Modest economic growth
Northeast Asia's gross domestic product is forecast to grow 1.3 percent annually for the next 20 years. This modest growth projection for the region reflects the heavy influence of Japan, which is experiencing lower birth rates and a declining working-age population. The region's economy will benefit somewhat from Korea's developing economy, which will grow at a faster rate as its industrial base broadens.
In general, Northeast Asia's nations are relatively small, in terms of total area, and somewhat isolated by water. The region's air travel grew rapidly in the 1990s, but growth has dampened over the past decade. This slowdown is due to a variety of factors, including the Asian financial crisis, concerns about SARS, the sluggish performance of the economy, and, most recently, disruptions caused by earthquakes and tsunamis.
Cumulative growth in air travel capacity has reached only 5 percent over the past 10 years. Capacity between Northeast Asia and North America has dropped significantly as airlines have extended direct nonstop service into other markets in the Asia Pacific region. At the same time, capacity between Northeast Asia and other markets in the Asia Pacific region has grown by 36 percent since 2000.
Easing operating restrictions
Northeast Asia's air travel is forecast to grow 4.3 percent annually over the next 20 years. Operating restrictions within the region are gradually easing. Restrictions involving the United States, Europe, China, and other Asia Pacific nations are also liberalizing, encouraging major network carriers and low-cost airlines to open new markets and to expand services in existing markets. The combined effect of liberalization and rapid economic growth is driving passenger traffic between Northeast Asia and other Asia Pacific countries to grow at a brisk pace. Airport capacity is increasing, particularly at Tokyo's Haneda and Narita airports. Improved market access; ongoing airport development; increased competition; and expansion of low-cost service to, from, and within the region will nurture the continued growth of air travel.
Fleet modernization continues
Northeast Asia's airlines will need 1,250 new airplanes over the next 20 years. Airlines in Japan and South Korea have wisely continued to modernize their fleets in recent years, demonstrating their focus on longer term planning. The number of regional jets, including the anticipated Mitsubishi MRJ, is forecast to grow slightly. Single-aisle airplanes for intra- and inter-regional service by major carriers and low-cost airlines will account for 46 percent of new deliveries.
New twin-aisle airplanes, with compelling market economics and flexibility to serve long-range markets, will account for 40 percent of new deliveries. The number of large airplanes in the region's fleet is expected to remain relatively constant. However, their percentage share of the total fleet will decrease, due to the economic and operational advantages of midsize twin-aisle airplanes.
