Long-Term Market
Modest economic growth
Northeast Asia's gross domestic product is forecast to grow 1.35 percent annually over the next 20 years. This modest growth projection reflects the slender growth of the dominant Japanese economy over the past decade. Although Japan's economy is forecast to grow as it recovers from the recent earthquakes and tsunami, low birth rates and a declining working-age population will moderate the long-term growth rate. South Korea's broadening industrial base is forecast to drive its economy to grow faster than Japan's.
Northeast Asia's air capacity grew more than 50 percent in the 1990s. Over the past decade, however, air travel growth slowed to 5 percent in the wake of a series of economic disruptions, including the Asian financial crisis, SARS epidemic, slumping global economy, natural disasters, and the restructuring of a major carrier. To keep pace with the economic growth and increasing air travel of neighboring nations, Japan and South Korea are executing new trade agreements, reducing traditional travel barriers, and potentially privatizing portions of infrastructure to spur domestic and inbound travel growth.
Easing operating restrictions to promote growth
Northeast Asia's air travel is forecast to grow 3.7 percent annually over the next 20 years. Expanded operations agreements with the United States, Europe, China, the Middle East, and other Asia Pacific nations are encouraging global network carriers and low-cost airlines to expand services and open new markets. Liberalization and the rapid growth of economic ties with neighboring regions are driving brisk growth in passenger traffic with other Asia Pacific countries. Low-cost carriers spurred substantial growth in travel to South Korea from neighboring nations in 2012, and three new low-cost carriers in Japan are also expected to stimulate domestic and short-haul demand.
Airport capacity will continue to increase, particularly at Tokyo's Haneda and Narita airports. Improved market access, airport development, increased 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 restructuring, renewing fleets, forming joint ventures, and introducing new products. Airlines in Japan and South Korea continue to modernize their fleets and grow their international networks, creating a need for 1,270 new airplanes over the next 20 years.
The number of regional jets, including the anticipated Mitsubishi Regional Jet (MRJ), is forecast to grow slightly. Single-aisle airplanes will account for 47 percent of new deliveries. New twin-aisle airplanes will account for 40 percent of new deliveries, while the number of large airplanes will remain relatively constant.
