Aviation change could drastically reduce CO2 levels of industry
Growth in the aviation industry is set to continue at pace, with demand from developing countries spiking, leading to the world’s fleet of planes expanding by thousands in the process. With new aircraft improving their fuel efficiency, the changes could see 400 million cubic tons of CO2 emissions cut from the aviation industry as older jets are replaced.
On the back of many years of lacklustre performance, the air transport industry has seen its profitability soar. The industry has been lifted by two key trends; low fuel prices, thanks in part to a crash in oil prices with lows not seen since prior to 2006; and increased demand, as passenger numbers soar, particularly in developing nations, where growing middle classes have demonstrated a hunger for new experiences overseas.
Aircraft numbers are subsequently projected to rise significantly over the coming decade. New analysis from Oliver Wyman has found the global commercial airline fleet is set to see 3.9% growth per annum over the coming five years, with 11,600 more in the air by 2029 – bringing the total to more than 39,000 commercial aircraft.
The period will see growth in both absolute numbers and also in terms of replacements, with the average age of aircraft decreasing from 11.3 to 10.9. Many of these units will make use of the latest designs, offering improved fuel efficiency and lower maintenance demand than older stock. Beyond the immediate future, in the years between 2024 and 2029, the fleet is projected to grow by 3.3% annually, while the average age of aircraft is set to remain relatively stable, at 10.7 years.
In total there will be almost 21,000 new passenger aircraft deliveries over the period and 413 new cargo planes. Around 427 passenger planes will also be converted into cargo planes, while around 9,200 will be retired. The effect of retirements and decreased aircraft age reflects considerable reductions in fleet maintenance hours – with the newer fleet ultimately requiring less servicing. Oliver Wyman projects that the shift away from older aircraft will shave around $3.3 billion of spending on maintenance.
While newer aircraft will impact demand for maintenance services, the addition of a large number of aircraft to the overall fleet will see demand for maintenance, repair and operations (MRO) continue to grow – albeit slower than the addition of new aircraft. In the coming period, growth across the four major maintenance lines is projected to see 3.4% growth per annum.
For the years between 2024 and 2029, stronger growth is projected as stock ages, with demand for engine maintenance the most significant mover, at 4.6%, while components will see growth in demand of about 4.1% annually. Overall revenue growth over the coming decade will see the industry grow from $80 billion annually to $120 billion.
Improved efficiency
The report notes that narrow body aircraft are set to see the most significant increase in maintenance work. This is due to their rapid growth compared to other plane types for the years to 2029. The segment is projected to grow at around the same pace as their growth in number, at 4.9% per annum, with the total MRO market for the type at $60 billion in 2029. Widebody planes MRO, meanwhile, will see growth of 2.6% annually, while regional jets will see much more modest growth of 0.4%. Turboprop will see declines of -2% for the period.
The firm found that 1990s aircraft, which today make up a significant portion of the global fleet, will slowly be phased out over the coming decade, falling from around 75% of the total fleet to around 45%. Stock from the 2010s is set to represent about a quarter of the market by 2029, while 2000s stock is set to represent around 15% of the market. 1980s stock will fall sharply to around 5%, while 1970s stock is almost completely phased out.
Perhaps most importantly, the changing of the guard that will see older aircraft finally retired could well help limit the amount of carbon dioxide and other greenhouse gas emissions produced by the aviation industry. Oliver Wyman suggests that, over the next decade, these new aircraft could cut more than 400 million cubic tons of CO2 emissions that would have otherwise been produced from the operation of older jets – something which is more important than ever, as a larger proportion of the human population looks to take to the skies.
Commenting on the findings, Tom Cooper, study leader and Vice President of Oliver Wyman’s aviation wing Cavok, said, “Economic growth in both mature and developing economies is driving solid increases in fleet size and MRO, although significant regional differences exist… The next decade holds great opportunities and challenges for the industry as both technological innovation and the move away from traditional energy sources redefine business as usual across industries and the globe. This will be an era of disruptive growth, driving companies to ask tough, fundamental questions about what it will take to stay relevant and expand.”
