Northeast Asia

Economic forecasts project modest growth

The Northeast Asia region encompasses Japan, North and South Korea, and Taiwan. The region's GDP is forecast to grow 1.5 percent over the next 20 years. Japan will grow moderately as it recovers from long-term stagnation. However, an aging and declining population will challenge that growth over the long term. Although Japan will remain the dominant economy in the region, South Korea and Taiwan currently provide almost one-third of the base and will generate much of the projected economic dynamism.

Fleet growth and modernization continues

Despite modest economic growth, air travel in Northeast Asia is forecast to grow 2.7 percent annually over the next 20 years. The region's major airline fleets are among the world's most modern and efficient. To maintain the resulting competitive edge, the region's airlines will require 1,340 new airplanes, valued at $280 billion. About 64 percent of these (860 airplanes) will be for replacement and 36 percent (490 airplanes) will be for growth.

Small and medium widebody airplanes will account for just under half of all deliveries. Single-aisle airplanes will account for 40 percent. Both the number of new regional jets and the number of large airplanes are projected to decline slightly. The requirement for new cargo airplanes is flat.

Low-cost carriers thrive

Northeast Asia was initially slow to adopt the low-cost model, but the emergence of low-cost carriers (LCC) is now a major driver of growth in the region. Whether established as subsidiaries of the major network carriers or as independent start-ups, LCCs are competing with the established airlines and among themselves to provide new, affordable opportunities for air travel. The strength and popularity of these new carriers are forcing the major international airlines of the region to reconsider their domestic strategies. The short distances between many of the destinations in the Asia Pacific region give the LCCs access not only to markets within Northeast Asia but also to locations in China and Southeast Asia.

Major airport expansion is proceeding

All the region's major airports have been modernized recently. Tokyo's Haneda has been upgraded to support expanded international operations and Narita to accommodate the new LCCs. Seoul's Incheon is being redesigned to create a major international hub that will serve all of Asia Pacific. Taiwan is improving its major airports to facilitate traffic across the straits in anticipation of relaxed travel restrictions with mainland China.