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For commercial aviation, 2006 was another strong year, second only to 2005. Airlines ordered 1,8821) aircraft, more than most analysts forecasted, and the global order backlog has now reached its highest level ever, with 4,988 units. Consequently, both Airbus and Boeing are ramping up production.
Traffic growth was robust, with world scheduled traffic growing by about 5%2), slightly above the annual average. Over the six years since 2000, traffic has expanded by approximately 30%, supported by buoyant economic growth (approximately 3.9% in 2006), the emergence of Low Cost Carriers (LCCs) and increased liberalisation.
Developing countries, in particular, are transforming their airline industries, expanding both aircraft numbers and related services. China (~10% 
GDP – Gross Domestic Product – growth in 2006) and India (~8% in 2006) are experiencing huge aviation growth, and large economies such as Russia and Brazil have tremendous potential.
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GDP Growth by Country ( CAGR* 2005-2007 in %) *CAGR: Compound Average Growth Rate – a measure of average growth rate over a number of years Source: IMF |
Fuel burnt per passenger/per 100 kilometers (Fuel/ RTK* in %) * RTK – Revenue Tonne Kilometres: RTK is a measure of overall airline volume. It is calculated by multiplying the number of tonnes of revenue load (passengers, baggage, freight and mail) by the flight stage distance Source: Airbus |
Improving financial performance
Globally, the airline industry was at its most profitable for several years. Net losses fell to an estimated USD 500 million3) (2005: USD 3.2 billion loss). This was due to lower-than-expected jet fuel prices, fare increases and better airline productivity combined with record load factors of almost 76% and lower non-fuel costs.
Airlines, especially those in the United States, have adapted to high jet fuel prices by increasing fuel efficiency per seat. They have reduced weight by introducing paperless cockpits and lighter flight carts, and cutting back on in-flight phones and magazines. Fuel economy has been improved by, for example, lowering cruise speeds, using just one engine to taxi at airports and careful cargo distribution.
LCCs are continuing to play a major part in air transport’s recovery. Their low fares have stimulated traffic, and their lean operating models have provided a catalyst for transforming the way airlines operate. LCCs’ new aircraft portfolios give them a competitive edge over legacy/network airlines, in terms of both fuel and maintenance costs. Network airlines have reacted by cutting maintenance costs, but LCCs have made greater cuts. LCC traffic market share in Europe and the United States respectively was 26% and 29% in 2006. In Asia it was about 10%.
Environmentally friendly aircraft
In order to meet airlines’ demands for more efficient and environmentally friendly planes, Airbus and Boeing launched new and upgraded models during 2006. Wishing to participate in the Kyoto Protocol’s initiative to reduce emissions, the airline industry is making environmental performance of paramount importance. Both leading aircraft manufacturers are investing heavily in research and development to improve their technologies.
Looking forward from 2006 to 2025, world passenger traffic is expected to grow by 4.8% per annum and freight traffic by 6%4). World airlines will require the delivery of 22,663 new passenger aircraft (with a capacity over 100 seats) and freighters, worth approximately USD 2.6 trillion (current list prices). This represents over 1,100 new aircraft deliveries on average per year. The world fleet (passenger and freight) will almost double, growing from over 17,000 aircraft to nearly 33,500.
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1) |
Data for Airbus and Boeing; does not include Bombardier and Embraer |
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2) |
According to the International Civil Aviation Organisation’s initial estimate |
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3) |
According to the International Air Transport Association |
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4) |
Airbus Global Market Forecast, November 2006 |
