Worldwide Market Forecast

Worldwide Market Forecast 2020-2040

Worldwide Market Forecast

2020-2040

March 2021

Japan Aircraft Development Corporation


Preface

The aircraft industry is knowledge intensive and has a great ripple effect on industries, making it

effective in advancing the structure of industry as a whole. Accordingly, in Japan, which aims to

become a scientific powerhouse, many efforts have been made for the development and advancement

of the aircraft industry as an essential industry.

It is believed that ongoing information collection and analysis of the world’s commercial aircraft

markets are vital to the further development of Japan’s aircraft industry. Therefore, Japan Aircraft

Development Corporation (JADC) collects and investigates information on the commercial aircraft

markets of the world, including air transportation, aircraft, airlines, and aircraft manufacturers,

forecasting demand for air passengers, air cargo, and aircraft, based on the analysis.

This document, which summarizes our forecasts, is intended to be provided to all parties concerned

as well as to the public through our website (http://www.jadc.jp/en/).

Since 2020, the world has been in disruption caused by the COVID-19 and been forced to fight

against it with no preventive medicine or a cure. And the countries have been striving to prevent and

control infection by severely restricting the movement of people. As a result, demand for both air

passenger transportation and aircraft dropped significantly, causing both airlines and aircraft

manufacturers to face a painful struggle.

At the end of 2020, however, the long-awaited vaccine became available and started to be given

first to medical personnel who are constantly exposed to the virus and others who are at high risk for

infection. Since then, not only the effect of infection prevention, but also the effect of psychological

stability started to be heard, showing the first glimmer of hope that the pandemic will subside.

Looking back in history, airlines around the world have been thrown into disruption and suffered

losses due to terrorism, diseases, and so on in the past. But each time they faced such difficulties, air

transportation demand has always recovered in a curve that converges to the long-term forecast growth

curve made before the disruption occurred within several years of the elimination of the cause.

In this document, for the short term, the time when air transportation demand will start to pick up

is estimated based on the progress of vaccinations and the time when the demand for aircraft will

rebound is also estimated in light of past epidemics or pandemics. While, for the long term, demand

for air transportation and aircraft are estimated on forecasted data such as the GDP data with the impact

of the COVID-19 based on the analysis on actual data for the past 20 years. And this document also

attempts to sort out factors that may be related to the possibility that the world and air transportation

market will have a different character and scale than before after the recovery from pandemic.

March 2021


YGR-5113


Table of Contents

1. Overview ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 1

2. Introduction ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 5

3. Summary of the Airline Industry ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 7

3.3 Until COVID-19 Calms Down ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 19

3.4 After COVID-19 Calms Down ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 27

4. Passenger Aircraft Demand Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 33

5. Air Passenger Demand Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 57

6. Factors Related to Air Transportation ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 83

7. Freighter Aircraft Demand Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 103

8. Air Cargo Traffic Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 111

9. Regional Overview ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 115

10. Airplane Sales Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 155

11. Aero Engine Sales Forecast ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 161

12. Methodology ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 163

Appendix A Definition of Airplane Segments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 165

Appendix B Definition of Aero Engine Segments ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 166

Appendix C Air Passenger Traffic ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 167

Appendix D Air Cargo Traffic ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 168

Appendix E Airplane Demand ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 169

Appendix F Evaluation of Secondary Demand ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 171

Appendix G Trends in Cargo Transportation Result of Major Airlines ꞏꞏꞏꞏꞏꞏꞏꞏꞏ 172

Appendix H Approach to Successfully Putting SAF on Track ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 174

Glossary of Terms ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 176

Abbreviations ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 177

Reference Materials ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 179

The content pertaining to the impact of COVID-19 is mainly explained in sections 3.3

and 3.4.


1

1. Overview

Long-term forecasts for the demand in the commercial aircraft market provide useful

information for market risk assessment and examination, medium- to long-term business

planning, and product strategy development, to be carried out in the course of conducting

commercial aircraft business. JADC forecasted demand for air passengers, air cargo, aircraft

(passenger jets, passenger turboprops, and cargo jets), and aircraft engines for the 21 years

from 2020 to 2040 using the 2019 level as the baseline, based on our analysis of the data for

the past 20 years.

In 2020, the COVID-19 pandemic brought serious damage to the world economy including the

air transportation sector. This impact is expected to gradually wane over the next several years.

Although airlines around the world have been thrown into disruption due to terrorism, diseases,

and so on in the past, air transportation demand recovered within several years of the

elimination of the cause in a curve that converges to the long-term forecast growth curve made

before the disruption occurred. In this forecast, the impact of the COVID-19 pandemic on air

transportation and aircraft demand has been estimated in the “With” and “Post” COVID-19

period. (Related Part: 3.3 to 3.4)

The world economic growth rate (GDP) in the forecast period is expected to be 2.47% on an

annual average.

(In our forecast we used the GDP data, which strongly influences on air transportation demand, as of the end of 2020 that

takes into account the impact of COVID-19. Thereafter, the IMF, the OECD, and other institutions presented forecasts for a

faster and higher level of recovery by taking into account the effect of the spread of vaccinations. If such forecasts are correct,

air transportation and aircraft demand can be expected to shift to a higher level than our forecast.)

2019 actual 2040 forecast Growth Rate Sales (2019 US$billion)

World Economic Growrh Rate (GDP) 2.47%p.a.

Passenger Demand (RPK ：×109 passenger km) 8,486 17,847 3.6%p.a.

Passenger Jet Airplane Fleet 24,015 ＊ 38,868 2.3%p.a.

New Passenger Jet Airplane Deliveries 33,494 5,160

Cargo Demand (RTK ：×109 ton km) 253 524 3.5%p.a.

Jet Freighter Fleet 2,023 ＊ 3,041 2.0%p.a.

New Jet Freighter Deliveries 736 225

Total New Jet Airplane Deliveries 34,230 5,385

Passenger Turboprop Airplane Fleet 3,583 ＊ 4,160 0.7%p.a.

New Passenger Turboprop Airplane Deliveries 3,311 73

New Engine Deliveries 82,871 1,213

（＊：This data is based on the database of Cirium. )


2

Revenue Passenger Kilometers (RPK) will increase 2.1 times from 8.49 × 1012 passenger km

in 2019 to 17.8 × 1012 passenger km by 2040, with an annual average growth rate of 3.6%

during that period.

(In addition to the already declining growth rate in the Middle East region, in which long-distance routes are mainly operated

[set to an equivalent of 3.1% on an annual average], China is predicted to transit from the fast growing model of developing

country type to the slow growing model of developed country type as a result of an increase in income in the country during

the forecast period [set to an equivalent of 4.5% on an annual average].)

The number of passenger jets in service will increase from 24,015 at the end of 2019 to 38,868

by the end of 2040. The number of new airplanes to be delivered in the next 20 years will be

33,494, with sales of 5.16 trillion dollars (based on the prices listed in the 2019 catalog). The

highest number of new airplanes to be delivered will be the 170 to 229 seat class aircraft, with

11,500 airplanes. By region, North America (23%), Europe (23%), and China (16%) are the

top delivery locations, accounting for 62% of the total airplanes delivered in the world.

The number of passenger turboprops in service will increase from 3,583 in 2019 to 4,160 by

2040. The number of new airplanes to be delivered will be 3,311, with sales of 73 billion dollars

(based on the prices listed in the 2019 catalog). The highest number of new airplanes to be

delivered will be the 60 to 79 seat class aircraft, with 1,206 airplanes. There will be no

particular regions with a high number of airplanes to be delivered, showing a tendency of being

purchased evenly from all over the world, but there will be high demand for new airplanes in

the Southeast Asia (505 airplanes) and South Asia (564 airplanes) regions.

Air Cargo Demand (RTK) will increase 2.1 times from 253 × 109 ton km in 2019 to 524 × 109

ton km by 2040, with an annual average growth rate of 3.5% during that period.

The number of cargo jets in service will increase from 2,023 in 2019 to 3,041 in 2040. The

demand for newly built airplanes will be 736 airplanes (In addition, 1,783 planes will be

converted from passenger jets.), with sales of 225 billion dollars (based on the prices listed in

the 2019 catalog). The breakdown of demand for newly built airplanes will be 293 large jets

and 443 medium wide body jets.

The world engine demand (including spares) will be 82,871 units, amounting to 1.21 trillion

dollars (based on the market price in 2019). The breakdown of the demand is 75,583 jet engines,

with sales of 1.20 trillion dollars, and 7,288 turboprop engines, with sales of 16.1 billion dollars.


3

WorldNew Deliveries

Economy (GDP) 2.47% 37,541

Pax. Traffic (RPK) 3.6% Sales

Cargo Traffic (RTK) 3.3% (2019US$B)

Airline Fleet 2.1% 5,458

Growth Rate

North AmericaNew Deliveries

Economy (GDP) 1.8% 8,280




Growth Rate

EuropeNew Deliveries





Growth Rate

Asia-PacificNew Deliveries





Growth Rate

Latin AmericaNew Deliveries




Airline Fleet 1.3% 219

Growth Rate

Middle EastNew Deliveries





Growth Rate

CISNew Deliveries





Growth Rate

AfricaNew Deliveries





Growth Rate

( Airline Fleet, New Deliveries and Sales in the above graph are the sum of that for passenger jets, passenger turboprops and jet freighters.)

(The terms and abbreviations used in this document are listed on page 176 and subsequent pages.)


4

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5

2. Introduction

The development of an airplane takes nearly 10 years from the planning stage to the delivery of the

first airplane, costs some billions of dollars in development costs, and takes years to recover the

investment. Once developed, the airplane will then continue to be produced for several decades

including the development of derived types. And once delivered, the aircraft will be in service as a

long-lasting product, for a decade in a short lifecycle or for over 40 years in a long lifecycle. For this

reason, the aircraft industry is said to be an industry with high business risk.

The airlines to purchase and operate aircrafts are subject to the impact of the economic situation

and social conditions at that time, such as deregulation, privatization, competition with new entrants

such as low cost carriers (LCC), and soaring fuel costs. In order to minimize the business and market

risks in such a business environment, it is important to continue to observe and analyze the trends in

the economic and social environments surrounding the aircraft industry and airlines.

JADC has continued to collect, investigate, and analyze information on the world’s commercial

aircraft markets, including aircraft, air transportation, and airlines and has been forecasting the long-

term demand for air transportation and aircraft since the latter half of the 1970s in order to support for

Japan’s aircraft industry and all other parties concerned to plan long-term product strategies and to

develop long-term business plans.

This edition of "Worldwide Market Forecast," which is a long-term forecast of JADC, covers air

passenger transportation and air cargo transportation in the forecast period of 2020 to 2040, setting

2019 as the baseline for the report, and forecasts the demand for passenger turboprops with 15 or more

seats, passenger jets with 20 or more seats, cargo jets, and aircraft engines. This report is intended to

make the results of our forecast available to the public.

Factors Considered in Demand Forecast

Alternative Means of Transport

Airlines’ Strategies

Aircraft

Air Policy

Environment

Business Models

Travel/Tourism Trend

Economic Trend

Route Network

Oil Price

Infrastructure

Demographics

Long-term Demand Forecast


6

Intentionally Blank


7

3. Summary of the Airline Industry

3.1 Summary of the Airline Business

Global Situation

In 2020, the entire world was affected by COVID-19.

We were required to maintain our economic activities while preventing the spread of infection

without preventive medicine or a cure, so our lives and production activities were subject to various

restrictions. As a result, the world’s real GDP growth rate in 2020 is estimated to be −4.3% (IBRD) to

−3.5% (IMF). On the contrary, the world’s real GDP growth rate in 2021 is expected to be 4.0%

(IBRD) to 5.5% (IMF). Although different organizations give different forecasts, the world’s real GDP

in 2021 is expected to grow and recover to the 2019 level, nearly making up for the economic

shrinkage in 2020. The growth rate is expected to be 3.7% (OECD) to 4.2% (IMF) in 2022, and then,

decrease gradually from 2021 to 2040, averaging 2.87% (IHS). After 2021, if the conditions permit,

the world economy is expected to recover rapidly although it depends on the progress of vaccination.

The airline business experienced a more drastic shrinkage than the overall economy. RPK, which

indicates the actual transportation volume, dropped in 2020 by as much as 66% (IATA) relative to

2019, and is expected to remain around 50% (IATA, Nov. 2020) in 2021.

Generally, an increase or decrease in air transportation demand has a clear correlation with the

increase or decrease in economic activities, based on which various demands are forecast. To prevent

the spread of COVID-19 infection, however, epidemic control measures were implemented. As a result,

immigration on international flights was prohibited or, even if permitted, required self-isolation for a

certain period after arrival and other unusual burdens were imposed, which became a decisive factor

that strongly suppressed the transportation demand. As for domestic flights, although such

immigration restrictions were not imposed, we were requested to refrain from traveling between

different regions and many worried about the health condition of the passengers sitting next to them,

which eventually caused the RPK to fall. In the fight against the invisible virus and people’s anxiety

about it, the RPK fell drastically in 2020, completely separated from its normal correlation with the

GDP and other economic indicators.

The RPK and revenue of the airline business disappeared due to this pandemic, and we were forced

to wait for about two years until collective immunity was reached. During this period, financing is a

matter of life and death to airlines, which are currently making every effort to overcome it, going so

far as to sell their aircraft, postpone or cancel the delivery of aircraft they ordered, and lay off their

employees. Also, aircraft manufacturers, which should be thought of as airlines’ counterparts, are

forced to reschedule their delivery or significantly reduce their production. Amid such a situation, the

first emergency use of the long-awaited vaccines started in December 2020, about one year after the

emergence of COVID-19. Although there are concerns about things such as there being a short supply,


8

the vaccines are expected to be a trump card against COVID-19, and the diffusion of vaccines has

been incorporated into each institution’s GDP forecast. We expect that if vaccination proceeds

smoothly, the RPK of domestic and regional flights in major developed countries will start to recover

in 2021, and the revenue, including that from some international flights, will recover considerably in

2022.

Current Situation of the Airline Business

With regard to the global air transportation demand in 2020, IATA (Nov. 2020) estimates that the

passenger transportation volume (RPK) and operating profit will drop by 66.3% and 338%,

respectively, compared to the previous year. Then, looking at the financial results for 2020, the total

sales of all the airlines in the world is 328 billion dollars, smaller than the previous year by 60.9%,

and the net profit is 118.5 billion dollars, suffering a record deficit. In this situation, the revenue from

passengers dropped by 68.8% compared to the previous year but the revenue from cargo transportation

rose by 14.9%, resulting in a decrease in the total revenue by 56.8%.

The unit price of fuel dropped by 43%, but the passenger yield also dropped by 8.0% compared to

the previous year. Despite such a drastic drop in the RPK, the passenger load factor was maintained at

65.5%, but because of a significant shortage in cargo transportation capacity (lower hold in passenger

flights) due to a significant decrease in passenger flights, the cargo yield recorded a significant increase

by 30% compared to the previous year.

The net profit to sales ratio was significantly negative in every region.

Trends in Air Passenger Transportation Volume (RPK) and Sales Profit

Operating profit (× 109 dollars)

RPK (× 1012 passenger km)

Operating profit


9

According to the Ministry of Land, Infrastructure, Transport and Tourism (Nov. 2020), the year-to

date RPK of Japanese airlines in 2021 dropped by 55.4% for domestic flights and 78.9% for

international flights from the previous year. If limited to the period after the declaration of a state of

emergency in April, the RPK dropped by 68.9% for domestic flights and 95.8% for international

flights.

Net Profit to Sales Ratio of Airlines

Ne

t p

rofi

t to

sa

les

ra

tio

(%

)

Africa Asia Pacific Middle East Central andSouth America

North America Europe


10

3.2 Aircraft Orders and Deliveries

As of the end of 2019, 24,015 passenger jets, 3,583 passenger turboprops, and 2,023 cargo jets were

in service in the world.

As of the end of 2020, according to the database, 18,317 passenger jets, 2,773 passenger turboprops,

and 2,117 cargo jets were in service, however in actual, many of them were stationed on the ground

due to COVID-19 and there were many surplus aircraft, greatly affecting aircraft orders and deliveries.

The number of passenger planes in storage that can possibly be returned to service was 3,314 at the

end of 2019 and increased to 9,403 at the end of 2020.

Order Situation

The annual number of orders*4 for variants for passenger jets*3, cargo jets, etc. were 570 in 2020

and dropped by 1,002 compared to the previous year. In addition to the decrease in the number of

orders due to the suspension of delivery of the 737MAX beginning in 2019 (the number of orders

dropped by 741 compared to 2018, out of which 553 aircraft were 737MAX), COVID-19 dictated the

order situation in 2020.

Among the aircraft ordered, 77 aircraft are wide body jets (the number of orders for wide body jets

accounts for 14% of the total number of orders in 2020, dropping by 314 compared to 2019), 489

aircraft are narrow body jets (the number of orders for narrow body jets accounts for 86% of the total

number of orders in 2020, dropping by 484 compared to 2019), and 4 aircraft are regional jets (the

number of orders for regional jets accounts for 0.7% of the total number of orders in 2020, dropping

Trends in Orders*2 for Jets*1 No. of orders

Source: Airbus, Boeing, Bombardier, Embraer, Cirium, JADC (Some estimates are included.)

Other

Embraer

Bombardier

Boeing

Airbus

*1) Passenger planes (including combi and quick-change) and its variants (cargo, military, etc.)

*2) Net orders. Canceled orders have been subtracted from the number of orders in the year when each order was placed.


11

by 183 compared to 2019). Among the wide body jets ordered, the number of orders for variants for

cargo jets etc.*5 in 2020 is 23 (dropped by 5), and the number of orders for major passenger turboprops

in 2020 is 5 (dropped by 74).

(*3: Including combi aircraft and quick change aircraft)

(*4: Actual number of aircraft orders, which is obtained by subtracting

the number of canceled orders from the nominal number of orders)

(*5: Including cargo jets, VIP aircraft, and aerial refueling aircraft)

Delivery Situation

The annual number of deliveries of jets in 2020 is 821, decreasing from 1,377 in the previous year

by 556. The numbers of deliveries of jets by Airbus and Boeing decreased by 297 and 223, respectively.

The decrease in the number of deliveries by Boeing is partly attributable to the suspension of

delivery of the 737MAX from March 2019, but the delivery of the 737MAX was resumed in December

2020, since which 43 737-series aircraft have been delivered in total (of which 27 aircraft are

737MAX). During this period, Airbus delivered 446 A320-series aircraft (642 aircraft in 2019). With

regard to cargo jets*2, 46 aircraft were delivered in 2020 (52 aircraft in 2019). With regard to major

passenger turboprops, 32 aircraft were delivered in 2020 (89 aircraft in 2019).

(*2: Newly build wide body cargo aircraft. The number is out of the number of jets delivered.)

Trends in Deliveries of Jets*1

*1: Passenger planes (including combi and quick-change) and its variants (cargo, military, etc.)

Other

Embraer

Bombardier

Boeing

Airbus

No. of deliveries


12

Backlog Situation

The number of backlogs for passenger aircraft and cargo aircraft began increasing in 2005, when

the crude oil (fuel) price began skyrocketing. The number of orders for energy-efficient new aircraft

rose beyond the production capacity and the number of backlogs continued to rise year by year until

2013 and 2014 which were said to be a bubble in the aircraft manufacturing industry. After 2015, when

the crude oil price dropped sharply, the number of orders decreased and became almost the same as

the number of deliveries, bringing the number of backlogs into a stable state. At the end of 2019, the

total number of backlogs for passenger jets and variants such as cargo jets, etc. is 14,525.

When the COVID-19 pandemic began in 2020, the transportation demand dropped rapidly and the

financial health of airlines deteriorated rapidly, resulting in the cancellation of some aircraft orders.

The total number of backlogs for passenger jets and variants such as cargo jets, etc. as of the end of

2020 was 13,450, dropping by 1,075 from the end of the previous year, but no noticeable changes were

seen in the backlogs share by region.


13

(In this chart, the backlogs in the Middle-East before 2007 is included in “Other.”

Asian-Pacific

North America

Other

Middle-East

Europe

Number of Backlogs by Region (Cumulative) (No. of backlogs)

Number of Backlogs by Region

Share of Backlogs by Region

Other

Middle East

Asia Pacific

North America

Europe

(No. of backlogs) Europe

North America

Asia Pacific

Middle East

Other

Other

Middle East

Asia Pacific

North America

Europe


14

Looking at the distribution of firm orders (backlogs) for passenger jets, there is a characteristic

tendency that the delivery of ordered aircraft is postponed.

Distribution of firm orders for passenger jets (RJ + NJ + WJ): At the end of 2019, orders for

more than 1,500 aircraft were secured for the next year's scheduled delivery, and from the next year

onward, the number of confirmed orders gradually decreased while leaving room for sales activities.

In 2020, however, only 42% of aircraft scheduled to be delivered as of the end of 2019 were delivered.

In addition, the number of firm orders for delivery in 2021 or later dropped below 1,100 per year.

In the chart, this decrease in the number of firm orders appears as the postponement of deliveries,

and the annual number of firm orders increases from 2025 to 2027 by nearly 300, and after that, over

120 aircraft are scheduled to be delivered every year until 2034, showing the trend that deliveries are

postponed but are not easily canceled. In a similar trend, there are many cases where an order is

maintained but the delivery date is left open, and as a result, the number of such ‘open’ orders at the

end of 2020 increases by approximately 400 from the previous year.

The total number of firm orders after 2020 is 9,813 as of the end of 2019 (including 273 planes

whose delivery date is undetermined), but as of the end of 2020, it decreases to 9,398 (including 703

planes delivered in actual in 2020 and 644 planes whose delivery date is undetermined).

Distribution of firm orders for Widebody Jets (WJ): With regard to wide body jets, the number

of planes scheduled to be delivered in 2020 was 307 as of the end of 2019, but that of delivered in

actual was 142 (46%). The number of planes scheduled to be delivered for 2021 to 2022 decreases to

around 160. The chart shows that this decrease appears as the postponement of deliveries to 2023 and

subsequent years, and the number of planes scheduled to be delivered in each year for 2023 to 2025 is

nearly 200, which is larger than that for 2019. After that, the number of firm orders in each year

decreases and returns to almost the same level as 2019 in 2027.

The total number of firm orders for 2020 to 2039 is 1,538 (including 99 planes whose delivery date

is undetermined) as of the end of 2019, but has decreased to 1,450 (including 142 planes delivered in

actual in 2020 and 147 planes whose delivery date is undetermined) as of the end of 2020.

While 142 planes delivered in actual in 2020, 167 planes are scheduled to be delivered in 2021 and

152 planes scheduled in 2022. These are nearly the same as the number of aircraft delivered in 2020

and is considered to be a feasible level reached as a result of coordination between airlines and

manufacturers.

Distribution of firm orders for Narrowbody Jets (NJ): The number of planes scheduled to be

delivered in 2020 was originally 1,135, but 474 planes (42%) were delivered in actual.

The numbers of planes scheduled to be delivered for 2021 to 2023 decrease but the chart shows that

this decrease appears as the postponement of deliveries to 2024 and subsequent years.


15

Distribution of Firm Orders for Passenger Jets (RJ + NJ + WJ)

Planned year of delivery

Distribution of Firm Orders for Widebody Jets (WJ)

Distribution of Firm Orders for Narrowbody Jets (NJ)

No. of firm orders/year



This indicates the sum of the number of deliveries in 2020 and the number of backlogs for 2020. D

eliv

ery

da

te

un

dete

rmin

ed

Result for 2020

De

live

ry d

ate

u

nde

term

ined

D

eliv

ery

da

te

un

dete

rmin

ed

Result for 2020




16

The numbers of planes scheduled to be delivered for 2025 to 2027 are larger than that originally

scheduled during this period by 200 to 300 in each year, and this trend continues until around 2035*.

(*: The increase in the number of planes scheduled from 2030 to 2035 is mainly

contributed by airlines in Southeast Asia and India.)

The total number of confirmed orders since 2020 is 7,703 as of the end of 2019 (included 166 planes

whose the delivery date is undecided), but has decreased to 7,492 as of the end of 2020 (including 474

planes delivered in actual in 2020 and 342 whose delivery date is undecided).

The number of narrow body jets scheduled to be delivered in 2021 is 764, which is 290 more planes

than that of delivered in actual in 2020, a 1.6-fold increase. However, the RPK just started to recover

in 2021, and airlines will probably be struggling with severe financial hardship. Therefore, there is

some doubt about whether or not the delivery of this number of narrow body jets is feasible.

Negotiations between airlines and manufacturers are probably ongoing.

The planned monthly productions of Airbus and Boeing aircraft for 2021 and 2022 are shown in the

next section. For wide body jets, the planned annual production for 2021 and 2022 is 168 each year,

which is almost consistent with the numbers of wide body jets scheduled to be delivered in 2021 and

2022 (167 to 152). For narrow body jets, the planned production for 2021 is 720*1, which is almost

consistent with the number of scheduled to be delivered in 2021 (764). Both companies plan to

increase the production of narrow body jets in 2022, and the planned annual production is 1,080

planes*1, which is larger than 814 planes scheduled to be delivered for the year. And the number is

close to the number of firm orders for 2022 as of the end of 2019, i.e., before the emergence of COVID-

19*2. (*1: In addition to this, shipments of 737 MAX in stock will be added.) (*2: Related Page: P. 50)

2021 2022

Airbus Boeing Monthly

production (total)

Annual production

Airbus Boeing Monthly

production (total)

Annual production

Widebody Jet 2+5 2+5 14 168 2+5 2+5 14 168

Narrowbody Jet 5+40 15 ? 60 720 14+45 31 90 1080

(This table is an excerpt from the table below.)

Production Situation

As shown in the section describing the delivery situation, passenger plane manufacturers had been

increasing their production capacity year by year since 2005. For example, in 2019, Airbus and Boeing

planned to produce 50 to 60 planes to accommodate the orders for A320- and 737-series narrow body

jets. However, the delivery of the 737MAX was suspended in 2019, after which the numbers of planes

produced and delivered decreased remarkably. In addition, in 2020, the air transportation demand

dropped rapidly due to the COVID-19 pandemic, dealing significant damage to airlines that resulted

in financial difficulties that threatened their existence. As a result, many deliveries have been

postponed, and aircraft manufacturers have been forced to reschedule their production plans and have


17

announced that they will reduce the production of each model.

No. of deliveries

made in 1st half

Nominal monthly production Nominal monthly production

2018 2019 2020 2021 2022

Q1 Q2 Q3 Q4 No. of

deliveries made

Q1 Q2 Q3 Q4 No. of

deliveries made

Q1 Q2 Q3 Q4 No. of

deliveries made

Q1 Q2 Q3 Q4 Plan Q1 Q2 Q3 Q4 Plan

737 (NG+MAX)

52 580 52 40 127 34 Production increased from

a single-digit figure.

Target: 31 aircraft per month by Q1

9 Production of MAX resumed on May 27. 43

767 14 16 30 3 3

777＆777X 4.5 48 4.5 45 10 16 (5) 26 2 2

787 14 145 14 157 36 17 (10) 53 6 → 5 5

A220 33 48 11 27 (4) 38 4 5 14

A319 8 6

157

289 (40)

3

40

43

45

45 A320 417 430 256

A321 201 206 187

A330 49 53 5 14 (2) 19 2 2

A350 93 112 23 36 (5) 59 5 5

737MAX: The monthly production was originally 52. The service and delivery were suspended in

March 2019. After April 2019, the shipment of the 737MAX was suspended but 40 aircraft were

produced per month to maintain the supply chain. The production of the 737MAX was suspended

in January 2020, and then resumed production in May and delivery in December. While

producing new 737MAX aircraft, Boeing will accelerate the modification and delivery of about

400 backlogged 737MAX aircraft produced in 2019, which, however, is expected to take about

two years. In 2021, Boeing will gradually accelerate its production, aiming to achieve a monthly

production of 31 aircraft by Q1 2022. For the 737MAX10, the Entry Into Service (EIS) is

scheduled in 2023 after countermeasures for the accident have been incorporated.

787: Due to the trade conflict between the United States and China, a reduction in production had been

planned before the COVID-19 pandemic, and was reduced further after COVID-19 started

spreading. In 2020, 787s were found to have manufacturing defects in their horizontal stabilizer

and fuselage. To address them, the delivery of 787s was suspended in November 2020 but

resumed in March 2021.

Old plan: Monthly production 12 (current) → 10 (late 2020) → 10 to 8 (2021) → 7 (2022)

New plan: Monthly production 6 (late 2020) → 5 (2021) → 5 (2022)

777X: The EIS was rescheduled from 2020 to late 2023 mainly because of a delay in engine

development, the rapidly decreasing demand for aircraft due to the COVID-19 pandemic, and the

increasingly stringent certification requirements and engineering changes after the 737MAX

accident. (For this reason, a delay of more than one year is expected in the delivery of some firm

orders, and as a result, the right of cancellation arises on the ordering party side.) Including the

production of 777 cargo aircraft, the monthly production of 777s and 777Xs will be reduced to 2

by the end of 2021.

No. of deliveries made in 2nd half (nominal monthly production)


18

A320 series: The target monthly production of A320 series aircraft (A319, A320, and A321) was

originally 60, but was decreased to 40 in 2020. Airbus plans to accelerate production after Q3

2021 and increase the monthly production to 45 in 2022.

A330: Airbus originally planned to produce 40 A330neo aircraft in 2020 (equivalent to a monthly

production of 3.3 aircraft), but delivered only 19 aircraft. Airbus decided to reduce the monthly

production to 2 after Q3 2020.

A350: Airbus originally planned to produce 9 or 10 A350XWB aircraft per month but decided to

reduce the monthly production to 5 after Q3 2020.

********************

The chart below shows the number of deliveries, planned production, backlogs for each year, and

forecasts of wide body jets.

We expect that the number of deliveries of wide body jets will start to recover in 2023 after

decreasing due to the COVID-19 pandemic. However, since a delay is expected in the recovery of the

GDP (or the RPK), the number of deliveries of wide body jets will probably remain below the level

before the COVID-19 pandemic for the time being, and be an average of around 300 per year until

around 2030. (Related Part: 4.2.2)

0

100

200

300

400

500

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

unit/year Delivery of Widebody Jets（Actual & Forecast）Backlog（End of 2019）Backlog（End of 2020）Delivered＋Planned

Forecast（JADC）Forecast（averaged）


19

3.3 Until COVID-19 Calms Down

Airlines in the world have so far experienced disruptions such as terrorism and the pandemic, but

after the cause of each disruption was eliminated, the transportation demand recovered and returned

to the growth curve, predicted before the disruption, within several years. This section estimates the

path to overcoming COVID-19 and the influence of COVID-19, focusing on things that can be

determined from actual data.

Current Situation

Since the emergence of COVID-19, our world has been forced to fight against it without preventive

medicine or a cure. To block the spread of infection, each country is restricting movement of people,

and the demand for transportation, especially transportation on international flights, disappeared,

depriving airlines of a large part of their profits. Even in this situation, airlines are forced to spend a

lot of money every month and securing enough operating capital is a vital challenge to them. They are

making every effort to address this situation, such as getting loans from financial institutions, selling

their aircraft to get cash, laying off their employees, and trying to postpone payments for their ordered

aircraft by postponing the delivery of them. Amid this situation, the first emergency use of the long-

awaited vaccines started in some countries in December 2020. However, the vaccine production

capacity is still insufficient, and it probably will not be until late 2021 at the earliest that the air

transportation demand will recover after collective immunity is established in each country.

Cost Structure

According to Airlines for America (A4A), the operating expenses of American airlines in Q4 2019

directly related to flights include fuel expenses (18%), transportation-related expenses (13%), and

landing fees (2%). With no flights, these expenses, or 33% of the total expenses, may be unnecessary,

but the reality is that 67%*1 of the total expenses remain, so airlines are trying to cut these remaining

expenses by laying off employees and reducing the number of new hires.

(*1: Labor expenses account for 33% out of the 67%.)

The expenses necessary to own aircraft (e.g., depreciation expenses, lease expenses) account for

7%. In addition, not only that, if an ordered aircraft is delivered, the airline is required to spend billions

of yen*2 to receive it. (*2: For small narrow body jets)

Recovery of Demands and Orders

Currently, the delivery of many new aircraft has been postponed, and manufacturers have decided

to reduce production. The number of planes delivered in 2020 is in the 40% range of originally planned.

The demand for new aircraft depends on the balance between the increase in number of passenger

planes required to address a growing transportation demand and the decrease in number of planes in

service due to retirement of them. Currently, however, because of the influence of COVID-19, the


20

transportation demand has disappeared and airlines are forced to reduce their flights and leave many

of their aircraft on the ground. Because airlines have many surplus aircraft, there is no demand for

new aircraft. After that, the recovery of demand for new planes follows the recovery of transportation

demand (RPK), but the delivery of planes already ordered will be resumed first, and the new orders

will be made after the financial condition of airlines is further improved.

Past Epidemics

In the past 20 years, we have experienced two world-wide epidemics, SARS (in 2003) and Pandemic

H1N1 2009 (in 2009). The following looks back over these epidemics.

SARS (2003):

Name: Severe acute respiratory syndrome (SARS)

Symptoms: Severe atypical pneumonia

An outbreak is likely to occur with close contact with infected people.

Cause: Novel coronavirus (SARS-CoV)

Emergence: November 16, 2002 (Guangdong province, China)

Termination: On July 5, 2003, the WHO declared that SARS was under control.

Affected areas: 8,096 cases in 32 regions and countries (774 deaths)

(Excerpt from an article of the National Institute of Infectious Diseases (NIID))

https://www.niid.go.jp/niid/ja/kansennohanashi/414-sars-intro.html

-6

-4

-2

0

2

4

6

8

-60

-40

-20

0

20

40

60

80

1996 2001 2006 2011 2016

Operating Profit

Net Profit

RPK

Order

RPK, Profit, Ordersat the previous epidemicsProfit

（×10 9 US$ ）PPK （ ×10 12 ）

Orders （ ×10 3 ）

Source : IATA, ICAO, Airbus, Boeing, Bombardier, Embraer

Skyrocketing Fuel Prices

European Debt Crisis911 SARS Financial Crisis

2009H1N1

Resuming Orders

（2005）

RPK initial Recovery

（2004）

Resuming Orders

（2011）

RPK initial Recovery

（2010）

after Pandemic 2009H1N1after SARS


21

SARS emerged before the wounds inflicted by the 9/11 attack was healed, and made the process of

RPK recovery from the incident prolonged.

The termination of SARS itself was declared in summer 2003. In the RPK recovery process after

the termination, the RPK dropped to 87% of its expected value*1 in 2003, but increased to 95% in

2004, showing a remarkable initial recovery. Furthermore, (despite the rocketing rise in the fuel price,)

the RPK continued a gradual recovery until 2007, eventually to 98.7% of the expected value*2.

In this recovery process, the airline business moved back into the black (although the surplus was

small) in terms of operating profit in 2004, and in 2006, moved back into the black in terms of net

profit. During this period, orders recovered drastically*3 in 2005 and returned to the level before the

9/11 attack.

(*1: The growth curve of the RPK through 1999 was extrapolated based on the average growth

rate from 1999 to 2019.)

(*2: After 2008, the RPK dropped again due to the disruption caused by the Global Financial

Crisis.)

(*3: It is natural that the return to profitability led to the recovery of orders, but in addition, it

became clear that crude oil prices began to rise in 2005, and airlines with sufficient sales

and financial resources seemed to have begun to order new models with excellent fuel

efficiency.)

H1N1 (2009)

Name: Pandemic (H1N1) 2009

Symptoms: Sore throat, soaring fever, cough, runny nose, fatigue, etc. H1N1 cannot be

distinguished from seasonal flu. The fatality rate in Mexico was 0.4 to 0.5%, which

is higher than the 0.05% of seasonal flu, and is almost the same as that of Asian flu.

More than half of those who died from H1N1 had underlying diseases, such as

asthma, diabetes, heart diseases, and diminished immune systems.

Cause: Novel influenza (Influenza A (H1N1) pdm: AH1pdm)

Emergence: April 12, 2009 (reported in Mexico)

Termination: In Japan, the H1N1 epidemic ended in March 2010.

