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COMMERCIAL AIRCRAFT
MARKET
FORECAST2012-2031
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 02TABLE OF CONTENTS
Executive Summary
Economic Trends
Airline Industry Trends
The Forecast
Conclusion
Geographic Details
03
07
16
28
36
38
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 03
EXECUTIVESUMMARY
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 04EXECUTIVE SUMMARY
Welcome to the Bombardier
Aerospace Commercial Aircraft
Market Forecast, our 20-year view
of the market for 20- to 149-seataircraft.
World airline profitability in 2011 was estimated
by International Air Transport Association
(IATA) to reach $7.9 billion, the second
consecutive year in which all regions were
break even or profitable. This expansion
was fueled by continuous traffic growth and
steady increases in overall ticket prices.These positive trends were countered by
rising oil prices, continued financial turmoil in
the Eurozone and increased political tension
in the Middle East and North Africa. While
airline profitability was considered fragile,
it was contrasted by another record year for
aircraft orders. The growing backlog in the
large single-aisle aircraft segment remains
a concern, as a sharp increase in traffic demandwould be required to absorb the excess
capacity represented by these orders. After
even a few tough years of industry consolida-
tion and tremendous discipline in constraining
capacity growth, it is difficult to understand
the rationale behind deliberately introducing
excess capacity back into the system. As op-
timization is always the survival instinct of the
aviation industry, it will eventually find its wayto adapt, adjust and ascend going forward.
MATURE MARKETS
IHS Global Insight reduced its long term
forecast of GDP growth from 3.4% last year
to 3.26% in 2012. North America and Europe
are forecast to have below-average GDP
growth for the next 20 years. In a mature
market, where route network and business
models are fully established, most demand12,80020- to 149-seat total
DELIVERY FORECAST (UNITS)
Segments Deliveries
20- to 59-seat 300
60- to 99-seat 5,600
100- to 149-seat 6,900
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 05EXECUTIVE SUMMARY
for commercial aircraft will result in the need
to rejuvenate an ageing fleet as it approaches
retirement. Even though these regions are
expected to see only small organic growth
year over year, their significant installed bases
will continue to require a large number of new
aircraft for the next 20 years.
GROWTH REGIONS
The growth regions of Africa, Asia/Pacific,
Latin America, Middle East and Russia & CIS,
where long-term GDP growth is forecast
above average, will require a significant
number of new aircraft to support the growth
of the aviation industry. In addition to more
capacity, new airline business models and
network connectivity are being tested or
optimized by airlines and entrepreneurs.
Aircraft in various capacities are all needed
to help shape the development of the
industry in these growth regions.
OPTIMIZATION
The financial viability of the airline industry
is extremely dependent on the external envi-
ronment, yet the industry is also very resilient,
due to its relentless drive for optimization.
The increased price of oil predicted by the
U.S. Energy Information Administration (EIA)
is the single most concerning factor in airline
economics over the forecast period. Thisconcern is further amplified by the increase
in oil price forecast, since EIA issued its
Annual Energy Outlook last year, by nearly
$20, reaching $126 per barrel average for
next 20 years. While airlines successfully
managed increasing fuel costs by raising
ticket prices last year, the continuous pressure
transferred from cost to ticket price will soon
reach the tipping point of consumer price
resistance. Aircraft with the lowest cost and
high performance capability will thereforebe favored going forward.
Airlines strive to optimize their fleet
solutions to best serve their customers’
needs. Airline customers expect frequency,
schedule, comfort and competitive fares
while traveling on modern aircraft. New
aircraft designs continue to focus on
optimizing performance, lowering fuel
consumption, reducing environmental foot-
print and maximizing cabin comfort.
0
4,000
8,000
12,000
16,000
20,000
2011 2031
9,000
6,800
1,200
20- to 59-seat
60- to 99-seat
100- to 149-seat
Source: Bombardier Commercial Aircraft Market
Forecast 2012-2031, OAG Aviation Solutions.
Total Fleet
Units 11,200 17,000
TOTAL FLEET UNITS
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 06EXECUTIVE SUMMARY
THE 20- TO 149-SEAT MARKET
Aircraft deliveries in the 20- to 59-seat market
will decline substantially over the next 20 years.
This capacity will gradually shift to larger and
more economical regional aircraft. Demand
for new aircraft in this larger, more economical
regional aircraft segment is expected to
increase in the latter half of the forecast
period, driven mainly by the anticipated
availability of new technology. Some 300
units will be delivered by the end of the
forecast period. In the near and mid-terms,
the pre-owned markets will continue to
supply the aircraft needed in this segment.
In particular, Russia, Africa and Latin America
will see considerable absorption of used
50-seat regional jets.
Regional airlines are gradually anchoring
their business models around large regional
aircraft in the 60- to 99-seat segment, both
turboprops and jets. With increased capacity,lower per-seat operating costs and a seam-
less service offering, large regional aircraft
connect route networks by adding new city
pairs. This service provides connections not
only between major airports, but also linking
secondary and tertiary airports. With some
5,600 units forecast for delivery, this segment
will experience the strongest fleet growth
over the next 20 years.
The 100- to 149-seat aircraft segment will
enjoy the strongest growth in terms of deliv-
eries. This segment is currently dominated
by ageing aircraft. Thanks to “step change”
engine technology, the arrival of new aircraft
specifically designed for this segment will
invigorate market demand to further optimize
airline route networks and profitability. We
forecast deliveries of 6,900 aircraft in the 100-
to 149-seat segment over the forecast period.
The commercial aviation industry is an
integral component of the global economy.
The long-term economic outlook supports
continuous demand for new, optimized
capacity and more fuel efficient aircraft, with
deliveries of 12,800 new aircraft predicted
over the next 20 years
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 07
ECONOMICTRENDS
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 08ECONOMIC TRENDS
ECONOMIC AND AIR TRAVEL
GROWTH
The world’s recovery from the 2008 financial
crisis began in 2009 and has continued, at
varying paces and with varying degrees of
success into 2012. Growth in gross domestic
product (GDP) has reflected this variation,
reaching 4.1% in 2010 and 2.7% in 2011. The
recovery has slowed due to continuing eco-
nomic concerns, notably the Eurozone crisis,
high and volatile oil prices (as discussed
below) and China’s ability to sustain its
comparatively rapid growth, the recovery
has slowed. As a result, IHS Global Insight has
reduced its expected rate of GDP compound
annual growth for the 2012 – 2031 forecast
period, from 3.4% (2011 – 2030) to 3.26%.
The economic recovery is taking longer than
expected in mature markets, while growth
in emerging economies has returned to
pre-crisis rates; whether they will be able tosustain this pace remains to be seen.
