Diversity leads to balance
Air transport throughout the world is constantly changing in response to market opportunities and challenges. The rise of new airline business models and rapid growth of air travel in the world's emerging economies are stabilizing worldwide demand for airplanes. Even during times of general slowing, some markets gain through regional economic growth and reduced market regulation. At the same time, airlines use new innovative business strategies to create opportunities and stimulate passenger demand.
Geographic shifts
Some regions already have large traffic volumes and are growing relatively slowly -- although their airline participants are continually evolving, introducing new markets and new passenger service concepts. Other regions are smaller but growing more rapidly with higher airplane growth opportunities but lower airplane replacement opportunities.
Travel volumes in Asia Pacific overall are large and growing rapidly. Asia Pacific will account for 41 percent of travel in 20 years' time, up from around 32 percent today. European travel features a little more prominently than in our previous forecast, especially as the European Union continues to actively pursue international market liberalization. Airlines in North America are expected to be among the most profitable in 2009, having carefully matched capacity to demand, and will continue to focus on updating their current fleet with many new airplanes.
Global vs. local strategy
Airlines employ a variety of business strategies to match the demands of the different markets they serve. An airline operating in global markets may have different aircraft configurations for specific markets -- higher density for leisure-oriented markets and more premium seats in business travel markets. Their local market services both maintain a presence on densely traveled routes and connect their long-haul network to local sources on demand.
Local market service is becoming increasingly characterized by low base fares with additional fees for optional services (ancillary revenues). Both network airlines and low-cost airlines have substantial market presence in local markets, with the share taken by each varying considerably around the world. Over time we expect continued growth of low-cost airlines in local markets as well as some growing penetration into long-haul markets.
