Today's market

Asia Pacific economies continue to have strong growth. In 2013, regional GDP rose 4.8 percent, driven both by the region's fast-growing, emerging economies and by the mature economies, which were lifted by recovery from the global recession. Passenger traffic grew 3.9 percent, slightly faster than capacity at 3.7 percent year-over-year growth. Despite high oil prices and fluctuating currency valuations, Asia Pacific airlines are estimated to have earned a net profit of $3.0 billion in 2013 and are forecast to earn $3.7 billion in 2014.

Continued liberalization

The structure of the Asia Pacific airline industry is changing as regulations liberalize and carriers expand beyond national boundaries. Cross-border cobranded subsidiary agreements and direct investment in foreign airlines allow established airlines access to new markets and promote expanded air service to small markets. The growth of air travel as low-cost carriers (LCC) reduce fares and open new markets testifies to the effects of liberalization. Improved affordability and accessibility will stimulate demand for air travel in established markets and meet the emerging travel needs of the growing middle class.

Strong demand

Continued economic growth is expected in the region over the next 20 years, with GDP averaging 4.4 percent growth annually. As income levels rise, Asia Pacific is set to become the largest air travel market in the world. In 2033, approximately 48 percent of global traffic will be to, from, or within the region. More than 100 million new passengers are projected to enter the market annually. By way of perspective, London Heathrow handles 70 million passengers and Atlanta 95 million annually.

To accommodate growing demand, the region will need 13,460 new airplanes, valued at $2,020 billion. By 2033, the fleet will be three times larger than it is today. Fast-growing LCCs and rapid traffic growth within the Asia Pacific region drive a need for 9,540 single-aisle airplanes. LCC market share in Asia is expected to grow from 15 percent today to 24 percent in 2033. Network carriers, the mainstay of international long-haul air transportation, will help drive demand for 3,570 widebody airplanes.

Air cargo also plays a crucial role, transporting goods over difficult terrain and vast stretches of ocean. Many of the world's largest and most efficient cargo operators are located in Asia. The region's air cargo will grow 5.5 percent per year. Carriers in the region are expected to take 360 new production freighters and 530 converted freighters.