Demand for air travel, and with it the health
of the world’s airline industry, depends heavily
on the strength of the economy. Most recently,
IATA reported a 7.4% increase in international
passenger travel (based on revenue passenger
kilometers (RPKs)) for the month of April 2012,
compared to April 2011. Demand for air travel
is also reflected in orders for new aircraft. New
aircraft order intake (encompassing 20 - 220
seats) more than quadrupled from 2009 to
2011. Net orders rose to 2,381 units in 2011, up
from the 2010 tally of 1,414 units, which itself
more than doubled the 2009 pace of 556
aircraft orders.
WORLD REAL GDP GROWTH %, 2011
Source: IHS Global Insight 2012.
Note: GDP = Gross Domestic Product
1.8%
World Average 2.7%
4.2%
1.8%
3.44%
4.8%
9.2%
6.8%
1.3%
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 09ECONOMIC TRENDS
The continuing recovery in demand for air
travel is also expected to see a return to
commercial service of some of the aircraft
currently parked. The parked commercial
aircraft fleet has declined by 9% year-over-
year, to approximately 2,220 at the 2011 year
end. This total is down from the peak of 2,496
aircraft idled in 2009, but it remains above the
10-year low of 1,681 aircraft parked in 2007.
Regionally, economies outside North America
and Europe are expected to lead the world in
GDP growth from 2012 to 2031. According toIHS Global Insight, China is expected to grow
at 6.6% annually, followed by Africa, at
4.4%; Latin America, at 4.1%; Middle East,
3.8% and Asia/Pacific at 3.4%. In contrast,
the North American economy is expected
to grow at 2.6%, with Europe trailing, at 2.1%.
The overall compound annual growth rate,
as noted, is expected to be 3.26%, with
non-North American or European economiesaccounting for 61% of the growth.
COMMERICAL AIRCRAFT ORDERS AND GDP GROWTH
Sources: Bombardier Analysis, OAG Aviation Solutions, IHS Global Insight
3500
3000
2500
2000
1500
1000
500
0
1971 1975 1980 1985 1990 1995 2000 2005 2010
Commercial Aircraft Orders GDP Growth
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Demand for air travel
is also reflected in orders
for new aircraft.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 10ECONOMIC TRENDS
North America and Europe have historically
represented both the largest commercial
aircraft fleets and the largest markets for
new aircraft. This year, the Bombardier
Commercial Aircraft Market Forecast antici-
pates total demand for new aircraft in the
20- to 149-seat segments to be evenly di-
vided between mature and emerging markets.
Although starting from much smaller base-
lines (and assuming proportionate growth
in aviation infrastructure), demand for new
aircraft is expected to be particularly strong in
emerging markets, such as China, Asia/Pacific(including India) and Latin America. Europe,
Africa, and the Middle East are expected to
require somewhat fewer aircraft during the
period and North American forecast
demand remains unchanged.
As a country’s per capita GDP grows, so
does its residents’ desire for travel, and this
desire in turn fuels demand for aircraft. The
Bombardier Commercial Aircraft Market
Forecast, which anticipates long-term growth
through the continuing economic recovery,
presents a positive picture of commercial
aircraft demand through the 2012–2031 period.
Overall fleet growth of 52% (2.1% CAGR) and
12,800 new aircraft deliveries – approximately
half of which will be needed to meet the
world’s growing demand for air travel - is
estimated over the forecast period.
POPULATION GROWTH AND
URBANIZATION
The propensity for air travel is closely as-
sociated with wealth (as represented by
per capita GDP) and urbanization. As both
wealth and urbanization increase, particularly
in emerging markets, the impact on commer-
cial aviation is expected to be profound.
The Organization for Economic Co-operation
and Development (OECD) estimates that
middle-class consumer spending, as a reflec-
tion of a region’s per capita GDP, will expand
rapidly in emerging markets. In Asia/Pacific
(including China and India in the OECD
analysis), middle-class consumer spending
is expected to balloon, from $5.0 trillion in
2009, to $32.6 trillion in 2030 on a purchasing
Passengers originating from respective country, GDP in 2005 USD.
Sources: IHS Global Insight 2012, MIDT data, Bombardier Analysis.
0.01
0.1
1
10
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
T r i p s p e r C a p i t a
2011 Per Capita GDP
PROPENSITY TO TRAVEL
New Zealand
Russia
China
India
UnitedStates
GermanyBrazil
Qatar
Italy
Israel
Portugal Switzerland
Netherlands
Hong Kong Norway
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 1 1ECONOMIC TRENDS
power parity basis. In other emerging markets,
the increase is expected to be substantial, if
not spectacular. Spending in Central/South
America is expected to grow from $1.5 trillion
to $3.1 trillion, while the sub-Saharan Africa
will see middle-class consumer spending
grow from $0.8 trillion to $2.0 trillion by 2030.
Spending in the Middle East and North Africa
is expected to grow from $0.3 trillion to $0.8
trillion over the same period.
Sources: IHS Global Insight, Feb 2012, Bombardier Analysis.
3.26%
7.4%
6.6%
4.4%4.1%
3.8%
2.6%2.4%
2.0%
1%
2%
3%
4%
5%
6%
7%
8%
World India China Africa Latin
America
Middle
East
North
America
Asia/Pacific
(ex. China,
India)
Europe
GDP GROWTH RATES
(2012-2031)
$5.6 $8.1
$1.5
$0.3
$0.8
$2.0
$0.8
$5.0
$5.8 $11.3 $32.6 $3.1
MIDDLE-CLASS CONSUMER SPENDING IN TRILLIONS USD*
Source: OECD. * On a purchasing power parity basis.
North
America
Europe Asia/Pacific
Central & South America
Middle East & North Africa
Sub-Saharan Africa
2009
$21.3
2030
$55.7PROJECTED
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 12ECONOMIC TRENDS
In contrast, while middle-class consumer
spending in mature markets is expected to
continue growing, the increases are much
smaller, with the result that, by 2030, Europe
and North America together are expected to
account for approximately 30% of the world’s
middle-class consumer spending, compared
to approximately 64% in 2009.
ASIA, AFRICA AND LATIN AMERICA URBANIZATION
Latin
America
Rest of
Aisa2China India Africa Europe North
America
561
1,042
862
494
661
560
341
Population living in urban areas
Millions
2025
2009
461
739
624
356 399
531
285
1 Urban population according to national definitions.
2 Excluding China and India.
Sources: United Nations Population Division Department of Economic and Social Affairs,
World population prospects: The 2009 revision, March 2010; McKinsey Global Institute analysis.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 13ECONOMIC TRENDS
Rapid urbanization is also a feature of many
of these fast-growing economies and presents
an even more dramatic picture of large-scaleglobal change. The United Nations estimates
that the population of the world’s urban areas
will increase by more than 1.1 billion people
over the period from 2009 to 2025. Urbaniza-
tion will continue in Europe, and more so in
North America. However, approximately 92%
of that urban growth will occur in Africa, Latin
America, India, China, and the rest of Asia,
leading to increased demand for air travel in
those regions.
