an economic situation

(GDP) and airfares (yield), it is affected by economic changes due to changes of crude oil

prices as well as changes of airfares due to changes of fuel prices, and rising fuel prices

gives negative effects to RPK.

This page shows calculation results concerning effects given to RPK via yield by crude

oil prices. A ratio of fuel costs to the cost structure of airlines during the period when

crude oil prices were stable is estimated, and yield changes are estimated considering

these fuel costs were expanding in proportion to fuel prices during the period when fuel

prices were soaring. The graph below shows the RPK changes estimated in the foregoing

manner.

(This calculation contains the effect of crude oil price changes on RPK via passenger

yield (i.e. airfare) only. The effect via GDP is not included.)

0

50

100

150

200

250

1990 2000 2010 2020 2030 2040Av

era

ge

Sp

ot

Pri

ce

(2

01

8U

S$

/bb

l.)

Changes and forecasts in crude oil prices (Brent Crude Oil)

EIA High Oil Price Case

EIA Low oil and gas resource and technology

EIA Reference Case

EIA High oil and gas resource and technology

IHS reference ( Brent Base )

JADC

EIA Low Oil Price Case

Source : EIA, IHS Markit


'19-'38

EIA High 3.9 32152EIA Low O&T 4.1 33923EIA Ref 4.2 34181EIA High O&T 4.2 34450IHS Ref. 4.3 35152JADC 4.4 35312EIA Low 4.4 35786

Number ofJet Airliners

DeliveredGrowthRate (%)

0

5000

10000

15000

20000

25000

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

RPK (×109) Influence of crude oil price on RPK (via Yield only)

EIA Low

EIA High O&T

EIA Ref

EIA Low O&T

EIA High

JADC & Actual

IHS Ref.


111

Appendix G : Evaluation of Secondary Deliveries

These demand forecasts for the next 20 years are calculated without including the

number of airplanes delivered within the forecast period and retired earlier within the

period in that the average retirement age of production airplanes has been around 25

years so far (longer than the forecast period).

However, in recent years, some groups of airplanes to retire though there are not many,

have begun to appear. It is estimated that these airplanes would have been operated

with high frequency by LCCs or FSCs on short-haul domestic routes. Considering recent

rising LCCs, such airplanes that retire at a younger age may be increasing in the future.

Light orange bars in the graph show the number of units to be delivered to replace them

during the forecast period to keep the Fleet constant. These are “secondary deliveries”.

(The secondary deliveries are not included in the number of units in the text.)

Of secondary deliveries, 1,562 units will be narrow body airplanes with 100 to 229 seats

and 572 units will be wide body airplanes with 230 or more seats, accounting for 6.9% and

5.9% of the primary deliveries, respectively.

(Fleet: airplanes which will be in service at the beginning or end of the forecast period)

(Remains: those which will be in service at the end of the period out of the initial Fleet)

(Primary retired: those which will retire during the period* out of the initial Fleet)

(Primary deliveries: those for replacement demand for primary retired airplanes and

those for new demand)

(Secondary retired: those which will retire during the period* out of the primary

deliveries)

(Secondary deliveries: those for replacement demand for secondary retired airplanes)

(* 2019-2038)

0 34173

2770

502 568 61312239

537 70

955

537 285 2807

119

2992

1748

12576

8184

5534

4129

301076

2028

519

9919

21641182

1743

284

‐2000

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20 〜 59 seats 60 〜 99 seats 100 〜 119seats

120 〜 169seats

170 〜 229seats

230 〜 309seats

310 〜 399seats

400seats

over

Passenger Jet Fleet and Delivery Forecast by Seat Category

23691750

2666

12689

592

15346

1821

3333

119406

2356

152

4742

6102

8686

1076

2038 Remains

2019‐2038 Retired (Primary)

2019‐2038 Delivery (Primary)

2038 Fleet

2019‐2038 Delivery (Secondary)

2018 Fleet


112

Appendix H : Changes in Cargo Transportation Results by Major Airlines (2006-2017)

This page shows the detailed version of the graph “Cargo Traffic of Lower Hold of

Passenger Airlines in Major Airlines” in Chapter 8.2, Page 65.

0

2

4

6

8

10

0 2 4 6 8 10 12 14 16

RTK

by Lower Deck Hold of Passenge

r Airplanes

(×10 9 )

RTK by Freighters (×10 9 )

Emirates Qatar Airways

Air France British Airways

Lufthansa Federal Express

Japan Airlines All Nippon Airways

Singapore Airlines Cathay Pacific Airways

China Airlines EVA Air

China Eastern Airlines China Southern Airlines

Air China Korean Air

Changes in Cargo Transportation by Major Airlines(2006-2017)

BA

Singapore

KAL

Cathay

Emirates

ANA

Qatar

AF

LH

FedEx

Source : IATA WATSJAL C.South

C.East

China AL

EVA

A.China


113

Reference Materials

Reference Materials used in the Japan Aircraft Development Corporation, Worldwide Market Forecast

2019 - 2038

AACO Arab Air Carriers Organization

AAPA Association of Asia Pacific Airlines

ACI Airports Council International

AEA Association of European Airlines

AFRAA African Airlines Association

ALTA Latin America & Caribbean Air Transport Association

A4A Airlines for America

BTS Bureau of Transport Statistics, U.S. Department of Transportation

CAAC Civil Aviation Administration of China

DOT U.S. Department of Transportation

EIA U.S. Energy Information Administration

ERAA European Regional Airline Association

Eurocontrol European Organisation for the Safety of Air Navigation

IATA International Air Transport Association

ICAO International Civil Aviation Organization

IEA International Energy Agency

JETRO Japan External Trade Organization

MLIT Ministry of Land, Infrastructure and Transport of Japan

RAA Regional Airline Association

UN United Nations

Air Transport World AviationWeek

AviationDaily AviationWeek

Cirium Cirium

IHS Connect IHS Markit

OAG OAG Aviation Worldwide Limited


114

This Worldwide Market Forecast 2019-2038 can be found on our website at:

http://www.jadc.jp/en/

Although this material is prepared based on various data which are believed to be

reliable under the present conditions, risk data and uncertainty factors are also included

in past performance data, and our association does not guarantee its accuracy and

completeness in any way.

We are not responsible for the decisions, acts and results of users based on this material.

Please make your decision on your own responsibility when using it.

In addition, when copying the whole or part of this material, permission of the copyright

owner is required, so please contact us. Be sure to mention Japan Aircraft Development

Corporation when quoting.

Contact details:

Market Analysis Group


Naohiko Ito ([email protected])

Postal address:

Hibiya Kokusai Bldg. 7F

2-2-3, Uchisaiwai-cho

Chiyoda-ku, Tokyo

100-0011, Japan

Tel: Tokyo (03) 3503-3212 (+81-3-3503-3212)

Fax: Tokyo (03) 3504-0368 (+81-3-3504-0368)

Documents

Japan Aircraft Development Corporation · 2018-01-01 · business plans andproduct strategies. In this document, Japan Aircraft Development Corporation (JADC) specifically show demand