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Aerospace Market Research

Agenda
• Global Aviation
• Trends in Regional Aviation
• Challenges
• Opportunities
Aerospace Market Research

Civilian aerospace Military aerospace


• Civilian Aerospace
1)Passenger air traffic demand to 1)The U.S military aircraft industry
grow 4.9%/yr. evolving continuously for almost a century.
2) World fleet of both passenger and With number of prime contractors peeking
Freighter aircraft to grow from 14980 at 16 in 1945.
@ end of 2006 to nearly 33000 by 2026 2) Changes in the industry structure
3) The worlds airline will require more than particularly the numbers of dominant firms
6000 smaller aircraft(30to100 seats) to serve are closely associated with revolutionary
regional demands. changes in technology e.g. Jet engines, low
4) Passenger traffic to grow in developing obeservability.
countries like India and China. Asia pacific 3) Current military aircraft fleet around
region to witness 7.2% growth Y-o-Y during 39000.
2007-16. With 62% fleet in North America and
5) Freight carriers to increase by six fold during Europe.F-16s the largest fleet accounting
2006-26 period. 8.5% of the total.
6) People want and need to fly. 4) Innovation the key .
US aviation industry
Scenario
After enjoying a brisk demand in mid 1990 to 2000, the us avaition industry
faced a sharp deterioration in earning post sept 11.
Six major network carriers posted massive operating deficit of $19.1 billion
form 2001-02
Us aviation industry recovered significantly in 2004 with growth in regional
carriers.
Opportunities
1) Restructuring
Restructuring can provide scope for increased cost cutting.
Major airlines in like United airlines and Delta has been on restructuring
spree after U.S commercial aviation industry went in Tail spin post sep11.
2) Airlines liquidating assets :-
To improve on the efficiencies many major airlines have gone for
liquidation. Thereby reducing excess assets that had been created
Challenges
Large airlines faces increased competition from LCCs.
High and fluctuating fuel prices pose a threat to operating margins.
overcapacity in the industry
UK aviation industry
• UK aviation contributed directly 11.4 billion pounds to GDP in 2004.1.15%
of overall economy of UK.
• 520000 jobs in UK dependent on the aviation industry.
Opportunities
Tourism makes a major contribution to UK economy. With 3.9% of GDP, 46.8
billion
pounds
¾ th of the international visitors to UK arrive by air
Increased trade form countries outside UK provide immense opportunity
1) 55% of the UK’s Export of manufactured goods transported by air
2) 60% of imports of machinery, mechanical appliance and electric
equipment outside EU carried by air
Challenges
11)Poor infrastructure to support the aviation Industry. passenger travelling by
air have risen faster than the transport system to handle them.
12)Congestion cost to passenger and airlines is estimated to be 1.7 Billion
pounds and expected to be excess of 5 billion pound by 2015
13)Increased global terrorism has impacted the UK avaition industry
China Aviation industry
Scenario
2) China will be the fourth largest international market for leisure
travelers by 2020, with 100 million outbound Chinese tourists.
3) Total routes served by Chinese airlines 1200
Domestic-975 (reaching 136 cities)
International-225( reaching38 countries)
Opportunities
7) Demand for regional airlines and small aircraft with 50-100 seats
for regional flights.
8) Western region (Tibet, inner Mongolia etc) covering 71% of total
Chinese territories still largely untapped
Challenges
• Weak aircraft component supply
• Lack of skilled labor
• Structural weakness
Indian Aviation industry
Scenario
2) Indian domestic passenger air traffic is bound to grow at 7.5%
CAGR from 2001-10
3) International passenger traffic to grow at 5.7% CAGR during same
Opportunities
5) Regional air connectivity still untapped .providing a vast scope for
expansion of civil aviation in the country.
6) Foreign equity participation up to 49% and investment by NRIs
and Overseas corporate bodies up to 100%.
7) Open sky policies for cargo services.
Challenges
9) Technology up gradation at snails pace.
10)Metro cities airport unable to meet the current passenger flow.
Passenger air traffic
 In future civilian aerospace will demand greater emphasis on the hub travel destinations.
 In 2015, 60% of Europe to Asia travel will be hub-to-hub. creating an additional requirement
of 15mn seats.
 Hub based traveling connects global hub cities like London-New York, Mumbai-New Delhi
etc. this cities are large center of business operation and trade.
 Advantages of traveling in Hub based destination
Improves connectivity fewer flights,
less fuel consumption and less carbon emission.
 A large pool of first generation travelers. As income in the emerging markets rise spending
pattern shifts from basic need to more discretionary like recreation, education and travel.
 Due to increased demand from the people of Asia for domestic and inter-regional flying has
prompted government to take necessary steps such as more green field airport developments and
going for a change in role or dual use of some military airfields for commercial activities.
Freight air traffic
Air cargo traffic to increase by an average of 5.8% y-o-y between 2007-26

Chinese freight air traffic overview. India freight air traffic overview.

 Growth to be largely driven by two international flows.  Domestic market in India to grow in similar
Between China to North America, and Europe both manner to that of China, in terms of growth. But
anticipated to grow by as much as 9%. Chinese will differ in the types of goods carried.
domestic Freight to reach current US levels within next  General cargo to continued in the merger with
20 years. passenger aircraft.
 With 10% growth yoy, flow from china to North  Still a large of India’s domestic growth to come
America to become almost twice the size of domestic from express cargo, the market to be driven by
market by 2026. strengthening economy.
 Domestic market around the world expected to triple  Express market to require 140 small or regional
over the next 20 years due to emerging freight demand freighters by 2026 from the current levels of 45.
within china

Chinese freight growth Indian freight growth


Military aerospace
Scenario
Nearly than 39,000 military aircraft generate almost of $60 billion in MRO activity in 2007, the defense
segment provides a unique opportunity for industry players cope up with depressed commercial passenger
aircraft market after September 11 and the continued recession that griped the entire America and Europe.
• Post-Gulf War decline in Reset combined with a smaller fleet and an increase due to ageing aircraft will
result in less than 1% growth through 2017
• with the increased need of the defense forces to have striking capabilities beyond their own national
territories like in Iraq and Afghanistan the need for logistics and transport capabilities have increased
manifold.
• This has led to increased demand of aircrafts like 263 tonne C-17, which U.S air force planning to buy
around 180 in next 10 year period.
• Several critical trends continue to shape the MRO(maintenance repair&overhaul) market
–Performance oriented contracts
–Lean transformation
–Civil / military market convergence
–Prognostics and diagnostics
Results of interpretation

• There is a vast opportunity of growth in the commercial (passenger/freight) sector of


aerospace.
• With the Asia-pacific region and mainly the Indian Sub continent the growth
stimulator, many manufacturers keen to focus on the needs of these region.
• Many new entrants in the industry to survive on the race with their innovative
capability.
• The market could see many new joint ventures like Lockheed-Martins, that will
change the equations in the market.
• Major players in the industry like Airbus and Boeing to focus jointly on both civilian
and military needs of the aerospace industry to cope with market depression and
maintain the sales and profit margins.
• Diversification of the products will ensure better market positioning.

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