Middle East airlines’ revenues are projected to triple in the next 20 years and top three Gulf carriers will get the benefit, according to Boeing’s latest forecast.
US planemaker on Tuesday revised upward its 20-year market forecast, predicting demand for 34,000 new aircraft worth $4.5 trillion on growth in emerging regions.
Out of $4.5 trillion, the Middle East aircraft’s market value is $470 billion and the region ranked fourth in terms of market value after Asia, North America and Europe.
“Middle East airline traffic is projected to grow 6.4 per cent, compounded annually, during the next 20 years. Revenue passenger-kilometers will more than triple by 2031, supported by healthy development of long-haul, short-haul, and domestic travel,” according to the Boeing 2012 Current Market Outlook (CMO). The “Gulf 3” - Emirates, Qatar Airways, and Etihad Airways - provide the largest part of the region’s long-haul service, operating under “sixth freedom” agreements to connect two foreign countries via a stop in the carrier’s home country, according to Boeing.
The Middle East generates its own long-haul origin and destination traffic, with business and leisure hubs in Dubai, historical and resort sites in Egypt, beaches and natural wonders in Oman, and growing Hajj pilgrim traffic to Saudi Arabia. Guest workers from South Asia and other regions also boost traffic to the region.
Low-cost carriers, with simplified networks and operations - often flying a single, narrow body airplane type - are taking an increasing share of the region’s short-haul traffic. The single-aisle fleets of airlines like Air Arabia and flydubai can reach many destinations in South Asia, Europe, the CIS, and Africa.
Middle East carriers often prefer to renew their fleets on a 15-year cycle, a shorter cycle than the global average. Thus, of the 2,370 forecast airplane deliveries to the region, about 30 per cent will replace older airplanes, leaving 70 per cent for the region’s fleet growth.
“The world’s aviation market is broader, deeper and more diverse than we’ve ever seen it,” said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes. “It has proven to be resilient even during some very challenging years and is driving production rate increases across the board.”
Airline traffic is forecasted to grow at a five per cent annual rate over the next two decades, with cargo traffic projected to grow at an annual rate of 5.2 per cent. The single-aisle market, served by Boeing’s Next-Generation 737 and the future 737 MAX, will continue its robust growth. Widebodies, such as Boeing’s 747-8, 777 and 787 Dreamliner, will account for almost $2.5 trillion dollars worth of new airplane deliveries with 40 per cent of the demand for these long-range airplanes coming from Asian airlines.
Major aircraft deliveries predicted for single-aisle as Boeing said total 23,240 single-aisle aircraft deliveries worth $2.03 trillion are expected in the new 20 years. While twin-aisle are 7,950 worth $2.08 trillion, large aircraft 790 worth $280 billion and regional jets 2,020 valuing $80 billion.
Robust growth in China, India and other emerging markets is a major factor in the increased deliveries over the next 20 years. Low cost carriers, with their ability to stimulate traffic with low fares, are growing faster than the market as a whole. There is also a strong demand to replace older, less fuel-efficient airplanes. Replacement accounts for 41 per cent of new deliveries in the forecast.