(Excerpt from an article of the National Institute of Infectious Diseases (NIID))

https://idsc.niid.go.jp/iasr/30/356/tpc356-j.html etc.

The H1N1 influenza epidemic occurred during the process of recovery from the disruption due to

global financial crisis in 2008, and airlines were influenced by the H1N1, the financial crisis and the

skyrocketing fuel prices at the same time.


22

The H1N1 epidemic itself ended in spring 2010. Comparing the subsequent RPK recovery process

with the expected RPK value for each year, the RPK bottomed out at 87% of the expected value in

2009 but saw an initial recovery from 2010 to 2011, recovering to 90.6% and 92.4% respectively of

the expected values. During this period, the fuel prices stayed high, which affected the recovery of the

RPK. However, the RPK continued a gradual recovery until 2014 and eventually reached 95.7% of

the expected value.

In the recovery process, the airline business moved back into the black in terms of operating profit

in 2010, and orders began recovering in 2010 and, in 2011, returned to the level before the H1N1

epidemic and financial crisis.

Recovery from COVID-19

From these two cases, the recovery pattern can be read as follows:

- An epidemic having calmed down, the RPK immediately begins recovering and the ‘initial recovery’

ends by the end of the following year.

In the case of SARS, the RPK recovered to 95% of the expected value.

- Following the initial recovery, the RPK continues a gradual recovery for about three years. In the

case of SARS, the RPK recovered to 99% of the expected value.

- The airline business moves into the black in terms of operating profit after the initial recovery of the

RPK, and in the following year, moves into the black in terms of net profit and sees a recovery in

new aircraft orders.

Based on the above, the process of recovery from COVID-19 can be presumed as follows:

- Vaccines, the trump card against COVID-19, were developed speedily thanks to the efforts of those

involved, and the emergency use of some vaccines was started at the end of 2020. However, it will

probably take at least the full 2021 to spread vaccines and establish collective immunity on a

regional scale even in areas with fast progress such as developed countries. In developed countries,

the recovery of domestic and regional flights will proceed during this period, and after that, the

recovery of international flights between the vaccinated developed countries, such as Atlantic routes,

will take place. We expect that the demand for international flights will begin recovery when each

country relaxes its epidemic controls by confirming the level of collective immunity in destination

countries. However, it will take a long time for vaccinations to spread in developing countries, and

it will take another two or three years for the RPK to recover completely all over the world.

- The RPK will begin to recover in Q3 or Q4 2021 with the start of vaccination, but the RPK for the

full year 2021 will be still low as it lacks the contribution before Q3*1. The initial recovery is

expected to take place from 2022 and 2023, mainly in domestic and regional flights*2. It will be


23

around 2022 that the operating balance and financial power of airlines begin recovery and the

number of deliveries of backlogs starts to increase.

(*1: The RPK is expected to be 50% of the 2019 level. [IATA])

(*2: The RPK for 2022 is expected to be 75 to 80% of the 2019 level. [JADC. See the next section.])

- New orders for passenger planes are expected to resume in 2023, the year following the return of

airlines to profitability due to the initial recovery of RPK.

0

5,000

10,000

15,000

20,000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

RPK（×10 9） Recovery of RPK from COVID‐19 (projection)

RPK（Actual Value）RPK（Forecast : Standard Model）RPK（Expected in the past） Projected deficit due to COVID‐19


24

RPK Recovery Models

Forecasts from 2021 to 2023

(JADC)

NA: North America, WE: Western Europe, EE: Eastern Europe, ME: Middle East

JA: Japan, OC: Oceania, NE: Northeast Asia, SE: Southeast Asia, AF: Africa

RPK (by route, compared to the same month of 2019)

Europe – Other regions Vaccination rate


North America – Other regions


China – Other regions

Results from January to December 2020 (IATA)

Within Europe North America (Atlantic route)

Vaccination rate

Within North America

Europe (Atlantic route)

Within China


25

Some of the RPK recovery models used for the analysis in the previous section are shown here.

Even in developed countries that are leading the way in securing vaccines, the vaccination to the

general public of the working-age generation, who are the main passengers of airlines, are expected to

be started after 2021Q2 at the earliest, since many countries give priority of vaccination for medical

personnel and the elderly. Therefore, we expect that the recovery of RPK resulting from vaccinations

will not proceed satisfactorily in the first half of 2021 but will be proceed in the last half of 2021.

Collective immunity is said to begin when the vaccination rate reaches about 70% of the population

of each country. In addition, at that situation, when you get on board a domestic flight, passengers

sitting next to you are highly likely to have been vaccinated. You will regain trust in your immunity

and have high expectations for the collective immunity of the general public and the health of their

neighbors, and use airlines on the sense of security. As a result, the RPK of domestic flights in

developed countries and flights within Europe is expected to rapidly recover especially from Q4 in

2021 or Q1 2022 at the latest. Likewise, international flights between developed countries will recover

about one quarter behind domestic flights and the RPK is expected to reach the normal level for most

of 2022 although this depends on the situation in destination countries.

On the other hand, vaccine acquisition is slow* and the number of infected patients has not

decreased in developing countries and such regions. To these countries, prevention measures by

vaccinated countries will be maintained to restrict traffic. As a result, the recovery of the RPK of

international flights with these countries will be slow. Hopefully, these countries will also obtain

sufficient vaccines in a few years as vaccine production including licensed production increases

around the world.

(* Emerging countries may experience more delays in vaccine acquisition due to lack of their purchasing power and

production power. In addition, if the duration of the antibody by the vaccine is not long, the vaccine will be procured

repeatedly for developed countries to make subsequent rounds of inoculation, and will be in short supply for developing

countries to procure. If the world must deal with new variants, the same thing may happen although this should be

addressed through production increase.)

The chart below shows the actual RPK of domestic flights. Although the RPK dropped below 20%

in each country when the pandemic started, the RPKs of domestic flights have often recovered to 40

to 60% of the normal level even before vaccinations spread, particularly in countries with large land

areas where airplane transportation is essential to living, indicating that the demand for transport is

solid.


26

In this document, the global RPK is expected to recover to 45 to 50% of the 2019 RPK in 2021,

75 to 80% in 2022 (start of the initial recovery) ,based on the assumed recovery models and the

composition ratio of each route in the global RPK at normal times. If vaccinations proceed smoothly,

the global RPK will recover to 90 to 95% in 2023 (completion of initial recovery), hopefully

exceeding 100% in 2024.

Maintenance of Airlines’ Transportation Capacity

Influenced by COVID-19, the airline industry has been suffering hardship for more than one year,

continuously facing financial difficulties. In response to this situation, airlines have reduced the

number of aircraft and cut their workforce. Airlines cut their workforce little by little through attrition

or early retirement, avoiding large-scale downsizing. Many airlines used government subsidy

programs to keep their employees, but some airlines and airport companies have announced that they

will start large-scale downsizing if such government subsidy programs are terminated*1.

(*1: Around fall 2020, some airlines announced that they decided to cut their workforce by 20% or so.)

Therefore, in 2020, airlines had almost the same numbers of aircraft and employees as in 2019, and

only the demand for passenger transportation dropped, but in 2021, airlines may be forced to dispose

of some aircraft and cut their workforce, resulting in a potential decrease in their available

transportation capacity, or ASK.

In the latter half of 2021, the RPK of domestic flights in developed countries is expected to begin

recovering, but if there is a delay in airlines recruiting staff, the ASK, which decreased temporarily

due to the reduced numbers of aircraft and employees, will probably be used up, resulting in a slight

delay in the recovery of the RPK to the 2019 level.

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8 9 10 11 12

% 国内線RPKの推移（対2019年同月比：2020年1～12月）

China

Russia

Brazil

Japan

India

United States

Australia

Within Europe

Source：IATA

Trends in RPK of Domestic Flights (compared to the same month of 2019: January to December 2020)


27

3.4 After COVID-19 Calms Down

The world economy and airline business will fully recover when COVID-19 becomes preventable

and curable. However, COVID-19 forced us to restrict the movement of people and impose constraints

on our industrial and economic activities, and therefore, caused the greatest loss since the Great

Depression to our economic activities and lives. The impact of COVID-19 on the GDP and RPK is

expected to remain for a while. The following attempts to estimate the impact of COVID-19 on the

GDP and RPK based on currently available information.

Impact of COVID-19 on the GDP and RPK

It is difficult to determine the impact of COVID-19 on the world economy (GDP) because COVID-

19 is still ongoing, but the following chart is based on GDP growth forecasts from the reports issued

by several institutions*1.

When this document was prepared, there were few institutions that gave GDP forecasts for 2023

and subsequent years, and many of the GDP forecasts through 2022 are lower than those as of the end

of 2019 by 5.0 to 5.2%*2. In 2021 or later, if the GDP will grow steadily and return to the growth rate

expected before COVID-19, the GDP will remain lower than that expected before COVID-19 by 5.0

to 5.2%. (*1: Sources OECD: OECD Economy Outlook, June 2020 to Interim March 2021

IMF: World Economic Outlook, October 2020, January 2021

World Bank: Global Economic Prospects, January 2021

IHS Markit: December 2019, December 2020)

(*2: See page 23.)

From the above, setting the decrease rate of the GDP forecast after COVID-19 with respect to the

standard model approximately 5% and the elasticity of the GDP with respect to the RPK is 1.6 to 2.0*3,

the decrease rate of the RPK forecast with respect to the standard model is expected to be 8 to 10%.

(*3: “1.6” was selected as the value for the mid-2020s from the forecasts with the standard model.)

0.8

0.9

1.0

1.1

1.2

1.3

1.4

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

GDP（2019年⽐）各機関によるGDP予測（2019年⽐）

IHS 2019-2020

IHS 2020-2021

IMF WEO 2020 Oct

IMF WEO 2021 Jan

OECD 2020 Jun

OECD Interim 2020 Sep

OECD Interim 2020 Dec

OECD Interim 2021 Mar

WorldBank 2021 JanWorld Bank Jan. 2021

OECD Mar.2021

IMF Jan. 2021

IMF Oct. 2020

IHS 2019 (JADC 2020‐2039)

IHS 2020 (JADC 2021‐2040)

GDP Forecasts by Institutions (compared to 2019) GDP (compared to 2019)


28

“2.0” was selected as a representative value from the results of analysis of actual RPK, GDP, and

yield values.)

Assuming that the RPK will be lower than the standard model by 8 to 10% at the end of the gradual

recovery and grow at the same rate as the standard model, or 4.0% per year, this decrease is equivalent

to the growth for 2 to 2.5 years. It can be seen that the subsequent RPK will be delayed by about 2 to

3 years from the standard model.

0

5,000

10,000

15,000

20,000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

RPK（×10 9） Recovery of RPK from COVID‐19 (projection)

RPK（Actual Value）RPK（Forecast : Standard Model）RPK（Post COVID‐19 : ‐7% estimated line） Projected deficit due to COVID‐19

Asymptotic Recovery completion

Equivalent to a delay of 2 to 3 years ( shift to right )

Initial Recovery completion

The recovery of the RPK and the number of aircraft deliveries after COVID-

19 forecast by JADC are based on the information available as of the time of

editing. JADC plans to prepare an updated version for the next fiscal year with

new input information, such as the latest GDP forecasts.


29

Estimation of the Number of Aircraft Deliveries

If the RPK grows 2 or 3 years behind the standard model as mentioned above, the number of

deliveries, which depends on the RPK, will grow 2 or 3 years behind the standard model as well, and

some expected deliveries will be postponed for 2 or 3 years and not done within the forecast period.

The table below estimates how the number of deliveries within the forecast period changes by using

this method on the standard model*4. (*4: Based on the data as of the end of 2019)

Number of Deliveries within the Forecast Period (2020-2039)

NJ (Narrowbody Jet)

Standard model (without COVID-19)

One-year delay

Two-year delay

Three-year delay

WJ (Widebody Jet)

Standard model

(without COVID-19)

NJ 24,989

WJ 7,808

Total 32,797

One-year delay

NJ 23,890

WJ 7,354

Total 31,244

Two-year delay

NJ 23,890 NJ 22,776

WJ 6,898 WJ 6,898

Total 30,788 Total 29,674

Three-year delay

NJ 22,776 NJ 21,663

WJ 6,438 WJ 6,438

Total 29,214 Total 28,101

The recovery of the passenger transportation demand relies fundamentally on the establishment of

collective immunity by the spread of vaccinations, which have been started in some countries. Each

country will speed up vaccinations, and as vaccinations proceed, the RPK will recover for domestic

flights, regional flights, and then international flights between vaccinated developed countries. As a

result, the RPK is expected to see an initial recovery from 2022 to 2023, then transit to gradual recovery.

In 2020 and in 2021, only the already scheduled firm orders will be received by airlines, but in 2022

and later, it is expected that the number of planes received will increase due to the recovery of

operating profit. In addition, demand for short- and medium-range narrow-body jets is expected to

begin to recover ahead of demand for long-range wide-body jets.

Separate from the method used in the previous section, the table below was obtained by directly

calculating the number of deliveries within the forecast period with new data*5, such as GDP forecasts

that take the impact of COVID-19 into consideration.

(*5: Based on the data as of the end of 2020)


30

Number of Deliveries within the Forecast Period (2020-2039)

YGR-5111 (2021)

NJ (Narrowbody Jet)

Standard model (without

COVID-19)

One-year delay Two-year delay (resumption of

delivery in 2022)

Three-year delay

(resumption of delivery in 2023)

WJ (Widebody Jet)

Standard model

(without COVID-19)

NJ 24,989

WJ 7,808

Total 32,797

One-year delay

Two-year delay (resumption of

delivery in 2022)

NJ 23,469

WJ 6,425

Total 29,894

Three-year delay (resumption of

delivery in 2023)

NJ 23,469 NJ 22,794 WJ 6,200 WJ 6,200 Total 29,669 Total 28,994

The area in dark green in this table, (resumption of delivery of NJ2022 and WJ2023) will be

explained in Chapter 4.

(Although the term “resumption” is used here, the delivery of backlogs will be carried out in 2020 and 2021 as well.)

In the calculation for this table and Chapter 4, the GDP data from IHS Markit (Dec. 2020) among

the reports listed on page 21 were used. Then, in spring 2021, IMF (Oct. 2020, Jan. 2021) and OECD

(Mar. 2021) suggested the possibility that the global GDP may recover earlier to a higher level (see

the graph on page 21). Since the detailed GDP data for each country are unavailable, JADC cannot

use that data in its calculations, but if the GDP recovers as suggested by IMF and OECD, the

transportation demand, or the RPK, is expected to be at a higher level after the gradual recovery period

(after 2025), and in addition, the aircraft demand is expected to be higher as well.

However, since COVID-19 caused serious financial damage to airlines, there may be a delay in the

recovery of their purchasing power. Also, the RPK of domestic flights is relatively small, accounting

for only about one-third of the global RPK, and therefore, the recovery of the RPK of international

flights is considered important for the full recovery of the financial power of the airline business.

Therefore, hopefully, we expect that the distribution of vaccines will be accelerated throughout the

world with the enhancement of vaccine production by countries capable of producing vaccines and

the framework like the COVAX Facility*, and it will lead to the recovery of the demand for

international flights. If the Southeast Asian countries and Central and South American countries fall

behind in vaccinations and international flights to these countries stand idle, the recovery of the RPK

of international flights will be greatly affected. In addition, in any region, suppressing the number of

infections is effective in reducing the possibility of the emergence of new variants.

(*: COVID-19 Vaccines Global Access Facility)


31

Other Factors

The table below shows the COVID-19-related factors that are likely to affect air transportation

demand and aircraft demand.

Factors that Affect Airlines and Aircraft Demand during and after COVID-19

Factor Key points Related

Part

Basic premise Establishment and diffusion of vaccines and treatments

Progress of vaccination delay or increase in production, handling of variants, antibody duration, procurement power of each country (purchasing power and international coordination) 3.3

Social changes

Epidemic control (immigration and movement restrictions) Shrinkage and recovery of GDP Changes in relationships between countries (triggered by COVID-19)

Termination timing and scope of epidemic control (directly related to the RPK of international flights) Period and progress of recovery (strongly related to RPK and GDP) Reconstruction of supply chain Changes in the movement of people and cargo

–

New way of doing things

Utilization of non-face-to-face media and remote media

Does such media partially replace air transportation and decrease the demand for transportation?

Video conferencing (substitute for conventional meetings: useful for remote persons and urgent meetings Does business traffic demand decrease?)

VR (virtual reality) (substitute for conventional sightseeing trip: inexpensive and easy Does consumer traffic demand decrease?)

Can such media be used as new media to attract customers and increase traffic demand?

VR (development of libraries: We can preview the proposed travel plan as if we actually visited each location.)

–

Hygiene measures

Hygiene, disinfection, elimination of anxiety

(acceleration of recovery of the RPK of domestic flights)

For Passengers: Vaccination, personal devices (masks, etc.)

For Airlines and airports: Disinfection of cabin equipment and airport facilities Screening by symptoms, such as fever Vaccine passport

–

Airlines Measures for survival

(securing operating capital)

Increase of debt, support from the government Airlines will have a large debt when they resume

flights and may refrain from placing new orders. –

(reduction of expenses)

Decrease of airplanes: Cancellation of orders, Retirement of airplanes

Downsizing: Layoff/dismissal Airlines may need to limit their transportation after

resuming flights, which could cause a delay in the recovery of their operating profit.

–

Environmental measures

Commencement of CO2 emissions regulations

Reduction of fuel consumption, driver to boost the demand to renew old models

5.3.1

The factors in the colored areas in this table have been reflected in this forecast calculation, or their

impact has been estimated.

In this forecast, the most reliable result is shown in the range that can be predicted quantitatively at

present, but the long-term recovery level of the RPK could be affected depending on the degree of

realization of each factor.


32

Intentionally Blank


33

4. Passenger Aircraft Demand Forecast

Chapter 4 describes the forecast of the number of passenger aircraft using the standard model.

The forecast of transportation demand (RPK), which is the basis for the number of aircraft

forecast, is presented in Chapter 5.

4.1 Number of Aircraft in Service

4.1.1 Income Level and Number of Aircraft in Service

In 1998, 15,820 passenger aircraft* were in service worldwide, and in 2018, 26,365 passenger

aircraft were in service, which means that the number of passenger aircraft in service increased by

10,545, or 1.67-fold, in 20 years.

(*: Total number of passenger jets and passenger turboprops. For passenger aircraft only.)

The number of passenger aircraft in service is increasing as transportation and travel demands

increase with the growing economy and increasing income. There is a positive correlation between the

number of aircraft in service per million people and the GDP per capita although it varies depending

on the land area and the degree of development of the ground transportation network.

Also, since it is known that in countries and regions with a GDP per capita of less than 10,000

dollars travel demand increases sharply as income increases, we expect that not only in China, which

has been growing remarkably, but also in Southeast Asian and South Asian countries, air transportation

demand will grow at a high rate, causing passenger aircraft demand to increase depending on the

population of each region.

(AF: Africa, CH: China, CI: CIS, EE: Eastern Europe, JA: Japan, LA: Latin America,

ME: Middle East, NA: North America, NE: Northeast Asia, OC: Oceania, SE: Southeast Asia,

SW: South Asia, WE: Western Europe)

For passenger jets in service only. Sources: IHS, Cirium

Trends in the Number of Passenger Aircraft (Jet + TP) per Million People (1996-2018)

Num

ber

of p

asse

nger

ai

rcra

ft in

ser

vice

pe

r m

illio

n pe

ople


34

4.1.2 Distribution of ASK by Route Distance

Airlines select suitable aircraft according to the distance of each route. According to the distribution

of ASK by route distance for regular non-stop flight routes, aircraft are operated as follows:

- Most turboprop aircraft are used for routes with a distance of 1,000 km or less, and the largest

number of turboprop aircraft are used for routes with a distance of 400 to 600 km.

- Regional jets are used mainly for routes with a distance of 400 to 1,500 km in all regions except

North America, but are used for routes with a distance of up to 2,000 km in North America, which

is a leading market.

- Narrow-body aircraft are operated on routes between 400 and 4,000 km. They are mainly used for

routes with a distance of 900 to 2,000 km. On routes up to 3,500 km, narrow-body aircraft provide

90% of the total ASK, and on routes up to 4,500 km, 98% of the total ASK. In all, narrow-body

aircraft provide 52% of the total ASK worldwide.

- Wide body jets are used for a wide range of route distances, but mainly for routes with a distance

of 5,500 to 10,000 km. Wide body jets supplied for routes with a distance of 4,500 to 13,000 km

account for 78% of the total ASK of wide body jets.

0

200

400

600

800

1000

1200

1400

(×109)

Distribution of ASK (Available Seat Kilometers) by Route Distance

Regional jet

ASK (× 109)

Turboprop

Regional jet

Narrow body jet

Wide body jet

Short range

Medium range

Long range

Source: Data by OAG as of September 2019

Non-stop route distance (km)


35

4.1.3 Distribution of ASK by Number of Seats

The distribution of ASK by number of seats in different route distances is as follows:

- For routes with a distance of 1 to 1,000 km, the bars for turboprop aircraft and regional jets with 40

to 99 seats are slightly higher than the other bars, and the bars for narrow body jets with 120 to 169

seats (e.g., A320, 737-700/800) are noticeably higher, showing that aircraft with 120 to 169 seats

are the mainstream.

- For routes with a distance of 1,000 to 2,000 km, aircraft with 120 to 169 seats are the most

commonly used as well. In addition, narrow body jets with 170 to 229 seats (e.g., A321, 737-900ER,

757) and wide body jets with 230 to 399 seats are also in service.

- For routes with a distance of 2,000 to 4,500 km, aircraft with 120 to 169 seats are the mainstream.

In addition, narrow body jets with 170 to 229 seats and wide body jets with 230 to 399 seats (e.g.,

A330, 767/787) are also in service. In this range of distances, due to the longer distances compared

to routes with a distance of 1,000 to 2,000 km, relatively large aircraft, such as narrow body jets

with 170 to 229 seats and wide body jets with 230 to 399 seats, are increasing.

- For routes with a distance of 4,500 km or more, the number of aircraft with 310 to 399 seats (e.g.,

A340, 777) is largest, followed by aircraft with 230 to 309 seats (e.g., A330, 787), aircraft with 500

to 800 seats (A380), and aircraft with 400 to 499 seats (747). In recent years, the number of aircraft

with 400 to 499 seats is decreasing due to the decreasing number of 747 aircraft.

1-1000

1001-2000

2001-4500

4501-

0

200

400

600

800

1000

1200

1400

1600

1800

2000

001-019

020-039 040-

059060-079 080-

099 100-119 120-

169 170-229 230-

309 310-399 400-

499 500-800

Distribution of ASK by Number of Seats – Global Total Annual ASK (× 109)

Regional jets and turboprop aircraft

Route distance (km)

Source: Data by OAG as of September 2019

Narrow body jets

Wide body jets

Number of seats (seats)


36

4.1.4 Increase in the Average Number of Seats (Adoption of Larger Aircraft with

More Seats)

Comparison of the relationship between the number of takeoffs and landings and the number of

passengers at the world’s top 50 airports between 2007 and 2019 shows that the number of takeoffs

and landings did not increase or decrease significantly but the number of passengers increased. The

average number of passengers per takeoff and landing in 2007 was 98, but it increased to 134 in 2019

by 37%. During this period, the world’s annual load factor increased from 76.1% to 81.9% by 5.8%.

Even with this in mind, the average number of seats per aircraft has increased, indicating that airlines

are working to increase the number of seats (increase the density) or increase the aircraft size to address

the increasing number of passengers.

The average number of seats per aircraft decreased until the mid-2000s because of the emergence

of regional jets, the adoption of twin-engine aircraft, which can be used for long-range flights, and

increased use of small aircraft in high frequency. After that, however, the average number of seats per

aircraft started to increase around 2004 first for routes with a distance of 2,000 km or less, due to the

rise of LCCs (high-density seat arrangement), the restricted number of takeoff-and-landing slots at

airports (difficulty in increasing flights), and the mergers of airlines which lead the reduction of

redundant routes and flights (streamlining). Then, the annual average load factor rose above 80% in

dealing with the skyrocketing fuel prices after 2005 (increased cost per seat). After around 2012, when

many four-engine aircraft had retired, the average number of seats per aircraft started to increase even

for mid- and long-range routes with a distance of over 2,000 km. On the whole, aircraft have an

increasing number of seats (high-density seat arrangement or shift to larger models of the same family).

0

20

40

60

80

100

120

0 200 400 600 800 1,000 1,200

2007 2018

Source ：IATAWATS+ 2019 & 2008

Number of Passengers at the World’s Top 50 Airports

Number of takeoffs and landings (1,000 times)

Num

ber

of p

asse

nger

s (m

illio

ns)


37

4.1.5 Retirement (Trends through around 2019)

The retirement and renewal of passenger aircraft depends mainly on fluctuations in economy

(transportation demand), fluctuations in fuel prices, application of noise control and other regulations,

and emergence of new aircraft with the latest technologies and the demand for them. In the past, the

enforcement of large-scale noise control regulations and the sharp and prolonged rise in fuel prices led

to the retirement of many aircraft and also produced a large demand for new aircraft for renewal, which

served as a driving force for advancing technologies and increasing economic efficiency in airline

industry through the replacement of old aircraft with new aircraft.

By 2002, many old aircraft which fell under Chapter 2 of the ICAO noise regulations (aircraft

around 30 years old) retired. The next few years after the older aircraft were retired were a period of

relative tranquility, with aircraft around 25 years old taking center stage in the annual retiring of

aircraft.

After 2005, however, the skyrocketing fuel prices forced airlines to replace their old aircraft, and

even relatively new aircraft that require higher maintenance costs with more fuel-efficient aircraft. As

a result, especially after 2009, the average retirement age dropped rapidly, and many aircraft that were

22 to 25 years old, and even aircraft around 18 years old retired. After 2015, because fuel prices had

stabilized, the temporary rush of requirement and renewal slowed down but the average retirement age

remains below 23 years. The stabilized fuel prices helped stop the average retirement age from

dropping, but because of a substantial number of backlogs, the average retirement age is expected to

remain at the current level for the time being.

Recently, more aircraft are exposed to heavy use because of the rise of LCCs, and these heavily

Trends in the Average Number of Seats per Aircraft

1,000 km or less

4,500 km or more


38

used aircraft are expected to retire earlier than the average retirement age. Since LCC is a new industry,

not many aircraft have reached their service life, but the number of aircraft that will retire early is

expected to increase noticeably in the future, causing the average retirement age, mainly of narrow

body jets, to drop.

Looking at passenger jets manufactured by Western companies, 227 aircraft retired in 2003, and the

average retirement age was 26.6, but after 2008, about 400 aircraft retired every year and between

2012 and 2015, over 500 aircraft retired every year. After 2015, when the fuel prices dropped, the

number of retired aircraft dropped but was 538 in 2019. During this period, the average retirement age

dropped from 27 to 28 years to 23 years or so, and was 22.8 years in 2019. Currently, many of the

aircraft delivered between 1990 and 2002 are retiring.

As for passenger turboprops manufactured by Western companies, only 20 aircraft retired every

year around 1980 and the average retirement age was about 21 years. After that, however, the annual

number of retired aircraft increased linearly and reached 80 in 2003, since which an average of 88

aircraft have retired every year. The average retirement age was on the increase between the 1960s

and 1985. After that, the average retirement age remained stable at around 23 years, and since 2005,

it has been increasing gradually and reached 26.8 years in 2019.

The number of retired passenger turboprops, like the number of retired passenger jets, dropped after

the peak. However, the average retirement age has been increasing gradually in the past 50 years, and

even in recent years remains at 26 to 28 years, which unlike the average retirement age of passenger

jets, is showing no declining trend.

There is a tendency for passenger turboprops to be used longer than passenger jets because their

good fuel economy was reconsidered when the fuel prices rose rapidly and appropriate alternative

models are not being produced for turboprops with certain numbers of seats.


39


40

Secondary Demand

In order to stay in the transportation business, airlines are required to maintain the required

transportation capacity, i.e., a sufficient number of aircraft, therefore, the retirement of passenger

aircraft will be linked to the procurement of alternative aircraft.

In the past, the average age of retired passenger aircraft was about 25 years, and had a dispersion of

about 4 to 5 years around there, but recently more than a few aircraft are being retired at less than 20

years. It is presumed that many of these aircraft are used heavily by LCCs and FSCs for their short-

range flights, and because of the recent rise of LCCs, the number of such early retired aircraft is

expected to increase.

In such cases, some of the aircraft delivered in the early stage of the forecast period in this document

will retire before the end of the period and new aircrafts will be delivered, causing the number of

deliveries in the period to increase. Appendix F shows the results of assessment of this “secondary

demand”.

During this period, the fuel prices remained extremely high.

(No. of retired aircraft per year)

Trends in the Number of Retired Aircraft (5-year Moving Average)

(years) Trends in the Average Retirement Age (5-year Moving Average)


41

4.2. Aircraft Demand Forecast

4.2.1 Air Passenger Demand Forecast (RPK)

In the previous forecast*, which was conducted before COVID-19 (standard model), the global RPK

was expected to grow by an average of 4.0% per year between 2020 and 2040 and increase by a factor

of 2.3 from 8.49 × 1012 passenger km in 2019 to 19.3 × 1012 passenger km in 2040. According to this

forecast, which is based on the GDP forecast and other data that incorporates the influence of COVID-

19 (COVID-19 forecast), the RPK in 2040 is 17.8 × 1012 passenger km and the annual average growth

rate through 2040 is 3.6%. This forecast has been affected by the revised GDP with COVID-19, the

RPK is expected to drop by around 7% compared to the forecast before COVID-19 and the growth

rate is expected to drop as well. (For details on RPK, refer to Chapter 5.)

(*: Worldwide Market Forecast 2020-2039) [JADC, YGR-5102])

0

4

8

12

16

20

2000 2005 2010 2015 2020 2025 2030 2035 2040

with COVID-19

Actual

no COVID-19

ForecastActual

5.1% p.a.

World Air Passenger Traffic (RPK)RPK （×1012 ）

3.6%

2.7 x

2.1 x

0 2 4 6 8

AfricaCIS

Latin AmericaMiddle East

North America（East Europe）（West Europe）

Europe（Japan）

（Northeast Asia）（Oceania）

（South Asia）（Southeast Asia）

（China）Asia-Pacific

World Air Passenger Traffic by Region

Results in 2019

Growth in 2020-2040

RPK (×1012 passenger km)

4.5%

6.5%2.9%2.0%2.9%

3.5%3.3%

5.7%

3.1%2.7%

3.0%

1.7%2.7%

4.8%

4.5%

Breakdown of Europe

Breakdown ofAsia‐Pacific

(Annual Growth Rate)


42

With regard to the air passenger demand, or RPK, by region, North America and Europe (Western

Europe and Eastern Europe) are expected to see a 20-year average growth rate of 3.0% and 3.5%,

respectively, relatively lower than the global growth rate because these markets have already matured.

With these growth rates, the RPK of North American airlines is expected to increase from 1.92 × 1012

passenger km in 2019 to 3.56 × 1012 passenger km in 2040, and that of European airlines from 1.97 ×

1012 passenger km to 4.04 × 1012 passenger km. As a result, the market share of North American

airlines is expected to change from 23% in 2019 to 20% in 2040, and that of European airlines from

22% to 21%.

The market shares of European and American airlines are expected to drop but those of Asian and

Pacific airlines* are expected to grow. (*: Indicated in brownish colors in the chart)

In the past 20 years, airlines in the Asia-Pacific region saw an annual growth rate of 7.3% in RPK,

forming the world’s largest market. The airlines in the region, including mainly airlines in China,

ASEAN countries, and India, are expected to continuously grow by a factor of 2.5 at an annual rate of

4.5%, from 2.90 × 1012 passenger km in 2019 to 7.27 × 1012 passenger km in 2040, and their market

share is expected to expand from 34% to 41%.

Looking at the annual average growth rate in air passenger demand by region, Chinese airlines saw

an average growth rate of 12.4% in the past 20 years, but in the next 20 years, their growth rate is

expected to drop to 4.5% because of the recent decline in the economic growth rate and the maturity

of the market. However, their growth rate is expected to remain higher than the global average, and

the RPK in 2040 is expected to be 3.39 × 1012 passenger km, 2.5 times 1.33 × 1012 passenger km in

2019.

South Asian airlines, including Indian airlines, and Southeast Asian airlines are expected to grow at

annual rates of 6.5% and 4.8%, respectively. According to the economic forecast revised after COVID-

19, these regions are expected to be more severely affected by COVID-19 than the global average, and

their growth rates in RPK are forecast to be lower than in other regions, but still remain higher than

the global average. The sum of their RPKs is 0.92 × 1012 in 2019, 69% of China’s, but because of the

North America 20%

North America 23%

Western Europe 21%

Western Europe 22%

Eastern Europe 2%

Eastern Europe 1%

China 19%

China 16%

Southeast Asia10%

Southeast Asia8%

Northeast Asia 2%

Northeast Asia 3%

South Asia 6%

South Asia 3%

Japan 2%

Japan 2%

Oceania 2%

Oceania 2%

Middle East8%

Middle East9%

Africa 2%

Africa 2%

Latin America 4%

Latin America

5%

CIS2%

CIS3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2040

2019

Breakdown of Air Passenger Demand (RPK) by Region


43

high growth rate, is expected to increase to 2.77 × 1012 in 2040, 82% of China’s.

Middle Eastern airlines saw an annual average growth rate of 11.6% in the past 20 years, harnessing

the transit passenger demand, but are seeing a decline in the growth rate beginning in 2016. In this

forecast, with an annual average growth rate of 3.1%, their RPK is expected to increase from 0.77 ×

1012 passenger km in 2019 to 1.47 × 1012 passenger km in 2040, but their share is expected to decrease

slightly from 9% to 8%.

Based on these RPK and load factor forecasts, the global ASK is expected to grow at an annual rate

of 3.7% in the next 20 years, and increase to 21.5 × 1012 seat km in 2040, which is 2.1 times the 2019

figure.

(Note: The forecast made after COVID-19 on the recovery of RPK and deliveries are based on

information available at the time of editing. JADC plans to revise its forecast for the next fiscal

year based on new input information, including the revised GDP forecast.)

5.1

2.7

6.0

3.7

9.5

5.0

11.6

3.9

1.0

12.4

4.4

6.8

9.4

8.6

3.6 3.0 2.7 3.3

5.7

2.73.1

2.9 2.9

4.5

2.0

4.8

6.5

1.7

0

5

10

15

20

World NorthAmerica

LatinAmerica

WestEurope

EastEurope

Africa MiddleEast

Oceania Japan China NortheastAsia

SoutheastAsia

SouthAsia

CIS

2000-2019 Results

2020-2040 Forecast

RPK Growth Rate by RegionRPK AnnualGrowth Rate (%)


44

4.2.2 Passenger Jet Demand Forecast

In 2020, COVID-19 caused great damage to airlines and aircraft manufacturers, and the number of

aircraft deliveries in 2020 was about 40% of the usual number of deliveries. This trend will continue

in 2021, but the RPK will start to recover in the fall at the earliest as vaccines are put to practical use

and spread. After 2022, the number of deliveries is expected to start to recover as well and exceed the

2019 level in 2024. (Related Part: Chapter 3)

After the recovery, we expect that the RPK will grow steadily again although it will be lower than

the forecast without COVID-19 by approximately 7% and the growth rate will be slightly lower as

well (long-term average: 4.0% → 3.6%). This document uses this model to forecast the passenger

aircraft demand. However, as suggested by IMF and OECD, the GDP (and eventually the RPK) may

recover earlier to nearly the level forecast before COVID-19.

********************

The number of in-service passenger jets worldwide is expected to increase by a factor of 1.6 from

24,015 in 2019 to 38,868 in 2040. The number of deliveries of passenger jets between 2020 and 2040

is expected to be 33,494, out of which 18,641 aircraft are delivered to replace existing aircraft,

accounting for 56% of the total number of deliveries, and 14,853 aircraft are to address a future

increase in the air passenger demand.