CHINA EXPENDITURE ON AIR TRAVEL
AND GROSS DOMESTIC PRODUCT
Billions of 2005 U.S. $
Expenditure on air travel (left scale) Gross Domestic Product (right scale)
Source: Bombardier Analysis and IHS Global Insight.
0
2,000
4,000
6,000
8,000
10,000
12,000
0
10
20
30
40
50
60
70
80
90
100
1 9 9 0
1 9 9 2
1 9 9 4
1 9 9 6
1 9 9 8
2 0 0 0
2 0 0 2
2 0 0 4
2 0 0 6
2 0 0 8
2 0 1 0
2 0 1 2
2 0 1 4
2 0 1 6
2 0 1 8
2 0 2 0
2 0 2 2
2 0 2 4
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 14ECONOMIC TRENDS
OIL PRICE AND VOLATILITY
The outlook for consistently high oil prices
and continued oil price volatility presents
some of the biggest challenges for the world
airline industry. Jet fuel – which closely tracks
the price of crude oil – represents airlines’
largest single expense, now amounting to 34%
of operating costs on average, according to
IATA. With this large and growing influence,
oil prices and oil price volatility are major de-
terminants of the size and other make-up of
the commercial aircraft fleet of the future.
From an average price of $80 a barrel in 2010,
oil prices rose by $20 to $100 per barrel in
2011. In the final months of the year, the prices
spiked higher, and continued upwards by
8% in the first five months of 2012. Although
peak prices have not reached the $147 per
barrel experienced in July 2008, neither have
they retreated to the December 2008 low of
less than $35 per barrel. With 2011 average oilprices 25% higher than 2010, we anticipate
that prices will remain above $100 per barrel
through 2012 and, indeed, throughout the
20-year forecast period. In fact, the U.S.
Energy Information Administration (EIA)
revised its 20-year average oil price forecast
from $107 per barrel in 2011 to $126 per barrel
in 2012 (Annual Energy Outlook 2012 Early
Release), a nearly $20 increase.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
U n i t O p e r a t i n g C o s t ( C e n t s p e r A v a i l a b l e S e a
t M i l e )
LABOUR AND FUEL UNIT COST HISTORY
Fuel
Labour
Source: Air Transport Association of America, 2012.
1 Q 0 0
3 Q 0 0
1 Q 0 1
3 Q 0 1
1 Q 0 2
3 Q 0 2
1 Q 0 3
3 Q 0 3
1 Q 0 4
3 Q 0 4
1 Q 0 5
3 Q 0 5
1 Q 0 6
3 Q 0 6
1 Q 0 7
3 Q 0 7
1 Q 0 8
3 Q 0 8
1 Q 0 9
3 Q 0 9
1 Q 1 0
3 Q 1 0
1 Q 1 1
3 Q 1 1
Source: Energy Information Administration. Note: 1. FOB = Freight on board
AVERAGE OF WEEKLY CUSHING AND BRENT SPOT PRICE FOB 1
(Dollars per Barrel)
$60
$70
$80
$90
$100
$110
$120
$130
2 - 1 0
3 - 1 0
4 - 1 0
5 - 1 0
6 - 1 0
7 - 1 0
8 - 1 0
9 - 1 0
1
0 - 1 0
1 1 - 1 0
1 2 - 1 0
1 - 1 1
2 - 1 1
3 - 1 1
4 - 1 1
5 - 1 1
6 - 1 1
7 - 1 1
8 - 1 1
9 - 1 1
1 0 - 1 1
1 1 - 1 1
1 2 - 1 1
1 - 1 2
2 - 1 2
3 - 1 2
2011 Avg.: $103.16
2010 Avg.: $79.72
YTD 2012 Avg.: $110.94
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 15ECONOMIC TRENDS
Further, as observers have noted, a continua-
tion of the unrest in the Middle East, particu-
larly the threatened closure of the Strait of
Hormuz (a major oil trading passage), coulddrive oil prices to the $150 per barrel range,
resulting in an estimated 2012 average price
of $135 per barrel.
While oil prices directly affect airlines’ profit-
ability, they also influence fleet decisions and
drive network optimization strategies. These
influences are reflected in increasing demand
for highly fuel-efficient, high-productivitysolutions, such as modern turboprop aircraft.
Oil price volatility challenges airlines’ ability
to forecast passenger volumes, airline work-
loads and fleet replacement timing decisions,
whether on a daily, monthly or annual basis.
Looking ahead, we believe that oil prices
will remain significantly above the historical
averages from just a few years ago and that
prices will continue to demonstrate significant
volatility over the near term.
Although continuing high oil prices will
challenge airlines’ profitability at least
through 2012, the arrival of new aircraft
incorporating technological advantages
that deliver direct operating cost reductions
will accelerate the retirement of older, lessfuel-efficient aircraft types.
Source: Annual Energy Outlook (AEO) by Energy Information Administration.
0
20
40
60
80
100
120
140
160
1
9 8 0
1
9 8 2
1
9 8 4
1
9 8 6
1
9 8 8
1
9 9 0
1
9 9 2
1
9 9 4
1
9 9 6
1
9 9 8
2
0 0 0
2
0 0 2
2
0 0 4
2
0 0 6
2
0 0 8
2
0 1 0
2
0 1 2
2
0 1 4
2
0 1 6
2
0 1 8
2
0 2 0
2
0 2 2
2
0 2 4
2
0 2 6
2
0 2 8
2
0 3 0
AEO2012 Early Release Reference
AEO2011 Reference
Average: $126 per barrel
Actual Forecast
OIL FORECAST
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 16
AIRLINEINDUSTRY
TRENDS
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 17AIRLINE INDUSTRY TRENDS
FRAGILE PROFITABILITY
The financial outlook for the world’s airlines
remains in a state of flux as broad economic
concerns continue to work their way through
our deeply interconnected, interdependent
global economic system.
Against this backdrop, demand for air
transportation remained strong through
2011 and into 2012. IATA reported that total
passenger demand increased 5.9% in 2011,
with a 4.8% expected increase in total
passenger kilometers flown in 2012.
IATA data covering the first four months
of 2012 reflected an overall 7.1% increase in
passenger traffic, while capacity (available
seat kilometres (ASKs)) increased 4.9%. As a
result, passenger load factors grew to 77.5%.
Global airline revenues have increased
throughout the period of economic recovery,
from a low of $476 billion in 2009, to $547
billion in 2010, and to $597 billion in 2011,
representing a 9.3% year-over-year increase.
According to IATA, global airline profitability
improved significantly, from a net loss of
$4.6 billion in 2009 to total net profits of $15.8
billion in 2010, before declining to $7.9 billion
in 2011. Should the world economy slip further
to a growth rate of just 2%, IATA observes
that historically, this slow growth rate has
resulted in the airlines sliding into industry-
wide losses.
