Today's record high fuel prices are forcing many airlines, particularly in the United States, to take urgent action in cutting back capacity or reducing planned growth. They are invariably doing so by reducing use of their oldest and least efficient airplanes, while retaining their investment in new airplanes.
Clear Direction
The influence of current market conditions on our outlook is clear, with replacement airplanes taking a greater share of demand (43 percent) than we previously forecast (36 percent), and a smaller fleet size at the end of the 20-year period (35,800 airplanes) than we predicted in the previous outlook (36,400 airplanes).1
Many of the newer aircraft being displaced from passenger fleets are ideal to satisfy pent-up demand for conversion into freighters. Around 2,500 airplanes will be converted from passenger to freight use, and 860 new freighters will be needed, most of which will bring new capabilities to the market.
Backlog = See the Future
A record 31 percent of our forecast for airplanes with more than 100 seats is already on firm order (7,900 aircraft).2 So we have unprecedented visibility of future airplane requirements, giving more certainty to the shape of our forecast.
Long-established airlines will soon order further replacements for the numerous aging airplanes that will remain even beyond announced capacity cutbacks. Leasing companies will continue ordering new airplanes in the near to medium term. They have placed a high proportion of their future deliveries with customers, and need to secure an additional supply of new airplanes..
1Comparisons are with data from Current Market Outlook 2007.
2Ascend CASE, June 2008.