RJ: Regional Jets

The number of in-service regional jets with 100 seats or less was 3,404 as of the end of 2019, and is

expected to decrease to 2,680 in 2040, and the proportion of regional jets in service to the total number

of aircraft in service is expected to decrease from 14% to 7%. We expect that between 2020 and 2040,

3,118 aircraft will retire and 2,394 aircraft will be delivered, accounting for 7.1% of the number of

0

10,000

20,000

30,000

40,000

50,000

2019 2040

No

. of

Air

pla

nes

Development of Passenger Jet Fleet

38,868

24,015 14,853

18,641

5,374

33,494 Replacement

Growth

Retained

44%

56%

New Deliveries


45

deliveries during this period.

Current regional jets were created through successful development of business jets with the CF34,

an excellent engine that was converted into a commercial engine based on the TF34 military engine

in the early 1980s. First, regional jets with 50 seats were put on the market in the early 1990s and they

attracted many orders to fill the demand for alternatives to turboprop aircraft, take over low-demand

routes from the main lines, and explore new routes. Around 2000, 70-seat class regional jets were put

on the market.

After that, mainly because of the airline slump after the terrorist attacks in the United States on

September 11, 2001 and the skyrocketing fuel prices, airlines rushed to shift from the aircraft of this

class, which require higher cost per seat (CASK) due to their compactness, to the 70-seat class aircraft,

which are more economically efficient. In addition, these aircraft have a shorter service life because

of the airframe structure inherited from the base business jet. For these reasons, the number of regional

jets decreased. The production of aircraft with 50 seats or less, such as the CRJ100/200 and ERJ

135/145, which is said to be the First generation, was discontinued in 2007 due to the skyrocketing

fuel prices, and after that, aircraft with 70 to 100 seats, such as the CRJ700/900 and EMB170/190,

which are the Second generation, were put on the market.

These models are mainly used for feeder lines connecting to main lines, but many of them are

covered by the Scope Clause and airlines are subject to restrictions on their service. In the North

American market, the largest market for regional jets in the world, a typical condition of the Scope

Clause is that the number of seats be 76 or less and the maximum takeoff weight be 86,000 lb. or less.

Because of this condition, airlines operating feeder lines cannot shift to large aircraft that can carry

more passengers and are economically efficient. As a result, the market for 70-seat class regional jets

has been formed, due to the effect of damming up the shift to larger aircraft with more seats.

During the period when improving operational economic efficiency was a critical challenge to

address the skyrocketing fuel prices, there was a movement to relax the scope clause to increase the

number of seats per aircraft. However, today, fuel prices are stable, and airlines are in a more stable

financial position than before. As a result, there is no movement to relax the scope clause which could

cause a dispute between labor and management.

Currently, the second-generation 70 seat-class aircraft are being produced, and at the same time, the

third-generation aircraft are under development, which are equipped with more economically efficient

next-generation geared turbo fan engines instead of the CF34 that supported the first-and second-

generation regional aircraft. The Embraer E2 series and Mitsubishi SpaceJet are included in this third

generation of aircraft.

As for regional jets, only those with 70 seats or more are being supplied. As suggested by the fact

that airlines shifted to 70-seat class aircraft to pursue operational economic efficiency, supplying new

aircraft with 50 seats (or less) in the future would require realizing measures to improve economic


46

efficiency that takes advantage of the characteristics of aircraft with 50 seats (or less) and achieving

the same level of economic efficiency as 70-seat class aircraft. However, it is unlikely for the time

being that improvement measures* applicable only to 50-seat class aircraft will be realized.

(*: New fuel-efficient engines, one-person operation that uses unmanned aircraft technologies, etc.)

This forecast assumes that for regional jets with 50 seats or less, no new aircraft will be supplied in

the next 20 years. The previous forecasts calculated that there was a certain level of demand for

regional jets with 50 seats or less by setting a virtual regional jet, but this forecast does not include

such an assumption. As a result, the number of deliveries of regional jets in this forecast is smaller

than the previous ones.

Incidentally, the salary of pilots is generally proportional to the number of seats of aircraft they

operate, which also applies to regional jets. In addition, the salary of copilots is said to be about half

that of captains, and it takes about 10 years to be promoted to captain. Therefore, regional jet pilot is

not an attractive job, and not many people want to be a regional jet pilot. In addition, there were times

when regional jet pilots were recruited to make up for the shortage of pilots for main lines. In order

for regional jets to be continuously used with a certain aircraft demand, these conditions must be

improved.

NJ: Narrow Body Jet

As for narrow body jets with over 100 seats, 15,937 aircraft were in service as of the end of 2019,

and 28,515 aircraft are expected to be in service in 2040, accounting for 73% of the total number of

passenger jets. We expect that between 2020 and 2040, 11,939 will retire and 24,517 new aircraft will

3,404 2,680 2,394

15,937 28,515 24,517

4,674 7,673 6,583

0%

20%

40%

60%

80%

100%

2019 Fleet 2040 Fleet New Deliveries 2020-2040

Sh

are

Fleet and New Deliveries

Regional Jet Narrowbody Widebody


47

be delivered. The number of deliveries of narrow body jets with over 100 seats accounts for 73% of

the total number of deliveries.

As for narrow body jets with 100 to 119 seats, which is classified as the smallest narrow body jet,

the release of the A220-100 (CS100) attracted a lot of attention recently. The DC-9 and 737 used to

belong to this class, but these models became larger and larger, through model changes, as the

generation proceeded and so no longer belong to this class. There were some short body variants of

large aircraft, such as the 737-700, but they did not attract attention mainly because of their low

operational economic efficiency. The A220 is the first brand-new aircraft to enter this class which had

been virtually empty for some time, and its 5 abreast configuration is a good choice for this class of

aircraft. Once, in this class, the airliner of 6 abreast configuration was used and called as "thick and

short." It is still fresh in our minds that when the A220 first entered this blank area, a "300% tariff"

fuss involving the US Department of Commerce was caused. Because the tariffs were denied by the

U.S. Government's International Trade Commission ruling, and the A220 project was brought under

the umbrella of Airbus, and the A220s will be finally assembled at the factory in the United States, it

is expected to be a stable business along with the A220-300 which is one class larger.

The class of Aircraft with 100 to 119 seats include the A220-100 of Narrowbody Jet and E195E2 of

large Regional Jet. The number of aircraft of this class is expected to increase to capture part of the

passenger demand that has been covered by aircraft with 120 to 169 seats, and the expected number

of deliveries in the next 20 years is 2,825.

1,064

1

2,340

285 580 103

12,534

3,208 2,823

687

2,582

646 1,697

379 395 65 0

2,394 2,825

10,192

11,500

3,404 3,171

8 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2019 2040 2019 2040 2019 2040 2019 2040 2019 2040 2019 2040 2019 2040 2019 2040

Total Fleet :

End of 2019 24,015

End of 2040 38,868

New Deliveries :

2020-2040 33,494

1

2,679 2,928

13,400

12,187

4,050 3,550

73

20-59 Seats

60-99 Seats

100-119 Seats

120-169 Seats

170-229 Seats

230-309 Seats

310-399 Seats

Over 400 Seats

Wide body Jet Narrow body JetRegional Jet

No. of Airplanes Passenger Jet Fleet and Delivery Forecast by Size

2019 2040

ExistingRetained

New Deliveries


48

As for narrowbody jets with 120 seats or more, because of economic efficiency and airport

congestion issues, slightly larger aircraft such as the A320/A321 and 737-800/MAX-8 are more

popular compared with the A318/319 and 737-700. The class of aircraft with 120 to 169 seats has the

largest fleet of aircraft, and orders for aircraft with 170 to 229 are on the increase as well.

The forecast results show that aircraft with 170 to 229 seats have the largest number of deliveries,

or 11,500, and the number of aircraft of this class in service is expected to be 12,187 in 2040.

Previously, it was expected that demand would gradually shift from the 120-169 seat class to this class,

but as specific types of aircraft such as the A321LR / XLR announced its candidacy to the market and

the ordering trend changed, this class is expected to have the largest number of orders in the forecast

period. At the same time, aircraft with 120 to 169 seats, which were expected to have the largest

number of deliveries in the previous forecasts, still have a large number of deliveries at 10,192 and the

number of aircraft of this class in service is expected to be 13,400 in 2040, still forming the largest

group.

Looking at the number of deliveries of narrow body jets by classifying them by number of seats in

increments of 50, the numbers of deliveries of aircraft with 101 to 150 seats, with 151 to 200 seats,

and with 201 to 250 seats are expected to be 8,062, 14,429, and 1,870, respectively.

This forecast basically classifies models with 100 seats or more but less than 230 seats as

narrowbody jets. All the currently supplied aircraft in this range are single-aisle aircraft, but there were

twin-aisle aircraft with 220 seats (two classes) such as the 767-200, and single-aisle aircraft with 240

seats (two classes) such as the 757-300. The class of around 230 seats has the property of forming a

boundary region. Since the production of 767 passenger jets was discontinued, no aircraft has belonged

to this class, giving a clear classification of aircraft by number of seats. Recently, however, the

successor to the 757 is getting attention, and the NMA has been named as a candidate. Airbus revealed

a plan to build the A321XLR after putting the A321LR on the market. Airbus decided to build long-

range A320-series aircraft with an increased number of seats and swiftly put them on the market to

capture as much of the niche market as possible. Boeing decided to aim to develop a new fuselage

with new cross section for its NMA, consisting of a twin-aisle cabin (enhanced passenger comfort)

and a single-aisle cargo compartment (enhanced economic efficiency with reduced drag).

As mentioned above, the 5 abreast layout is suitable for narrowbody jets of the smallest class (with

100 seats or less), which therefore require a different fuselage than those with a 6 abreast layout, which

is the standard for narrow body jets, and should be planed as a different model. The DC-9 series is an

example of aircraft with a 5 abreast layout, and the MD80/90 was supplied in two-class configuration,

and was in service for a long time with the number of seats increased up to 150. Depending on where

the number of seats, which is the boundary between the 5 abreast layout and the 6 abreast layout, is


49

set in the lineup provided by the manufacturer in the future, it is possible to cover the range from 100

seats to the NMA area with 2 models or divide it into 3 models.

WJ: Wide Body Jets

As for wide body jets, 4,674 aircraft were in service as of the end of 2019, and 7,673 aircraft are

expected to be in service in 2040. The percentage of wide body jets to the total number of passenger

jets is expected to increase slightly from 19.5% to 19.7%. 3,584 aircraft will retire and 6,583 new

aircraft will be delivered between 2020 and 2040, accounting for 20% of the number of deliveries

during this period.

Wide body jets are marketed mainly for medium- and long-range international flights and major

domestic flights with high demand. Since the enforcement of Extended-range Twin-engine

Operational Performance Standards (ETOPS), twin-engine aircraft have come to be able to be used

over much larger areas, including oceans. In addition, the 787 and other medium-sized aircraft that are

excellent in terms of fuel economy and flight range have allowed airlines to expand their business into

long-range routes with moderate demand which used to be unprofitable with large aircraft like the 747

and 777. The current widebody jet market consists of medium- and large-sized twin-engine aircraft,

such as the 787, 777 and A330, A350, and majority of which are aircraft with 230 to 400 seats.

As for large aircraft with over 400 seats, some thought that there was a demand mainly in high-

demand routes connecting major cities to address the restriction on the number of flights in order to

reduce congestion at airports and the prolonged rise in fuel-related expenses, but looking at the current

order situation, this demand is covered by aircraft with less than 400 seats. The number of scheduled

deliveries of (four-engine) large aircraft with over 400 seats is only 8 because of the discontinuation

of the production of the A380 (scheduled in 2021) and 747 (scheduled in 2022), and the number of

such aircraft in service is expected to decrease as the retirement of these models proceeds, eventually

reaching 73 in 2040. In addition, the unexpected emergence of COVID-19 has significantly

accelerated the retirement of 747s, marking the end of an era.

Today, the passenger transportation demand has disappeared due to COVID-19, and the retirement

of twin-engine aircraft may accelerate as well as four-engine aircraft. The EIS of the 777X was

postponed to the second half of 2023 because of its oversized fuselage and other technical problems,

and as for twin-engine wide body jets, such as the 787, the production of many aircraft has been

reduced due to the cancellation of orders or postponement of deliveries. Some are pessimistic, thinking

that this situation will last a long time.

The chart below shows the number of deliveries done, planned production, and number of firm

orders (backlogs), and forecasts.


50

With regard to the delivery of wide body jets, it is assumed that the number of deliveries of ordered

aircraft will start to recover in 2023 after a decline due to COVID-19. Because the recovery of aircraft

demand is delayed due to the delay in recovery of GDP (and RPK), in addition the demand on the

widebody planes side (230-309 seat class) is partly sucked in due to the attractive model on the

narrowbody planes side (170-229 seat class), the demand of widebody jets will not reach the level

before the COVID disaster for the time being, but it is expected to deliver around 300 aircraft per year

on average until around 2030. As can be seen in the chart, the total planned production of Airbus and

Boeing in 2021 and 2022 are very consistent with the number of backlogs scheduled to be delivered

in 2021 and 2022 as of the end of 2020 (firm orders: deliveries that can be made in each year).

(In addition, the forecasting calculation assumes the emergence of 767-class aircraft in the 2030s,

which is expected to cause the demand for narrow body jets to shift back to wide body jets, and the

annual production of wide body jets is expected to recover to 350 to 400.)

With regard to the delivery of narrow body jets, it is assumed that, stimulated by the demand for

domestic flights, the number of deliveries of ordered aircraft will start to recover in 2022 after a decline

due to COVID-19. The planned production of aircraft manufacturers is consistent with the number of

backlogs for 2021, but the planned production in 2022 is shown to exceed the number of backlogs for

2022.

Attractive narrow body jets, such as the A321XLR, helps shift part of the demand for wide body

jets to narrow body jets, and the annual number of deliveries is expected to stay between 1,200 and

1,500 for the time being to make up for the shortage in deliveries from 2019. The number of new

aircraft to be produced in the years following the start of the recovery of deliveries will be the number

of aircraft delivered in each of the years shown in the figure, minus the 737MAX shipments that have

been delayed since 2019.

0

100

200

300

400

500

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

unit/year Delivery of Widebody Jets（Actual & Forecast）Backlog（End of 2019）Backlog（End of 2020）Delivered＋Planned

Forecast（JADC）Forecast（averaged）

(~2020) (2021,2022)


51

Classification by Region

Looking at the forecasts by region, the number of passenger jets in service as of the end of 2019 is

largest in North America, where 6,697 aircraft were in service. In 2040, the number of aircraft in

service in North America is expected to increase to 8,244, the second largest after Europe by a slight

margin. The proportion of the number of aircraft in service in North America to the total number of

aircraft in service is expected to decrease from 28% to 21%, during which, however, the number of

deliveries in North America is 7,533, which is the second largest, accounting for 22% of the total

number of deliveries in the world, and being the second largest market.

The number of aircraft in service in Europe is expected to increase from 4,931 as of the end of 2019

to 8,694 in 2040, and the proportion of the number of aircraft in service in Europe is expected to

increase from 21% to 22%. During this period, the number of deliveries in Europe is expected to be

7,714, accounting for 23% of the total number of deliveries in the world, and being the largest market.

The number of aircraft in service in China was 3,719 as of the end of 2019, the third largest in the

world. It is expected to increase to 6,944 in 2040, still the third largest following North America and

Europe, but grow to over 80% of the numbers of aircraft in service in North America and Europe.

During this period, the number of deliveries in China is expected to be 5,443, accounting for 16% of

the total number of deliveries in the world. Out of 5,443 aircraft deliveries, 1,110 are wide body jets

(which accounts for 17% of the total number of deliveries of wide body jets), the second largest

following Europe (1,464 aircraft, 22%), exceeding the numbers of deliveries of wide body jets in the

Middle East (1,018 aircraft, 15%) and North America (1,070 aircraft, 16%).

0

400

800

1200

1600

20002017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

unit/year Delivery of Narowbody Jets（Actual & Forecast）Backlog（End of 2019）Backlog（End of 2020）Delivered＋Planned

Forecast（JADC）(~2020) (2021,2022)


52

Chinese airlines have been growing rapidly mainly in medium-range (up to 4,500 km) routes. The

average growth rate of the RPK in the past 20 years (between 2000 and 2019) reaches 12.4%, and

Chinese airlines have been a pillar supporting the global aircraft demand, but its growth rate dropped

to 8.1% in 2019. Future growth of RPK is expected to change from a fast-growing type of developing

countries to a slow-growth type of developed countries. In this forecast, 2024 is set as the inflection

point, referring to the actual changes that have already occurred in other regions, and set the growth

rate after that close to the global average. As a result, the number of deliveries dropped by

approximately 1,600 from the previous forecast (between 2019 and 2038), including affected by the

downward revision of the GDP forecast due to COVID-19. (Related Part: Section 5.3.3)

As for Southeast Asia (mainly ASEAN countries), the Middle East, and South Asia (India, etc.), the

passenger demand is expected to grow at a higher rate than the global average, and the number of

aircraft in service is expected to increase as well. The numbers of aircraft in service in Southeast Asia,

the Middle East, and South Asia in 2040 are expected to be 3,628, 2,333, and 2,218, respectively. The

numbers of deliveries are expected to be 3,026, 1,979, and 2,114, respectively.

In the Middle East, the number of deliveries of widebody jets will be 1,018, accounting for 51% of

the total number of deliveries in this region. Especially since 2003, Middle Eastern airlines had been

actively expanding their business, and had captured the long-distance transit passenger demand under

“the sixth freedom of the air.” They had been showing an annual growth rate of more than 10%, or

even 20% at times mainly in routes with long distances (4,500 km or more), and achieving rapid scale

6,697

711

4,931

980

7,686

2,654

608 215

3,719

1,501 560

132

1,580 602 690 104 529 100

1,328 354

1,449 308 807

139 1,117

228

7,533 7,714

12,619

720

5,443

586

3,026

2,114 730

1,979 1,705

786 1,158

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,0002

01

9

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

Total Fleet : End of 2019 End of 2040

New Deliveries : 2020-2040 33,494

24,01538,868

Retained

No.of Airplanes

New Deliveries

8,244

NorthAmerica

Europe AsiaPacific

MiddleEast

8,694

15,273

2,333

LatinAmerica

Africa CIS

2,013 925 1,386

Japan OceaniaSouthAsia

SoutheastAsia

NortheastAsia

China

Passenger Jet Fleet and Delivery Forecast by Region


53

expansion by purchasing many wide body jets, driving the market. However, after the crude oil price

dropped in fall 2014, the growth rate of the RPK dropped rapidly, eventually to 2.3% (IATA) in 2019.

This forecast by JADC did not use this growth rate directly, but carried out calculations assuming,

based on the actual RPK growth data in the Middle East after 2015, that the rapid growth accompanied

by the redivision of markets have ended and the average growth rate will be around the global market

level (3.1%). The future number of deliveries is lower than the previous forecast by JADC. In reality,

the airlines have already canceled orders, postponed deliveries, and changed their aircraft models. In

addition to a movement to use existing aircraft longer than initially planned, depending on how the

actual growth rate will change in the future, there is a possibility that the number of deliveries,

especially of large wide body jets, will decrease further. (Related Part: Section 5.3.2)

In addition, Middle Eastern airlines are suspending the use of the A380 to address the rapidly falling

transportation demand due to COVID-19 as well as other airlines. Since A380 aircraft are young, they

are handled as aircraft in storage. This forecasting calculation assumes that half of these aircraft will

return to service (the probability is 50%), but depending on future demand, it is possible that surplus

aircrafts or impact on the delivery plan of other aircrafts occur.

4.2.3 Passenger Turboprop Demand Forecast

With regard to passenger turboprops with 15 seats or more, which are operated by airlines all over

the world, the number of aircraft in service in 1994 was 5,908, where it peaked. After that, the number

of aircraft in service decreased because of the spread of regional jets, eventually falling to 3,583 at the

end of 2019.

Most of the turboprop aircraft currently in service are operated in routes with a distance of 1,000

km or less. These routes include those that offer the minimum required transportation service in society

and those with difficulty using jets for technical reasons, and therefore, are expected to be maintained

because a certain transportation capacity is required even after the withdrawal and reduction of

0

50

100

150

200

250

300

350

0

100

200

300

400

500

600

700

1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

Jet

Fu

el P

ric

e *

(US

￠/g

allo

n)

No

. of

Ord

ere

dA

irp

lan

es

Trends in Orders for Passenger Airplanes( Turboprops and Regional Jets )

* : Jet fuel refinery delivery price (nominal price) Source : Cirium, IndexMundi

Regional Jet

Jet Fuel Price *

Turboprop


54

unprofitable routes and flights has proceeded. In addition, because fuel prices remained extremely

high for a long time, fuel-efficient turboprop aircraft have been preferred again, showing a recovery

in orders after 2005. (However, orders dropped rapidly in 2020 due to COVID-19.)

The forecast expects that the number of turboprop aircraft in service will increase from 3,583 at the

end of 2019 to 4,160 at the end of 2040. During this period, 2,734 aircraft will retire and 3,311 new

aircraft will be delivered.

3,583

849

2,734

0

1,000

2,000

3,000

4,000

5,000

2019 2040

No

. of

Air

pla

nes

Development of Passenger Turboprop Fleet

4,160

Replacement

Retained

3,311

New Deliveries

Growth 17%

83%

577

672

102

571

135

1,096

382

55 26 74 32 34 18

319 150

248 81

366 75 45 17

448

84

520

84 231

45

407 450

1,565

33 91 9

505 564

363

37

350 329

173

0

400

800

1,200

1,600

2,000

2,400

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

201

9

204

0

Passenger Turboprop Fleet and Delivery Forecast by Region

Total Fleet : End of 2019 3,583 End of 2040 4,160

New Deliveries : 2020-2040 3,311

Retained

No. of Airplanes

New Delivery

509

North

AmericaEurope

AsiaPacific

Middle East

585

1,947

54

434 413

218

Latin America

Africa CISJapan China OceaniaSouthAsia

SoutheastAsia

NortheastAsia

655

438

645


55

Looking at the number of turboprop aircraft in service by region, the numbers of aircraft in North

America and Europe are slightly larger than those in other regions, but 300 to 500 aircraft are currently

used in Latin America, Africa, Oceania, Southeastern Asia, and other regions, revealing a characteristic

that turboprop aircraft are used widely in almost every region without unevenly distribution.

Turboprop aircraft are continuously required in routes that require the minimum required air

transportation service even if they are unprofitable and routes with special geographical conditions,

such as isolated islands. We expect that, in these routes, turboprop aircraft with 15 to 19 seats will

continue to be in service, and 632 aircraft will be delivered in the next 20 years.

As of 2019, not many aircraft of this class were produced and supplied, and airlines are forced to

prolong the service life of their aircraft to continue service. The average age of aircraft in service is

28.3 years, but 46% of aircraft are over 30 years old, 14% of which are over 40 years old. 80% of

aircraft 40 years old or older are DHC-6 (186 aircraft), and when thinking of aircraft that are 30 years

old or older, many Do228, Jetstream31, and EMB110 aircraft are included as well as DHC-6 aircraft.

There are also Beech 1900 (255 machines) in the range of 30 to 20 years old, which will gradually

begin to exceed 30 years old.

The previous forecasts by JADC set virtual aircraft in this class for demand calculation. However,

Cessna, an American aircraft manufacturer, announced that it would develop SkyCourier, which is its

first new model in a while and is a passenger aircraft with 19 seats. This has significantly increased

the expected number of deliveries. We expect that because aircraft of this class will absorb the demands

for aircraft of other classes, and the number of deliveries of aircraft of neighboring classes, or aircraft

with 20 to 39 seats, will decrease.

In 2019, 490 aircraft with 20 to 39 seats were in service. In this class, many DHC8-200 and

SAAB340 aircraft are in service, accounting for 70% of the total number of aircraft of this class in

1,196

130

510

12

599

82

1,278

625

0 0

632 656 433

1,206

384

0

500

1,000

1,500

2,000

2,500

2019 2040 2019 2040 2019 2040 2019 2040 2019 2040

Total Fleet : End of 2019 3,583

End of 2040 4,160

New Deliveries :

2020-2040 3,311

668 515

No. of Airplanes

1,831

762

384

Passenger Turboprop Fleet and Delivery Forecast by Size

2019 2040

ExistingRetained

New Deliveries

15-19 Seats 20-39 Seats 40-59 Seats 60-79 Seats 80-99 Seats


56

service. 72% of aircraft in this class are 20 years old or older but younger than 30 years. Although

these aircraft are not old now, they are expected to reach their economic life in the early 2020s.

Therefore, alternative aircraft are increasingly required especially among North American airlines, but

suitable alternative aircraft of this class have not been produced. JADC carried out calculations

assuming high-speed cruise turboprop aircraft with 30 seats as aircraft of this class, and expects that

there will be a new demand for 656 aircraft in the next 20 years and the number of aircraft in service

will be 668 aircraft in 2040. However, since no aircraft is supplied in reality, the average age was 26.3

as of the end of 2019, showing an aging of the aircrafts. The supply of suitable aircraft is required.

Approximately 16% of aircraft with 40 to 59 seats in service are over 40 years old, most of which

are An-24/26 aircraft. 70% of aircraft in this class are less than 30 years old, most of which are ATR42

and DHC-8-300 aircraft. Among these models, the ATR42 is in production but the annual number of

deliveries stays at around 5 on average. The DHC-8-300 is no longer produced, so cannot be renewed.

Some airlines are modifying them to extend their service life. In-service aircraft in this class in 2019

are 24.4 years old on average.

Almost all aircraft with 60 to 79 seats in service are ATR72 and DHC-8-400 aircraft. For both

models, new aircraft are supplied smoothly, and the both models are accounting for most of the

turboprop airliner orders since 2005. And the average age of the aircraft in this class is 7.8 years young

at the end of 2019.

The number of aircraft that will be delivered in the next 20 years in the 40-59 seat class and the 60-

79 seat class also increased compared to the previous forecast, but this was largely due to an influx of

aircraft demand to the turboprop side, since the hypothetical supply of aircraft in the 50-seat class (and

below) regional jets, for which new production of aircraft are not expected, was stopped in the forecast.

Both turboprop and regional jets exist in this class, and therefore, the aircraft demand is filled by either

of them.

As for turboprop aircraft with 80 to 99 seats, no new aircraft are currently supplied, and therefore,

JADC carried out calculations assuming high-speed cruise turboprop aircraft with 90 seats as virtual

aircraft and expect that there will be a demand for 384 aircraft in the next 20 years. Turboprop aircraft

of this class are expected to compete with regional jets, but in short-range routes, there is no large

difference in flight time between these turboprop aircraft and regional jets and ground time at the

airfield is also added to reduce the impact.

Worldwide Market Forecast 2020–2040

57

5. Air Passenger Demand Forecast

5.1 Air Passenger Demand (RPK)

In recent years, the world has experienced 911 attacks in 2001, SARS and the Iraq War in 2003, the

financial crisis in the United States in 2008 and the debt crisis in Europe following it. The global air

traffic volume (RPK) decreased every time these incidents occurred. In addition, the escalation of fuel

prices from 2005 to 2014 weighed on airlines and decreased passenger demand. However, as fuel

prices started dropping in autumn 2014, the RPK began recovering, then increased at a rapid pace of

around 6.5% every year, and seemed to have almost returned to the growth line estimated with the

data before 2001 by 2019.

In this way, air passenger demand is affected by the impact and burden from the external

environment, but tends to start growing again and return to the initial growth curve every time.

As shown by the red line in the figure, the global RPK grew by 5.1% on annual average,

experiencing ups and downs, during the past 20-year evaluation period between 2000 and 2019 (from

the end of 1999 to the end of 2019) and, at the end of the period, increased 2.7 times compared with

the beginning of the period. JADC made a forecast with the results of a correlation analysis between

RPK and the GDP and other factors during this period. The RPK forecast based on the GDP and other

factors made before the COVID-19 pandemic is shown as the ‘standard model’ in the figure. Likewise,

the RPK forecast based on the GDP*1 and other factors made at the end of 2020, taking the impact of

COVID-19 into account, is shown as the ‘RPK forecast’. According to the standard model, it is

Source: IATA, ICAO, JADC

Equivalent to a 1.6 to 2-year delay.

Air

pass

enge

r tr

affi

c vo

lum

e (R

PK

: × 1

012 p

asse

nger

-km

)

Trends in Global Air Passenger Traffic Volume (RPK)

Average growth rate (%)

2.7 times

Actual RPK

Forecast RPK

5.1%/year

Standard model Recovery forecast

Old expected value

2.04 times

(based on new GDP, etc.) (Loss due to COVID-19 and recovery forecast in Chapter 3)

2.12 times

* Hatched sections indicate aviation recessions, etc. The orange frame indicates the escalation period of crude oil prices.


58

anticipated that the global RPK will be 2.2 times that of 2019 in 2039 and that the annual average

growth rate will be 4.0% during this period. However, the RPK forecast*2 made this time indicates that

the global RPK will be 2.04 times that of 2019 in 2039, that the annual average growth rate will be

3.64%, and that the RPK after 2025 will be lower than that in the standard model by about 6 to 7%.

(*1: Source: IHS)

(*2: The JADC forecast the recovery of RPK and the number of aircraft deliveries after the COVID-19 pandemic based

on the information available at the time of editing. The JADC plans to obtain new input information including revised

GDP forecasts and update this document in the next year.)

5.2 Forecast of RPK

5.2.1 Composition of RPK

The air passenger demand (RPK) is known to change depending on the income, airfare, population,

distance, number of flights, season, availability of alternative transportation, and other factors and be

particularly strongly related to income levels (GDP) and airfares (yield).

As shown in the figure, when RPK increases, GDP basically increases as well. They behave very

similarly and have a clear positive correlation. In contrast, airfares generally decrease when RPK

increases, showing a negative correlation. The future trend of the RPK is mostly forecast by using

long-term forecast values and assumed values of GDP and yield in these relationships.

The yield and RPK moved in the same direction at some places in the figure. For example, in 2001

(the 9/11 attack) and 2008 (the global financial crisis), the economic (GDP) disruption caused by these

incidents spoiled transport demand (RPK) and airlines were overwhelmed regardless of their desperate

efforts to attract customers by lowering ticket prices (yield). The RPK is affected by factors such as

-8

-6

-4

-2

0

2

4

6

8

10

12

-16

-12

-8

-4

0

4

8

12

16

20

24

1989 1994 1999 2004 2009 2014 2019

GD

P G

row

th (

%)

RP

K G

row

th(%

),

Yie

ld G

row

th (

%)

Relationship between RPK, Real GDP and Real Yield

Financial CrisisH1N1 Pandemic

Iraq WarSARS

9/11 Attacks

Gulf War

Yield

RPKGDP

Stablization of Crude Oil Prices


59

conflicts, terrorism, disease, and financial crisis. While the RPK often recovers after a short period

once the causes are removed, some temporarily cause significant drops. It is therefore an important

challenge for airline management to address fluctuations in air transportation demand due to these

external factors (or event risks).

It is noteworthy that, in the past, even if the growth of RPK was affected by the oil crisis, etc., it did

not show a decrease to the extent that it became zero growth. However in recent years RPK has clearly

shown a decrease when an big incident occures.

Chapter 5 explains the RPK which is base of aircraft demand forecast. In this forecast, the reference year should be 2020,

but the data acquisition in 2020 is not smooth, or even if it can be processed, it will often be temporary and peculiar data,

and is not suitable for the base of long-term forecast. Therefore, we used 2019 as the reference year and data at normal

times before 2019 as environmental data for the forecast.


60

5.2.2 Economic Trend (GDP)

In 2020, the COVID-19 pandemic took the world by storm, largely affecting the economy and

people’s lives in society. By no preventive medicine or a cure, the world has experienced restriction

and resumption of economic activity, expansion and contraction of infections repeatedly, and even the

emergence of variants, and is still under constraints and anxiety as of the spring of 2021.

However, long-awaited vaccinations finally started in December 2020. Hopefully, vaccinations will

spread in each country with an accelerated increase in production, leading to a decrease in infected

patients, a lower possibility of generation of new variants, and establishment of collective immunity,

which will mitigate anxiety in society and restore economic activities and movement of people.

The global real GDP growth rate is said to be 4.3% (IBRD) to 3.5% (IMF) in 2020, but is expected

to be 4.0% (IBRD) to 5.5% (IMF) in 2021. It is generally expected to recover to the level in 2019 by

almost completely making up for the economic shrinkage in 2020 by the growth in 2021, although

forecast values differ by organization. The growth rate is expected to continue to be 3.7% (OECD) to

4.2% (IMF) in 2022 and then gradually decrease. The 20-year average between 2021 and 2040 is

expected to be 2.87% (IHS). If conditions are good, the world economy can rapidly recover after 2021

although it largely depends on vaccinations.

In the long run, the annual average growth rate of the global real GDP (calculated in 2015 USD) is

forecast to be 2.47% between 2020 and 2040 (reference year is 2019). China, Southeast Asia (mainly

ASEAN), and South Asia (such as India) are expected to keep relatively high GDP growth rates during

this period.

2.47%

3.62%

1.81%

1.23%

1.15%

2.05%

0.63%

2.11%

4.27%

1.51%

3.88%

4.98%

2.07%

2.40%

2.80%

1.64%

3.02%

5.21%

2.09%

1.75%

1.63%

3.48%

0.88%

2.71%8.78%

3.83%

5.20%

6.13%

3.81%

1.94%

3.93%

3.94%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

WorldAsia‐Pacific

North AmericaEurope

Westen EuropeEastern Europe

JapanOceaniaChina

North‐East AsiaSouth‐East Asia

South Asia

Middle East

Latin AmericaAfrica

CIS

Average Growth Rate of Real GDP

Economic Forecast by Region (Real GDP Growth Rate)

2020‐2040

2000‐2019Breakdown of Europe

Breakdown of Asia‐Pacific


61

In particular, China will continue to produce significant GDP growth partly due to its scale, although

its growth rate will be 4.3% for the next 20 years, which is lower than the annual average growth rate

of 8.8% for the past 20 years. In addition, Southeast Asia and South Asia are also anticipated to have

a growth rate of 3.9% and 5.0%, respectively. In developed regions, the economic growth rate is

expected to be 1.81% in North America, 1.23% in Europe, and 0.63% in Japan. The economic growth

rate in the Middle East is expected to be 2.07%. The total global real GDP is expected to be 140 trillion

dollars in 2040, a 1.67-time increase from 84 trillion dollars in 2019.

5.2.3 Passenger Yield

The global real passenger yield has decreased by 2.0% on annual average for the 20 years between

1999 and 2019. Major factors that decreased the real yield during this period are a reduction in

operating costs as a result of updating to new planes with good operational economy and streamlining

NA 23%

NA 26%

EUR 19%

EUR 24%

CH 25%

CH 17%

SE 5%

SE 4%

NE 2%

NE 3%

SW 7%

SW 4%

JA 4%

JA 5%

OC 2%

OC 2%

ME 3%

ME 3%

AF 3%

AF 3%

LA6%

LA6%

CIS2%

CIS2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2040

2019

GDP Share by Region

0

5

10

15

20

25

1989 1994 1999 2004 2009 2014 2019

Trends of Real Yield by Region2015 UScent/RPK

World

Source : AEA, A4A, ICAO, IATA, Cirium

North America

Western Europe


62

efforts by airlines. The rise of LCCs and their competition with existing airlines are additional

important factors.

The escalation of fuel prices that continued for about 10 years ended, and airfares will probably

continue to drop as a result of further improvement in the operational economic efficiency of aircraft,

corporate efforts by airlines, and competition among airlines including LCCs. However, cost reduction

by airlines seems to be about to hit a wall and so, naturally, airlines seek to increase yields. As a result,

the reduction in airfares is expected to slow down.

During the forecast period, the real passenger yield is forecast to decrease by about 0.8% on annual

average given the competition among airlines and impact of fluctuations in fuel prices as well.

5.2.4 Passenger Load Factor

The global annual average of the passenger load factor was 82.0% in 2019. The passenger load

factor was 68.6% in 1999 and has increased by about 13% in 20 years. In 2019, the annual average

reached 84.0% and 84.6% in North America and Europe and reached 88% in the U.S. during the busy

season. The load factor in other regions also increased year by year and the annual average is above

80% in many regions.