Region 2007 2008 2009 2010 2011 2012F
World 12.9 15.8 7.9 3.0
North America 3.7 4.1 1.3 1.4
Europe 6.4 0.0 1.9 0.5 -1.1
Asia/Pacific 3.0 2.6 8.0 4.9 2.0
Middle East 0.9 1.0 0.4
Latin America 0.1 0.9 0.3 0.4
Africa
-16.0 -4.6
-9.6 -2.7
-4.3
-4.7
-0.1 -0.3 -0.6
-1.4 -0.5
-0.2 -0.1 -0.1 0.1 0.0 -0.1
AIRLINE INDUSTRY NET PROFITS
(Billions U.S. $)
Source: International Air Transportation Association (IATA), June 2012.
AIRLINE ECONOMICS
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 18AIRLINE INDUSTRY TRENDS
IATA’s central forecast for 2012 anticipated
a further decline in airline profitability, to
just $3.0 billion. Regionally, Asia/Pacific is
expected to perform best, as per IATA’s centralforecast scenario, indicating profitability of
$2.0 billion. North America airline profitability
is expected to be $1.4 billion, Middle East
$0.4 billion and Latin America $0.4 billion.
Airlines in Europe and Africa are expected
to incur new losses of $1.1 billion and $0.1
billion, respectively.
In summary, the economic recovery iscontinuing and demand for air transportation
also continues to build with it, subject to the
challenges posed by slow growth in global
gross domestic product and high oil prices.
In the face of these challenges airlines have
shown creativity and consistency, in address-
ing their expenses – a scenario in which
operating a modern, highly fuel-efficient
aircraft fleet remains the single most
important strategy for business viability
and long-term success.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 19AIRLINE INDUSTRY TRENDS
AIRLINE BUSINESS MODELS
Three distinct business models are present in
the passenger segment of the airline industry:
mainline carriers (sometimes referred to as
network carriers), regional carriers and low-
fare (or low-cost) carriers. Mainline carriers
are characterized by fleets of 100-plus seat
aircraft serving multiple cities and countries
through hub-and-spoke networks. Due to
cost pressures, notably high fuel prices, and
relentless competition, mainline carriers have
focused on the replacement of older equip-
ment with newer, more efficient aircraft.
Regional carriers typically operate smaller
aircraft, such as regional jets and turboprops
with fewer than 100 seats, on short- and
medium-haul routes. By representing mainline
carriers to meet passenger demand for service
and frequencies in markets with lower volumes,
regional carriers enable their mainline partners
to right-size aircraft use throughout theirnetworks. This specialization strategy for
network optimization has developed strong
linkages between mainline and regional car-
riers, which now account for one third of all
commercial passenger flights worldwide.
Low-fare carriers typically operate aircraft
from 70 to 200 seats on point-to-point service
connecting secondary airports. By separating
ancillary revenue from the base fare, the
low-fare carriers have thereby made air travel
accessible to passengers who could not
otherwise afford it. Low-fare carriers, which
typically have lower cost bases than mainline
carriers, are now present in nearly every
part of the world and their market share has
increased significantly, particularly in North
America and Europe.
Source: U.S. Bureau of Transportation Statistics, May 2012.
*Most current available data. **Low-Cost Carriers are also referred to as Low-Fare Carriers
U.S. AIRLINE SEGMENTATION PROFITABILITY/LOSS*
4Q
2008
1Q
2009
2Q
2009
3Q
2009
4Q
2009
1Q
2010
2Q
2010
3Q
2010
4Q
2010
1Q
2011
2Q
2011
3Q
2011
-10.0
-5.0
0.0
5.0
10.0
15.0
O p e r a t i n g P r o fi t / L
o s s a s % o
f T o t a l O p e r a t i n g C o s t s
Low-Cost** Regional Mainline
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 20AIRLINE INDUSTRY TRENDS
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2000 2005 2010 2015 2020 2025 2030
20- to 59-seat 60- to 99-seat 100- to 149-seat
COMMERCIAL AIRCRAFT CAPACITY WORLDWIDE BY SEAT CATEGORY
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
Actual Forecast
The growing importance of regional carriersin the U.S. is reflected inthe growing size of
regional aircraft to an average size of 37 seats
in 2000 to 50 seats in 2005 and to 56 seats
today. Regional carrier average trip length
has also increased over this period, from 296
statute miles in 2000, to 464 statute miles in
2010 and to 468 statute miles as of the first
half of 2011. A similar pattern is recognizable
in Europe, at least partly due to less restrictive
scope clauses, where average regional aircraft
size has increased from 63 seats in 2001, to 72seats in 2009 and to 78 seats today. Although
European average regional airline stage
lengths are shorter than their U.S. counterparts,
these have increased from 384 statute miles
to 390 statute miles over the same period.
Continued turbulence in the airline industry,
including insolvency, consolidation, outsourc-
ing, unbundling of services and attempts by
some mainline carriers to reinvent themselves
by shedding legacy cost structures, hasresulted in the three established business
models becoming less individually distinct.
However the need to right-size aircraft to
market needs remains paramount in control-
ling costs, especially as commercial aircraft
capacities range from fewer than 50 seats
to more than 600.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 21AIRLINE INDUSTRY TRENDS
For longer routes with less traffic, regional
jets in the 60- to 99-seat segment present an
optimized solution. While small, single-aisle
jets provide longer-haul capacity up to 3,000nautical miles and routing flexibility, and
advanced technology turboprops are best
suited to short and medium-haul flights.
LABOUR TRENDS
While airline labour costs have decreased as
a percentage of airlines’ total costs, largely
due to the increase in fuel prices, they remain
the airlines’ second biggest expense categoryand one of the largest sources of optimization
opportunities.
At the industry level, selective outsourcing of
scheduled passenger operations to regional
carriers has increased the mainline carriers’
access to passengers in smaller centres, who
would otherwise be cost-prohibitive to serve
with larger aircraft. As low-cost carriers,regional airlines can generate profits on thin
routes that their mainline counterparts find
too costly. One constraint on this strategy has
been “scope clauses” negotiated between
mainline carriers and their unionized flight
crews, which restrict the use, number and
seating capacity of regional airlines’ aircraft
in mainline carriers’ network. Scope clauses
are a predominantly U.S. and European
phenomenon.
Additional labour cost control outsourcinginitiatives have addressed catering operations,
maintenance services and reservations, and
have helped lower airline costs dramatically.
Continued loosening of scope clause rules
(to permit regional carriers to operate even
large aircraft) as well as the development of
new business models, will increase demand
for air transportation. Bombardier expects
these trends to continue.
