Aircraft production to hit record in 2015

As air travel demand is increasing, aircraft equipment continues to improve with enhancements powered by dramatic innovations in jet engine fuel efficiency, navigation technology, and materials science.

Dubai — The Middle East and the Asia Pacific regions will help set new records for aircraft production in 2015 on growing passenger travel demand, according to the latest study by Deloitte released on Wednesday.

Passenger travel demand in countries experiencing continued wealth creation, primarily in India, China, the Middle East, and other Asia-Pacific region countries, are driving requirements for global passenger leisure and business travel growth, as well as increasing freight transportation requirements.

In the Middle East the UAE carriers alone are expected to get deliveries of more than 50 aircraft in 2015, according to the data gathered by Khaleej Times. Dubai-based airlines — Emirates and flydubai — expect possible deliveries of 33 aircraft worth around $10.5 billion at list prices in 2015.

Sharjah-based Air Arabia is looking for six Airbus A320 aircraft worth around $563 million at list prices this year. While Etihad Airways, which expects 204 aircraft by the end of 2025, is also likely to induct a minimum double-digit number in its fleet this year.

Global revenue passenger kilometres have experienced significant growth over the last 30 plus years, resulting in greater utilisation of aircraft and more sold out flights. Passenger travel demand is expected to increase five per cent every year over the next 20 years, contributing to increases in aircraft production.

Revenue and earnings growth in the commercial aerospace sector is expected to be a bright spot and driving force behind the global aerospace and defense (A&D) industry performance in 2015.

While the rate of growth for the overall industry has been slowing over the last two years as a result of declines in defense sector spending, the commercial aerospace sector is likely to enjoy close to an eight per cent growth rate, according to the Deloitte Manufacturing Industry group 2015 Global aerospace and defense industry outlook.

“The commercial aerospace sector is expected to set new records for aircraft production in 2015. The accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, and growing passenger travel demand, especially in the Middle East and the Asia-Pacific region are key drivers behind this trend,” said Tom Captain, Deloitte Global Aerospace and Defense Sector Leader. 

“Recent lower oil prices will not likely have a dramatic lasting impact on production rate increases for commercial aircraft, given the nine-year backlog the industry enjoys,” explains Captain. “Supply chain capacity and capability remain the critical risks that need to be managed in order to maintain production commitments.”

As air travel demand is increasing, aircraft equipment continues to improve with enhancements powered by dramatic innovations in jet engine fuel efficiency, navigation technology, and materials science. These improvements, especially in fuel efficiency, are driving demand for aircraft replacement, thus advancing the obsolescence of certain previous generation aircraft. Fuel costs, as a percentage of total operating costs for airlines have risen from an average of 13.6 per cent in 2001 to 28.6 per cent in 2014. However, it is still too early to determine what impact the significant reduction in the price of oil since late-2014 may have on orders for next generation fuel-efficient aircraft. However, despite this trend, the investments in next generation aircraft, which promises to deliver at least an estimated 15 per cent better fuel burn rate, has become very attractive for airline operators.

— abdulbasit@khaleejtimes.com