This high passenger load factor resulted from a decrease in revenue caused by a reduction in airfares

due to competition among airlines including LCCs and the efforts to improve the RASK (revenue per

ASK) by keeping an increase in the ASK lower than that in the RPK to address a significant rise in the

breakeven point of the load factor caused by an increase in operating costs due to the escalation of fuel

costs and other causes.

Because the crude oil prices, which continued to soar for about 10 years, dropped significantly

starting in the autumn of 2014, economic pressures on airlines were largely mitigated. A subsequent

sharp drop in orders for new fuel-efficient aircraft showed their sense of relief. However, because a

significant reduction in CO2 emissions will be demanded in the future, airlines are expected to incur

40

50

60

70

80

90

100

NorthAmerica

Europe Asia-Pacific

MiddleEast

LatinAmerica

Africa CIS World

Load Factor (%) Passenger Load Factor by Region199920192039


63

new costs to purchase CO2 emissions credits and expensive SAF (sustainable aviation fuel) and it will

remain difficult to increase fuel consumption without careful consideration.

Besides, passenger airfares are not expected to largely rise in the future partly due to competition

among airlines. Therefore, the passenger load factor seems like it will remain high in the future through

precise supply and demand adjustment by airlines. For this forecast, the passenger load factor is

assumed to change from 82.0% in 2019 to 83.0% in 2039 across the world.

For example, in the U.S., the load factor has a clear seasonality. Summer is the peak season and the

load factor hits a peak centered around July. As shown in the figure, the load factor steadily rose in the

2000’s and was fixed at around 87% during the busy season for the last 10 years or so. Certain airlines

have had a load factor of over 90% during the busy season and are said to be racking their brains trying

to increase the number of passengers. For example, they try to make more seats available to customers

by asking employees and their family members to avoid using their employee discount. Winter is the

(domestic and international flights)

Monthly

Passenger Load Factor of U.S. Airlines

Annual average

(Escalation period of fuel prices)


64

low season and the load factor is much lower than the busy season. However, the lower limit has

steadily risen as shown in the figure probably due to the effects of upgraded seat selling logic. In recent

years, the low limit is the same level to the upper limit of around 2000. Because the upper limit has

been fixed at the constant level and the lower limit rose, airlines had been always crowded throughout

the year. Although both the upper and lower limits seemed to further rise in 2019, passenger demand

dropped sharply due to COVID-19 in 2020. The load factor also dramatically dropped and then

recovered to about 50% at the end of 2020.

5.2.5 Crude Oil Prices

Crude oil prices, and therefore fuel prices, largely affect the economy of air transportation.

Escalation of crude oil prices shrinks the world economy (GDP). Escalation of fuel prices hinders the

growth of air transportation demand (RPK) via a rise in airfares (yield). Although the last escalation

of crude oil prices ended after continuing for about 10 years, crude oil prices and fuel prices could

fluctuate again in the future due to changes in the supply-demand balance or incidental or external

factors. In 2018, a rise in crude oil prices reduced the profit of airlines although it was temporary. In

2020, crude oil prices temporarily dropped below zero due to the disruption caused by COVID-19, but

regained value with expectation for practical application of vaccinations in 2021.

0

20

40

60

80

100

120

140

1968Q1

1969Q3

1971Q1

1972Q3

1974Q1

1975Q3

1977Q1

1978Q3

1980Q1

1981Q3

1983Q1

1984Q3

1986Q1

1987Q3

1989Q1

1990Q3

1992Q1

1993Q3

1995Q1

1996Q3

1998Q1

1999Q3

2001Q1

2002Q3

2004Q1

2005Q3

2007Q1

2008Q3

2010Q1

2011Q3

2013Q1

2014Q3

2016Q1

2017Q3

2019Q1

2020Q3

2022

2025

2028

2031

2034

2037

2040

2043

(2015USD/bbl.)Trends in Imported Crude Oil Prices in the U.S.

(Real price: 2015 USD)暦年平均

EIA Imported Crude Oil Price

IHS Brent Forecast

0

20

40

60

80

100

120

140

160

180

200

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

USD/bbl. Trends in Crude Oil and Jet Fuel Prices (Real price: 2015 USD)

Jet Fuel(U.S. Gulf Coast)

WTI Crude

Brent Crude

First oil crisis

Second oil crisis

Gulf War

Production increase in

Saudi Arabia Financial crisis COVID-19

Source: IHS, EIA

Source: IHS, EIA


65

The argument for raising prices and the argument for maintaining prices both have ground to stand

on in the long run, but the input conditions that the JADC used in the forecast take into consideration

that supply will not be tightened but slowly rise in the future due to the increase of production in non-

OPEC countries, the reduction of demand for conventional crude oil due to practical application of

shale oil in North America and the fact that many oil-producing countries want to increase the

production of crude oil to ensure revenue since their primary balance is still negative on the current

level of crude oil prices. The crude oil price setting of JADC based on the price assumed by IHS is

also shown in the graph. This is incorporated into the RPK forecast via the yield.

After the COVID-19 pandemic calms down, crude oil prices are expected to temporarily return to

the price level of around 2017, slowly rise until around 2030, and then mostly maintain a certain real

price level. The real price of Brent crude oil is expected to stabilize around $65 after 2030. This price

level is lower than 2018 and close to the level in 2019.

5.2.6 Environmental Issues

In the past, noise and air pollution problems around airports were spotlighted as environmental

issues in the airline industry. However, as interest in global warming is recently increasing, CO2

emissions from aircraft* are also gathering attention. (*: Accounts for 1.8% of global annual CO2

emissions.)

It is thought that there will be strong demands for dealing with environmental problems in the future.

Airlines will make further efforts such as updating to fuel-efficient aircraft, adopting efficient flight

methods that lead to fuel saving, and use of alternative fuels in the future.

Although past issues such as noise and exhaust gas were not a part of the economy of passenger

planes, one characteristic of recent CO2 emission controls is that they are tied to emissions trading and

so are directly incorporated into the airline’s economy. Because demand for new generation passenger

0

20

40

60

80

100

120

140

160

1990 2000 2010 2020 2030 2040 2050

Ave

rag

e S

po

t P

rice

(2

015

US

$/b

bl.

)

Trends in Crude Oil Prices (Actual and forecast prices based on the Brent crude oil prices)

Brent Crude (real)

IHS Brent (& JADC) 2020

IHS Brent (& JADC) 2021

Source : IHS Markit


66

planes that employ new environmentally conscious technologies increases accordingly, environmental

measures will drive aircraft updates, in addition to the conventional fuel economy.

CO2

CO2 emissions from international air transportation was 604 × 106 tons in 2018, increasing by 4.2%

from 2017. These CO2 emissions account for about 1.8% of the global total CO2 emissions, but are

forecast to continuously increase in the future in line with the growth of air traffic volume.

In the 37th session of the Assembly in 2010, the ICAO set a reduction goal that involves improving

fuel efficiency by 2% every year until 2050 and not letting CO2 emissions increase after 2020, that

applies to both developed and developing countries. Then in the 38th session of the Assembly in 2013,

the ICAO decided to establish an emissions reduction system that uses the market mechanism

(emissions trading) within 2016 and apply it from 2020. In the 39th session of the ICAO Assembly in

2016, 191 countries agreed on a framework to regulate greenhouse gas emissions from international

flights. This agreement was made to prevent CO2 emissions by aircraft from increasing after 2020 and

obliges each airline to purchase emissions credits for excess amount.

In 2017, the ICAO established a system to promote the agreement in the 2016 Assembly, the

CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation)*1. The reference CO2

emissions as of 2020 was defined*2 and each airline is obliged to purchase emissions credits for the

CO2 emissions above this reference value after 2021. According to data from the Ministry of Land,

Infrastructure, Transport and Tourism, the costs that airlines in Japan incur to purchase emissions

-250

-50

150

350

550

750

950

1150

0

100

200

300

400

500

600

700

1995 2000 2005 2010 2015

RTK

（×10 9ton km : Int. + Dom.）

CO

2Em

issions（×10 6ton : International ）

Trends in Traffic Volume (RTK)

and CO2 Emissions in Air Transportation

Source： IEA, ICAO, IATA

Electriciry and Heat Production 41.7%

Other Energy Industry own use

4.8%

Manuf. industries and Construction 18.4%

Others 8.6%

Road 18.2%

International Aviation 1.8%

International Marine 2.1%

others 2.6%その他

Share of CO2 Emissions (2018)

24.6%

Transport

( Pax. + Cargo )

円グラフはラベルオプションでリフレッシュさせる。「運輸24.6%」と2018年は手書き。


67

credits are expected to start at over a billion yen a year in 2021 and increase to several tens of billions

of yen a year by 2035.

(*1: The CORSIA applies to international flights between participating countries and does not apply

to flights of which place of departure or arrival is not a participating country, airlines whose CO2

emissions from international flights are 10,000 tons or less per year, and emissions from aircraft

with a maximum take-off weight of 5.7 tons.)

(*2: The reference emissions based on which the amount of CO2 emissions credits to be purchased is

determined after 2021 is the average emissions in 2019 and 2020.)

The above regulation applies to international aviation. CO2 emissions on domestic routes in each

country are included in total emissions by country from the other domestic industries in the country

and each country shall seek to reduce CO2 emissions on the government’s responsibility toward the

reduction target according to the Kyoto Protocol and the subsequent Paris Agreement.

For exhaust gas regulations based on each aircraft size, the CO2 emissions standard for aircraft was

newly enacted as the Volume III to Annex 16 of the Convention on International Civil Aviation

(Chicago Convention). This standard makes it obligatory to keep an indicator based on the fuel

consumption rate of aircraft below a certain value. This standard applies to jet aircraft with a maximum

take-off weight of over 5.7 tons and propeller aircraft with a maximum take-off weight of over 8.6

tons. The standard takes effect on the following dates and it is prohibited to manufacture new aircraft

that do not meet the requirements after the effective date.

1) January 1, 2020 for models newly developed for which a new type certificate is applied for

(January 1, 2023 for jet aircraft with a maximum take-off weight of 60 tons or less and a maximum

seating capacity of fewer than 19 seats)

2) January 1, 2023 for models currently in production for which a type change will be applied for

3) January 1, 2028 for other aircraft that continue to be manufactured

Because the generation of CO2 directly corresponds to fuel combustion, constant efforts to improve

the fuel efficiency of aircraft that have been underway for some time directly contribute to a reduction

in CO2 emissions through a reduction in fuel consumption. However, it has become clear that it is

difficult to achieve the goals only through technological innovations of airframe and engines as

research on reducing CO2 emissions progresses. Therefore, research is being conducted toward the

practical application of SAF (sustainable aviation fuel) as an aviation fuel to replace fossil fuels, based

on the concept of carbon neutral. However, the low supply capacity and high prices have been pointed

out about SAF from the very beginning.

Various measures must be implemented together to achieve CO2 emissions reduction goals. Besides

fuel efficiency improvement and carbon neutrality, prospective measures are reduction in taxi time

and changes in takeoff climbing and gliding approach patterns at airports using the GBAS to reduce


68

fuel consumption. It is also expected for the SBAS to shorten flight distances directly to reduce fuel

consumption by removing the constraints of island-based navigation system and use ocean flight paths

as great-circle routes.

Noise

Large-scale noise regulations were implemented multiple times from the mid 1980’s to the early

2000’s to address noise problems around airports. The technological innovations and generation

changes in airplanes has been done through the replacement of many passenger planes and freighters.

Although aircraft that make much less noise than in the past are widely used now, the noise problems

still remain. Measures against noise such as restrictions on take-off, landing, and night flights are

implemented at many major airports.

Although the increase in number of flights and the flight of large aircraft are required to keep up

with the growth of air traffic volume, it is not easy to relax the restrictions on take-off and landing at

existing airports, expand airports, build new airports etc. partly due to concerns about environmental

deterioration around airports.

Under these circumstance, the ICAO adopted ‘Chapter 14’ noise standard, which is stricter than the

previous standard, in the 38th session of ICAO Assembly in August 2013. The new standard applies

to aircraft for which a type certificate is applied for after January 1, 2019*.

(*: The standard takes effect at the end of 2020 for aircraft with a maximum take-off weight of less

than 55 tons.)


69

5.2.7 Travel Demand

As data from the World Tourism Organization (UNWTO) shows, income levels are

correlated with the number of times people travel. Demand for overseas travel* increases in line with

an increase in real GDP per capita. (*: Overseas trips include land and sea travel as well in UNWTO

data.)

As shown in the figure, in developed countries with a real GDP per capita of over $20,000, the

overseas travel demand moderately changes with changes in income levels. Whereas, in emerging and

developing countries with a real GDP per capita of around $10,000, the overseas travel demand clearly

rises sharply with an increase in income levels.

0.01

0.10

1.00

10.00

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Trips ab

road

per capita per year

GDP per capita （2015US$）

Relationship between Income Level and Trips Abroad* (1) (2015)

Source ： UN, IBRD, IHS

United States

ItaliaRussia

China

Brazil

India

Switzerland

France

Japan

HungaryGermany

Canada

Australia

Netherland

United Kingdom

New Zealand

( * : Trips include land and sea routes)

0.00

0.01

0.10

1.00

10.00

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Trips ab

road

per capita per year

GDP per capita （2015$US）

Relationship between Income Level and Trips Abroad* (2) (2015)

UK USA

Frnace Japan

Russia Czech

S.Korea Colombia

China India

Thailand

Source ： UN, IBRD, IHS

( * : Trips include land and sea routes)

0.0010.001

Source: UN, IBRD, IHS

Japan

China

Korea U.S.

U.K.

France Russia

Czech Republic

India

Thailand


70

This suggests that if income levels rise through an economic growth in future particularly in

emerging countries and regions with large populations where income levels are still low, a large

middle-income group will be formed and will greatly contribute to increase air transportation demand.

Currently, Southeast Asian countries, Southwest Asian countries including India, and many African

countries fall in this category. China has also been in this group for a long time and has largely grown.

It is also pointed out that the fast growing model of developing country type will transit qualitatively

to the slow growing model of developed country type when the real GDP per capita reaches around

$10,000. Although developed countries are already passed this range, Northeast Asian countries

experienced the transition in the late 1990’s. Now (2019), the real GDP per capita of China has just

reached $10,000. In other words, the growth rate of RPK in China is likely to experience this transition

after a short time and then drop, although the country has contributed to the market growth with the

high growth rate. The real GDP per capita has just reached $10,000 in the Middle East region and

around $13,000 in Eastern Europe region where the growth rate of RPK is high with the success of

LCCs. Their future trends are worthy of attention.

The transition may happen gently and continuously at normal times, but could instantaneously occur

due to the impact of a political or economic incident. The transition in Northeast Asia region was

caused by the impact of the Asian currency crisis (1997). In the world as it is today, things that can be

the cause such as the U.S.-China economic conflict and COVID-19 are occurring one after another.


71

5.3 Study of RPK

5.3.1 Impact of Reduction in CO2 Emissions

We have experienced phenomena probably caused by global warming such as heat waves, torrential

rain, floods, and changes in agricultural products suitable for the region around us. A reduction in CO2

emissions is recognized as an important issue that human beings can control to some extent to prevent

global warming and its destructive effects on people’s lives. The agreement based on ICAO’s CORSIA

obliges airlines to purchase CO2 emissions credits to promote CO2 emission reduction in the air

transportation field as well. Once the application starts, airlines must incur new costs, most of which

are eventually born by passengers in the form of airfare. This is likely to affect the growth of transport

demand and aircraft demand through a rise in yield. (Related Part: Section 5.2.6)

********************

Regarding the purchase of emissions credits, airlines do not have to purchase emissions credits for

CO2 emissions up to the reference amount specified based on the past record up to 2020, but are

obliged to purchase credits for the excess amount.

The following are CO2 emissions and financial costs to purchase associated CO2 emissions credits

for the next 20 years estimated by combining actual data released by various organizations and the

results* of the forecast of transport demand and aircraft demand made by the JADC.

(Source: Carbon Markets Express)

OperationalImprovements

Inte

rnat

ion

al a

viat

ion

net

CO

2 E

mis

sio

ns(

MT

)

CO2 Emissions Forecast and Emissions Reduction Goals for International Routes

Carbon neutral growth from 2020

2010 Technology and 2010 Operational Efficiency

Aircraft technologies

Sustainable alternative fuelsand Market-Based Measures


72

5.3.1.1 Forecast of CO2 emissions

Actual values Studying the correspondence between the global air traffic volume (RTK, which

covers passengers and freight) and CO2 emissions, fuel efficiency has been constantly improved ever

since the 1970’s and the slope that corresponds to the quotient of annual CO2 emissions divided by the

RTK has been shallowed over time. During this time, the slope was very similar in the 1970’s, 1990’s,

and between 2013 and 2018, whereas CO2 emissions barely increased even though the RTK increased

between 2010 and 2013. During this period, many old-generation aircraft retired and had been rapidly

replaced with new ones in response to the escalation of fuel costs. In contrast, the slope did not shallow

for the 10 years between 2000 and 2010.

Emissions forecast 1 By combining the line* ,extrapolated from the line connecting the point in

2018 (the latest actual value) and the origin, and the forecast value of global transport demand (RTK)

between 2018 and 2039 (horizontal axis), the CO2 emissions in each year can be estimated on the

extrapolated line in the case where the technical level remains the same in future. (*:the slope the line

(CO2 emissions divided by RTK) corresponds to the technical level of fuel saving) As shown in the

figure, annual CO2 emissions in 2039 are estimated to be 1.89 × 109 tons (navy blue line in the figure).

The figure also shows the transition of CO2 emissions in cases where the fuel efficiency is improved

by 1.0%, 2.0%, and 3.5% on annual average after 2018. According to the ICAO’s CO2 emissions

reduction plan, airlines are expected to reduce CO2 emissions by 2.0% every year. If improved the fuel

efficiency by 3.5% every year, CO2 emissions will hardly increase even if air traffic volume increases

in the future.

Emissions forecast 2 The CO2 emissions have continued to decrease every year by about -1.2%

to -1.6% year-on-year for the past 6 years from 2013 to 2018 as a result of airlines’ efforts including

the effects of aircraft updates. If extrapolating the straight line (from 2013 to 2018) assuming that this

slope is maintained in the future, CO2 emissions will be 1.75 × 109 tons in 2039. This means that the

(Source: ICAO, IATA, IEA, JADC)

Amount for which emissions credits must be purchased (example with an annual growth rate of 2%)

Air Traffic Volume (RTK of passengers and freight, international and domestic flights) and CO2 Emissions

CO2 emissions in 2039 assuming the efficiency of around 2018

1%/year

CO2 emissions if the efficiency is improved by 2% every year

CO2 emissions in 2019

3.5%/year

RTK2039E (forecast RTK in 2039)


73

fuel efficiency will be improved by 0.6% per year on average for the next 20 years (green line in the

next figure).

Emissions forecast 3 By combining the composition of passenger planes (number of planes in

service per model in each year) to be used by global airlines for the next 20 years that was obtained

when forecasting demand for passenger planes shown in Chapter 4 of this document and the fuel

economy index per model*, the transition of CO2 emissions was estimated, including the effects of

fuel efficiency improvement by replacing old planes with new models during this period (e.g., 737NG

→ 737MAX → successor model). (*: Assumptions such as the EIS time, economic performance, and

number of deliveries of each model of aircraft are included.)

The figure shows the result on the presumption that the fuel economy is improved by 20% with

every generation of aircraft as a result of technological progress in airframe and engines (yellow line

in the figure). This means that the fuel efficiency will be improved on the long-term average of

0.90%/year for the next 20 years. Likewise, the long-term average improvement rate is 0.77%/year

and 1.03%/year, respectively, when the improvement rate is 15% and 25%.

Airlines are expected to reduce CO2 emissions by 2% every year. Although the above-mentioned

effects of updating aircraft are anticipated to cover around 1% of the reduction, additional measures

are required to reduce the remaining amount. Possible measures include the purchase of CO2

emissions credits and the use of SAF.

Air Traffic Volume (RTK of passengers and freight, international and domestic flights) and CO2 Emissions CO2 emissions in 2039

assuming the efficiency of around 2018

Extrapolated line assuming the pace between 2013 and 2018 (corresponds to improvement by 0.6% every year on average)

Forecast based on the demand forecast by the JADC

(example of fuel saving by 20% at every generation change that corresponds to improvement by 0.9% every year on average for 20 years)

RTK2039E (forecast RTK in 2039)

CO2 emissions in 2019


74

5.3.1.2 Purchase costs of CO2 emissions credits

Keeping CO2 emissions at the 2019 level in the future corresponds to emissions reduction by about

3.5%/year on average. The amount exceeding 0.9 to 1.0%/year mentioned above will probably be

covered mainly by the use of alternative fuels (SAF: sustainable aviation fuel) and the purchase of

CO2 emissions credits. However, it is often unclear about SAF, and the current manufacturing unit

price of SAF is said to be two to six times as high as the jet fuel used now*1. This fuel is not only

expensive, but also future price expectations are unclear. (*1: If fuel prices rise by six times from

around 2019, airfare is expected to be more than double the current price.)

Global airlines will have to purchase CO2 emissions credits equivalent to 23.3 × 109 USD*2 in 2035

based on the purchase amount of CO2 emissions credits*2 estimated with the condition of forecast 3 in

the previous section (0.9%/year) on the assumption that SAF is not used. Likewise, it is expected that

airlines in Japan will have to pay 38 billion yen*2 in 2035. The cumulative cost from 2021 to 2035 is

anticipated to be 240 billion yen*2 and the cumulative cost until 2039 is anticipated to be 450 billion

yen*2.

(*2: Calculated in 2015 USD. The dollar to yen rate is fixed to 105 yen/dollar for the entire period.)

Unit 2020 2030 2040 Reference CO2 emissions (purchase of emissions credits not required) 106 CO2 tons 700 700 700

Assumed price of CO2 emissions credits Euro/CO2 ton 25 30 45

As long as SAF is expensive, it is realistic to purchase emissions credits for the amount short of the

CO2 reduction target. However, given the future supply amount of emissions credits and possible

escalation of market price, the use of emissions credits may also become unstable and the costs can

further increase in the future.

As mentioned above, airlines in Japan will eventually purchase CO2 emissions credits equivalent to

several tens of billions of yen a year. The price of CO2 emissions credits could soar and the costs may

0

60

120

180

240

300

360

420

480

0

10

20

30

40

50

60

70

80

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

Sum total ( since_2021 )( ×10 9 yen )

(×10 9 Yen

per year)Trends in Purchase Amount of

CO2 Emissions Credits of Airlines in Japan


75

continue to be endless. Therefore, it is sufficiently meaningful to proactively conduct research and

development regarding future costs as current funds to reduce future costs rather than just continue to

pay costs in the future. For example, Japan has always imported oil, but can be an exporter of SAF.

SAF does not depend on underground resources and so provides an opportunity to any country that

has the will and technological capabilities.

5.3.1.3 Estimation of the costs of CO2 emissions credits

The impact of the costs of CO2 emissions credits on RPK was estimated based on the study result

in the previous section. The impact on RPK was estimated with the equivalent fuel price (and

equivalent crude oil price) and forecasted yield. The equivalent fuel price was calculated by adding

the purchase costs of emissions credits to fuel prices, And the yield was forecasted based on the

equivalent fuel price, assuming that all the purchase costs of CO2 emissions credits will be reflected

in airfares (yield). (Related Part: Section 5.2.6)

The equivalent crude oil prices to which the costs of CO2 emissions credits are added will be about

$68/bbl. in 2030 and about $73/bbl. in 2040. The amount added to the crude oil prices at each point in

time is expected to be about $3/bbl. in 2030 and about $8/bbl. in 2040. Based on the real Brent price,

$68/bbl. to $72/bbl. corresponds to the level around 2018 when crude oil prices were temporarily high.

Although this price level is not as high as around 2008 or 2012, passengers will incur the costs in the

form of ‘CO2 surcharge’, etc., and airlines and manufacturers will be required to make efforts to reduce

fuel consumption, for example, by improving operations and introducing new technologies.

Using these equivalent crude oil prices, the average growth rate of RPK for the next 20 years was

estimated to drop by about 0.02% as shown in the table. The costs could increase if more SAF is used

in the future.

0

20

40

60

80

100

120

140

160

180

1990 2000 2010 2020 2030 2040 2050

Ave

rag

eS

po

tP

rice

(201

5U

S$

/bb

l.)

IHS Brent& JADC 2021

Brent Crude (real)

Source : IHS Markit

Costs of CO2 emissions credits

Trends in Equivalent Crude Oil Price (Actual and forecast values based on the Brent crude oil prices)


76

Average growth rate of RPK Remark 2020-2039 2020-2029 2030-2039

IHS Brent & JADC 2020 4.02% 4.29% 3.75% Standard model

IHS Brent & JADC 2021 4.04% 4.33% 3.75% Drop in crude oil prices Cost of CO2 emissions credits added

(derived from 2021) 4.02% 4.32% 3.72% Costs of emissions credits

5.3.1.4 Estimation of the introduction costs of SAF (SAF: sustainable aviation fuel)

Major countries have accelerated their effort to reduce CO2 emissions with the goal of almost

halving the emissions by around 2030 and effectively achieving zero by around 2050. If the air

transportation industry aims to reduce CO2 emissions at a similar pace, the use of SAF is expected to

be the core. In this section, we made an assumption about the price of SAF and its gradually decreasing

trend and estimated the impact of each case on the growth of global RPK with the following

assumptions.

- Future annual CO2 emissions from global airlines are calculated by multiplying the RTK (passengers

and freight) forecast in this document by the fuel consumption efficiency in 2018.

- Effective CO2 emissions from the use of SAF corresponds to 20% of that from the same amount of

conventional fuel.

- SAF will be introduced to halve CO2 emissions in 2030 compared to that of 2019.

- The unit price of SAF will be 160 or 240 USD/bbl. in 2025 (about double or triple the jet fuel prices

in 2019). After 2025, the price will gradually decrease at a rate of decrease of 0 to 4% every year.

- By 2025, the use of SAF is sequentially increased while conventional fuel is mainly used. Although

SAF is still expensive, the escalation of equivalent fuel price is prevented as a whole by using CO2

emissions credits as well.

SAF will have to account for 77%*1 of the fuel consumption in 2030 under the above assumptions.

The upper right figure shows an example where the unit price of SAF will reach 160USD/bbl. in 2025

and then gradually decrease by 3% every year. As the amount of SAF usage quickly increases until

2030, the equivalent fuel prices will also rise which is the overall mean including SAF and

conventional fuel. After 2030, the equivalent fuel price will start to decline due to the slowdown of

increase of the ratio of SAF in the total fuel and the gradual decrease in unit price (3% per year).

SAF Adoption Rate Unit Price of Crude Fuel and SAF (USD/bbl.)

Equivalent jet fuel unit price CO2 emissions credits

(*1: This corresponds to 102% of the fuel consumption in 2019.)


77

Likewise, the equivalent crude oil prices (Brent base) calculated by the combination of the unit

prices of SAF in 2025 (160 or 240 USD/bbl.) and rates of decrease (0 to 4%) are illustrated in the

graph. The equivalent crude oil prices (real prices) in 2030 almost match the price range from 2011 to

2014 in the $160 group and, in the $240 group, reach an unprecedented price range. In both groups, if

the rate of decrease is about 1%/year, the equivalent prices do not drop but remain high. The rate of

decrease must be at least 3%/year to make the prices drop after 2030.

We estimated a rise in yield (a rise in airfares) through adoption of SAF based on the current yield

structure and estimated its impact on the growth of transport demand*2. In the case of the initial unit

price as of 2025 is $160 and the rate of decrease is 1%/year, between 2025 and 2040, the total RPK

integrated in the period decreases by 2.8% and the growth rate of RPK drops from 4.16% to 3.96%,

compared with the case where SAF is not introduced (principal value in this document). If the rate of

decrease is 3%, the integral value of RPK decreases by 1.9% and the growth rate drops to 4.07%. If

0

50

100

150

200

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040Ave

rag

e S

po

t P

rice

(20

19U

S$/

bb

l.)

Estimation of Equivalent Fuel Prices ( SAF + CO2 emission credits + conventional fuel based on the Brent crude oil price)

SAF240-0 (Gradual rate 0%)









Brent (IHS/JADC 2021)

Brent Crude (real)Source : IHS Markit, JADC

Brent Crude Oil Price( Average Spot Price )

0

5,000

10,000

15,000

20,000

25,000

2015

2020

2025

2030

2035

2040

RPK (×10 9) SAF導⼊の負担がRPKに及ぼす影響の試算

YGR‐5111 (with/after COVID‐19)

160ドル 3%

240ドル 0%

YGR‐5102 標準モデル (no COVID‐19)

(If CO2 emissions are assumed to be halved from the current amount by 2030, it is required to drastically reduce emissions in

the future. Because CO2 emissions credits do not actually reduce emissions, the estimation in this section assumes that SAF

is used to reduce the emissions.)

Estimated Impact of SAF Introduction Costs on RPK

YGR-5102 standard model (COVID-19 not considered)

YGR-5111 (during and after the COVID-19 pandemic)

$160, 3%

$240, 0%


78

the initial unit price is $240, the impact will be larger and the required rate of decrease will increase

accordingly. (*2: This only refers to the impact via airfare and does not include the impact via economy in general such as GDP.)

Initial unit price /bbl. $160 $160 $160 $240 $240 $240 YGR-5111 Principal

value of this forecast

YGR-5102 Standard

model Gradually decreasing rate /year 1% 2% 3% 0% 2% 4%

RPK integration 2025-2040 ×10^9 214,841 215,887 216,875 208,005 210,647 213,069 221,132 238,558

Comparison 97.2% 97.6% 98.1% 94.1% 95.3% 96.4% 100.0% 107.9%

Growth rate 2020-2040 /year 3.45% 3.49% 3.53% 3.24% 3.36% 3.45% 3.60% 4.00%

Growth rate 2025-2040 /year 3.96% 4.01% 4.07% 3.69% 3.84% 3.96% 4.16% 4.68%

Period

It is important to both keep the initial unit price low when SAF starts being used in full swing and

to subsequently gradually decrease the unit price every year to reduce the impact on the air

transportation demand and the transport industry while introducing SAF. The prerequisite to realize

them is to always ensure a sufficient supply of SAF for the demand.

5.3.2 RPK in the Middle East Region (Slowdown in the Long-Distance Range)

Airlines in the Middle East have adopted aggressive expansion policies particularly since around

2003, and have captured the demand of long-distance transit passengers through “the sixth freedom of

the air.” As the RPK has quickly expanded the scale at an annual growth rate of well above 10% and

even above 20% for a while mainly in the long-distance range (4,500 km or longer), they have

procured many widebody passenger planes and have driven the market. However, when crude oil

prices dropped after the autumn of 2014, the growth rate quickly decreased. The growth rate of RPK

dropped to 2.3% (IATA, total in all the distance ranges) in 2019.

In this JADC forecast, the calculation was performed on the assumption that the growth rate of RPK

in the entire Middle East region, after the rapid growth of RPK of market redivision type ceased, will

be equivalent to the growth rate of the world (3.1%: total of all distance ranges). The forecast shows

that the number of deliveries of passenger planes for the next 20 years will be smaller than that shown

in the past forecast by the JADC. Airlines have already canceled or postponed orders, reviewed models,

and made other adjustments. And the airlines also aim to use existing aircraft longer, the number of

deliveries of passenger planes could further decrease mainly in large widebody jets depending on the

actual change in the growth rate in the future.

********************

The RPK of airlines in the Middle East differ in characteristics between the short-distance range

(up to 1,000 km) to the medium-distance range (up to 4,500 km) and the long-distance range (4,500

km or longer). Both the past rapid expansion and sharp slowdown occurred in the long-distance range.

The figure below shows the RPK in the long-distance range estimated by the JADC. For example,

the average growth rate was 17.3%, much higher than the global average growth rate of RPK, which

was 5.2%, between 2004 and 2014. This suggests that most of the growth did not result from market


79

growth, but redivision of existing air transportation demand among airlines. This sort of growth will

saturate and rely on the market growth rate when they eventually dominate the whole market share

even if carried out perfectly.

And since the fall of 2014, the growth rate of RPK in this distance range has been declining as if in

line with the decline in crude oil prices, with an average growth rate of 4.1% from 2016 to 2019 and

2.0% in 2019. The average growth rate in the long-distance range after COVID-19 calms down is

assumed to be 2.7% for the forecast.

The results of correlation analysis between the RPK and the GDP or yield in the medium- (2,000 to

4,500 km) and shorter-distance ranges suggest that residents in the Middle East region mainly use

flights in these distance ranges. No RPK bending has been observed so far. By analyzing the actual

RPK, GDP, and yield values for the past 20 years or so and forecasting the future RPK using the

forecast future GDP and yield values based on this data, the annual average growth rate is expected to

be 4.1% in the medium-distance range, for example, after the COVID-19 pandemic ends. The average

growth rate of RPK of the airlines in the Middle East is expected to be 3.1% for the next 20 years in

all the distance ranges including the long-distance range as well.

(Actual and forecast RPK in the long-distance range:

The future growth rate is assumed to be higher than the actual value in 2019.)

10

100

1000

10000

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

RPK (Bil.) Long Range Traffic Forecast - M.East

ForecastHistory

17.3% 3.2%


80

(Actual and forecast RPK in the medium-distance range:

The market characteristics are different from the long-distance range.)

Average growth rate of RPK Number of aircraft deliveries Number of aircraft in

service at the end of the forecast period

All the distance ranges

Long-distance range RJ NJ WJ Total

Old forecast 2018-2037 6.02 % 6.46 % 60 880 1,410 2,350 2,654

This forecast 2020-2040 3.11 % 2.65 % 47 914 1,018 1,979 2,333

5.3.3 RPK in the China region (Transition to the Moderate Growth Model)

Airlines in China (CH) have rapidly grown mainly in the short- and medium-distance ranges

(up to 4,500 km). With an average growth rate of RPK for the past 20 years that reached 12.4%, China

is one of the pillars that supports the global aircraft demand. However, the growth rate dropped to

8.1% in 2019. Besides, the GDP per capita has just reached $10,000 in China and the future RPK is

expected to transit* from the fast growing model of a developing country type to the slow-growing

model of a developed country type during the forecast period. (*: Related Part: Section 5.2.7)

For this forecast, we assume that $13,000 in 2024 is an inflection point with reference to the actual

transition that has already happened in other region and that the subsequent growth rate will be close

to the global average. As a result, the number of aircraft deliveries for the next 20 years decreased

from the last forecast by about 900. This qualitative change may progress drastically due to some

external political or economic impact. The transition is expected to happen early during the forecast

period (from 2020 to 2040), though what will trigger the transition in China is unknown.

********************

10

100

1000

10000

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

RPK (Bil.) Medium Range Traffic Forecast - M.East

ForecastHistory

4.1%


81

Although the transition is expected to happen after the GDP per capita in the region exceeds $10,000,

the GDP per capita in China has just reached $10,000 in 2019 and the transition has not yet occurred.

We used the Northeast Asia (NE) region* whose actual data is available and that is economically closer

as a model to estimate the time of the transition.

(*: The Northeast Asia region here refers to Taiwan and South Korea.)

The figure below shows the RPK (including all the distance ranges) and the actual GDP per capita

in the NE region. As the figure shows, the region experienced the transition when the GDP per capita

was around $13,000. The growth rate of RPK in the region dropped from the previous high value to

about 4%/year after the transition period and stabilized. The transition occurred for a short period due

to the strong impact of the Asian currency crisis in 1997 that decreased not only the RPK but also the

GDP.

For this forecast, we estimate that the transition occurs when the GDP per capita reaches around

$13,000 based on the actual example in the Northeast Asia region and applied this estimation to the

forecast value of the GDP of China to conclude that the transition will occur in 2024.

Although it is unknown whether this transition will be rapid or moderate, the transition is likely to

proceed early during the forecast period (2020–2040).