Source: Air Transport Association of America (ATA), 2012
FTE: Full Time Equivalent employees, most current annual data
500
1,000
1,500
2,000
2,500
3,000
1 9 9 1
1 9 9 2
1 9 9 3
1 9 9 4
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
P r o d u c t i v i t y , A S K s ( 0 0 0 ) p e r F T E
U.S. AIRLINE LABOUR PRODUCTIVITY
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 22AIRLINE INDUSTRY TRENDS
TURBOPROPS AND JETS:
OPTIMIZATION IN PRACTICE
Aircraft and engine types are critical choices
in optimizing airline fleets and networks. The
greatest efficiencies are achieved by deploying
turboprop aircraft on short- and medium-haul
markets and jet aircraft on longer routes.
Rising fuel prices expanded the use of
turboprops worldwide and led aircraft
manufacturers to increase the size and
capability of these aircraft. These aircraft
began operating in mainline carriers’ fleets in
significant numbers in 2007. Advanced tur-
boprops will continue to play an integral role
in the regional airline marketplace as carriers
confront the dual pressures of rising fuel costs
and increasingly restrictive environmental
regulations. The comparatively lower fuel burn
of turboprops, compared to regional jets of
similar size, will enable carriers to maintain
capacity and shrink their overall environmental
footprint. Modern 70-passenger turboprop
aircraft represent a cost-effective replacement
on routes previously served by 50-passenger
jets, which are no longer in production.
Of approximately 5,900 aircraft to be delivered
in the 20- to 99-seat segment, Bombardier’s
Commercial Aircraft Forecast for 2012 - 2031
anticipates – based on oil at an average $126
per barrel – that 48% will be modern tur-
boprop airliners, the first time this product
category has achieved this degree of market
penetration. Further, of the approximately
2,850 turboprop aircraft to be delivered over
88%
55% 52%
12%
45% 48%
248
2001 Actual
319
Turboprop
Regional Jet
2012-2031 Forecast
5,900
2011 Actual
Units
Sources: Bombardier Commercial Aircraft Market Forecast 2012-2031, Energy Information Administration 2012-2031 forecast.
Oil @ $111 per barrel Oil @ $26 per barrel Oil @ an average of$126 per barrel
DELIVERY BY ENGINE TYPE 20- to 99-SEATSUnits, %, Actual 2001 and 2011, Forecast 2012-2031 period
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 23AIRLINE INDUSTRY TRENDS
the period, approximately 2,700 or 95% will
be in the 60- to 99-seat segment, which is ex-
pected to experience substantial growth over
the forecast period.
The balance of the forecast deliveries in the
20- to 99-seat segment will be larger regional
jets, which airlines will require to optimize
seating capacities, maintain passenger com-
fort and accommodate traffic growth while
reducing unit costs.
AIRCRAFT RETIREMENTS
Aircraft retirements and replacements are key
product life-cycle milestones in shaping future
aircraft deliveries and fleet composition.
Historically, older aircraft are replaced to
capture the financial, operating and mainte-
nance advantages offered by newer, more
cost effective and more fuel-efficient aircraft,
as they become available.
Other factors that influence aircraft retirement
timing decisions include international and
local airport noise and emissions regulations
and fees; airline branding; the competitive
environments; as well as financial and tax
considerations (such as maintenance costs,
depreciation and incentives), airline growthstrategies, aircraft economic structural life, the
certification status of new aircraft development
programs and replacement opportunity factors,
such as delivery slots.
This year, the number of anticipated aircraft
retirements over the 20-year forecast period
has been increased by a total of 300 units,
from approximately 6,700 in our 2011 forecastto 7,000.
Today’s Fleet
(units)
2031 Fleet
(units)
4,200
17,000
12,800
Deliveries
FLEET EVOLUTION FROM
2011 TO 203120- to 149-seat Fleet
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
Replacement
Retained
Fleet
Growth
11,200
l
i
5,800
(45%)
7,000
(55%)
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 24AIRLINE INDUSTRY TRENDS
Much of the reason for this increase lies in oil
prices, which have seen a $20 per barrel jump
on average prices over last year, reaching an
average $126 per barrel throughout the fore-cast period. A further factor in the increased
forecast retirements is Russian regulators’
decision to ground ageing, domestically pro-
duced aircraft. However, since the utilization
of these aircraft is typically very low, they will
not be replaced on a one-to-one basis.
The increased retirements are expected
primarily in the 20- to 59-seat segment (anincrease of 200 units, from 2,500 retirements
to 2,700), as well as in the 60- to 99-seat
segment (an increase of 100 units, from 1,200
retirements to 1,300).
Gradually rising oil prices over the forecast
period add burden to aircraft operating
economics. Twenty- to 59-seat aircraft are
particularly affected due to the resulting
higher cost per seat, and hence the increased
retirements in this segment. This also applies
to the 60- to 99-seat segment towards the
end of the next decade due to the ageing
70-seat and 90-seat aircraft that entered
service in the early 2000s.
Most aircraft move through a recognizable
series of product life cycle stages. Passenger
aircraft, when removed from commercial
operation with front-line carriers, typically
move into cargo operations. Some others
move to less demanding markets and appli-
cations, serving commercial operators with
different utilization needs, different operating
environments and different business models.
As a significant number of 50-seat regional
jet airliners reach 20 years of age, Bombardier
expects many will be converted into freighter
aircraft. Small freighter aircraft (with payloads
of 5,000 to 20,000 lbs) are expected to be in
demand to replace a large fleet of all-cargo
aircraft currently in service around the world,
nearly all of which are limited-range turbo-
props averaging 29 years of age. The constant
evolution of the regulatory environment also
influences the pace and pattern of aircraft
retirements and, thereby, the fleet mix. During
the past 40 years, regulations imposed by
the International Civil Aviation Organization,
Committee on Aviation and Environmental
Protection (ICAO/CAEP) led to the phase-out
of noisier aircraft from U.S. and European
commercial fleets. New ICAO/CAEP noise
and emission standards will further affect
the global aviation fleet. Most recently, the
European Union has implemented an
Emissions Trading Scheme that, since
January 1, 2012, has applied to commercial
aircraft operating in European airspace.
IN-SERVICE AIRCRAFT 15 YEARS OF AGE OF OLDER
Sources: OAG Aviation Solutions, Bombardier Analysis.
500
1000
1500
2000
2500
10- to
19-seat
20- to
39-seat
40- to
59-seat
60- to
99-seat
100- to
149-seat
150- to
174-seat
175- to
219-seat
220+
seat
U n i t s
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 25AIRLINE INDUSTRY TRENDS
The typical life cycle stages of aircraft use are
also influenced by seemingly unconnected
external events. Following the attacks of
September 11, 2001 for example, older aircraftretirements accelerated and even some new
model aircraft were temporarily parked. Now,
almost 11 years later, not all of these aircraft
have returned to active service.
