Modest economic growth
This year, our definition of the Northeast Asia region encompasses Taiwan, Japan, and North and South Korea. Consequently, the economic base for our analysis is larger and the region’s economic growth appears slightly higher than in previous outlooks. Northeast Asia’s gross domestic product is forecast to grow 1.6 percent annually over the next 20 years. Japan’s economy is forecast to grow as it recovers from the economic challenges of the last decade, although low birth rates and a declining working-age population will moderate growth in the long term. Japan remains the dominant economy of the region, but South Korea and Taiwan provide one-quarter of the base and one-half of the projected economic growth over the forecast period.
Northeast Asia’s air capacity grew substantially in the 1990s, but slowed during the past decade as a result of a series of economic disruptions. Northeast Asia countries are concluding trade agreements, reducing travel barriers, and considering infrastructure changes to spur domestic and inbound travel in response to growth in the economy and air travel between neighboring nations.
Easing operating restrictions
Northeast Asia’s air travel is forecast to grow 3.1 percent annually over the next 20 years. In particular, several developments will boost air travel in Taiwan, including a recent Open Skies agreement with Japan, inclusion in the US Visa Waiver Program, and continued easing of cross-strait travel restrictions to mainland China.
Expanded operations agreements by Northeast Asia nations with the United States, Europe, the Middle East, and fast-growing neighboring nations are encouraging expansion of services and the opening of new markets. Airport capacity will continue to increase, particularly at Tokyo’s Haneda and Narita airports. Improved market access, increased trade, liberalization, airport development, amplified competition, and expanded low-cost service to, from, and within Northeast Asia will nurture continued air travel growth.
Fleet modernization continues
Network carriers in Northeast Asia are renewing fleets, forming joint ventures, and introducing new products. Airlines in Japan, Taiwan, and South Korea continue to modernize their fleets and grow their international networks, creating a need for 1,360 new airplanes over the next 20 years.
The number of regional jets, including the anticipated Mitsubishi MRJ, is forecast to grow modestly. Single-aisle airplanes will account for 42 percent of new deliveries. New small and medium widebody airplanes will account for 48 percent of new deliveries, while the number of large airplanes will remain relatively constant.