This forecast assumes that the transition proceeds for a short period and that the average growth rate

of RPK after the transition is on the same level as the global average. In addition, the transition is

presumed to affect all the distance ranges in the same way.

Average growth rate of RPK Number of aircraft deliveries Number of aircraft in

service at the end of the forecast period Entire period After transition RJ NJ WJ Total

Old forecast 2019–2038 5.66 % – 187 4,568 2,286 7,041 8,433

This forecast 2020–2040 4.54 % 3.85 % 236 4,097 1,110 5,443 6,944


82

0

50

100

150

200

250

5000 10000 15000 20000 25000 30000

RPK ( 10^9 )

GDP per Capita (2015USD)

NE GDP per Cap. ~ RPK

‐30%

‐20%

‐10%

0%

10%

20%

30%

40%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

NE RPK 成長率（前年比）

0

5,000

10,000

15,000

20,000

25,000

30,000

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

CHのGDP per Capitaの推移（実績と推移：2015USD）

Asian currency crisis (1997)

Source: ICAO, IATA

Source: ICAO, IATA, IHS

Source: IHS

RPK growth rate in the NE region (year-on-year)

Development of GDP per Capita in China (Actual and Forecast values, in 2015USD)

$13,000 (2015USD)


83

6 Factors Related to Air Transportation

6.1 Changes in the Airline Industry

6.1.1 Mergers

Although numerous emerging airlines entered into the airline industry where competition became

much more open from the 1980s as a result of deregulation, this led to over competition. When the

industry briefly regained balance, the number of airlines in the U.S. was actually smaller than that

before the deregulation due to companies merging or closing down.

A merger is often an effective measure for airlines. A merger is useful as a measure against over

competition and abrupt changes in external loads such as escalation of fuel costs. In addition,

absorbing the flight authorizations for routes, arrival and departure slots at airports, usage rights for

airport facilities, and other properties of the merged airlines has large effects and very quick impact in

expanding their network and market share. An example is Pan American Airways, which sold its

Pacific and Latin American routes to United Airlines and its European routes to Lufthansa in the mid-

1980s before it finally went bankrupt in 1991.

Recently, Delta Air Lines and Northwest Airlines (2008), United Airlines and Continental Airlines

(2010), and American Airlines and US Airways (2013) merged in the U.S. As a result of these mergers

and integrations, the U.S. airline industry is now becoming increasingly oligopolistic. These 3 biggest

airlines and the largest LCC, Southwest Airlines, which absorbed ATA Airlines and AirTran Airways

in the 2000s, accounted for 78% of the ASK in the U.S. domestic market (2018). Meanwhile, many

prestigious airlines founded before World War II disappeared.

Similar airline reorganization is also under way in Europe and Latin America.

Although mergers have happened as effective measures in this way, they now face risks related to

antimonopoly laws as consolidation proceeds. In addition, foreign investment regulations apply to

investment in foreign airlines and mergers with them. Foreign companies are usually not allowed to

have more than 50% of the stocks with some exceptions, which is why international mergers are rare.

In this context, airlines have established global alliances since the 1990s.


84

6.1.2 Alliances

Currently, there are three well-known major alliances: Star Alliance (founded in 1997, 26 member

airlines*1), Oneworld (founded in 1998, 14 member airlines*1) and Skyteam (founded in 2000, 19

member airlines*1) in the world (*1: as of April 2021).

These alliances have seamlessly laid out their network across the world by mutually connecting the

route networks of each member company and are trying to increase the number of members. Within

the network, the alliances have improved passenger convenience through efforts such as code sharing,

mutual use of airport lounges, through baggage check-in for transit passengers, and integration of

mileage programs among member airlines to further attract customers and each airline tries to provide

standardized services for passengers, meeting the service level of the alliance. In addition, joint

purchase of equipment, etc. has been carried out, and joint purchase of aircraft is also being considered

in some airlines.

An alliance is similar to a merger in that a large route network is built. However, because they are

not associated with management integration or control, they are likely to be exempt from foreign

investment regulations and antimonopoly laws and they make it easier to expand the network*2.

(*2: Although some may establish joint ventures (JV), which are one step beyond code sharing, JVs

mean deeper management integration and are often not authorized by the antimonopoly law

regulatory agency.)

As of 2016, the member airlines of the 3 major alliances account for 59% of the RPK and 64% of

the operating revenue of the IATA member airlines.

As described above, most airlines have joined an alliance in terms of business scale. In addition, as

the member airlines of the same alliance are gathered at the same terminal to make transit more

convenient at some airports, the benefits of joining an alliance seem to be increasing. However, some


85

airlines are going against the tide. For example, Emirates Airlines and Hawaiian Airlines note the

disadvantages of joining an alliance and are trying to expand their network and improve convenience

on their own and Etihad Airways finances other companies and takes them in as equity partners.

In addition, although partnerships including code sharing were initially supposed to stay within

alliance member airlines, some alliance member companies have recently started sharing codes with

airlines in other alliances.

In 2016, the first LCC alliance called Value Alliance (currently, five member airlines) was

founded mainly in the Southeast Asia region. The functions of this alliance are very limited

compared with the 3 major alliances, this alliance is said to provide transit reservations, through

ticketing, and reservation of ancillary services between member airlines as well. This is noteworthy

because LCCs that only cover short-distance routes up to about 2,000 km can establish a wide-range

network without largely changing their business models if things go well.

6.1.3 LCC

A recent trend in the airline industry is the rise of LCCs. There are two types of LCCs, independent

LCCs and LCCs that are subsidiaries of full-service airlines. And many LCCs that have successfully

established and continued business are so-called Southwest clones.

The efforts that Southwest Airlines made after the Deregulation are considered to have created the

first LCC business model. Congestion at large airports worsened due to security enhancement after

the 9/11 terror attacks in 2001 is said to have partly contributed to today’s rise of LCCs. Although

LCCs had still small presence at that time, passengers who got sick of the temporal and physical

burdens of the pre-boarding procedure including security checks after the 9/11 terror attacks at large,

crowded airports took an interest in LCCs that provide flights at secondary airports that are less

crowded. As a result, despite its casual service, it gained popularity for its ease of use combined with

its simple flight style, and it is believed that LCCs were rapidly gaining recognition in American

society during this period. LCCs also appear to have had the character of a new mode pushed out by

economic and social shocks.

Besides North America, a liberalization framework was also established in Europe after 1993 and

the spread and rise of LCCs have been reported in various regions since the 2000s. LCCs were also

founded in Japan and Taiwan, which had been called the blank area of LCCs, in 2012. In addition,

many LCCs were founded in emerging countries in line with the progress of aviation liberalization.

As shown in the figure, in 2019, LCCs supplied over 30% of the available seats of whole airlines even

in Europe and the U.S., where income levels are high. They show a particularly high proportion of the

seat supply in regions with relatively low income levels such as South Asia (mainly India). This

suggests that low airfares offered by LCCs are suitable for exploring air transportation demand in these

regions.


86

Characteristics of LCC flights include single model (or family), narrow body (fuel-efficient) jet,

many seats (high seat-density), frequent flights, and no-frills services. LCCs seem to realize many of

these characteristics by only offering short-distance flights (i.e., short time flights).

Although some LCCs have started offering long-distance flights after gaining a certain share of

short-distance flights, few have clearly succeeded. However, there are many cases where the route is

suspended soon after it is opened, and cases where the business condition goes dark.

This is not only attributed to the procurement costs of long-distance aircraft. Providing medium to

long flights probably disrupts the core of the LCC business model that has been specialized for short

flights.

A drop in utilization* is another example. One of the prerequisites for the success of medium- and

long-distance LCCs is to improve utilization by using aircraft more efficiently. ZIPAIR, founded in

2020 as a medium- and long-distance LCC, combines a long-distance flight between Narita and

Bangkok and a short-distance flight between Narita and Inchon and is worthy of attention as one of

such measure.

(*: Utilization here means how many hours per day a passenger aircraft is flying.)

Establishment of the first LCC alliance, Value Alliance, in 2016 is also noteworthy. LCCs operating

in the Southeast Asia region will work together via the alliance to provide services including transit

reservation and through ticketing. If this alliance gets into gear, each LCC could perhaps also provide

effective medium- to long-distance transportation services for passengers with smooth transit, while

maintaining the business model dedicated to short-distance routes.

0

10

20

30

40

50

60

70

2007

2019

Source：Cirium, OAG, JADC

Change in Proportion of LCCs in Seating Capacity

North America

Pro

port

ion

of L

CC

s in

sea

ting

capa

city

(%

)

Western Europe

Eastern Europe

Japan China North- east Asia

South-east Asia

South Asia

Oceania Middle East

Latin America

Africa CIS World


87

fewer Spare airplaneslower Airplane unit price

Limiting the range of Single Model or lower Training costs route distance → Single Family → lower Maintenance costs

lower Related investmentsVital !

→ Narrow Body Jet → lower Fuel costsShort Range Compromizing on （low Drag） ↓ comfortShort Time → High Density → more Seats

（No. of seats）（per Airplane）

→ no frills → lower Beverage costsLoading food and drink

Having crew takeCabin cleaning charge or → less ground → lower Labor costs low cost, low fare

abolishing works workers ↓Cargo loading low margin and

short TAT Operating → more Flights → more Passengers high turnoverTaxiing more frequently （availability）（Airline overall） ↑

larger scale→ higher Utiliｚation → more capital turnover capital efficiency

Independent company （Slots）

Point to Point → Secondary less Landing fee → lower cost LCC !no Network connection airport Facility usage fee

(not crowded) （Ground side conditions）


88

6.2 ETOPS

6.2.1 Establishment of ETOPS

In the past, twin-engine aircraft were not allowed to fly in airspaces 60 or more minutes away from

the nearest airfield where they could make an emergency landing at a speed with one engine stopped.

However, with the improvement of engine reliability and other improvements, aircraft have been

allowed to fly in airspaces more than 60 minutes from the nearest airfield since 1985 on the condition

that the aircraft and airlines satisfy certain conditions. This standard is called ETOPS.

First, a 75-minute exception was made for the A300 in 1977. Then, the ETOPS system started when

AC120-42 took effect as an exceptional authorization of FAR 121.161 in 1985. The first ETOPS

(ETOPS-120) rating was given to the 767 in 1986. Then, ETOPS-180 was provided in AC120-42A

(1988) and aircraft such as the 757 and 767 were rated for ETOPS-180. In addition, the concept of

assigning an ETOPS rating before entry into service started in 1995.

As a result, in the 20 years since 1985 ETOPS-180 became the mainstream. If aircraft can fly with

ETOPS-180 rating, twin-engine aircraft can fly across most airspaces in the world including oceans.

So, now, multi-engine aircraft are rarely required.

ETOPS largely affected the fate of twin-, three-, and four-engine aircraft and airlines’ procurement

trend of aircraft.

Although ETOPS like concepts are known by several names, ETOPS is the most common. EDTO

is not intended to replace ETOPS.

6.2.2 From Multi-Engine Aircraft to Twin-Engine Aircraft

In 1964*, three-engine aircraft were excluded from the conventional 60-minute rule (FAR 121.161)

and were allowed to fly in airspaces 60 minutes or more away from an airfield regardless of the aircraft

size. As a result, three-engine aircraft were able to fly on long-distance routes including over oceans

like four-engine aircraft. This largely increased the degree of operation freedom. Because three-engine

aircraft were also able to fly over oceans where twin-engine aircraft were not, the 727 became the

bestselling product and the L-1011 and the DC-10 opened an era of wide body jet with the 747 as

aircraft for North America transcontinental routes and long-distance ocean routes. Some call this

period as the era of three-engine aircraft. (*: The 727 entered into service in 1964.)

However, when ETOPS started in 1985, a group of new twin-engine aircraft that had just been

launched quickly replaced existing three-engine aircraft because of the higher economic performance

of twin engines, the new engines, two pilots, and other features. On Atlantic routes on which ETOPS

was initially applied, ETOPS flights quickly increased after 1985. The number of twin-engine aircraft

flights exceeded the total number of three- and four-engine aircraft flights in 1991 and reached double

their number in 1997. Partly because new three-engine aircraft of just the right size were not available,

this trend became firmly established in just five years or so. The supply of new three-engine aircraft

ended when the MD-11 was discontinued in 2000. In addition, as the importance of three-engine


89

aircraft dropped, the ETOPS system started applying to three- and four-engine aircraft in 2007 and

multi-engine aircraft lost their institutional advantage over twin-engine aircraft.

Twin-engine aircraft from small aircraft (the 737 and the A320) to large aircraft (the 777)

complied with ETOPS before around 2000. With the launch of the 777, the 747 was no longer

ordered (by 2002, passenger model) and had begun to retire in earnest. Four-engine aircraft projects

following the 747 did not proceeded as expected. As the A340 was already discontinued (2012) and

both the A380 and the 747 were set to be discontinued by 2022, the era of four-engine aircraft seems

to be coming to an end.

Airspaces corresponding to ETOPS-60

(60 minutes, 400 nm)

There remain areas where aircraft cannot fly not

only over ocean, but also over land. Whereas

twin-engine aircraft were bounded by this 60-

minute rule before ETOPS, the rule did not apply

to three- and four-engine aircraft.

ETOPS-120 (120 minutes, 800 nm)

The areas where twin-engine aircraft can fly

have largely expanded including Atlantic routes

between the U.S. and Europe, Pacific routes

between Japan and the U.S., and the Kangaroo

Route. However, Arctic routes were still out of

reach. The routes between Hawaii to the U.S.

mainland and those between Australia and the

U.S. mainland were not covered, either.

ETOPS-180 (180 minutes, 1200 nm)

Twin-engine aircraft can fly in most areas and on

most routes both over land and ocean.

Comparison of Area where Aircraft Can Fly according to ETOPS

(The figures are taken from ICAO data.

Blue indicates areas where aircraft cannot fly.)


90

ET

OP

S

(min

ute

s）

370

370

min

.

A3

50-9

00

(be

fore

EIS

)

EA

SA

330

330m

in.

33

0min

.3

30m

in.

78

77

47-

8

FA

AF

AA

FA

A

285

285m

in.

285

min

.

240

240m

in.

A3

30/E

AS

A(A

330

-90

0 o

pti

on

)(A

330

-800

op

tio

n)

207

207

min

.

FA

AE

arly

ET

OP

S77

7(3

co

mp

an

ies

in N

A)

AC

120-

42A

to

ok

eff

ect

EP

L2

0-1

(FA

A)

180

180

180

18

0min

.1

80m

in.

180m

in.

18

0min

.1

80m

in.

180m

in.

180

min

.

767

/AA

etc

.7

57/

A3

00-

600

777/

FA

A7

67/

AN

A/J

CA

BA

320

/319

/32

1A

330

-900

/EA

SA

A3

30-8

00/E

AS

A

A3

30/E

AS

AE

AS

AA

220

/EA

SA

AC

12

0-42

120

120

120

min

.12

0m

in.

767/

TW

A e

tc.

757

/76

7/A

NA

737

/Alo

ha

JCA

B

75

75m

in. E

xce

ptio

n

A3

00,

Ea

ster

n A

irlin

es

etc

.

60

AC

120

-42B

10

'50

'51

'52

'53

'54

'55

'56

'57

'58

'59

'60

'61

'62

'63

'64

'65

'66

'67

'68

'69

'70

'71

'72

'73

'74

'75

'76

'77

'78

'79

'80

'81

'82

'83

'84

'85

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'21

'22

'23

'24

'25

'26

'27

'28

'29

'30

'78

De

reg

ula

tio

n

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Oil

Cri

sis

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2n

d O

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ois

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til 1

985)

707

, DC

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27

A3

10E

IS

DC

-9 E

IS7

67E

ISA

300

-600

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MD

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rge

d75

7E

IS’9

3 A

340

EIS

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A34

0 d

isco

nti

nu

ed

↓↓

↓D

eve

lop

me

nt

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ted

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DC

-10

dis

co

n.

Dev

elo

pm

en

t st

arte

d '6

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2 L

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11

EIS

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0 M

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0 M

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72

7 d

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on

.('

85 E

TO

PS

)

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73

7 E

IS’8

5 7

37C

FM

I EIS

'98

737

NG

EIS

'86

737

-200

ET

OP

S

777

(Tre

nd

par

tic

ula

rly

on

Atl

an

tic

rou

tes)

ET

OP

S fl

igh

ts q

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kly

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reas

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er

19

85.

'91

, th

e n

um

ber

of

flig

hts

of

twin

-en

gin

e a

irc

raft

exc

eed

ed

th

e to

tal

of t

ho

se

of

thre

e-an

d f

ou

r-e

ng

ine

air

cra

ft.

'97

,Th

e n

um

be

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f flig

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of

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tota

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airc

raft

.

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To

ok

effe

ct a

s e

xce

pti

on

al a

uth

ori

za

tion

of

AC

120

-42

: F

AR

12

1.1

61.

ET

OP

S a

lso

ap

plie

s to

th

ree

-a

nd

fo

ur-

en

gin

e ai

rcra

ft f

rom

200

7.

75

1-34

0 d

raft

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firm

ed.

Dev

elo

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f 76

7s

tart

ed.

De

vel

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f D

C-9

s

tart

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ree

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(Th

e B

727

en

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to

se

rvic

e i

n t

he

sam

e y

ear

)

'52

,FA

R 1

21

.161

Tw

in-e

ng

ine

air

cra

ft a

nd

th

ree

-en

gin

e a

irc

raft

With

in 6

0 m

inu

tes

’66

AA

re

qu

es

ted

(tw

in-e

ng

ine

airc

raft

)

'87

A3

40 a

nd

A33

0

De

velo

pm

en

t s

tart

ed

’90

737

-30

0 ac

qu

ire

d E

TO

PS

for

the

fir

st t

ime

.’9

973

7-7

00 a

cq

uir

ed

ET

OP

S

for

the

firs

t ti

me

.

Ea

rly E

TO

PS

/ E

TO

PS

be

fore

ent

ry i

nto

se

rvic

e m

eans

tha

t a

ircra

ft ca

n b

e r

ate

d fo

r E

TO

PS

up

to

180

min

utes

up

on i

ts E

IS i

f ce

rta

in r

eq

uire

men

ts a

re s

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fied.

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rly E

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PS

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dua

lly b

eca

me

wid

esp

read

af

ter

19

95.


91

Names for “ETOPS”

6.3 Infrastructure

Building of infrastructure including air routes, airspace control, and airports is critical to the

development of air transportation.

6.3.1 Development of Air Routes

~ North Pole Route or Northbound Flights to Europe

The route connecting Asia and Europe used to be operated as the southbound European route via

the Middle East and India. It was also a detour to avoid flying over the communist bloc, but it was far,

time consuming and costly.

Once Scandinavian Airlines System (SAS) successfully developed the grid navigation and opened

the North Pole route in 1957, this route had frequently used until the beginning of the 1990s. Japan

Airlines also started the northbound European flights using the DC-8-33 and the grid navigation in

1961, which reduced the required time by about 11 hours compared to the southbound flight. (The

flight time between Japan and the U.K. was shortened from about 30 hours to about 19 hours.)

Route

On this route, Anchorage was used as a relay

point throughout the Cold War as part of a

detour to avoid flying over the Soviet Union.

Both passenger planes and freighters were

refueled here. On the route departing from

Japan, both the Pacific route to the United

States and the European route were refueled and

branched here.

ETOPS (Extended Twin OPerationS) DT: Up to 180 minutes

Subject: Twin-engine aircraft only

ETOPS (ExTended OPerationS) DT: Can be 180 minutes or longer

Subject: Twin-, three-, and four-engine aircraft

ETOPS (Extended Twin OPerationS) DT: Can be 180 minutes or longer

Subject: Twin-engine aircraft

LROPS (Long Range OPerationS) DT: Can be 180 minutes or longer

Subject: Three- and four-engine aircraft

EDTO (Extended Diversion Time Operations)

DT: Can be 180 minutes or longer Subject: Twin-, three-, and four-engine

aircraft


92

Grid navigation

Practical application of grid navigation made it possible to open the North Pole route. Although grid

navigation required research and development of dedicated equipment and techniques*1, the

pioneering efforts of SAS put it into practical use and the North Pole route was opened in 1957.

Because a normal magnetic compass is not usable in the polar zones, a gyrocompass and the polar grid

map were used as alternative measures in grid navigation. Because drift occurred due to the accuracy

of manufacturing or bearings, and errors gradually accumulated even though a high rotation speed

gyrocompass was used, pilots used to fly planes while correcting for the errors based on celestial

observation. (*1: Survival equipment in case of emergency landing was included in addition to navigation equipment.)

In 1958, in the year following the opening of the North Pole route by SAS, the first-ever nuclear

submarine, SSN-571 Nautilus, successfully entered the Arctic Ocean from the Bering Strait, reached

the North Pole while still submerged, and exited to the Europe side. Nautilus used an INS for

submersible navigation without using radio waves or celestial observation.

Grid navigation also had disadvantages such as the need for celestial observation and complex

calculations and fell into disuse as navigation with an INS became popular*2. However, the pioneering

efforts by SAS that opened a new route and changed the movement of people and cargo are impressive.

(*2: Japan Airlines introduced the INS for the first time in 1970 with the 747.)

The North Pole route, which was explored by SAS with grid navigation, continued to be used for

more than 30 years while navigation systems were being changed. Because Russia granted permission

to fly through their airspace for a fee in the 1990’s, the routes via Anchorage gradually fell into disuse.

However, these routes may be used again and aircraft suitable for the route may come to be needed

depending on future changes in international situations.


93

6.3.2 Airport

Europe, the U.S., and Japan are

currently establishing next-

generation flight control systems to

use airspaces efficiently, mitigate

congestion, and improve economic

performance.

Major airports in each country

have already been faced with delays

due to airport congestion and

shortage of arrival and departure

slots that hinders the increase of

flights and opening of new routes.

Delays of 30 minutes to one hour

have already become an everyday

affair during peak times at many

major airports around the world.

Eurocontrol forecasts that the

delay time per flight will increase

from 8.8 minutes in 2012 to 14.2

minutes in 2035 in 28 EU countries

and that the total amount of loss of

passengers’ time value due to these

delays will expand from 4 billion

euros in 2012 to 13.4 billion euros in

2035.

Infrastructure building including

the construction of new airports,

expansion of runways and aircraft

parking aprons at existing airports,

and extension and renovation of

airport terminal facilities are required

to prevent such delays. However, this

not only takes a large amount of

money and time, but because

Changes in Number of Incoming and Outgoing Passengers by Airport

Nu

mb

er

of

inco

min

g a

nd

ou

tgo

ing

pa

sse

nge

rs

(mill

ion

/ye

ar)

Atla

nta

Beijin

g

Dub

ai

Toky

o - H

aned

a

Los

Ange

les

Chi

cago

Lond

on -

Hea

thro

w

Hon

g Ko

ng

Shan

ghai

Paris

Amst

erda

m

Dal

las

- For

t Wor

th

Gua

ngzh

ou

Fran

kfur

t

Ista

nbul

New

Del

hi

Jaka

rta

Sing

apor

e

Inch

on

Den

ver

Changes in Amount of Cargo by Airport

Ca

rgo

am

oun

t (m

illio

n to

ns)

Hon

g Ko

ng

Mem

phis

Shan

ghai

Seou

l - In

chon

Anch

orag

e (*

1)

Dub

ai

Loui

sville

Toky

o - N

arita

Taip

ei

Paris

Fran

kfur

t

Sing

apor

e

Los

Ange

les

Mia

mi

Beijin

g

Doh

a

Lond

on -

Hea

thro

w

Can

ton

Amst

erda

m

Chi

cago

*1) Some 2010 data was not available.

Changes in Number of Take-Offs and Landings by Airport

Nu

mb

er

of t

ake

-offs

and

land

ing

s

(mill

ion

tim

es/

yea

r)

Atla

nta

Chi

cago

Los

Ange

les

Dal

las

- For

t Wor

th

Beijin

g

Den

ver

Cha

rlotte

Las

Vega

s

Amst

erda

m

Shan

ghai

(*1)

Paris

Lond

on -

Hea

thro

w

Fran

kfur

t

Toro

nto

Gua

ngzh

ou (*

1)

Ista

nbul

(*1)

San

Fran

cisc

o

Toky

o - H

aned

a

Hou

ston

Mex

ico

City

*1) Some 2010 data was not available.


94

environment awareness has recently risen, it is also necessary to obtain consent from neighborhood

residents about noise and air pollution around the airport.

In this way, infrastructure building tends to fall behind the curve even though a long-term approach

to infrastructure building is strongly desired to address the future growth of air transportation demand.

In order to satisfy transportation demand with a limited number of arrival and departure slots in this

situation, airlines select larger passenger aircraft with more seats to increase the number of passengers

per flight. Therefore, the number of seats per flight (per aircraft) is on the increase as a whole and large

wide body jet that are usually used for long-distance international flights are often operated even on

short-distance routes if transportation demand is particularly large. Aside from that, it has become

common to actively use secondary airports around crowded large airports to distribute the departure

and arrival load. One example of that is LCCs.

6.3.3 Navigation and Routes

The current air traffic system is facing challenges such as delays due to traffic volume beyond its

capacity, constraints on flights resulting from inflexible operation of airspaces and routes, and an

increase in workload on flight control officers and pilots. To address these challenges, the International

Civil Aviation Organization (ICAO) put together the operation concept of ATM (air traffic

management) and presented its future vision toward 2025 in 2003 and then continuously requested the

promotion of action planning, necessary research and development, and other efforts in regions,

countries, and industries using the ATM operation concept as guidelines again in the ICAO Assembly

in 2007. Taking this opportunity, SESAR created a future vision (ATM master plan) in Europe and

NextGen created a future vision in the U.S. in 2008. In Japan, CARATS created a roadmap to realize

CARATS in 2011. This section describes navigation and flight practices, routes, and flight paths.

SESAR (Single European Sky Atm Research)

NextGen (Next Generation Air Transportation System)

CARATS (Collaborative Actions for Renovation of Air Traffic Systems)

Flight practices

An example of flight practices already in use is RNAV.

Autonomous flight

The aircraft receives radio waves from ground facilities such as VOR/DME and flies toward the source of the radio waves.

Passive flight

The flight depends on navigation equipment and ground facilities. Navigation support facilities are identified.

Because the aircraft measures its position based on signals from VOR/DME, GPS, etc. and makes calculations based on that data, flight courses and other settings can be flexibly specified.

Positioning and calculation

VOR/DME, GPS, etc.

The flight depends on navigation performance (precision). Navigation support facilities are not identified.

Technological innovation

Navigation principles of RNAV (Source: https://www.mlit.go.jp/koku/15_bf_000379.html)


95

The navigation system before RNAV largely depended on the precision of the aeronautical

navigation aid facilities in that aircraft fly along the path set with radials from VOR or the final

approach path instructed by the ILS, for example. Therefore, aircraft had to be equipped with receivers

for each navigation aid facility and satisfy requirements such as high category operation using the ILS

as needed.

In contrast, with RNAV, aircraft fly an arbitrary path consisting of way points and other elements,

identifying its own location as latitude and longitude by using the GNSS, VOR/DME, and INS, IRS,

and other sensors. This enables efficient use of airspaces through flexible path setting, safety

improvement, meeting increasing air transportation demand, enhancement of operation efficiency and

in-service rate, and reduction in environmental load.

RNAV (Area Navigation) VOR (VHF Omnidirectional Radio range)

ILS (Instrument Landing System) GNSS (Global Navigation Satellite System)

VOR/DME (Distance Measuring Equipment)

INS (Inertial Navigation System) IRS (Inertial Reference System)

In Japan, RNAV was operated for evaluation in the en-route area in 1992 and the departure and

arrival method (path) using the FMS was operated for evaluation between Hakodate airport and

Kumamoto airport in 1997. In 2005, four airports (Shin-Chitose, Hakodate, Hiroshima, and Naha)

started using the RNAV approach method.

For reference, during general RNAV flight, an airborne system monitors navigation performance

but does not have a function to issue an alert to the pilot if the required navigation performance may

not be satisfied. However, RNP (required navigation performance) such as RNP10 and RNP4 is a sort

of RNAV flight with an airborne system that monitors navigation performance and has a function to

issue an alert to the pilot if required navigation performance may not be satisfied.

As a revised version of “RNAV Roadmap (2007, version 2),” the “New Roadmap for RBM

Introduction and Deployment Plan (Draft)” sets nationwide deployment of RNAV and RNP paths as

a short-term goal (by FY2024), promotion of satellite navigation (adoption of RNP) in all flight phases

as a mid-term goal (by FY2030), and realization of TBO (realization of satellite navigation in all flight

phases including the time axis) as a long-term goal (from FY2031). Among them, consideration of

advanced RNP in areas around airports starts as a high precision RNP including the time axis in 2024.

Overseas examples of RNAV introduction include the RNP-AR approach method at Los Angeles

airport in the U.S. and the RNP to ILS approach method at Charles de Gaulle airport in France and

Bremen airport in Germany. RNP-AR (Required Navigation Performance Authorization Required)

RNP to ILS (Required Navigation Performance to Instrument Landing System)


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Flight paths

There are four types of ocean flight paths: 1 fixed path, 2 variable path, 3 UPR, and 4 DARP.

An efficient flight path is set using RNP navigation.

(1) Fixed path

Fixed paths have been used as air routes for a long time. Examples include Fukuoka FIR (flight

information region) in the airspace controlled by Japan and the NOPAC (North Pacific) path at the

northern edge of Anchorage FIR controlled by the U.S. A horizontal control interval is ensured

between each path. These paths are important air routes between Asia and North America.

(2) Variable path

Variable paths are set based on daily weather forecasts. An example in the Pacific Ocean is the

PACOTS (pacific organized track system) path. Variable paths are set by an air traffic control

organization based on the weather forecast about 24 hours before flights.

(3) UPR (User Preferred Route)

UPRs are set to each aircraft. The operator considers the aircraft model, takeoff weight, flight time,

fuel consumption, and weather forecast of each flight and sets the optimal path. UPRs may be

different even between flights to the same city that depart at the same time, depending on

differences in model and airline flight policy.

(4) DARP (Dynamic Airborne Reroute Procedure)

Procedure to request to change to a more efficient path to the air traffic control organization during

flight.

Japan (CARATS), the U.S. (NextGen), and Europe (SESAR) took the proposal of the ATM

operation concept by ICAO as an opportunity to individually develop next-generation flight control

systems. Japan has already started operation of the RNAV flight practices and, as a result, can improve

safety, satisfy increasing air transportation demand, enhance flight efficiency and in-service rate, and

mitigate environmental load. In addition, efficient flight paths are set by leveraging RNP navigation

as air routes for ocean flights, which were fixedly set in the past.


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6.4 Demographic Change

Expansion of the middle-income group (potential and new passengers)

With a high economic growth rate, the population in the middle-income group (with an annual

household disposable income of $5,000–$35,000) is increasing in emerging countries in Asia and other

regions. The population in the middle-income group grew by 13.3% on annual average for the 10 years

between 2000 and 2010 and reached 2.1 billion. The population in this group is forecast to increase to

3.1 billion in 2020.

According to the U.N. World Population Prospects in 2019, the global population will increase from

7.71 billion in 2019 to 8.64 billion in 2030 and 9.4 billion in 2040. The population in developing

countries (including emerging countries and China) is estimated to increase from 6.44 billion in 2019

to 8.1 billion in 2040. (The population excluding China is 4.98 billion in 2019 and is expected to

increase to 6.6 billion in 2040.)

According to World Bank data, the population in the upper middle-income group (with GNI per

capita from $4,000 to less than $12,000), which is 2.64 billion in 2019, will be 2.87 billion in 2040

and the average increase rate during this period will be 0.41%. Similarly, the population in high income

countries (developed countries) is expected to increase from 1.26 billion to 1.34 billion in 2040 with

an average increase rate of 0.30%. On the other hand, the population in the lower middle-income group

(from $1,000 to less than $4,000) is expected to increase from 3.06 billion to 3.97 billion. The average

increase rate of this group is as high as 1.26% and the population will be nearly the same as the total

of the population in high income countries and upper middle-income countries in 2040.

Regarding air passenger transportation, high income countries (developed countries) and countries

in the upper middle-income group country can afford to stably pay for airfares and currently account

Trends in Middle-Income Group Population Middle group population (0.1 billion)

Lower middle group (from $1,000 to less than $4,000)

Upper middle group (from $4,000 to less than $12,000)

Source: U.N. World Population Prospects 2019


98

for half of the global population. However, their population increase rate is already of the developed

country type or similar to it being as low as 0.3 or 0.4%/year. Therefore, the future growth of air

transportation demand resulting from a population increase will be accordingly small. In contrast, the

lower middle-income group has a high increase rate and the population increase is also large. Those

with relatively high incomes in this group can become a new customer segment of air passenger

transportation depending on the population and increase rate.

India is currently at this stage. Although the GDP per capita is still as low as $1,900 (2019), demand

has grown particularly for short-distance routes and aircraft demand is also high due to its large

population (about 1.8 billion in 2019). If supply and demand are balanced in a way comparable to the

ability to pay for airfares, the airline and aircraft markets are expected to grow in India. However, at

present, airlines have competed with one another to gain market share even though general consumers

cannot afford to pay for airfares yet. As a result, the whole industry became busy without making

profit. In 2019, Jet Airways liquidated. It was the second largest domestic airline. The remaining

airlines increased their share of the market as a result of the discontinuation of Jet Airways and are

said to have stopped the airfare discount battle for the time being. However, it is also said that the

resumption of this battle is unavoidable. It will be interesting to see if the Indian airline industry can

enter a stable growth trajectory.

Population by Income Group

Developed countries

Upper middle-income group

Lower middle-income group

Poverty group


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Progression of urbanization and concentration of population (passengers)

Urbanization has also proceeded in the world in line with economy growth and population increase.

The ratio of urban population to global population was 29.6% in 1950 but has continued to increase

since then and is expected to be 56.2% in 2020 and 59.8% in 2030.

In the past, the hub-and-spoke business model was effective for air transportation and has been used

for a long time. In this model, small passenger aircraft are used between small airports in small cities

and the nearest large airport to collect and distribute passengers and large passenger aircraft are used

for mass transportation between large airports. This model assumes that the number of passengers is

not large at small airports at the ends of the spokes.

However, when large cities increase in line with global urbanization, those urban areas are expected

to ensure a sufficient number of passengers to each destination. If this happens, nonstop flights can be

provided between large cities without collection, distribution or transfer of passengers. For this

Global Future Population Estimates (Median Estimate) P

opul

atio

n (

106

)

*Developed countries refer to North America, Europe, Japan, Australia and New Zealand.Source: UN World Population Prospects: The 2019 Revision

Middle East Latin America

World 0.92% p.a.

Asia and Oceania

Africa

Emerging countries 1.09% p.a.

Developed countries* 0.07% p.a.

Ratio of Urban Population to Global Population


100

purpose, long-distance medium-sized aircraft will be suitable for international flights with a number

of seats that keeps the load factor high according to the number of passengers traveling between cities.

6.5 Competition

High-speed rail

Although rail transportation is an important partner for air transportation as it collects and

distributes passengers around airports, at the same time, high-speed rail is also in competition with

short-distance flights. The flight speed of aircraft is three times as fast as high-speed rail and this

advantage becomes clearer with longer-distance routes. Therefore, their competition mainly occurs

on short-distance routes.

Although high-speed rail connects large cities with large populations, many passengers travel

between these large cities and many of them are business users. Therefore, these routes are also

important for airlines.

Many people use high-speed rail because rail transportation is safe, reliable, convenient, and

comfortable. Specifically, passengers can directly travel between city centers. Trains are punctual and

not as susceptible to the weather. No time is required for security checks like at airports and they offer

more spacious seats. In addition, passengers can have a meal even if they don’t have a high-class seat

and can use mobile phones and the Internet while traveling.

Competition is particularly intense on routes where the flight time is 1 to 2 hours. It is said that

high-speed rail is more competitive when the travel time is within 4 hours by rail. Recently, Brazil,

India, the U.S., Indonesia, and other countries are advancing plans to build new high-speed rails. On

top of that, a modal shift from air to rail has also been made in cargo transportation from the viewpoint

of CO2 emission reduction in addition to passenger high-speed rail.