Of the current fleet of 20- to 149-seat com-
mercial passenger aircraft, Bombardier antici-
pates that 60% will retire by 2031. Looking in
more detail, we expect the fewest retirements
in the 60- to 99-seat segment, and the most
– 70% of today’s fleet – in the 20- to 59-seat
segment. These aircraft will be retired due to
their comparatively higher per-seat operating
costs and high fuel costs. Without the advent
of new technology-advanced, in-production
20- to 59-seat aircraft in the near-term fore-
cast period, Bombardier expects this segment
to decline dramatically, from 33% of today’s
20- to 149-seat fleet, to just 8% in 2031.
In sharp contrast, the near-term period will
see the introduction of new-generation 100-
to 149-seat aircraft, which are expected to
account for 53% of the total 20- to 149-seat
fleet in 2031. The response to the arrival of op-
timized, new generation aircraft is expected to
result in significant retirements and deliveries,
amounting to 3,000 retirements and 7,000new aircraft deliveries.
More than half of the current commercial
aircraft fleet will be replaced in the next 20
years, a slightly greater percentage than
expected last year, due to technical obsoles-
cence, cost inefficiencies and age. The
increasing pace of older aircraft retirements
will have a positive impact on demand for
new aircraft.
80% retired from commercial passenger service
COMMERCIAL AIRCRAFT GENERAL RETIREMENT PROFILE
Standard
Commercial Passenger Aircraft
Retirement Curve
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 20 2 1 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 394 0 41 4 2 4 34 4 4 5
Source: Bombardier Analysis.
% o
f fl e e t a c t i v e
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 26AIRLINE INDUSTRY TRENDS
AIRLINES AND THE ENVIRONMENT
Environmental issues and increasing environ-
mental regulation will increasingly shape the
world’s airline industry and infrastructure over
the 2012 – 2031 forecast period. These issues
can be broadly categorized as: local air
quality, aircraft emissions and community
noise. The aviation industry has improved
its performance in these areas consistently
over more than 50 years.
Greater fuel efficiency directly boosts airline
profitability and aircraft operations havebecome 20% more fuel efficient over the
past 10 years alone. Modern aircraft now
achieve fuel efficiency of 3.5 litres per 100
passenger kilometers, roughly comparable
to today’s leading hybrid passenger cars,
with much greater speed.
Other environmental performance highlights:
• Today’s aircraft y three times fartheron the same fuel than 30 years ago, a
75% gain in fuel efficiency per passenger
kilometer.
• New aircraft are 70% more fuel ecient
than 40 years ago.
• The maximum range of commercial jet
aircraft has increased to 15,200 km from
5,190 km in 1960, carrying more passengers
farther, with less fuel.
• While passenger trac (in revenue
passenger kilometers) has increased at
an average of 5% annually, increasingly
efficient aircraft operations have limited
emissions growth to about 3%.
• Today’s aircraft are 50% quieter than those
40 years ago. Current ICAO Chapter 4
requirements are 35-40 dB quieter than
the requirements 40 years ago.
The aviation industry – aircraft manufacturers
and airlines – are working on further improve-
ments in aircraft environmental performance,
with guidance from ICAO and the Air Trans-
port Action Group (ATAG), among others.
Bombardier, with other key stakeholders, is
committed to moving toward carbon-neutral
growth within the industry during the forecast
period and achieving by 2050 a 50% reduc-
tion in CO2 emissions from 2005 levels.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 27AIRLINE INDUSTRY TRENDS
The application of new technological devel-
opments in new aircraft designs will be para-
mount in meeting these commitments. IATA’s
Technology Roadmap provides a summary andassessment of technology-based opportunities
for future aircraft, including technologies that
will reduce, neutralize and eventually eliminate
commercial aviation’s carbon footprint.
Bombardier is also taking steps to reduce
its own carbon and environmental impacts.
Through our corporate responsibility activities,
Bombardier is committed to minimizing thefootprint of its manufacturing and operating
activities, through increased efficiency, on-site
innovation and the creation of environmental
synergies through engagement with our
supply chain partners.
In summary, the world aviation industry is
actively addressing environmental concerns
through the retirement of older aircraft, fleet
modernization, application of technology, and
improvements in operations and infrastructure.
Growing environmental awareness and in-
creased environmental regulation will increase
demand for efficient new aircraft.
Source: International Air Transport Association (IATA) Technology Roadmap 2 009.
Riblets
Wireless opticalconnections for IFE
Spiroid wingtip
Advanced fly-by-wire
MEA architecture
Fly by light
Variable camber with newcontrol surfaces
Energy harvesting devices
Natural laminar flow
Hybrid laminar flow control
Engine replacements
New engine coreconcepts
Geared turbofan Open rotor / unducted fan
Advanced direct drive
Counter-rotating fan
Biomass to fuel or biojet
Biodiesel
Synthetic paraffinic kerosene
Liquefied petroleum gas
Compressed natural gas
Liquid methane
Furans
Butanol
Transesterification fuels Liquid hydrogen
Ethanol
Hybrid wing body
Cruise-efficient STOL
Truss-braced wing
Wireless flight control system
PEM fuel cell
Solid-oxide fuel cell
Solid acid fuel cell
Morphing materials
Morphing airframe
Advanced 3rd gen. core
Active stability management
Thermal management
Variable cycle Adaptive cycles
Boundary-layer ingesting inlets
Embedded distributed multi-fan
Adaptive / active flow control
Ubiquitous composites
Non-Brayton cycles
Pulse detonation cycles
Regenerative / recuperative cycle
Retrofit
Update
New Aircraft< 2020
New Aircraft> 2020
All stages
20202010 2030
A i r T r a ffi c M a n a g e m e n t
A l t e r n a t i v e F u e l s
E n g i n e
A i r f r a m e & S y s t e m
s
Data link communication
Required time of arrival
Performance-based navigation
Automatic dependent surveillance broadcast - OUT
System-wide information management
GNSS landing system via ground based augmentation system
Automatic dependent surveillance broadcast - IN
IATA TECHNOLOGY ROADMAP, 2009
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 28
THE FORECAST
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 29THE FORECAST
ASSUMPTIONS
The Bombardier Commercial Aircraft Market
Forecast covering the period 2012 – 2031 is
based on the following principal assumptions
and market drivers:
• Demand for air travel will be cyclical and
directly related to economic growth and
wealth creation over the long term
• Fleet utilization is directly related to
economic growth
• Demand for air travel will be supported by
aviation infrastructure. In some emerging
markets, lagging infrastructure develop-
ment will constrain growth in air travel and
• Increasing environmental regulation will
affect fleet mix and encourage carriers to
seek lower per-passenger fuel burns and
emissions
The following assumptions regarding
commercial aviation also guided development
of the forecast:
• Oil / fuel prices will aect eet mix
• Airlines will continue to focus on cost
reduction and will prefer the advantages
of larger capacity aircraft in each
segment
• Contractual restrictions on airline
operations – based on aircraft size and
engine type – will ease over time and
• Airline markets will continue to be
opened to greater competition through
liberalization of international air
transportation agreements
The forecast was developed based on the
following metrics applied to the 20-year period:
3.26% Average economic growth in global
GDP (down from 3.4% last year)
$126 /bbl Average oil price, according to the
EIA (up from $107/bbl last year).
