Travel markets
North America's well-developed internal market is projected to grow at a modest rate of 2.5 percent over the next 20 years. Longer-haul international services will continue to achieve higher growth rates, driving strong demand for efficient twin-aisle airplanes such as the Boeing 787 and 777.
Airplane replacement
Slow growth in short-haul markets means that the majority of airplane deliveries (over 60 percent) will be for replacement. Fuel-thirsty existing fleets continue to age. By the year 2014, more than 700 passenger airplanes, mostly single-aisle types, will be at least 25 years old, unless significant numbers of airplanes are retired.
The broad capabilities of newer generation airplanes, such as today's 737 family, provide economic incentives to replace a wide spectrum of older types, including the large number of MD-80s and the oldest 737s, 757s, and A320s in the existing fleet.
Consolidation and new entrants
Some industry observers see the recent merger of two of the region's top airlines as a sign that there is room for further industry consolidation, which would have a dramatic effect on the structure of the industry. Consolidation typically creates economies of scale, bringing revenue and cost improvements from elimination of redundant services and excess capacity.
Any resulting realignment of major airline route networks would provide opportunities for smaller airlines and startups to fill the voids created by the withdrawal of network carriers. New entrants will benefit from access to lightly utilized facilities and a customer base revitalized by new services and innovative product offerings.
Larger regional jets
North America's airlines are reshaping their regional fleets to use larger-sized regional jets and small single-aisle airplanes. The larger airplanes cost less to operate per seat and offer greater revenue potential. We project demand for more than 1,600 large regional jets and small single-aisle airplanes over 20 years.
Fuel costs and intense competition have taken a heavy toll on small regional jet economics. Many relatively young regional jets are being removed from fleets as network airlines cope with an unforgiving business environment. We forecast only 140 new deliveries in this category, all of them to replace older airplanes. Regional jets will account for only 9 percent of the fleet in 2028, compared to over 27 percent today.