Trends in Global Urban Population

Cities with 10 million or more residents

Cities with 5 to 10 million residents

Cities with 1 to 5 million residents

Cities with 500,000 to 1 million residents

Cities with 300,000 to 500,000 residents

Cities with 300,000 or fewer residents

Pop

ula

tion

( 1

06)


101

On the other hand, because building and maintenance of railroads takes a lot of money and time and

cost recovery also takes time, long-term demand forecasts and good business judgment are required

to execute a plan. In contrast, opening of airline routes can take less money and time and is easy to

participate in because routes can be opened just by constructing an airfield. For this reason, air

transportation may start first in countries where rail transportation and other infrastructure are not yet

established.

Ocean cargo transportation

Air cargo transportation is advantageous in that cargo can be quickly transported to distant

destinations with its uniquely high speed. However, air cargo transportation is not suitable to carry

large or heavy cargo and airfares are rather expensive than other modes of transportation. Therefore,

this transportation is only used to carry electronic parts, fresh food, high-profile products, and other

lightweight expensive goods that can cover the airfare.

On the other hand, most goods that support society and people’s lives are transported by train or

ship. Both types of transportation are excellent at transporting a large amount of goods at low cost

regardless of the weight and volume.

Therefore, normal long-distance freight relies on low-cost ocean transportation. If demand

overflows from ocean transportation for some reason, it will usually be handled as air cargo. Possible

reasons include economic boom, emergency, and inventory building during economic recovery.

Because the volume of freight handled by ocean transportation is much larger than that of air cargo,

even if only a part of it flows in, the handling volume of air cargo will fluctuate greatly, causing

fluctuations in busyness.

Actual Traffic Volume of Global High-Speed Rail T

raffi

c vo

lum

e (

109

pass

enge

r-km

)

China

Japan

Korea

Taiwan

France

Germany

Spain

Italy

Other

Source: UIC (Union Internationale de Chemins de Fer)


102

Teleconference systems and virtual reality

People travel to see relatives or friends who live far away and travel for business for communication.

Aircraft satisfies these demands as high-speed transportation. Some say that speed and time reduction

should be pursued with SST.

On the other hand, now that we are in the era of the Internet, a means of high-capacity high-speed

electronic communication has been developed meaning you can have a teleconference, which was

once considered a thing of the future, even on a home PC. Teleconference systems for business use

are actually being used and allow for a high degree of expression. With a teleconference system, it is

possible to eliminate the time and cost for travel even if the other party is in a remote location. In

addition, the more urgent the matter, the larger the effects of instantaneous connection. In addition, as

a teleconference system is not associated with actual movement, it leads to little CO2 emissions and is

a reasonable choice when pursuing CO2 emission reduction as a measure against recent global

warming.

There is a deep-rooted belief that it is critical to meet face-to-face and shake hands for human

communication. However, if telework is promoted and spreads as a measure against the current

COVID-19 pandemic, on-screen communication will be accepted for the most part. This can be a

starting point for using teleconferencing as an alternative to air transportation for some purposes in

the future. Similarly, some airlines and travel agencies are said to be studying ways of letting customers

have virtual “local experiences” at destinations without traveling using an avatar, etc.

Worldwide Market Forecast 2020 - 2040

103

7. Freighter Aircraft Demand Forecast

7.1 Fleet Analysis

Number of aircraft in operation

The number of jet freighters being operated by airlines around the world gradually decreased from

1,754 in 2010 to 1,673 in 2013, but afterwards the number began to increase until it reached 2,117 in

2020 (777 narrowbody aircraft, 686 medium widebody aircraft, and 654 large widebody aircraft).

Regarding the share of freighters by size, the share of large aircraft trended upwards from 2010 to

2013, but after 2013, the number of large aircraft decreased and the numbers of both medium widebody

aircraft and narrowbody aircraft increased.


104

Converted Aircraft

Historically, many converted passenger aircraft have been used in the freighter market. In 2020,

50% of aircraft were passenger-to-freighter conversions. These conversions occur after the aircraft

are over 10 years old, with most conversions taking place when the aircraft are between 15 to 20

years old.

Looking at the delivery record of new and converted aircraft since 2000, there have been no new,

Western-made, narrowbody aircraft, other than the 757 freighter aircraft manufactured in the 1990s.

For this reason, there is a relatively stable demand for converted aircraft in the narrowbody freighter

market. In particular, a large number of 737-300/400 and 757 passenger aircraft have been converted.

In the future, many surplus 737-800 are expected to convert into freighters with the resumption of

737-8 service. Many surplus A320ceo Family also are expected to convert into freighters with

increasing the number of A320neo Family in operation. Freighters converted from Airbus passenger

airplanes has been in operation since 2020.

As for widebody aircraft, many aircraft such as the A300/A310 and DC-10 and the 747, 767, and

MD-11 were converted into freighters in the 1990s and the 2000s, respectively. Since 2008, due to

sluggish demand for air cargo and soaring fuel costs, there was a significant reduction in the number

of converted Trijets and Quadjets. Moreover, deliveries for new aircraft such as the 767F, 777F, and

747-8F have been increasing over the past few years due to various factors such as a shortage of used

767 and A300 passenger aircraft that are retired and suitable for conversion, the short amount of time

that has passed since the converted A330 cargo aircraft was introduced in 2017, and the launch of the

converted 777 cargo aircraft in October 2019, as well as the longer service life and lower maintenance


105

costs associated with new aircraft.

In 2020, deliveries of new aircraft did not increase because of airline's financial difficulties due to

Covid-19.

In 2020, freight capacity of the lower holds of passenger aircraft sharply gone down due to

significant decreasing of passenger flights. The result most of air cargo transport relied on freighters.

In this situation, some suspended passenger aircraft were converted into “Preighter” by removing seats

to compensate for luck of freighter. In 2020, 155 passenger aircrafts were transferred into Preighters,

at the end of 2020 96 aircrafts has been operated as Preighter.

Example of removing only the seats from a passenger aircraft to temporarily use it as a cargo

aircraft (Preighter)


106

7.2 Jet Freighter Demand Forecast

Trends in cargo traffic volume

Freighter cargo traffic fluctuates drastically per annual by economic condition, trade war and

unpredictable risk like Covid-19, but it in terms of RTK trend increase over the period between 1999

and 2019.

In 2020, freighter cargo traffic decreased 10.6% to compared last year due to Corvid-19, but as

described in section 7.1 traffic share of freighter increased temporarily because of suspension

passenger flights.

Result of Jet Freighter Demand Forecast

Demand of jet freighter of airlines fluctuate drastically more than demand of passenger plane. In

the long term the number of jet freighters operated by airlines is forecast to increase from 2,023 in

2019 to 3,041 in 2040. The breakdown is 522 existing aircraft, 1,501 replacement demand, and 1018

new aircraft. In the next 21 years, 2,519 aircrafts including replacement demand plus new demand are

forecast to be delivered.

With regard to the number of jet freighters by size and share, in 2019, narrowbody aircraft made up

37%, medium widebody aircraft 32%, and large aircraft 31%, in 2040 e-commerce is predicted to

increase but the change of other social system is unpredictable, change of the number of jet freighters

share by size is not much, narrowbody aircraft made up 38%, medium wide body aircraft 31%, and

large aircraft 31 % are forecast.


107


108

Deliveries of jet freighters by size will be 1,151 narrowbody, 739 medium widebody, and 629 large

freighters, totaling 2,519 units. Their shares will be 45.7%, 29.3%, and 25.0% respectively. Of these,

736 deliveries will be newly manufactured aircraft. The breakdown of these aircraft will be 443

medium widebody and 293 large aircraft, which will comprise 40% of the total.

As there will be no newly manufactured narrowbody freighters, the majority of the fleet will be

conversions from A320/321, MD80, 737, and 757 passenger jets. There are even a small number of

freighters converted from regional jets such as the CRJ100/200 and the BAe146, so there is a

possibility that freighters converted from aircraft such as the CRJ700/900 and E-Jet will appear.

While newly manufactured widebody jets, such as the A330-200F, 767-300F, 777F, 747-8F already

exist, we expect to see the A330neo, A350, 787, and 777X aircraft in the future. In the future, freighters

converted from retired A330, 777 and 747-8I passenger aircraft can be expected.


109

Regionally, over the period from 2020 to 2040, the number of units in service in North America will

increase from 950 units to 1091 units; the Asia-Pacific region from 366 units to 865 units; Europe

from 300 units to 362 units; the Middle East from 81 units to 266 units; Latin America from 114 units

to 168 units; Africa from 65 units to 126 units; and the CIS from 147 units to 163 units. As a market

for freighters, North America will remain the largest throughout this period. Emerging countries in the

Asia-Pacific region, the Middle East, and Latin America will put more units into service, with the rate

of growth particularly high in the Asia-Pacific region.

The number of new deliveries (newly manufactured freighters and converted freighters) will be the

greatest in North America with 870 units, followed by the Asia-Pacific region with 737 units, Europe

with 282 units, the Middle East with 215 units, Latin America with 162 units, the CIS with 136 units

and Africa with 117 units.


110

Demand for newly manufactured jet freighters in North America will be 340 units, followed by the

Asia-Pacific region with 199 units, the Middle East with 84 units, Europe with 72 units, and the CIS

with 23 units. North America and the Asia-Pacific region have the largest new freighter markets.

Ramp-cargo-door type freighters, which are principally a commercial version of the former Soviet-

era military freighters such as the An-124 and Il-76, are operating in the HOM (Heavy and Oversize

air cargo Market) to transport heavy and oversize cargo. The market share of HOM is very small in

terms of RTK, at only about 0.5% of total air cargo traffic, but that market is expected to grow faster

than average for global air cargo traffic due to growing demand in the aerospace, precision machinery

and the mining industries, as well as in the fields of humanitarian operations and disaster relief. As no

replacements for current freighters such as the An-124, An-225, and Il-76 exist at the moment, and

they operate infrequently, these airplanes are expected to be in service over the forecast period.


111

8. Air Cargo Traffic Forecast

Air Cargo Market Actual and Forecast

Global air cargo traffic, in terms of RTK, grew at an average rate of 3.0% per annum during the 20-

year period from 2000 to 2020. Compared to the passenger airline business, the cargo business is more

susceptible to economic fluctuations, and in ten years between 2000-2009, due in part to the effects of

the U.S. financial crisis in 2008-2009 and credit concerns in Europe, its average growth rate was 2.1%

per annum. The average annual growth rate recovered and increased to 5.3% between 2010-2018.

In 2020, the downside of cargo traffic has occurred due to Corvid-19, but at the end of 2020, RTK

recovered to level of a year ago. In term of RTK, its average growth rate will be 4.0% during period

from 2021-2040, which is expected to increase 2.2 times.


112

Regionally, the number of cargo traffic of the Asia-Pacific airlines is most of all, reflecting the

geographical spread and high economic growth, 896 million RTK in 2020 will increase 2.2 times to

1,992 million TK. Meanwhile that of North America airlines will incrase from 580 to 1046, Europ

from 495 to 965, Eest Asia will increase 3.1 times from 279 to 854 taking advantae of geographical

location.


113

Cargo Load Factor

The cargo load factor system, when viewed as a combination of transportation by freighters and

transportation in the lower holds of passenger airplanes, increased from 50.1% in 2000 to 53.8% in

2020, fluctuating within ±5% of 50％, according to demand.

The freighter load factor decreased slightly to 62.8% in 2019, after increasing from 66.0% in 2000

to 69.8% in 2010. This appears to have happened due to the fact that even though airlines introduced

freighters to expand their transportation capacity in anticipation of increased air freight demand,

freight transportation demand declined due to global trade conflicts, slowing Chinese economic

growth over the last few years, and increased cargo volume in the lower holds of passenger airplanes.

In 2020, the amount of freight transport decreased 10.6% compared to 2019. As a result of the

increased suspension of passenger flights aircraft due to Covid-19, cargo volume in the lower holds of

passenger aircraft decreased. As a result, freighter transport increased, and it’s load factor also

increased.


114

Cargo yield

The real global cargo yield, an indicator of cargo revenue, decreased by an annual average of 1.4%

in the 40-year period from 1980 to 2019, and it decreased by an annual average of 2.2% in the 20-year

period from 1999 to 2018. From 1985 to 1998, the real cargo yield showed a significant decline due

to deregulation and the entry of international courier companies into the general air cargo arena.

Soaring fuel prices caused a sharp increase in 2004-2005, but afterwards, the yield started again on a

downward trend.

In 2020, as a result of the increasing suspension of passenger flights aircraft due to Covid-19, the

cargo volume in the lower holds of passenger aircraft decreased. As a result, demand of freighter

transport increased, and it’s cargo yields also is expected to increase.


115

9. Regional Overview

For the past 20 years (2000-2019), global GDP has grown at an average rate of 3.0% per year,

passenger traffic at 5.1%, and cargo traffic at 3.7%. In the meantime, airline liberalization has

progressed around the world, reorganizations of airlines including new entry, amalgamation, shakeout,

privatization of state-owned airlines have been implemented, and furthermore, many LCCs have

entered the market. Airlines have been shifting their business strategy from forming individual

networks on their own, to forming networks by groups of airlines called “alliances.” In addition,

previously it was airlines from the U.S. and Western Europe that drove the growth of air transport, but

in recent years, airlines from the Asia-Pacific region and the Middle East have grown remarkably. In

this way, airline business models and network strategies have been changing with the times; and the

airlines and the regions experiencing growth have changed as well.

In addition, requirements for airplanes are different by region. Airlines in the Middle East, due to

their regional requirements, have been demanding widebody jets that can fly long distances, while

airlines in Europe have been using widebody jets which have a cruising range of 12,000 km or less.

In North America, narrowbody jets are operated on all routes ranging from Regional Range to Trans-

continental lines. Many LCCs that have experienced remarkable expansion also use narrowbody jets.

Circumstances characterizing airlines differ depending on business models and regions to which these

airlines belong, and their demand for airplanes also differs.

Passenger demand, cargo demand, and airplane demand by region shown below are the cumulative

sums of the demand for passengers and cargo transported by, and number of airplanes operated by

airlines, as well as number of airplanes delivered to airlines by region which contains countries in

which airlines are registered as a corporation or have their head office.

Europe

Africa Latin America

North America

CIS

Asia-Pacific

Middle East

(In the following description, “Regional Range” means less than 1,000 km, “Short Range” means 1,000 to less than

2,000 km, “Medium Range” means 2,000 to less than 4,500 km, and “Long Range” means 4,500 km or longer.)


116

9.0 Regional Economic Characteristics

For each region covered in this report, its economic character is described below by trends in

population and real GDP per capita from 20 years in the past to 20 years in the future (1996-2019/2019-

2040). The horizontal axis shows the real GDP per capita of regions, and the vertical axis shows the

population. Also, the hyperbola (5, 10, 20, 40 × 1012 USD) shows the product of both (GDP per capita

× population = GDP).

・In North America (NA), GDP per capita has grown rapidly in the past and will continue to do so in

the future, with the population showing a slightly increasing tendency. The increase of its transport

demand is caused by further economic growth rather than population growth, which has already

become the slow-growth model seen in developed countries.

・Western Europe (WE), Japan (JA), and Oceania (OC), are similar to NA in that GDP per capita

continues to grow despite stagnant (or decreasing) population growth.

・China (CH) has impressed rapid population growth in the past. However, it will pass its peak of the

population by around 2030. Afterward, it will enter a gradual decline process and will face with a

rapidly aging of the population. The increasing burden of supporting dependents will also slow

down its economic growth. Meanwhile, GDP, underpinned by the large population size, will grow

to a level comparable to NA around 2040. GDP per capita does not still come up to those of Europe

and the U.S., but will exceed $20,000 during the forecast period (2020-2040). As a result, the RPK

is expected to transit from the rapid growth model of developing country type to the slow growth

model of developed country type early in the forecasting period.

・Increase in per capita economic power in South Asia (SW: India, etc.) is slow, and the region is still

characterized by rapid population growth. Africa (AF), even more than SW, is also characterized by

slow growth of per capita economic power and rapid population growth.

・In addition, the Middle East (ME) and Latin America (LA) will soon reach a GDP per capita of

$10,000. Eastern Europe (EE) is currently around $13,000.

0

4

8

12

16

20

24

0 10000 20000 30000 40000 50000 60000 70000 80000Regional Population

（×10 8）

GDP (real) per Capita (2015USD)

Population 〜 GDP(real) per Capita

( 1996‐2019(〇) / 2020‐2040(×) )

NA

EE

CI

SW

AF

SE LA

ME

NE

CH

JA

WE

OC

GDP 40E12

20E1210E12

5E12


117

9.1 North America

Azimuthal Equidistant Projection

Center: Los Angeles

Isometric Circles:

in 5,000km increments


Center: New York

Isometric Circles:



118

In 2020, the United States recorded one of the highest numbers of infected people in the world

due to the relatively gradual epidemic prevention measures against COVID-19 and the delay in

the initial response. However, at the same time, the development and procurement of vaccines

using new technology and the preparations for urgent approval were also underway.

Since the inauguration of the new president in 2021, the vaccination plan has been accelerated

with the approval of new vaccines and the increase in supply due to the start of production.

Currently, it is planned to complete one or more vaccinations for all adults by early July. The

military, dentists, veterinarians, medical students, etc. are also mobilized for inoculation, and

large-scale inoculation venues are operated 24 hours a day. It also plans to produce a large amount

of vaccines by the end of 2021, which will significantly exceed the total population of the United

States. (For example, J & J alone for 1 billion people, etc.)

In this way, the progress of vaccination and the acquisition of immunity in the United States

will progress rapidly, including the major age groups using air transportation, and the number of

domestic passengers and RPK in the United States will recover rapidly in the second half of 2021.

Moreover, it is expected that domestic flights throughout 2022 will achieve the same level of

transportation performance as usual before COVID-19.

Domestic flights account for 72% of the annual operating revenues of US airlines during

normal times before COVID-19, and 84% when combined with Atlantic flights. (Source: BTS,

2019) (Related: Section 3.3)

The U.S.-China feud, which initially surfaced in the form of trade friction, became serious after

concerns about Huawei, response to Hong Kong and Taiwan, and suspicion of theft of U.S.

intellectual property via the Internet. The situation has now changed to the point for the United

States to point out that China is the only competitor potentially capable to mount a sustained

challenge to a stable and open international system. If the world is restructured after COVID-19,

supply chain reorganization may occur, which may affect the form of passenger and freight traffic.

Airlines in North America were significantly damaged by the 9/11 terrorist attacks in 2001.

Since then, in the process of recovery, they have proceeded with the streamlining of their

organizations, and mergers with other companies. As a result, major airlines in the U.S. have been

nearly consolidated into three companies: American Airlines, Delta Air Lines, and United

Airlines; and regional airlines also into three companies: SkyWest Airlines, Republic Airlines,

and Trans States Airlines. Currently, four companies (American Airlines, Delta Air Lines, United

Airlines, and Southwest Airlines) account for nearly 70% of the U.S. domestic market on an RPK

basis, and these airlines are becoming increasingly dominant.


119

Now, airlines in North America are the most profitable in the world, resulting from the

improved financial situation due to restructuring and precise supply/demand adjustments. Airlines

in North America, responding to soaring fuel prices, took emergency measures to reduce

personnel costs from around 2004 to around 2006, which was maintained for nearly 10 years, and

then, they brought their distribution to personnel costs back up to the previous level in the wake

of lower fuel prices after 2015. Nevertheless, in 2018, their net profits accounted for

approximately 45% (approximately 22% in terms of RPK) of the net profits earned by airlines

worldwide.

In autumn 2017, the U.S. Department of Commerce made a preliminary decision to impose a

292% tariff on Bombardier (a Canadian airplane manufacturer) C series passenger planes (the

current Airbus A220) to be imported to the U.S. While this decision was rejected by the U.S.

International Trade Commission in January, 2018, this fuss at once led to the realization of a

partnership between Bombardier and Airbus, and the C Series planes were set to be produced as

the Airbus A220 at an Airbus factory in the United States. Such an unexpected outcome may

change the long-term, strategic balance of sales force.

*******************

Although 4,500 km is almost the same as the north american transcontinental lines, regional

jets and narrowbody planes are mostly used up to this distance in the North America region, and

the number of widebody planes used is quite small. Even on the Atlantic route (NY-London great-

circle distance of approximately 5,600 km), the 757, which is a large, narrowbody planes, has

been used for a long time. Widebody planes increase in number when route length gets 5,000 km

or longer and they are mainly used up to about 9,000 km. The number of planes operated is not

much at longer distances than 9,000km, but they are used up to about 14,000km.

Regional jets are heavily used in a Regional Range, with their usage concentrated at around a

route distance of 600 km, and while the number is gradually decreasing as the route distance

increases, they are used up to a Short Range (2,000 km or less). Passenger turboprops are used

in a Regional Range, and small planes with less than 40 seats are mainly used in a Regional

Range of 600 km or less, with their peak usage around route length of 200 to 300 km. Medium

and large planes with 40 seats or more are used extensively in a Regional Range up to 1,000 km,

and they are most heavily used for around 600 km.


120

RPK in the North America region in 2019 was 1.923×1012 passenger kilometers, of which the

Long Range (4500 km or longer), Medium Range (2000 to 4500 km), and Short Range (1000 to

2000 km) markets account for 28%, 34%, and 25% in RPK respectively. In addition, the average

growth rates in RPK of the markets over the next 20 years are expected to be 3.2%, 3.3%, and

3.0%, respectively, and the Medium-range market is expected to continue to be the largest

category in transport demand in the region even in 2040.

LR 2.8% 3.2%MR 3.2% 3.3%SR 3.2% 3.0%RR 1.1% 1.0%

Total 2.7% 3.0%

LR : Long RangeMR : Medium RangeSR : Short RangeRR : Regional Range

2000-2019

2020-2040

RPK AverageGrowth Rate

200 206 249 302 259 323 483

889 345 412 645

1260

317 381

546

1041

0

1000

2000

3000

4000

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐North America

RR SR MR LR

18% 16% 13% 9%

23% 24% 25%25%

31% 31% 34% 36%

28% 29% 28% 30%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐North America

RR SR MR LR


121

The number of planes in service in the North America region (including freighters) will increase

from 8,319 in 2019 to 9,844 in 2040. Over this period, the number of planes to be delivered and

the sales value (at 2019 list price) are expected to be 8,810 units and 1.09 trillion U.S. dollars,

respectively. Narrowbody planes will account for 70% of all passenger planes deliveries (7,533

units).

In the North America region, over the past 20-year period from 2000 to 2019, GDP grew at an

average annual rate of 2.1%, passenger demand at 2.7%, and cargo demand at 2.5%. As for the

growth rate forecast for 2020 to 2040, GDP will grow at 1.8%, passenger demand at 3.0% and

cargo demand at 2.4%. The average growth rate of transport demand in the mature North

American market is forecast to be slightly lower than the global average for both passenger and

cargo transport. In addition, 83% of the planes to be delivered in the forecast period will be

replacements for existing planes.

8,319

1,034

0

7,285

0

1,525

0

2,000

4,000

6,000

8,000

10,000

12,000

2019 2040

No

. of

Air

pla

ne

s

Fleet Developments of Airlines in North America

Replacement

Growth

Retained

New Deliveriesｄｆ

8,810

9,844

83%

17%

North America New Deliveries New Deliveries

2019 2040 2020-2040 2019 2040 2020-2040

Passenger Turboprops (TP) Jet Freighters (JF : New + Converted) 15-39 seats 401 242 229 Narrowbody 273 312 312 40-59 seats 109 55 47 Medium Widebody 400 535 406 60 seats and larger 162 212 131 Large 277 244 152 (Total) TP 672 509 407 (Total) JF 950 1,091 870

Passenger Jets (JP) (Grand total) TP + JP + JF 8,319 9,844 8,810 20-59 seats 759 2 0 60-99 seats 1,239 1,386 1,213 (subtotal) Regional Jets (RJ) 1,998 1,388 1,213 Growth Indices (2020-2040)

100-119 seats 179 895 869 GDP 1.8 ％

120-169 seats 2,706 2,234 2,013 RPK 3.0 ％

170-229 seats 1,120 2,549 2,368 RTK 2.4 ％

(subtotal) Narrowbody Jets (NJ) 4,005 5,678 5,250 Fleet 0.8 ％

230-309 seats 458 793 721 Sales (2019 List Price) 1,092 US$ billion 310-399 seats 231 385 349 400 seats and larger 5 0 0 (subtotal) Widebody Jets (WJ) 694 1,178 1,070 (Total) JP = RJ + NJ + WJ 6,697 8,244 7,533

FleetFleet


122

9.2 Europe

It is difficult to be optimistic about the future of Europe’s politics and economy, due to the

changes and confusion expected to take place due to the BREXIT, the skeptical trends about the

EU over issues such as terrorism and immigrants/refugees, and the risks including government

debt of some countries although it's not much talked about now. However, despite these issues,

Europe is one of the three major markets including North America and China, which shore up

global demand for air transport.

Although Europe has promoted market integration, freedom of movement of people and goods,

and liberalization of aviation, in response to the COVID-19, quarantine measures such as

immigration restrictions or waiting after entering, have been executed by country even within the

region. As a result, the decline in air transportation within Europe was greater than that of

domestic flights in the United States which is a single country.

The long-awaited vaccination began in the region in 2021, and immunity will be widely

established by the end of 2021, and the condition will restore air transport demand within Europe,

as well as the Atlantic route to the United States / North America which will have acquired

collective immunity.


Center: London

Isometric Circles:



123

Europe, as defined by JADC, includes the countries of Western Europe, Eastern Europe,

Northern Europe, and Turkey. European countries have their core parts almost within a range of

an equilateral triangle of 4,500 km on a side, and if a circle of 10,000 km radius is drawn with

London in its center, it will encompass the main parts of the globe. If the radius is expanded to

12,000 km, it will reach Singapore.

Almost all of countries in the region are EU member countries that constitute a single aviation

market in continental scale, in which the member states have open access to one another even for

respective domestic operations under the agreements. Over the past 20 years, passenger demand

showed a steady growth. Major airlines in Western Europe have already almost been

consolidated into three groups: Air France-KLM, IAG (BA, among others), and Lufthansa. In

addition, Europe’s LCCs have rapidly developed after the 1993/1997 liberalization and have now

come to account for about 37% of the available seat capacity in European airlines as of 2019.

With regard to airplanes used in the Western European region, while widebody planes are used

for Long-Range, narrowbody planes are mainly used in a Short and Medium range. The number

density of narrowbody planes peaks in a route range of around 500 km, and the number

monotonically decreases as the route hength increase toward around 3,500 km. Although in the

Regional Range market, regional jets are also used mostly in a route range of around 600 km, the

number in use is significantly fewer than in the North American region, and far fewer than in the

Short Range market. In the Regional Range, passenger turboprop planes are also used along with

regional jets, but they are mostly used in a route length of around 300 km, indicating that they are

operated in shorter length than regional jets are. Many medium and large passenger turboprop planes

with 40 seats or more are used. Small turboprop planes with less than 40 seats are used in the range of

600km or less with their peak usage at around 200km.

The great majority of airplanes used in the Eastern European region are narrowbody planes.

They are mainly used in the Short Range of 900 to 1,900 km*, and with regard to longer range

than this range, they are used for ranges up to around 4,000 km with their number gradually

decreasing. The number of widebody planes is small. They are used for lines between 5000 to

10000 km, with their usage a little concentrated in around 5500 to 7000 km. In the Regional

Range, passenger turboprop planes with 40 seats or more are used in a range of 300 to 700 km,

mainly around 400 km. At longer distances than 700 km, the number of turboprop planes

decreases, but some are used up to 1000 km. The market is split between middle- and large-

sized turboprops and narrowbody jets with the boundary around 700km. Regional jets are used in

the range of 300-1500 km, but they are not many in number.

(* In Eastern Europe, Wizz Air, an LCC, is performing well).


124

RPK in Europe (Western Europe and Eastern Europe) in 2019 was 1.974×1012 passenger

kilometers, of which the Long Range (4,500 km or longer) market accounted for the largest share

of 41%. Average growth rates of RPK in the next 20 years are expected to be 6.3% and 4.3% in

the Medium Range and Short Range markets respectively, relative to 2.5% in the Long Range

market, and in 2040. While the Long Range market will increase to 31% in RPK, the Short Range

and Medium Range markets are expected to increase to 32% and 27%, respectively. It is expected

that the presence of lines within Europe will increase.

The number of planes (including freighters) in service in Europe will increase from 5,802 at

the end of 2019 to 9,641 in 2040. Over this period, the number of planes to be delivered and the

sales value (at 2019 list price) are expected to be 8,446 units and 1.22 trillion U.S. dollars,

respectively. Of the units to be delivered, 55% will be replacements for existing planes.

Narrowbody planes will constitute 77% of passenger planes delivered (7,714 units).

LR 2.4% 2.5%MR 7.6% 6.3%SR 6.3% 4.3%RR 2.2% 1.9%

Total 3.8% 3.9%


2000-2019

2020-2040


180 207 276 407 145 268 493

1203 91 162

389

1393

513 493

816

1376

0

1000

2000

3000

4000

5000

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Europe

RR SR MR LR

19% 18% 14% 9%

16% 24% 25% 27%

10%14% 20%

32%

55%44% 41%

31%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Europe

RR SR MR LR


125

In Europe, over the past 20 years from 2000 to 2019, GDP grew at an average annual rate of

1.7%, passenger demand at 3.8%, and cargo demand at 2.6%. As for the growth rate forecast from

2020 to 2040, GDP will grow annually at an average rate of 1.2%, passenger demand at 3.5% and

cargo demand at 2.9%. Although growth in demand for air transport in Europe is slightly lower

than the global average since Western Europe (growth rate of 3.3%), like the U.S., is a mature

market, the growth rate in Europe as a whole is expected to be nearly the same as the global

average since the growth rate of passenger service in Eastern Europe (5.7%) is particular high.

5,802

1,195

0

4,607

0

3,839

0

2,000

4,000

6,000

8,000

10,000

12,000

2019 2040

No

. of

Air

pla

ne

s

Fleet Developments of Airlines in Europe

Replacement

Growth

Retained

NewDeliveries

55%

9,641

8,446

45%

42%

Europe New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040

Passenger Turboprops (TP) Jet Freighters (JF : New + Converted) 15-39 seats 207 135 125 Narrowbody 140 166 166 40-59 seats 53 56 53 Medium Widebody 71 109 84 60 seats and larger 311 394 272 Large 89 87 32 (Total) TP 571 585 450 (Total) JF 300 362 282

Passenger Jets (JP) (Grand total) TP + JP + JF 5,802 9,641 8,446 20-59 seats 58 0 0 60-99 seats 371 359 317 (subtotal) Regional Jets (RJ) 429 359 317 Growth Indices (2020-2040)

100-119 seats 131 827 790 GDP 1.2 ％

120-169 seats 2,889 2,818 2,174 RPK 3.5 ％

170-229 seats 509 3,050 2,969 RTK 2.9 ％


230-309 seats 542 871 742 Sales (2019 List Price) 1,219 US$ billion 310-399 seats 308 760 722 400 seats and larger 123 9 0 (subtotal) Widebody Jets (WJ) 973 1,640 1,464 (Total) JP = RJ + NJ + WJ 4,931 8,694 7,714

FleetFleet


126

9.3 Asia-Pacific

The Asia-Pacific region is expected to see strong economic growth well into the future, given

the expanding middle-class population, based on the region’s large population and the impressive

economic growth rate. Currently, China is exercising strong economic traction with its capacity

based on both its population and economic growth rate, and also creating massive demand for air

travel.

Its economic growth is expected to

continue through this forecast period

(2020 to 2040), during which, the

economic growth and expanded demand

for air travel (RPK) are also forecasted

for the Southeast Asian countries

(ASEAN) including Thailand, Vietnam,

and Indonesia.

However, China’s demographic bonus

ended by about 2015, and its total

population will begin to decline after

passing its peak about 2030, and the

aging of Chinese society will be set to accelerate rapidly.

A deregulation for Airline business has been in progress in this region as well. LCCs have been

established even in Japan and Taiwan, where no LCCs had existed before, and open skies (full

liberalization within the region) in the ASEAN began to emerge from 2016, along with the launch

of the AEC (ASEAN Economic Community).

9,148

3,164

0

5,984

0

8,937

0

5,000

10,000

15,000

20,000

2019 2040

No

. of

Air

pla

nes

Fleet Developments of Airlines in Asia-Pacific

Replacement

Growth

Retained

NewDeliveries

%

14,921

18,085

40%

60%

Japan

Northeast Asia

SoutheastAsia

South Asia

Oceania

China


127

The Asia-Pacific region covers a geographically large area, with the seas and mountains therein.

Its ground transportation networks have not yet been fully developed due to being separated by

the sea and mountains, and therefore, air transportation is suitable for the region.

In the region, over the past 20-year period from 2000 to 2019, GDP grew at an average annual

rate of 5.2%, passenger demand at 7.3%, and cargo demand at 3.6%. In the meantime, the region

shored up the growth of global air transport. In the period from 2020 to 2040, the region is

expected to continue growing significantly; GDP will grow at an average annual rate of 3.6%,

passenger demand at 4.5%, and cargo demand at 3.8%. It is a growth market where 60% of planes

to be delivered during the forecast period will be for new demand.

The number of planes in service (including freighters) in the region will increase from 9,148 in

2019 to 18,085 in 2040. Over this period, new deliveries and the sales value (at 2019 list price)

are expected to be 14,921 units and 2.1 trillion U.S. dollars, respectively. Partly because massive

domestic (Regional- and Short-Range) markets also exist in India and China, and partly because

there is great demand for planes by LCCs, narrowbody planes will account for 76% of the number

of passenger planes to be delivered (12,619 units).

Asia-Pacific New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040

Passenger Turboprops (TP) Jet Freighters (JF : New + Converted) 15-39 seats 432 573 519 Narrowbody 182 422 412 40-59 seats 153 193 152 Medium Widebody 49 122 95 60 seats and larger 511 1,181 894 Large 135 321 230 (Total) TP 1,096 1,947 1,565 (Total) JF 366 865 737

Passenger Jets (JP) (Grand total) TP + JP + JF 9,148 18,085 14,921 20-59 seats 9 0 0

60-99 seats 318 503 487

(subtotal) Regional Jets (RJ) 327 503 487 Growth Indices (2020-2040)

100-119 seats 64 656 637 GDP 3.6 ％

120-169 seats 4,603 5,871 4,090 RPK 4.5 ％

170-229 seats 883 5,202 4,854 RTK 3.8 ％


230-309 seats 1,015 1,626 1,330 Sales (2019 List Price) 2,117 US$ billion 310-399 seats 682 1,401 1,221 400 seats and larger 112 14 0 (subtotal) Widebody Jets (WJ) 1,809 3,041 2,551 (Total) JP = RJ + NJ + WJ 7,686 15,273 12,619

FleetFleet


128

[ China ]

China is a continental market with a vast territory, and transport demand (RPK) is mainly for

regional and short range domestic routes. China, along with Europe and North America, will be

one of the three major markets pillaring the global air passenger traffic demand at the end of the

forecast period (2040).

China's economic growth has been accompanied so far by a rapid increase in air passenger

demand. During that time, China was within a range for a long time where GDP per capita is less

than $10,000 and the demand for travel increases rapidly as income levels rise. In consequence,

the average RPK growth rate was 12.4% per year over the past 20 years. However, as a result of

economic growth, GDP per capita has reached $10,000, and as that is expected to continue to

increase, China transition of growth model from the rapid growth model of developing countries

type to the slow growth model of developed countries type will occur at an early stage within the

forecast period. Therefore, future RPK growth rate is expected to decline.

(Related Part: sections 5.2.7, 5.3.3)

RPK in the region in 2019 was 1.333×1012 passenger kilometers, of which the Short Range

(1,000 to 2,000 km) market was the largest accounting for 44%, and together with the Regional

Range market accounted for 59%. They are expected to grow at an annual average rate of 5.0%

and 4.6% respectively in the next 20 years, and of these, in 2040, the Short Range market is

expected to account for 48% in RPK, and together with the Regional Range market 63%.