FLEET GROWTH FORECAST
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
WORLD 2011 Fleet Deliveries Retirements 2031 Fleet
20- to 59-seat 3,600 300 2,700 1,200
60- to 99-seat 2,500 5,600 1,300 6,800
100- to 149-seat 5,100 6,900 3,000 9,000
TOTAL 11,200 12,800 7,000 17,000
20-YEAR OUTLOOK
Market Drivers that increase/decreaseaircraft demand
Economic Growth
Fuel Prices
Fuel Volatility
Replacement Demand
Emerging Markets
Environmental Regulations
Environmental Fees
Labour Trends
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 30THE FORECAST
FORECAST RESULTS
The Bombardier Commercial Aircraft Market
Forecast anticipates the delivery of 12,800
new 20- to 149-seat aircraft in the 2012 – 2031
period. Coupled with retirements of approxi-
mately 7,000 aircraft, the world commercial
fleet will grow from approximately 11,200
aircraft at the start of 2012, to approximately
17,000 at the period end. Overall fleet growth
will be 52%, representing a compound annual
growth rate of 2.1%. Almost half of the new
deliveries will be replacement aircraft, while
the balance will be deployed for growth innew or expanding markets.
The 20- to 59-seat segment of the market is
expected to shrink by approximately 66% over
the period, from approximately 3,600 aircraft
in 2012, to just 1,200 by 2031. The 300 expect-
ed deliveries in this segment will be more than
offset by 2,700 expected retirements.
The 60- to 99-seat segment is expected to
grow 270% between between 2012 and 2031.
From a current base of 2,500 aircraft, 5,600
new aircraft deliveries will be countered by
1,300 retirements, resulting in a 2031 fleet of
6,800 aircraft.
The 100- to 149-seat segment is expected to
grow from a current base of approximately
5,100 aircraft, with deliveries of 6,900 new
aircraft and retirements of 3,000 aircraft
resulting in a fleet of approximately 9,000
aircraft at the forecast period end, representing
a 2.9% (CAGR). Aircraft in this segment
are typically employed to replacement and
growth roles in about equal proportions.
Overall fleet growth will
be 52%, representing a
compound annual growth
rate of 2.1%.
BOMBARDIER MARKET SEGMENT EVOLUTIONFleet, Deliveries, Retirement: 2011-2031
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
20- to 59-seat 60- to 99-seat 100- to 149-seat
2011
Fleet
2031
Fleet
Fleet 2011: 11,200 Deliveries: 12,800 Retirements: 7,000 Deliveries: 17,000
2011
Fleet
2031
Fleet
2011
Fleet
2031
Fleet
3,600 300 2,700
1,200
2,500
5,600 1,300
6,800
5,100
6,900 3,000
9,000
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 31THE FORECAST
REGIONAL 20-YEAR DELIVERY OUTLOOKUnits, 2012-2031
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
Africa andThe Middle East
970
NorthAmerica
4,730
LatinAmerica
930
China
2,220
Asia/Pacific
1,710
Europe,Russia & CIS
2,240
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 32THE FORECAST
GEOGRAPHIC BREAKDOWN
Global demand for air travel and new aircraft
continues to shift towards emerging markets,
although not as rapidly as anticipated in pre-
vious forecasts. Over the forecast period to
2031, North America is expected to account
for 37% of new aircraft deliveries, China 17%,
Europe (including Russia & CIS) 18%, Asia/
Pacific 13%, Latin America 7% and Africa &
Middle East 8%.
While total world forecast period aircraft
deliveries in the 20- to 149-seat segments
are expected to decline by 2.3%, compared
to Bombardier’s 2011 forecast, the reduction
is expected primarily in European and Middle
Eastern markets (down 200 and 80 aircraft,respectively). Demand in North America,
China, Asia/Pacific and Latin America is
expected to remain on par with last year’s
forecast. Aircraft demand in China and Asia/
Pacific, considered together, reflect the grow-
ing economic strength and influence of these
markets, which are expected to experience
more rapid economic growth than western
markets.
20- TO 59-SEAT SEGMENT
Bombardier foresees a total of 300 20- to
59-seat new aircraft deliveries in this segment
over the 20-year forecast period. This segment
is the only part of the 20- to 149-seat com-
mercial aircraft market expected to experi-
ence a net reduction in fleet size, a reflection
of the preference for larger aircraft sizes
throughout the industry in response to high
fuel prices.
Over the last year, new aircraft deliveries in
this segment effectively balanced the few
retirements and maintained the fleet size
at approximately 3,600 units. Bombardier
expects very few deliveries annually over
the next 15 years, with the potential of new
aircraft offerings in this segment driving a
potential resurgence later in the forecast
period.
This year’s forecast also anticipates an addi-
tional 200 aircraft retirements (8%) over the20-year period, due mainly to the impact of
high fuel prices on the competiveness of small
regional jet aircraft in service with mainline
carriers in developed markets. These 50-pas-
senger class aircraft will continue to deliver
profitable service in emerging markets, such
as Africa, Latin America and Eastern Europe,
where the capacity and range characteristics
can help accelerate the development of the
air travel industry.
20-YEAR OUTLOOK
GDP Distribution by Country
(2011 and 2031)
20,000
40,000
60,000
80,000
100,000
120,000
2011 2031
North America Europe (incl: Russia & CIS)
Asia/Pacific (ex. China) China ROW
Sources: Bombardier Commercial Aircraft Market Forecast 2012-2031,IHS Global Insight, February 2012.
T o t a l G D P
( $ T r i l l i o n )
39%
61%
50%
50%
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 33THE FORECAST
60- TO 99-SEAT SEGMENT
This segment is one of the most dynamic in
commercial aviation, as growth will be driven
largely by the evolving relationship between
mainline and regional carriers. The outsourcing
of regional aircraft operations to carriers with
appropriate, low-cost structures, namely re-
gional airlines, continues to be the main thrust
of network optimization efforts. Bombardier
expects that scope clauses in North American
and European operations will continue to
ease, to meet growing demand in this market
segment.
Elsewhere, the attractive economics and
operational flexibility of regional aircraft can
be used to right-size aircraft capacity
according to traffic demand.
Since on short stage lengths turboprop
aircraft are more economical to operate than
jets, modern turboprops are a natural hedgingtool for air carriers against high and volatile
fuel prices. High speed turboprops are now
used by many airlines to replace 50-seat
regional jets on short-haul routes, with little
or no increase in block time or reduction in
passenger comfort.
