In 2014, there were approximately 21,600 airplanes in service, a number that is expected to double over the next 20 years to an in-service fleet of 43,560 airplanes. To achieve that number, 38,050 new airplanes will be needed, and 26,730 of them, or 70 percent, will be single-aisle airplanes. Additionally, 8,830 new widebody airplanes will be needed. Regionally, the need for new airplanes is well balanced—Asia will need approximately 40 percent; Europe and North America combined will need approximately 40 percent; and together, the Middle East, Latin America, Africa, and CIS will need the remaining 26 percent.
Because aviation has been a growth business strongly tied to economic expansion and development, much of the demand focuses on industry growth requirements. But how are replacement dynamics evolving? Historically, 2 to 4 percent of the in-service fleet is removed from service annually. In the past few years, that number has been 500 to 700 airplanes per year, of which 350 to 400 were single aisle, and 150 to 200 were widebody, plus regional jets.
Many factors can drive the need for replacement. Age is the primary one, but others include relative airplane economics, maintenance requirements, and the overall market environment. In recent years, high fuel costs have played a larger role in influencing decisions to remove airplanes from service, especially in the single-aisle category. On the other hand, the lack of availability of widebody airplanes has challenged airlines’ ability to remove certain types from service as rapidly as desired. So far in 2015, however, a more favorable environment has provided airlines with some near-term flexibility to manage aging fleets while growing capacity.
In the next 10 years, the number of single-aisle and widebody airplanes entering the zone of replacement will double. The number of single-aisle airplanes reaching 25 years of age has traditionally averaged 250 to 275 annually, but that figure will double to more than 500 by the beginning of the next decade. Meanwhile, the number of widebody airplanes reaching 25 years of age currently averages approximately 100 annually but will increase to well over 200 during the same period. These numbers are in addition to the more than 1,400 single-aisle, widebody, and freighter airplanes still in service after more than 25 years.
To continue growing globally at the expected annual rate of nearly 5 percent, the airline industry needs an approximate net annual increase in fleet size of 4 percent, with approximately 3 percent replacement. Since fleet replacement is largely less optional than fleet growth, it provides a solid, stable base for long-term demand for new airplanes. The two largest fleet domiciles, Europe and North America, are expected to need well over 50 percent of their new deliveries to replace older, less efficient airplanes, as are the mature Northeast Asia and Oceania regions, thereby balancing the growth across emerging and developing markets in Asia, Latin America, and Africa.
Our long-term view of market demand is that airplane replacement will form 42 percent—a figure that has increased nearly every year as more fleets in emerging markets launch replacement cycles in the 20-year timeframe.