Center: Shanghai

Isometric Circles:



129

Among current airplanes, narrowbody planes are used in a medium or shorter range (4,500 km

or less), with their usage concentrated in a range from 400 to 2,200 km, and most planes used in

the region are narrowbody planes. Their peak usage occurs at a range of around 1,300 km, but the

distribution is spread out fairly evenly and there is no outstanding range of distance.

Widebody planes, which are fewer than narrowbody planes, are extensively used across the

region from Long Range to Regional Range (around 800 km). In the Long Ranges over 5,000 km,

widebody planes are used for range distances up to 13,000km. In the ranges between 5,000 km

and 13,000 km, although their fleet density exhibits some characteristic peaks, they are used

almost uniformly across the entire range. For ranges of less than 5,000 km, the fleet density is

particularly high in the range of 1,000 to 2,000 km.

A small number of passenger turboprop planes are used.

LR 10.9% 3.7%MR 13.0% 4.4%SR 13.9% 5.0%RR 10.6% 4.6%

Total 12.4% 4.5%


2000-2019

2020-2040


26 87

194 588

43 187

589

1899

20 62

228

652

41

90 323

812

0

1000

2000

3000

4000

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐China

RR SR MR LR

20% 20% 15% 15%

33%44%

44% 48%

15%

15%17%

16%

31%21% 24% 21%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐China

RR SR MR LR


130

Demand for air transport in China is mainly for Regional Range lines and Short Range lines up

to 2,000 km, of which 90% is considered to be for domestic lines (when combined with Medium

Range lines, 80% is for domestic lines). The airplanes used on these lines are narrowbody planes,

and China’s domestic-made C919 passenger plane is applicable for these ranges, in addition to

the 737 and A320 families.

As thus described, since there is sufficiently large demand for narrowbody planes even in the

domestic route market alone, even if it is not feasible to export the C919 due to issues such as

type approval, it is conceivable that China can develop domestic plane production and the aviation

industry by generating demand from its domestic market, given the approval by the Civil Aviation

Administration of China and China’s vast territory. In aiming to become an aviation power, it is

conceivable for China to adopt an import substitution policy, and even if it is currently using the

737 or A320, to shift to procurement focused on domestic aircraft. If that is the case, even though

transport demand in the region is large, China’s market size might substantially shrink in the next

20 years from the viewpoint of the U.S. & European manufacturers. In addition, the outlook for

US-China relations has not been optimistic in recent years, and the business environment may

change in the future.


131

Intentionally Blank


132

[ Southeast Asia ]

The Southeast Asia region, defined by JADC, consists of the 10 ASEAN member countries and

East Timor.

RPK in Southeast Asia in 2019 was 648×109 passenger kilometers, of which the Long Range

(4,500 km or longer) market was the largest accounting for 32%, followed by the Medium Range

(2,000 to 4,500 km) market which accounted for 32%. Average growth rates in distance ranges

over the next 20 years are 5.1% in the Medium Range market and 5.6% and 5.6% in the Short

and Regional Range markets respectively. As a result of the growth of the Regional and Short

Range markets, in 2040, in RPK, the ranges of 2,000 km or shorter will account for 46% in total,

and the range of 4,500 km or shorter will account for 83% in total.

Narrowbody planes are the main planes in fleet of the region, and mainly used in the range

from 300 to 3,500 km, with their peak density of planes at a range from 500 to 700 km. They are

especially utilized in the range up to 2,000 km. Medium and large passenger turboprop planes

with 40 seats or more are used in the Regional Range market of 700 km or less, and heavily used

around 300 km. Widebody planes are used in a range from Long Range (up to around 14,000

km) to Short Range market, but the number of them is low.

LCCs are flourishing in Southeast Asia as well. Of the number of seats provided by airlines in

the region, that provided by LCCs exceeds 50%, which is the second highest after South Asia

(India, etc.). Since income levels have not yet been so high (overall average GDP per capita is

slightly less than $3,000 in the region), the low-cost fares offered by LCCs appear to be suitable

for eliciting the potential air transportation demand. In 2016, the “Value Alliance” was established

as the first alliance by LCCs, which is for LCCs operating in the Southeast Asian region to

cooperate with each other to provide services such as transit reservations and through-ticketing.


Center: Singapore

Isometric Circles:



133

If things get on the right track, it is expected for LCCs that are good at Short Range lines to be

able to provide passengers with substantial Medium or Long Range travel services by means of

smooth connections between LCCs.

Furthermore, aviation liberalization is progressing in this region as well. Preparations began

with the reference to the Open Sky Policy made during the 1995 ASEAN Summit, and, under the

RIATS roadmap, which promotes integration of air travel sectors, the multilateral agreement on

full liberalization of air freight services (MAFLAFS), the multilateral agreement on air services

(MAAS) and the multilateral agreement for the full liberalization of passenger air services

(MAFLPAS) were prepared and all ASEAN members have ratified before now. As a result, the

designated airlines are granted third, fourth and fifth freedom traffic rights in sub-regions within

the ASEAN region, cities where international airports are located, and between capitals.

LR 2.9% 1.4%MR 9.1% 5.1%SR 9.3% 5.6%RR 8.2% 5.6%

Total 6.2% 4.4%


2000-2019

2020-2040


20 44

96 342

16 41

95

339

29 61

164

532

92 126

163

246

0

400

800

1200

1600

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Southeast Asia

RR SR MR LR

13% 16% 19% 23%10%

15%18%

23%18%

22%

32%

36%59%

47%32%

17%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Southeast Asia

RR SR MR LR


134

[ South Asia ]

The region, including the Indian subcontinent, has a large interior space. In addition, many

migrant workers are sent from the countries in the region to the Middle East. The Middle East

(Dubai) is in medium range (2,000 to 4,500 km) and at a reachable location from anywhere in

the region.

RPK in South Asia in 2019 was 275×109 passenger kilometers, of which the Short Range (1,000

to 2,000 km) market was the largest accounting for 36%, followed by the Medium Range (2,000

to 4,500 km) market accounting for 30%. The average growth rates in the distance ranges over

the next 20 years are expected to be 6.7% to 7.4% in the Medium and Short Range markets, and

6.8% in the Regional Range market. As for the breakdown of RPK in 2040, it is expected that the

Medium Range and the Short Range markets will account for 32% and 43% respectively. In those

markets, including the Regional Range market, air transport demand on the Indian subcontinent

will expand.

Narrowbody planes are the main planes in fleet of the region, which are used in distances for

500 to 4,000 km, and especially used heavily for 500 to 2,000 km. Between 2,000 km and 4,000

km, the number of planes to be operated decreases as the distance increases. Widebody planes are

used in distances of 2,000 km or longer, and used in combination with narrowbody planes in

distance up to 4,000 km. Only widebody planes are used beyond that. The number of widebody

planes to be operated is small. Many passenger turboprop planes are used in the Regional Range

of 100 to 800 km, with their peak usage at 300 km.


Center: New Delhi

Isometric Circles: in 5,000km increments


135

India is representative of

this region in terms of both

population and economic

scale, and in recent years has,

along with experiencing

remarkable economic grow-

th as a cornerstone of BRICs,

increased RPK and been

strongly motivated toward

procurement of new planes

as well. GDP per capita in

India is at a level of around

$2,000, indicating that India is in a rapid growth stage where travel demand is rapidly increasing

as income levels rise. However, it is characterized that GDP is expanding due to the increase in

population and the increase in GDP per capita is gradual. Therefore, the income level and thus the

ability to pay air fare are still low. In this environment, in which domestic airlines compete fiercely

for market share and have been unable to generate satisfactory profits, Jet Airways, the second

largest airline in India, was forced to liquidate the company and disappeared in 2019.

Immediately after the bankruptcy of Jet Airways, the yield of the remaining airlines increased,

but a recurrence of market share competition is reported to be inevitable. Based on the actual data

for the past 20 years and the future economic outlook, this forecast predicts that the RPK in this

region, excluding Long-Range markets, will grow at a rate of around 7%. To realize this growth,

however, it will be necessary to establish a long-term sustainable balance between income levels

and airline yields in the region.

LR 5.5% 1.2%MR 11.3% 6.7%SR 11.3% 7.4%RR 8.6% 6.8%

Total 9.4% 6.5%


2000-2019

2020-2040


10 18 52

227

11 33 98

482

10 30

83

354

14 32

42

58

0

400

800

1200

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐South Asia

RR SR MR LR

22% 16% 19% 20%

25%29%

36%43%

22% 27%

30%32%

31% 28%15% 5%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐South Asia

RR SR MR LR


136

[ Northeast Asia ]

The Northeast Asia region, defined by JADC, consists of Taiwan, North and South Korea, and

Mongolia, and Taiwan and South Korea form the cores of the region in terms of economic power

as well as in terms of RPK. The land areas of the countries are small, much of the air transport

are flights to outside regions, and Long Range markets occupied 48% of the RPK in 2019.

Meanwhile, from the region, all of the Southeast Asia area falls within a Medium Range (~4,500

km), and besides, the lines between Taiwan and Korea fall within a range of 2,000 km. Similarly,

the lines between Taiwan and Japan’s Kansai area are within a range of 2,000 km as well, and

even Taiwan to Hokkaido within a range of 3,000 km. In recent years, LCCs have become much

more active in the region.

RPK in Northeast Asia in 2019 was 232×109 passenger kilometers, of which the Long Range

(4,500 km or longer) market was the largest, accounting for 48%, followed by the Medium Range

(2,000 to 4,500 km) market, accounting for 30%, and the Short Range (1,000 to 2,000 km) and

Regional Range (up to 1000km) markets, accounting for around 11% respectively. Average


Center: Taipei

Isometric Circles:



137

growth rates in the distance ranges over the next 20 years are expected to be 3.7% and 3.0% in

the Short Range and Medium Range markets respectively, indicating growths in the Short and

Medium Range markets. And in 2040, the Long Range and Medium Range markets are expected

to account for 40% and 37% in RPK respectively.

Among current fleet, while passenger turboprop planes are used in the Regional Range, but not

longer than 300 km, and in the 300 to 3,700 km range, narrowbody planes are used, with their

peak utilization between 400 to 500 km. Widebody planes are used at the distance of 500 km up

to 13,000 km. Widebody planes are used alongside narrowbody planes in the Short Range and

Medium Range, and the number of planes in use is almost the same as that of narrowbody planes

used in each range. For ranges of 4,000 km or longer, only widebody planes are used, and

especially used in ranges of 9,000 km or longer.

LR 3.5% 1.1%MR 6.8% 3.0%SR 6.4% 3.7%RR 2.3% 0.8%

Total 4.4% 2.0%


2000-2019

2020-2040


16 19 26 32 7

10 25 57

19 27

69

138

56 89

112

149

0

100

200

300

400

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Northeast Asia

RR SR MR LR

17% 13% 11% 9%

7% 7% 11% 15%

19%18%

30%37%

57% 61%48%

40%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Northeast Asia

RR SR MR LR


138

[ Japan ]

The great-circle distance from Japan (Tokyo) to the West Coast of the United States is

approximately 9,000 km, and that to the East Coast is about 11,000 km. The main part of Europe

is also located about 10,000 km away from Japan in great-circle distance. Even among Southeast

Asian countries which are considered to be “close” to Japan, it is only Thailand (Bangkok), the

Philippines, Vietnam, Myanmar (Naypyidaw), etc. that can be reached from Tokyo on the

Medium Range lines (covering up to 4,500 km), and Malaysia, Singapore and Indonesia are more

than 4,500 km away from Tokyo, falling under Long Ranges. The destinations which airplanes

can reach from Japan on the Short Range lines up to 2,000 km are limited to places such as Beijing,

Shanghai, and Northern Taiwan. The Regional Range lines of 1,000 km or less include all

domestic routes, as well as the main routs of Tokyo-Sapporo and Tokyo-Fukuoka.

RPK in Japan in 2019 was 204×109 passenger kilometers, of which the Long Range (4,500 km

or longer) market was the largest accounting for 39%, followed by the Regional Range (up to

1,000 km), Short Range (1,000 to 2,000 km) and Medium Range (2,000 to 4,500 km) markets

accounting for 33%, 18% and 10% in RPK respectively. The average growth rate of each distance

range over the next 20 years is expected to be 4.9% for Medium Range and 3.5% for Short Range,


Center: Tokyo

Isometric Circles:



139

and as a result of the increase in Short to Medium Ranges than the present, the breakdown in RPK

in 2040 is 37%, 14%, 20% and 29% in order from longer distance range.

Among current fleet, narrowbody planes are mainly used in a range from 500 to 2,000 km, and

many are used in a range up to around 1,300 km. Widebody planes are used in ranges from the

Long Range (up to 11,000 km) to the Regional Range lines. Both narrowbody and widebody

planes have their pre-eminent peak of fleet density especially in the 900 km distance range.

Regional Jets and passenger turboprop planes are used in the Regional Range; and both are used

in almost the same number as widebody planes, in the range from 500 to 700 km. Turboprop

planes of small size are mostly used in the range of less than 500 km, with their peak fleet density

at 300 km.

LR -0.5% 2.6%MR 1.9% 4.9%SR 3.6% 3.5%RR 1.8% 2.2%

Total 1.0% 2.9%



2000-2019

2020-2040

47 54 68 104 18 24

37

73

13 12 20

51

88 52

80

132

0

100

200

300

400

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Japan

RR SR MR LR

29%38% 33% 29%

11%

17%18% 20%

8%

8% 10% 14%

53%37% 39% 37%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Japan

RR SR MR LR


140

[ Oceania ]

The Oceania region, defined by JADC, consists of Australia, New Zealand, Papua New Guinea

and the island states which lie to the east of these countries. These are in isolated positions in the

Pacific Ocean, and, for example, even if a circle is drawn with a radius of 10,000 km centered on

Sydney, no major land masses can be reached and contact with only Southeast Asia area is

possible. One must fly 7,000 to 8,000 km to reach Japan and Singapore from around the Sydney

area, even utilizing a Great-Circle route. Even within the region, the distance between Sydney

and Wellington is approximately 2,500 km.

RPK in the Oceania region in 2019 was 211×109 passenger kilometers, of which, reflecting its

geographical features, the Long Range (4,500 km or longer) market is the largest accounting for

46%. Average growth rates of RPK in each distance range markets in the next 20 years are

expected to be 4.1% and 4.2% in the Medium Range and Short Range markets respectively, and

as the results of increases in the Short Range and Medium Range markets, in 2040, the Long

Range market (35%) and the Medium Range market (33%) are expected to have a larger share in

RPK.


Center: Sydney

Isometric Circles:

in 5,000 km increments


141

Among current fleet, many small, medium and large passenger turboprop planes are used in

the Regional Range of 700 km or less, mostly around 400 km. Narrowbody planes are main force

of the fleet in a range of 700 to 4,500 km, and, especially they are heavily used in the range from

500 to 2,700 km. Widebody planes, the number is not so many, are used in a range from the Long

Range (up to 13,400 km) to the Medium Range (2,200 km or longer ).

LR 3.1% 1.6%MR 5.1% 4.1%SR 5.4% 4.2%RR 3.3% 2.5%

Total 3.9% 2.9%


2000-2019

2020-2040


16 23

30 53 10

19 29

72

21 39

55

133

52

71

96

140

0

100

200

300

400

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Oceania

RR SR MR LR

16% 15% 14% 13%

10% 12% 14% 18%

21% 26% 26%33%

53% 47% 46%35%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Oceania

RR SR MR LR


142

9.4 Middle East

The Middle East region is located at the junction of the Eurasian and African continents. For

example, in Great-Circle distance, Dubai-London is 5,500 km, Dubai-Cape Town is 7,700 km,

Dubai-Singapore is 5,900 km, and Dubai-Tokyo is 8,000 km. Utilizing passenger planes capable

of cruising ranges of about 10,000 km, passengers can reach Europe, Africa, and Asia by

connecting in Dubai. (11,500 km from Dubai to Washington, 14,000 km from Dubai to Los Angeles)

Taking advantage of its geographical features, airlines in the region have captured global Long

Range air transport demand in a form of the sixth freedom of the air, and have experienced double-

digit growth in both passenger and freight demand over the past 20 years. In particular, Emirates,

Etihad Airways and Qatar Airways have expanded their lines around the world, centering on

Dubai, Abu Dhabi and Doha, and have captured much of the transfer flight demand.

RPK in the region in 2019 was 774×109 passenger kilometers, of which the Long Range (4,500

km or longer) market accounted for 63%, and this market showed annual growth rate of more

than 15% year after year, over the past 20 years, driving growth in the air transport of this region.

Since 2015, however, the pace of growth has slowed. It is conceivable that the acquisition of

transport demand, due to the opening of new routes or the re-splitting exist transport demand in

other airlines, have come to an end, resulting in saturated conditions.


Center: Dubai

Isometric Circles:



143

Among current fleet in the region, narrowbody planes are the main passenger planes in service

and have the highest fleet density in the range of 4,000 km or shorter. And widebody planes are

also used frequently in ranges between 2,000km and 4,000 km. Only widebody planes are used

at distances further than 4000 km, and especially heavily used in the range of 4,500km to 6,500km.

A particular concentration is also observed in the 11,000 to 12,000 km range.

In this forecast, the average growth rate in RPK for Long Range market over the next 20 years

is expected to be 2.7%. It is expected that the Medium Range and Short Range markets will show

growth rates of 4.1% and 3.5% respectively, and even if growth in the Long Range market slows

down, transport demand in this region is expected to keep growing. However, their volumes are

small (37% of RPK in 2019) compared to the Long Range market (57%), therefore average

growth rate over all distance ranges is expected to be 3.1%.

LR 14.0% 2.7%MR 10.2% 4.1%SR 8.5% 3.5%RR 6.2% 2.9%

Total 11.6% 3.1%


2000-2019

2020-2040


12 22 41

74 12

33 62 127

26 83 183

427

36 162

488

845

0

400

800

1200

1600

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Middle East

RR SR MR LR

14% 7% 5% 5%

14%11% 8% 9%

30%

28%24% 29%

41%54%

63% 57%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Middle East

RR SR MR LR


144

The Long Range market, which has grown by capturing the capturing transit-type demand,

carries mostly passengers who live outside the Middle East region, but RPK analysis shows that

the Medium Range and shorter routes are mainly used by people living in the region.

Airlines in the Middle East have developed primarily around Long Range routes, but airline

liberalization has even started in the Middle East. In Saudi Arabia, Flynas (formerly Nas Air),

which is an LCC and the only private airline in the country, was founded in 2007 and operates

domestic and Short Range international flights. In the UAE, flydubai was founded as an LCC in

2008. The airline, in cooperation with Emirates, has expanded their routes including the opening

of direct flights from Dubai to Helsinki (with 737MAX8).

Major airlines in this region have proactively engaged in the air freight transport “belly cargo”

business using vacant spaces in lower hold of their large widebody passenger planes, and they

have achieved remarkable growth while major global airlines have been struggling to grow or

maintain their air freight transport businesses (refer to Appendix G). Emirates has increased its

RTK by focusing on belly cargo, and in addition, it has begun strengthening transport by freighter

jets since 2013. However, its total RTK growth has slightly stagnated since 2016. Qatar Airways

has increased its RTK by belly cargo and freighter jets at a ratio of almost 1:1, and the growth

was also recorded in 2018.

In June, 2017, four countries including Saudi Arabia broke their diplomatic relations with Qatar

and closed their border roads, and, at the same time, decided to refuse to allow planes from Qatar

to fly over their territory. The decision blockaded Qatar’s land transport, and Qatar has been forced

to rely on the conveyance by sea and air to have food, daily commodities and others. In January

2021, an agreement was reached between these countries to restore diplomatic relations. Air

routes are also expected to be normalized.

In the Middle East region, over the past 20 years from 2000 to 2019, GDP grew at an average

annual rate of 3.9%, passenger traffic demand at 12.4%, and cargo demand at 12.9%. It is expected

for the period from 2020 to 2040, that, while becoming gradually stabilized, growth will continue,

with GDP set to grow at an average annual rate of 2.1%, passenger traffic demand at 3.1%, and

cargo demand at 4.4%.

The number of planes in service in the Middle East (including freighters) will increase from

1,454 in 2019 to 2,653 in 2040. Over this period, the units delivered and the sales value (at 2019

list price) are expected to be 2,231 units, worth 522.6 billion U.S. dollars, respectively. Of the

units delivered, 54% will be new demand. In addition, widebody planes will account for 51% of

new deliveries (2,217 units) for passenger planes.

Previously, airlines in the Middle East required large, widebody planes with excellent load

capacity as well as a long flight range, and their purchasing power allowed them to exert great

influence on airplane manufacturers. Development of the 777X began with purchase orders from


145

airlines in the Middle East, while the A380 came to an end due to order cancellation. Since then,

as the RPK growth rate in the Long Range market has declined, airlines have already canceled or

postponed orders placed, and reviewed plane types of their fleet. Depending on changes in the

actual growth rate in the future, along with a trend towards continuing to use existing planes, the

number of deliveries may be further reduced, especially for large, widebody planes.

In response to the decrease in transportation demand due to the COVID-19 disaster, airlines in

the region are also suspending the operation of A380. Since the A380s are so young that they are

all in storage and it is possible for them to return to service post COVID-19. JADC calculated the

forecast on the assumption that half of the A380s will return to service again, therefore, passenger

planes (or ASK) in the region are expected to be in excess during the period 2025-2030, including

future planes to be delivered such as the 777X.

1,454

422

0

1,032

0

1,199

0

1,000

2,000

3,000

2019 2040

No

. o

f A

irp

lan

es

Fleet Developments of Airlines in Middle East

Replacement

Growth

Retained

NewDeliveries

%

46%

2,653

2,231

54%

Middle East New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040



100-119 seats 12 70 68 GDP 2.1 ％

120-169 seats 476 609 483 RPK 3.1 ％

170-229 seats 62 385 363 RTK 4.4 ％

(subtotal) Narrowbody Jets (NJ) 550 1,064 914 Fleet 2.9 ％

230-309 seats 239 413 341 Sales (2019 List Price) 523 US$ billion 310-399 seats 342 759 669 400 seats and larger 146 50 8 (subtotal) Widebody Jets (WJ) 727 1,222 1,018 (Total) JP = RJ + NJ + WJ 1,328 2,333 1,979

FleetFleet


146

9.5 Latin America

The Latin America region, defined by JADC, consists of Mexico, the Central American region

south of Mexico, the South American continent, and the Caribbean region. Along with Asia, Latin

America has shown significant growth over the period called resources boom. With a surge in

direct investment in Latin America thanks to the development of resources and the Free Trade

Agreement, nominal GDP more than doubled during the period of over ten years from 2000, and

the real GDP growth rate from 2003 to 2008 was 5.1%. However, with the end of the boom, the

economic situation in Latin American countries has deteriorated.

The analytical institution has shown an average growth rate of 2.4% in real GDP for the region

over the next 20 years, and JADC is making forecasts based on that. However, the average growth

rate of real GDP from 2015 to 2019 is around 0.9%, and the medium-term economic growth rate

may be lower.

Airline mergers took place in Latin America as in the U.S. and Western Europe. Among major

airlines, cross-border mergers have taken place between AVIANCA in Colombia and TACA

International Airlines in El Salvador, and between LAN Airlines in Chile and TAM Airlines in


Center: Quito

Isometric Circles:



147

Brazil, respectively. As a result, airlines in this region have been consolidated into two major

companies. Airline restructuring in Brazil made progress as the result of domestic mergers. In

addition, in this region too, the progress of airline liberalization has led to the founding of LCCs

such as GOL Airlines in Brazil, Interjet and Volaris in Mexico, and Viva Colombia in Colombia.

With regard to available seat capacity for intra-regional routes, the share of LCCs rose by about

12 times, from about 3% in 2001 to 35% in 2017. In addition, in order to attract domestic demand

in countries other than their own, LCCs have established subsidiaries to operate in those countries.

RPK in the region in 2019

was 442×109 passenger

kilometers, of which the

Long Range market was the

largest, accounting for 41%,

followed by the Short Range

market, which accounted for

26%. Over the next 20 years,

while the Short Range

market share will grow,

relatively high, at an average rate of 4.0%, the other markets will grow at an average rate ranging

from 2.3% to 2.9%. It is expected that in 2040 the Short Range market share will have expanded,

while the Long Range market will have dwindled.

As for current fleet, narrowbody planes are the main airplanes and used for distances between

300 to 5,000 km. The number of planes being operated is particularly large in the range of 300 to

LR 4.4% 2.3%MR 6.9% 2.3%SR 6.4% 4.0%RR 4.5% 2.9%

Total 6.0% 2.7%



2000-2019

2020-2040

41 57

98 170

32 54

111

239

11 18

42

65

73 79

173

262

0

200

400

600

800

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Latin America

RR SR MR LR

26% 28% 23% 23%

20%26%

26% 32%

7%9% 10%

9%

47%38% 41% 36%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Latin America

RR SR MR LR


148

1,300 km, followed by in the rage of up to 2,500 km. Widebody planes are used in the 6,500 to

13,000 km range, but not in large numbers. Turboprop planes are commonly used in the Regional

Range of less than 700 km, and their peak usage occurs around the 300 km range. Regional jets

are also used in the 400 to1,000 km range. In the Regional Range (up to 1,000 km), all three

categories other than widebody planes are used.

In the region, over the past 20 years from 2000 to 2019, GDP grew at an average growth rate

of 2.1 %, passenger demand at 6.0%, and cargo demand at 1.5%. With regard to the growth rates

from 2020 to 2040, while GDP will grow at the rate of 2.4%, which will be almost the same as

that worldwide, the rate of passenger demand will decrease to 2.7%. Cargo demand is expected

to grow at 1.9%.

2,011

398

0

1,613

0

604

0

1,000

2,000

3,000

2019 2040

No

. of

Air

pla

nes

Fleet Developments of Airlines in Latin America

Replacement

Growth

Retained

NewDeliveries%

2,615

2,217

73%

27%

Latin America New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040



100-119 seats 71 247 233 GDP 2.4 ％

120-169 seats 941 955 726 RPK 2.7 ％

170-229 seats 95 468 453 RTK 1.9 ％


230-309 seats 132 119 87 Sales (2019 List Price) 219 US$ billion 310-399 seats 26 62 53 400 seats and larger 0 0 0 (subtotal) Widebody Jets (WJ) 158 181 140 (Total) JP = RJ + NJ + WJ 1,449 2,013 1,705

FleetFleet


149

9.6 Africa

Africa has abundant underground resources such as oil and minerals, and in recent years it has

been growing rapidly by focusing on development of these resources. Chinese investment in these

resources has been well reported. There is a view that air transport demand will grow because of

the expanding middle class which will serve as a driver force for consumption. However, there

are many problems which are yet to be solved such as poverty, regional conflicts and infectious

disease. GDP per capita in Africa as a whole will show little increase over the next 20 years, and

the increase in GDP is expected to be brought about by population growth.

RPK in the region in 2019 was 180×109 kilometers, of which the Long Range (4,500 km or

longer) market accounted for the most significant share at 37%. In this forecast, the Medium

Range market in the next 20 years is expected to grow at an average rate of 4.1%, followed by

the Short Range market at 2.7%. RPK in 2040 is expected to be 312×109 passenger kilometers,

of which the Medium Range market will be the largest, accounting for 37%

Currently, narrowbody planes are the main airplanes in the region, and heavily used for

distances between 400 to 2,000 km. They are also used for distances up to 4,500 km, with

gradually decreasing in number as the distance increases. Turboprop planes are mainly used in


Isometric Circles: in 5,000km increments


150

the Regional Range of 700 km or less, and small planes and medium-sized planes are heavily

used with their peak of fleet density at the 200 km and in the range of 300 to 500 km, respectively.

Regional jets are also mainly used for distances around 500 km.


of 4.0%, passenger demand at 5.0%, and cargo demand at 9.0%. As for the growth rate forecast

from 2020 to 2040, GDP will grow at an average growth rate of 2.8%, passenger demand at 2.7%,

and cargo demand at 3.6%.

LR 4.3% 1.8%MR 6.7% 4.1%SR 5.2% 2.7%RR 3.9% 1.2%

Total 5.0% 2.7%


2000-2019

2020-2040


11 13 24 31 14 22 39

68 13 27 50

115

29 40

67

97

0

100

200

300

400

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐Africa

RR SR MR LR

16% 13% 13% 10%

21% 22% 22% 22%

20% 27% 28% 37%

43% 39% 37% 31%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐Africa

RR SR MR LR


151

1,392

232

0

1,160

0

72

0

1,000

2,000

2019 2040

No

. of

Air

pla

ne

s

Fleet Developments of Airlines in Africa

Replacement

Growth

Retained

NewDeliveries

%

1,232

1,464

94%

6%

AFRICA New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040


Passenger Jets (JP) (Grand total) TP + JP + JF 1,392 1,464 1,232 20-59 seats 109 (1) 0 60-99 seats 75 56 47 (subtotal) Regional Jets (RJ) 184 55 47 Growth Indices (2020-2040)

100-119 seats 45 91 90 GDP 2.8 ％

120-169 seats 397 351 272 RPK 2.7 ％

170-229 seats 7 212 212 RTK 3.6 ％

(subtotal) Narrowbody Jets (NJ) 449 654 574 Fleet 0.2 ％

230-309 seats 116 121 86 Sales (2019 List Price) 128 US$ billion 310-399 seats 58 95 79 400 seats and larger 0 0 0 (subtotal) Widebody Jets (WJ) 174 216 165 (Total) JP = RJ + NJ + WJ 807 925 786

FleetFleet


152

9.7 CIS

Led by Russia which has overcome the destructive economic crisis after the collapse of the

former Soviet Union and recorded 8 consecutive years of economic growth since 2000, the

economies of the CIS member countries, such as Ukraine*, which has tried to promote a

transparent market economy, Kazakhstan and Turkmenistan which have shown steady economic

development utilizing their rich resources, have continued to grow. In Russia, the average wage

rose from 2,200 rubles in 2000 to 12,500 rubles in 2007, and the number of people with middle-

income increased significantly. Unstable situation, however, has continued in recent years, due to

falling crude oil prices and Western economic sanctions over the Crimea crisis.

(*: Still included in the CIS, in this forecast, in order to maintain statistical continuity.)

As the region are spread out over a vast land area, and thus distances between cities are vast,

air transport is important for movement within the region. Accordingly, there has been strong

demand for air transport in the region. Especially during the ten years period from 2004 to 2014,

when economy in the region grew steadily, the average growth rate of RPK reached 8.9%.

Although it has stopped growing since then due to the economic slowdown in emerging


Center: Moscow

Isometric Circles:



153

countries, RPK in 2019 seems to be 290×109 passenger kilometers.

Of RPK, the Medium Range (2,000 to 4,500 km) market accounted for 44%, followed by the

Short Range (1,000 to 2,000 km) market accounting for 26%. For 2040, it is expected that the

average growth rate of the Regional and Short Range markets will be 2.3 and 2.1% each, which

is relatively high, and the growth rate of the Medium and Long Range markets will be 1.6 and

1.5% each. The mix of intra-regional shares of RPK in 2040 is expected to be almost the same as

that in 2019.

LR 7.6% 1.5%MR 9.4% 1.6%SR 9.4% 2.1%RR 6.1% 2.3%

Total 8.6% 1.7%



2000-2019

2020-2040

6 7

20 33 13

22 76

119

22 38

129

180

15 21

65

89

0

100

200

300

400

500

1999 2009 2019 ・・・ 2040

( ×109 ) RPK by Distance Range ‐CIS

RR SR MR LR

11% 8% 7% 8%

23% 25% 26% 28%

39% 43% 44% 43%

27% 24% 22% 21%

0%

20%

40%

60%

80%

100%

1999 2009 2019 ・・・ 2040

RPK share by Distance Range ‐CIS

RR SR MR LR


154

Among the airplanes operated in the region, those manufactured in the former Soviet Union

have been decreasing in number, with a shift to planes mainly manufactured in the U.S. and

Western Europe. As of the end of 2016, 72% of planes in service being operated by airlines in the

CIS and 82% of the backlog are planes by Western manufacturers including Airbus and Boeing.


of 4.0%, passenger demand at 8.6%, and cargo demand at 11.7%. As for the average growth rate

from 2020 to 2040, it is expected that GDP will grow at the rate of 1.6%, passenger demand at

1.7% and cargo demand at 3.5%.

1,495

300

0

1,195

0

272

0

1,000

2,000

2019 2040

No

. of

Air

pla

nes

Fleet Developments of Airlines in CIS

Replacement

Growth

Retained

NewDeliveries

%

1,767

1,467

81%

19%

CIS New Deliveries New Deliveries2019 2040 2020-2040 2019 2040 2020-2040



100-119 seats 78 142 138 GDP 1.6 ％

120-169 seats 522 562 434 RPK 1.7 ％

170-229 seats 147 321 281 RTK 3.5 ％

(subtotal) Narrowbody Jets (NJ) 747 1,025 853 Fleet 0.8 ％

230-309 seats 80 107 97 Sales (2019 List Price) 162 US$ billion 310-399 seats 50 88 78 400 seats and larger 9 0 0 (subtotal) Widebody Jets (WJ) 139 195 175 (Total) JP = RJ + NJ + WJ 1,117 1,386 1,158

FleetFleet


155

10. Airplane Sales Forecast

This section shows the number of units (passenger planes and freight planes) to be newly built

and delivered during the current forecast period (2020-2039), as well as the sales amount and

share.

The sales amount is calculated by multiplying each price by the number of units delivered by

model determined in the demand forecast calculation, and the price for each model is mainly

based on the sales price each manufacturer makes available to the public. These prices are so-

called “catalog prices”, and the prices in actual contracts are said to be 60% or 70% of these, but

since individual contract details are not disclosed, catalog prices will be used for our calculations.

10.1 Jet Airplane (Passenger and Cargo) Sales Forecast

7,873 7,786

12,818

2,063 1,719

790 1,181

1,084 1,208

2,081

522

212 121 158

0

1,000

2,000

3,000

0

5,000

10,000

15,000

North America Europe Asia-Pacific Middle East Latin America Africa CIS

No. of Airplanes

34,230 Airplanes5,385 US$ billion

Total

2019 PriceUS$ billion

＊Total of passenger jets and jet freighters

Jet Airplane Sales Forecast by Region


North America20%

Europe 22% Asia/Pacific 39%Middle East

10%

Latin America 2%

Africa 4%

CIS 3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Jet Airplane Sales Share by Region ( Pax. & Cargo )


156

10.2 Passenger Jet Sales Forecast

Most sales will be seen in the 170-229-seat class. The number of delivered aircraft will be only

slightly more than the 120-169-seat class aircraft, but the sales amount will be higher due to the

larger body size and higher per unit price.

Narrowbody aircraft cost less per unit, but the number of airplanes is larger. For that reason,

their total sales amount exceeds that of widebody aircraft.

0

2,394 2,825

10,192

11,500

3,404 3,171

8 0

4,000

8,000

12,000

16,000

20-59 60-99 100-119 120-169 170-229 230-309 310-399 400 over

1,600

1,200

800

400

0

Passenger Jet Sales Forecast by SizeNo. of Airplanes2019 PriceUS$ billion

114

205

1,075

1,567

1,001

1,195

4

Size ( No. of Seats )

Narrow body Wide body

0

Total33,494 Units

5,160 US$ billion

Regional Jet

20-590%

60-992%

100-1194%

120-16921%

170-22930%

230-30920%

310-39923%

400 over0%

Passenger Jet Sales Share

NarrowbodyWidebody

(Seats)

43%55%


157

In terms of the number of aircraft delivered by region, North America, Europe, and China are

the largest in that order, and sales by region are highest in Europe ($ 1.19 trillion), North America

($ 0.99 trillion), and China ($ 0.86 trillion).

7,533 7,714

12,619

1,979 1,705

786 1,158

993

1,188

2,010

489

208 120 153

0

1,000

2,000

3,000

0

5,000

10,000

15,000


No. of Airplanes


Total


＊Total of passenger jets and jet freighters

Passenger Jet Sales Forecast by Region


6,697

711

4,931

980

7,686

2,654

608 215

3,719

1,501 560

132

1,580 602 690 104 529 100

1,328 354

1,449 308 807

139 1,117

228

7,533 7,714

12,619

720

5,443

586

3,026

2,114 730

1,979 1,705

786 1,158

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

20

19

20

40

2019 Year End: 2040 Year End: 2020-2040 Deliveries:

Total Fleet24,01538,86833,494

Retained

No.of Airplanes

New Delivery

8,244

NorthAmerica

Europe AsiaPacific

MiddleEast

8,694

15,273

2,333

LatinAmerica

Africa CIS

2,013 925 1,386

Japan OceaniaSouthAsia

SoutheastAsia

NortheastAsia

China

Passenger Jet Fleet and Delivery Forecast by Region


158

10.3 Passenger Turboprop Airplane Sales Forecast

Compared to the jet airliner market, the number of new deliveries of turboprop airliners over

the next 20 years is only about 10%, and sales are only about 1.4%.

632 656

433

1,206

384

0

500

1,000

1,500

2,000

15-19 20-39 40-59 60-79 80-99

Total3,311 Units

73 US$ billion

Size ( No. of Seats )

Passenger Turboprop Airplane Sales Forecastby SizeNo. of Airplanes


5

129

35

12

40

30

20

10

0

407 450

1,565

37

350 329

173 8 11

36

1.0

6 7 3

0

15

30

45

60

75

0

400

800

1200

1600

2000


Passenger Turboprop Sales Forecast by RegionNo. of Airplane

3,311 Airplanes73 US$ billion

Total




159

Demand for turboprop aircraft is highest in the Asia-Pacific region, with Southeast Asia and

South Asia (mainly India) being the two largest, followed by Oceania. There is very little demand

in China. With the exception of a few regions, turboprop aircraft are so in steady demand in each

regions that they appear to be essential links for the local residents of each region.

672

102

571

135

1,096

382

55 26 74 32 34 18

319 150

248 81

366 75 45 17

448

84

520

84 231

45

407 450

1,565

33 91 9

505 564

363

37

350 329

173

0

400

800

1,200

1,600

2,000

2,400

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

2019

2040

Passenger Turboprop Fleet and Delivery Forecast by Region

Total Fleet 2019 Year End： 3,583 2040 Year End： 4,160 2020-2040 Deliveries：

3,311

Retained

No. of Airplanes

New Delivery

509

North America

EuropeAsia

PacificMiddle East

585

1,947

54

434 413

218

Latin America

Africa CISJapan China OceaniaSouthAsia

SoutheastAsia

NortheastAsia

655

438

645


160

10.4 Airplane Sales (total) (passenger jets, passenger turboprops, and jet freighters)

For new freighters, 736 aircraft will be delivered and sales will be $ 225 billion, of which the

most demanded large aircraft sales at $ 115 billion and medium-sized wide-body aircraft at $ 110

billion.

8,280 8,236

14,383

2,100 2,069 1,119 1,354

1,092 1,219

2,117

523

219 128 162

0

1,000

2,000

3,000

4,000

0

5,000

10,000

15,000

20,000


No. of Airplanes


Total

2019 PriceUS$ Billion

＊Total of passenger jets, passenger turboprops and jet freighters

Airplane Sales Forecast by Region


North America 20%

North America 22%

Europe 22%

Europe 22%

Asia‐Pacific 39%

Asia‐Pacific 38%

Middle East10%

Middle East6%

Latin America 4%

Latin America 6%

Africa 2%

Africa 3%

CIS 3%

CIS 4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Total Sales

NewDeliveries

Market Share of Sales and Airplane Demand by Region 2020‐2040( Passenger Airplanes (Jet+TBP) and Cargo Airplanes )

New Deliveries Units

Total Sales US$ billion

37,541

5,458


161

11. Aero Engine Sales Forecast

This forecast covers new engine deliveries and the associated sales amount for the forecast period

(2020-2040). Aero engine demand is comprised of two segments: demand for engines installed on

airplanes at the time of delivery, and demand for spares (finished products). The former is calculated

by multiplying the number of airplanes newly delivered by the number of engines mounted on the

airplanes, and the latter is calculated by multiplying the number of engines mounted on airplanes at

the time of delivery by a spare ratio of 10%. An engine is the most expensive equipment to purchase

among the components of an airplane, and the engine price is estimated to account for about 20% of

the price of an airplane.

7,288 2,607

55,235

3,586

14,154

0

20,000

40,000

60,000

80,000

TurboProp <12 12-35 35-65 65-115

No.of Engines Value(US$billion)

Turboprop 7,288 16Jet 75,583 1,197

Total 82,871 1,213

CRJ700/900/1000E-Jets E1

ARJ21

ATR42/72DHC-8L410

Aero Engine Delivery and Sales Forecastby Thrust RatingNo. of Engines

016 14

629

61

494

200

2019 Price(US$ billion)

Thrust(×1,000 lbs)

400

800

A318,A319,A320,A321A340-200/-300, 737

A220-100/-300MRJ M90/M100

E-Jets E2

A300-600,A310A340-500/-600

747,757RS,767RS

A380A350,A330

777,787* Including 10% of total number of engines installed on airplanes as spare engines.

600

17,486 17,998

31,309

4,469 4,539 2,471 2,971

255 274

478

11851

30 38

0

200

400

600

800

0

10,000

20,000

30,000

40,000


Aero Engine Delivery and Sales Forecast by RegionNo. of Engines


Total82,871 units

1,213 US$ billion

2019 Price(US$ billion)

* Including 10% of total number of engines installed on airplanes as spare engines.


162

Intentionally Blank


163

12. Methodology

Passenger Forecast Methodology

The forecast flow is divided into three parts ('air traffic', 'Open ASK', and 'aircraft sales

forecast') as shown below:

In the forecast of 'air traffic', air passenger demand (RPK) is obtained by econometric methods

as a function of GDP and Passenger Yield because the correlation with income and fare is clear.

However, RPK is also affected by major policy changes such as the deregulation and promotion

of CO2 reduction measures, by entry of new formats such as LCCs, and by competition with other

transportation modes such as high-speed rail. Therefore, JADC not only analyzes based on actual

data using a causal model using GDP and Passenger Yield, but also predicts RPK in consideration

of the effects of possible events in the future. The forecasts are made by classifying RPK into

regional categories (13 categories) and distance categories (4 categories).

In the 'Open ASK', the transportation capacity (ASK) and its distribution (seat size,

transportation distance) required to actually transport the predicted RPK are calculated. In

addition, based on the actual retirement age of passenger planes, the decrease in the transportation

capacity due to the existing planes is predicted, and the transportation capacity that needs to be

added (delivered) in the future is calculated. The Forecasts are made by classifying ASK into seat

size categories (15 categories in total) in addition to regional categories (13 categories) and

distance categories (4 categories).

In the 'Aircraft sales forecast', the results of the Open ASK are assigned to specific models of

passenger planes based on the performance of each model such as the number of seats and cruising

range, and on the sales force of the manufacturer. The number of each model is calculated for

each category and aggregated.


164

Cargo Forecast Methodology

Cargo demand forecasting flow is divided into three parts (traffic forecast, capacity forecast

and freighter forecast) as shown below:

Air cargo demand is known to have a correlation with GDP and cargo yields as is the case with

passenger plane. JADC forecasts air cargo demand by analyzing actual data basing on causal

models using GDP and cargo yields and by evaluating various factors that affect the air cargo

demand considering present and future trends. After consolidating the global flight routes into 33

markets, the air cargo demand is forecasted by market.

A forecast for supplied transport capacity of freighters is calculated using macroeconomic

forecasting methodology (Top Down Analysis), in which the forecast is categorized by region (7

regions) and payload (3 segments). Air cargo is transported by freighters or by the lower hold of

passenger planes. The forecasts of cargo transport demand (RTK) and supplied transport capacity

(ATK) of freighters can be calculated by deducting those carried by lower hold of passenger

planes from the forecasted air cargo demand. The RTK and ATK to be carried by passenger planes

are estimated based on the forecasted passenger plane fleet.

Cargo transport volume (CTV) = CTV carried by lower hold of passenger planes

+ CTV carried by freighters

Due to analyzing the fleet composition by airplane type and flight routes and considering the

service life of freighters, the supplied transport capacity needed in the future is forecasted by

category. The forecasted number of aircraft to be delivered is calculated by allocating the supplied

transport capacity needed in the future to specific type of airplanes in view of airplane

performance, including payloads and cruising distance, and the ratio of newly-built freighters and

converted freighters.

Cargo Demand

Economic Forecast

(GDP)

YieldForecast

Cargo Capacityneeded

FreighterCapacityneeded

FreighterDemand

Production Freighter Deliveries

Lower HoldCapacity

PassengerForecast

Retirement

Converted Freighter

Network Analysis

FleetAnalysis

Traffic Forecast Capacity Forecast Freighter Forecast

Freighter Demand Forecast Flow Chart


165

Appendix A: Definitions of Airplane Segments

Passenger Turboprops

　　15－19 seats DHC6-400, Do228, BE1900, L410

　　20－39 seats DHC8-200, Saab 340, Do328, Su-80

　　40－59 seats ATR42, DHC8-300, An-140, MA60/600

　　60－79 seats ATR72, DHC8-400, Il-114

　　80－99 seats (ATR92)

Passenger Jets

Regional Jets

　　20－39 seats ERJ135, Do328JET

　　40－59 seats CRJ100/200, ERJ140/145

　　60－79 seats CRJ700, E170, E175, MSJ M100, An-148

　　80－99 seats CRJ900/1000, E175E2, E190/E2, MSJ M90, ARJ21, SSJ100

　Narrowbody

　　100－119 seats A220-100, E195/E2, A318, 737-600

　　120－169 seats A319ceo/neo, A320ceo/neo, 737-700/-800, 737MAX-7/-8,

A220-300, C919-200, MS21-200/-300, Tu234

　　170－229 seats A321ceo/neo～XLR, 737-900ER, 737MAX-9/-10, 757,

　Widebody

　　230－309 seats 787-8/-9, A330ceo/neo, 767, A300, A310, Il-96

　　310－399 seats A350-900/-1000, 787-10, 777-8/9, 777, A340

　　400－499 seats 747

　　　>500 seats A380

Jet Freighters

　　Narrowbody (< 50 ton) A320, A321, BAe146, CRJ100/200, DC-8, DC-9, MD-80,

707, 727, 737, 757, Tu-204

　　Medium Widebody (40-70 ton) A300, A310, A330, DC-10-10, 767, Il-76

　　Large (>70 ton) DC-10-30/-40, MD-11, 747, 777, An-124, An-225

Note: Aircraft are segmented according to number of seats based on 1-class seat configuration for 99 seats or less, 2-class seat configuration for 100–229 seats, and 3-class seat configuration for 230 seats or more.


166

Appendix B: Definitions of Aero Engine Segments

Engine ManufacturerThrust

(x1000 lb)Aircraft Type (No. of Engines)

65～115 CF6-80E1 GE 67～72 A330(2)

GEnx GE 67～73 B787(2), B747-8(4)

GE90 GE 75～115 B777(2)

GP7000 GE/PW 76～82 A380(4)

PW4000-100 PW 64～70 A330(2)

PW4000-112 PW 74～98 B777(2)

TRENT 700 RR 67～71 A330(2)

TRENT 800 RR 75～95 B777(2)

TRENT 900 RR 68～84 A380(4)

TRENT 1000 RR 64～74 B787(2)

TRENT 7000 RR 68～72 A330neo(2)

TRENT XWB RR 83～92 A350XWB(2)

CF6-50 GE 46～54 B747(4), A300(2)

CF6-80A GE 48～50 B767(2), A310(2)

CF6-80C2 GE 52～62 B747(4), B767(2), A300-600(2), A310(2)

MD-11(3)

JT9D PW 43～56 B747(4), B767(2), A300(2), A310(2)

PW4000-94 PW 52～68 B747(4), B767(2), A300-600(2), A310(2)

MD-11(3)

RB211-524G/H RR 58～61 B747-400(4), B767-300(2)

TRENT 500 RR 56 A340-500/600(4)

PW2000 PW 38～42 B757(2)

RB211-535C/E4 RR 37～43 B757(2)

12～35 V2500 IAE 22～30 A319(2), A320(2), A321(2), MD-90(2)

CFM56 CFM INT'L 18～34 B737-300/400/500(2),

B737-600/700/800/900(2)

A318(2), A319(2), A320(2), A321(2),

A340-200/300(4)

LEAP-1 CFM INT'L 18～33 A319neo(2), A320neo(2), A321neo(2),

737MAX(2), C919(2)

PW1000G PW 15～35 MSJ M100/90(2), A220-100/300(2), MS-21(2)

A319neo(2), A320neo(2), A321neo(2)

E175E2(2), E190E2(2), E195E2(2)

JT8D-200 PW 18～21 MD-80(2)

PW6000 PW 20～23 A318(2)

BR700 BMW/RR 18～22 717(2)

SMI46 SNECMA/NPO 17.4 SSJ100(2)

～12 CF34 GE 8.6～20 CRJ100/200(2), CRJ700(2), CRJ900(2), CRJ1000(2)

E170(2), E175(2), E190(2), E195(2),

ARJ21(2)

AE3007 ALLISON 7.2～12 ERJ135(2), ERJ140(2), ERJ145(2)

PW300 PWC 4.2～5.7 328JET(2)

CT7 GE 1700～1940 SHP CN235(2), SAAB340(2), L610(2)

PW100 PWC 2000～5000 SHP ATR42(2), ATR72(2),

DHC8-100(2)/300(2)/400(2), Do328(2)

EMB120(2)

PT6A PWC 700～1300 SHP DHC-6-400(2), BEECH1900

TPE 331 GARRETT 700～1100 SHP CASA212(2), Metro(2), Do228(2)

Turboprop

ThrustCategory(x1000 lb)


167

Appendix C: Air Passenger Traffic

Region

1999 2019 2040 2020-2040

North America 1,121 1,923 3,560 3.0%

Europe 928 1,975 4,040 3.5%

Western Europe 912 1,877 3,727 3.3%Eastern Europe 16 98 312 5.7%

Asia-Pacific 714 2,903 7,269 4.5%

Japan 166 204 375 2.9%China 130 1,333 3,391 4.5%Northeast Asia 98 232 354 2.0%Southeast Asia 175 648 1,741 4.8%South Asia 46 275 1,027 6.5%Oceania 99 211 381 2.9%

Middle East 86 774 1,473 3.1%

Latin America 139 442 775 2.7%

Africa 68 180 312 2.7%

CIS 55 290 418 1.7%

World 3,111 8,486 17,847 3.6%

AverageGrowthRPK ( ×10 9 person km)


168

Appendix D: Air Cargo Traffic

Region

1999 2019 2040 2019-2040

North America 38 62 105 2.4%

Europe 31 52 96 2.9%

Asia-Pacific 43 88 199 3.8%

Middle East 3 33 85 4.4%

Latin America 5 7 10 1.9%

Africa 1 5 10 3.6%

CIS 1 8 17 3.5%

World 122 254 524 3.3%

AverageGrowthRTK ( ×10 9 ton km)


169

Appendix E: Airplane Demand

Changes in Airplanes and Sales by Region

Changes in Airplanes and Sales by Airplane Capacity

Region 2019 Fleet Removed New Deliveries 2040 Fleet Value (US$B)

North America Total 8,319 6,755 8,280 9,844 1,092 Passenger Turboprop 672 570 407 509 8

Passenger Jet 6,697 5,986 7,533 8,244 993

Jet Freighter 950 729 340 1,091 91

Europe Total 5,802 4,397 8,236 9,641 1,219 Passenger Turboprop 571 436 450 585 11 Passenger Jet 4,931 3,951 7,714 8,694 1,188 Jet Freighter 300 220 72 362 20

Asia-Pacific Total 9,148 5,446 14,383 18,085 2,117 Passenger Turboprop 1,096 714 1,565 1,947 36 Passenger Jet 7,686 5,032 12,619 15,273 2,010 Jet Freighter 366 238 199 865 71

Middle East Total 1,454 901 2,100 2,653 523 Passenger Turboprop 45 28 37 54 1 Passenger Jet 1,328 974 1,979 2,333 489 Jet Freighter 81 30 84 266 33

Latin America Total 2,011 1,465 2,069 2,615 219 Passenger Turboprop 448 364 350 434 6 Passenger Jet 1,449 1,141 1,705 2,013 208 Jet Freighter 114 108 14 168 4

Africa Total 1,392 1,047 1,119 1,464 128

Passenger Turboprop 520 436 329 413 7

Passenger Jet 807 668 786 925 120

Jet Freighter 65 56 4 126 1CIS Total 1,495 1,082 1,354 1,767 162

Passenger Turboprop 231 186 173 218 3 Passenger Jet 1,117 889 1,158 1,386 153 Jet Freighter 147 120 23 163 5

World Total 29,621 21,093 37,541 46,069 5,458 Passenger Turboprop 3,583 2,734 3,311 4,160 73 Passenger Jet 24,015 18,641 33,494 38,868 5,160 Jet Freighter 2,023 1,501 736 3,041 225

(Cargo aircraft are for new aircraft only ↑)

Airplane Category 2019 Fleet Removed New Deliveries 2040 Fleet Value (US$B)

Passenger Turboprop 15-39 seats 1,736 1,594 1,288 1,430 17 40-59 seats 589 507 433 515 9 More than 60 seats 1,258 633 1,590 2,215 12 Total 3,583 2,734 3,311 4,160 73

Passenger Jet 20-59 seats 1,064 1,063 0 1 0 60-99 seats 2,340 2,055 2,394 2,679 84 Regional Jet 3,404 3,118 2,394 2,680 84 100-119 seats 580 477 2,825 2,928 17 120-169 seats 12,534 9,326 10,192 13,400 90 170-229 seats 2,823 2,136 11,500 12,187 1,567 Narrowbody 15,937 11,939 24,517 28,515 1,675 230-309 seats 2,582 1,936 3,404 4,050 4

310-399 seats 1,697 1,318 3,171 3,550 1,195

More than 400 seats 395 330 8 73 4

Widebody 4,674 3,584 6,583 7,673 1,202

Total 24,015 18,641 33,494 38,868 2,961

Jet Freighter Narrow Body 748 736 0 1,163 0 Medium Widebody 649 453 443 935 110 Large 626 312 293 943 115 Total 2,023 1,501 736 3,041 225

(Cargo aircraft are for new aircraft only ↑)


170

Fleet and New Deliveries by Region

2019 Fleet

North America Europe Asia-Pacific Middle East Latin America Africa CIS World

Passenger Turboprop 15-39 seats 401 207 432 10 279 308 99 1,736 40-59 seats 109 53 153 9 74 86 105 589 More than 60 seats 162 311 511 26 95 126 27 1,258Total 672 571 1,096 45 448 520 231 3,583

Passenger Jet 20-59 seats 759 58 9 11 51 109 67 1,064 60-99 seats 1,239 371 318 40 133 75 164 2,340 Regional Jet 1,998 429 327 51 184 184 231 3,404 100-119 seats 179 131 64 12 71 45 78 580 120-169 seats 2,706 2,889 4,603 476 941 397 522 12,534 170-229 seats 1,120 509 883 62 95 7 147 2,823 Narrowbody 4,005 3,529 5,550 550 1,107 449 747 15,937 230-309 seats 458 542 1,015 239 132 116 80 2,582 310-399 seats 231 308 682 342 26 58 50 1,697 More than 400 seats 5 123 112 146 0 0 9 395 Widebody 694 973 1,809 727 158 174 139 4,674Total 6,697 4,931 7,686 1,328 1,449 807 1,117 24,015

Jet Freighter Narrow Body 273 140 182 3 85 38 27 748 Medium Widebody 400 71 49 23 28 15 63 649 Large 277 89 135 55 1 12 57 626Total 950 300 366 81 114 65 147 2,023

2040 Fleet


Passenger Turboprop 15-39 seats 242 135 573 10 204 155 111 1,430 40-59 seats 55 56 193 3 87 78 43 515 More than 60 seats 212 394 1,181 41 143 180 64 2,215Total 509 585 1,947 54 434 413 218 4,160

Passenger Jet 20-59 seats 2 0 0 0 0 -1 0 1 60-99 seats 1,386 359 503 47 162 56 166 2,679 Regional Jet 1,388 359 503 47 162 55 166 2,680 100-119 seats 895 827 656 70 247 91 142 2,928 120-169 seats 2,234 2,818 5,871 609 955 351 562 13,400 170-229 seats 2,549 3,050 5,202 385 468 212 321 12,187 Narrowbody 5,678 6,695 11,729 1,064 1,670 654 1,025 28,515 230-309 seats 793 871 1,626 413 119 121 107 4,050 310-399 seats 385 760 1,401 759 62 95 88 3,550 More than 400 seats 0 9 14 50 0 0 0 73 Widebody 1,178 1,640 3,041 1,222 181 216 195 7,673Total 8,244 8,694 15,273 2,333 2,013 925 1,386 38,868

Jet Freighter Narrow Body 312 166 422 27 125 70 41 1,163 Medium Widebody 535 109 122 41 40 28 60 935 Large 244 87 321 198 3 28 62 943Total 1,091 362 865 266 168 126 163 3,041

2020-2040 New Deliveries


Passenger Turboprop 15-39 seats 229 125 519 8 193 135 79 1,288 40-59 seats 47 53 152 3 66 71 41 433 More than 60 seats 131 272 894 26 91 123 53 1,590Total 407 450 1,565 37 350 329 173 3,311

Passenger Jet 20-59 seats 0 0 0 0 0 0 0 0 60-99 seats 1,213 317 487 47 153 47 130 2,394 Regional Jet 1,213 317 487 47 153 47 130 2,394 100-119 seats 869 790 637 68 233 90 138 2,825 120-169 seats 2,013 2,174 4,090 483 726 272 434 10,192 170-229 seats 2,368 2,969 4,854 363 453 212 281 11,500 Narrowbody 5,250 5,933 9,581 914 1,412 574 853 24,517 230-309 seats 721 742 1,330 341 87 86 97 3,404 310-399 seats 349 722 1,221 669 53 79 78 3,171 More than 400 seats 0 0 0 8 0 0 0 8 Widebody 1,070 1,464 2,551 1,018 140 165 175 6,583Total 7,533 7,714 12,619 1,979 1,705 786 1,158 33,494

Jet Freighter (New Build) Narrow Body 0 0 0 0 0 0 0 0 Medium Widebody 287 58 62 8 14 2 12 443 Large 53 14 137 76 0 2 11 293Total 340 72 199 84 14 4 23 736

Jet Freighter (Converted) Narrow Body 312 166 412 27 125 70 39 1,151 Medium Widebody 119 26 33 29 20 26 43 296 Large 99 18 93 75 3 17 31 336Total 530 210 538 131 148 113 113 1,783


171

Appendix F: Evaluation of Secondary Deliveries

This forecast covers the next 20 years. The recent average retirement age of passenger planes

has been around 25 years, which is longer than 20 years, so the number of short-lived planes

which would be delivered within the forecast period and would retire within the period, has not

been counted in the main part of this forecast. However, in recent years, cases of retirement at

under 20 years have begun to increase. These are presumed to be airplane that were frequently

operated on short-distance domestic flights of LCCs or FSCs, and in view of the recent rise of

LCCs, it is expected that the number of young retired planes of this type would increase in the

future.

In order for airlines to continue their transportation business, if one airplane is retired, one new

plane will need to be replenished. Therefore, the retirement of the short-lived airplanes in the

forecast period will in turn lead to secondary demand for airplanes. Here, of the passenger planes

which would be delivered within the forecast period (i.e. the primary deliveries), the number of

planes to be retired within the period is predicted, and the number is shown in light orange in the

figure as the secondary deliveries.

(The secondary deliveries are not included in the number of units in the main part of this forecast.)

Of the secondary deliveries, 1,683 units will be narrow-body airplanes with 100 to 229 seats

and 358 units will be widebody airplanes with 230 or more seats, accounting for 6.9% and 5.4%

of the primary deliveries, respectively.

(Fleet: passenger planes that are in service at the beginning of the forecast period* (i.e. initial fleet))

(Remaining: passenger planes which will be left in service at the end of the period* out of the initial fleet)

(Primary retired: passenger planes which will be retired during the period* out of the initial Fleet)

(Primary deliveries: passenger planes to be delivered to replace for the primary retired planes)

(Secondary retired: passenger planes which will be retired during the period* out of the primary deliveries)

(Secondary deliveries: passenger planes to be delivered to replace for the secondary retired planes) (* 2020-2040)

0161 103

1031

457 150 20800

2394 2825

10192

11500

34043171

81 285

103

3208

687 646 379 651063

2055

477

9326

2136 19361318

330

‐2000

0

2000

4000

6000

8000

10000

12000

14000

16000

20 〜 59seats

60 〜 99seats

100

〜119seats

120

〜169seats

170

〜229seats

230

〜309seats

310

〜399seats

400seats

over

Passenger Jet Fleet and Delivery Forecast by Seat Category

234025822823

12534

580

13400

29282679

1 395

1697

73

35504050

12187

1064

2040 Remaining

2020‐2040 Retired (Primary)

2020‐2040 Delivery (Primary)

2040 Fleet

2020‐2040 Delivery (Secondary)

195

2019 Fleet

11223 2020‐2040 Total Deliveries

8

30202555

0

33793554

11957

20 〜 59 60 〜 99 100 〜 119 120 〜 169 170 〜 229 230 〜 309 310 〜 399 400 over

( seats )


172

Appendix G: Trends in Cargo Transportation Results by Major Airlines (2006-2019)

There are two types of freight transportation by airlines: one is by freighter, and the other is by

using the cargo compartment (Lower Hold) * of passenger flights to transport general freight. At

airlines, the average size of airplanes is increasing due to wide-body aircraft, and there is room

for capacity and weight even in the cargo compartment of passenger flights. If the surplus capacity

is used to transport general freight other than passengers' luggage, it is possible to make a profit

from freight transportation at a small additional cost. In addition, it is easy to deal with

fluctuations in the busyness of transportation demand seen in air freight transportation.

In recent years, major airlines in Middle East region have taken positive measures in freight

transportation and have greatly increased their RTK.

On the other hand, there are many cases where even major airlines are struggling to maintain

the total RTK (by freighters plus by cargo compartment of passenger planes), reducing the

freighters only to shift to the cargo compartment of passenger planes. Some airlines have

completely abolished freighters and only transport cargo by the cargo compartment of passenger

planes.

(*: lower hold cargo or belly cargo)

0

2

4

6

8

10

0 2 4 6 8 10 12 14 16 18

RT

K b

y Lo

we

r H

old

of P

asse

nger

Pla

nes

( ×10 9 )

RTK by Freighters ( ×10 9 )

Trends in Cargo Transportation by Major Airlines(2006-2019)

Emirates Qatar Airways

Air France British Airways

Lufthansa Federal Express

Japan Airlines All Nippon Airways

Singapore Airlines Cathay Pacific Airways

China Airlines EVA Air

China Eastern Airlines China Southern Airlines

Air China Korean Air

5 4

3

Source : IATA WATS

Cathay

Qatar

Emirates

ANABA

Singapore

A.China

KAL

China AL

EVA

C.South

JAL

AF

C.East

LH

FedEx


173

For all airlines in the world, RTK continued to increase in the 1990s under the leadership of

freighters, but since 2004, the trend has changed significantly to increase transportation capacity

by utilizing the cargo compartments of passenger planes. RTK by freighter decreased or leveled

off. However, the RTK by freighter have resumed to increase around 2013, and is now increasing

somewhat predominantly. As of 2019, freighters accounted for 53% of the total cargo RTK, and

cargo compartments of passenger planes accounted for 47%.

Freight transportation in 2020 was responded to by a decrease in cargo compartment

transportation of passenger plane due to a significant reduction in passenger flights and by an

increase in transportation by freighter, but overall it decreased by 10.6% compared to 2019 results

(IATA). The breakdown of RTK in 2020 is still unknown, but considering the response to the

decrease in ASK, it seems that the RTK by freighter in 2020 increased to about 1.2 to 1.3 times

the actual result in 2019 (red line part in the figure).

0

50

100

150

200

0 50 100 150 200

RTK

by Lower Hold of Passen

ger Planes（

RTK：×109）

RTK by Freighters（ RTK：×109）

Volume of Air Cargo Transported by World Airlines(1990‐2019; scheduled air service only)

JADC (1990‐2004)

IATA WATS (2005‐ )

***

***

2009

2004

2017

〜 2019

2012

1990

×1.3

×1.2

Line indicating the level of total RTK for 2020


174

Appendix H: Approach to Successfully Putting the SAF on Track

Although the introduction of new aircraft with excellent fuel consumption is an effective means

that can be adopted for CO2 emissions reduction, that alone is not sufficient to achieve the CO2

reduction goal. Therefore, CO2 emissions credits should be purchased for the time being to offset

the insufficiency. However, there is a concern about the stable supply in the future of such credits.

In addition, the future CO2 emissions reduction goals will become more challenging, SAF will

be more necessary going forward even though it is expensive. In that case, reducing the initial

price and gradually decreasing the subsequent prices will be important. It is considered that the

key is to always secure a sufficient production scale to meet the demand for SAF.

SAF will probably be manufactured mainly through the Fischer-Tropsch (FT) process while

collecting CO2 in the atmosphere in the future. Synthetic petroleum produced by the FT method

has always been costly compared to regular petroleum and people have not paid much attention

to while they had access to ordinary petroleum resources. It was, however, used in former

Germany, South Africa, and other countries that had no choice but to use it, and they are

considered to have achieved a certain level of success by working and using it with nationwide

initiative. For such countries, it was a key to ensure a large enough production scale while

receiving policy-based support such as subsidies and guaranteed profit. In future efforts to put

SAF into practical use, it is anticipated that getting out of the vicious circle of low production

volume due to lack of use and lack of use due to the high cost. Ensuring sufficient initial demand

and preparing a level of mass production capability that meets such demand would provide the

breakthrough they need. To this end, it would be a key to seek a collaboration with fuels used in

other fields such as automotive without limiting the concept of alternative fuel only to aviation

fuels.

In 2018, global CO2 emissions originated from automobiles was 18.2% out of total, and so it

can be said that automobiles emit 10 times more CO2 and have a 10 times larger fuel market size

than international air transportation (accounting for 1.8% of the global CO2 emissions) (Related

part: 5.2.6). If these industries work together to secure alternative fuels *, it will be possible to

secure production scale and reduce costs with a much larger hinterland than the aviation industry

alone. And I think this will be the surest way to get the spread of SAF on track at an early stage.

If the SAF becomes practical, passenger planes will not only reduce substantial CO2 emissions,

but will also be able to maintain high cruising efficiency as before by consuming fuel during flight

and reducing the weight of the aircraft. As for automobiles, if Green / Blue fuels become available

as alternative fuels, not only EVs and FCVs that will be produced in the future, but also

conventional automobiles that have already been produced and are used in the world will be

equivalent to Green / Blue cars just by replacing their fuels.


175

(*: Fuel manufacturing technology and equipment such as the FT method will be shared

between aviation fuel and automobile fuel, and will be branched to jet fuel, light oil, gasoline,

etc. at the final refinery stage.)


176

Glossary of Terms

ASK or Available Seat Kilometers

Passenger transport capacity

The number of seats × Transportation distance (kilometers)

RPK or Revenue Passenger Kilometers

Transportation performance with revenue passengers on board and flown

The number of revenue passengers × Transportation distance (kilometers)

Passenger Load Factor

A numerical value indicating the ratio of the number of revenue passengers on board

to the total number of seats, that is, an indicator for measuring seat sales

Revenue passenger kilometers (RPK) ÷ Available seat kilometers (ASK)

Different from a boarding rate which does not include non-revenue passengers

Yield

Revenue per kilometer (or per mile) for one passenger

Obtained by “Passenger revenue ÷ Revenue passenger kilometers”

In the case of cargo, revenue per kilometer (or per mile) for one ton of cargo

Obtained by “Cargo revenue ÷ Revenue ton kilometers”

CASK or Cost per ASK

An indicator for cost per unit passenger transport capacity

Obtained as cost per seat kilometer (ASK)

ATK or Available Ton Kilometers

Air cargo capacity

Payload capacity (tons) × Transportation distance (kilometers)

RTK or Revenue Ton Kilometers

Transportation performance with revenue cargo on board and flown

Revenue Cargo (tons) × Transportation distance (kilometers)

Cargo load factor

Revenue ton kilometers (RTK) ÷ Available ton kilometers (ATK)


177

Abbreviations

A4A Airlines for America

AAPA Association of Asia Pacific Airlines

ACI Airports Council International

AEA Association of European Airlines

ASEAN Association of Southeast Asian Nations

BRICs Brazil, Russia, India, China

BTS Bureau of Transport Statistics, U.S. Department of Transportation

CAPA Centre for Asia Pacific Aviation

CIS Commonwealth of Independent States

COVID-19 Coronavirus disease 2019

DOT United States Department of Transportation

EIA Energy Information Administration

ETS Emission Trading Scheme

EU European Union

FTA Free Trade Agreement

GDP Gross Domestic Product

HOM Heavy and Oversize air cargo Market

IATA International Air Transport Association

ICAO International Civil Aviation Organization

IEA International Energy Agency

JADC Japan Aircraft Development Corporation

JETRO Japan External Trade Organization

JICA Japan International Cooperation Agency

MLIT Ministry of Land, Infrastructure, Transport and Tourism

NIID National Institute of Infectious Diseases

OPEC Organization of the Petroleum Exporting Countries

SARS Severe Acute Respiratory Syndrome

UIC Union Internationale des Chemins de fer

(International Union of Railways)

UN United Nations

UNWTO UN World Tourism Organization


178

Abbreviations (cont.)

ASK Available Seat Kilometers

ATK Available Ton Kilometers

CASK Cost per ASK

FFP Frequent Flyer Program

FSC Full-Service Carrier

LCC Low-Cost Carrier

RASK Revenue per ASK

RPK Revenue Passenger Kilometers

RTK Revenue Ton Kilometers

TEU Twenty-Foot Equivalent unit


179

Reference Materials

In preparing the "Japan Aircraft Development Corporation, Worldwide Market Forecast 2020-

2040", data and materials published by the following organizations and groups were used.

AACO Arab Air Carriers Organization

AAPA Association of Asia Pacific Airlines

ACI Airports Council International

AEA Association of European Airlines

AFRAA African Airlines Association

ALTA Latin America and Caribbean Air Transport Association

A4A Airlines for America

BTS Bureau of Transportation Statistics, U. S. Department of Transportation

CAAC Civil Aviation Administration of China

DOT U.S. Department of Transportation

EIA U.S. Energy Information Administration

ERAA European Regional Airline Association

EUROCONTROL European Organisation for the Safety of Air Navigation

IATA International Air Transport Association

ICAO International Civil Aviation Organization

IEA International Energy Agency

JETRO Japan External Trade Organization

MLIT Ministry of Land, Infrastructure, Transport and Tourism

RAA Regional Airline Association

UN United Nations

Air Transport World Aviation Week

Aviation Daily Aviation Week

Cirium Cirium

IHS Connect IHS Markit

OAG OAG Aviation Worldwide Limited


180

The “Worldwide Market Forecast 2020–2040” can be found on our website at: http://www.jadc.jp

Although the preparation of this material is based on various data believed to be reliable under

the present conditions, risk data and uncertainty factors are also included in past performance data,

and we neither guarantee its accuracy nor completeness.

The association is not liable for any decision made or action taken by users which is based on this

material, or any consequences thereof. Users assume personal responsibility for any decision

made when referring to this forecast.

When copying this material, either in whole or in part, permission of the copyright owner is

required; please contact us regarding this matter. Be sure to cite Japan Aircraft Development

Corporation when quoting any content of the forecast.

Contact details:

Strategic Planning & Market Analysis Department


Osamu Kato ( [email protected] )

Address:

Hibiya Kokusai Bldg. 7F

2-2-3, Uchisaiwai-cho

Chiyoda-ku, Tokyo

100-0011, Japan

URL: http://www.jadc.jp

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