More than 200 new 60- to 99-seat aircraft
were delivered in 2011, bringing the total
segment fleet up to 2,500 aircraft at the
beginning of the forecast period. In compari-
son to last year’s forecast, expected 20-year
deliveries have been reduced by 200 units,
due largely to a slower economic recovery inmature markets and a preference for larger
capacity aircraft in emerging markets. Aircraft
retirements have also been increased by 100
units in this year’s forecast, principally 70-seat
and 90-seat regional aircraft delivered in the
early 2000s that are expected to go into
retirement towards the end of the next decade.
Of the approximately 5,900 new aircraft to
be delivered in the 20- to 59-seat and 60- to
99-seat segments in the forecast period to
2031, 48% will be turboprops and virtually all
of these deliveries are expected to be in the
60- to 99-seat segment.
Regional jet deliveries in this 60- to 99-seatsegment are expected to amount to approxi-
mately 2,900 units and represent $102 billion
in sales revenues. These aircraft will be used
by the world’s airlines to help optimize network
capacity. In all, this segment is expected to
have a demand for 5,600 new aircraft, worth
over $180 billion in sales revenue. The current
fleet will grow 270%, to reach 6,800 aircraft
by the end of the forecast period.
Segment 2012 CAMF
20- to 59-seat 150
60- to 99-seat 2,700
Total 2,850
20- TO 99-SEAT
DELIVERY PROFILE
20-YEAR TURBOPROP FORECAST20- to 99-seat Aircraft
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
Regional Jets
52%
Turboprops
48%
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 34THE FORECAST
100- TO 149-SEAT SEGMENT
The 100- to 149-seat segment is expected
to achieve a 2.9% CAGR as it expands from
approximately 5,100 aircraft in 2012, to
approximately 9,000 units by 2031 – the
largest market growth opportunity recognized
by the Bombardier Commercial Aircraft
Market Forecast.
This segment will see deliveries of approxi-
mately 6,900 new aircraft against retirements
of 3,000 units, or 59% of today’s fleet. Many of
these aircraft are derivatives of larger aircraftand not originally designed for this segment.
The higher weight and greater drag of these
current products result in higher fuel burns
and greater CO2 emissions. Such aircraft are
daily more challenging to operate in an ultra
cost-conscious and increasingly environmen-
tally-aware business environment. An industry
that requires a fundamental improvement in
operating economics as a matter of survival
is turning its future focus toward aircraft
optimized for their intended segments and
able to deliver significant improvements in
airline profitability.
Newly designed aircraft that deliver superior
operating economics, through advances in
technology, as well as operational flexibility
and attention to passenger comfort, will
accelerate the retirement of older aircraft.
In fact, at the 2011 year end, the OAG Fleet
iNet identified approximately 2,091 single-aisle
aircraft in storage and at least temporarily
inactive.
Newly designed aircraft
that deliver superior
operating economics will
accelerate the retirement
of older aircraft.
Current large single-aisle jetNew design small single-aisle jetLarge RJ
Passenger Demand per Departure
P r o fi t c o
n t r i b u t i o n p e r D e p a r t u r e
Sources: U.S. Department of Transportation, Bombardier Analysis.
RJ = Regional jet, Small single-aisle jet: 100- to 149-seats, Large single-aisle jet: 150+ seats.
PROFIT ZONE – RIGHT-SIZING AIRCRAFT FOR TRAFFIC DEMAND
High
Low
60 200
Current small single-aisle jet
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 35THE FORECAST
This segment saw a fleet decrease of approxi-
mately 100 units in 2011, while deliveries also
declined, as some orders for new 130-seat
single-aisle aircraft were converted into ordersfor larger aircraft. Total deliveries in this
segment across the 20-year forecast period
have been reduced by approximately 100
units, due mainly to the slower economic
growth. The expected rate of aircraft retire-
ments in this segment has remained constant
since last year’s forecast. While higher oil
prices are accelerating the retirement of older
platforms, the large majority of the aging
aircraft in this segment, such as MD80/90,
BAe 146 and Boeing 737 Classics would have
exited the market by the middle of the next
decade, even with fuel prices at 2011 levels.
The 6,900 new aircraft destined for the
100- to 149-seat segment over the next 20
years will generate sales revenues of more
than $449 billion.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 36
CONCLUSION
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 37CONCLUSION
The commercial aviation industry has gone
through significant change since the recent
global recession. The industry’s unwavering
focus on optimization and efficiency is the keyreason for its resilience. Economic growth will
drive the demand for more aircraft. Rising oil
prices and continued price volatility will drive
airlines to accelerate the retirement of older,
less efficient aircraft, thereby increasing the
demand for new-technology and fuel-efficient
aircraft.
Bombardier remains optimistic in the 20- to
149-seat aircraft market. The company pres-
ents the most optimized capacity aircraft to
connect not only primary and secondary, but
also tertiary airports around the world. The
overall fleet in this market will grow by 51%
from 11,200 units in 2011 to 17,000 units in
2031. New aircraft deliveries will reach 12,800
units, generating over $630 billion in sales
revenue over the next 20 years.
New aircraft deliveries
will reach 12,800 units,
generating over $630 billion
in sales revenue over
the next 20 years.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 38
GEOGRAPHICDETAILS
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 39GEOGRAPHIC DETAIL
INTRODUCTION
The top-level message delivered by the
Bombardier Commercial Aircraft Market
Forecast this year is that while airline industry
fundamentals remain sound and attractive
over the longer term envisioned by this
forecast, the immediate term presents some
important challenges that will see early-term
deliveries of new aircraft delayed until
somewhat later in the period.
The first of these challenges is that the world
economy is not recovering from the financialcrisis of 2008 as quickly or as consistently as
we might have concluded a year ago. Europe
continues to deal with sovereign debt crises,
unemployment remains stubbornly high in the
United States and political unrest – present
or imminent – threatens economic stability in
much of Africa and the Middle East.
A second central challenge is the extent to
which growth regions can sustain their pace
of expansion. As the world’s economies are
increasingly interconnected and interde-pendent, significant economic events in one
region – such as a sovereign default in Europe
– can be expected to have negative global
implications as far away as China.
The third challenge is that fuel prices, which
have spiked significantly since the third quar-
ter of 2011, have shown their potential to put a
brake on economic recovery and growth, and
demonstrate clearly the extent to which west-
ern economies still rely on inexpensive energy.
More expensive fuel is also here to stay.
These challenges, and more, have seriously
compromised the ability of the world’s airlines
to operate at a profit – a circumstance which
is likely to result in continuing consolidation
and capacity reductions, and which is certain
to heighten carriers’ focus on cost reduction
as a central strategy of day-to-day operations.
What has not changed, despite these
challenges, is that air travel remains a
central building block of future prosperity
and continuing development. Air travel links
populations quickly and efficiently over
distances that make other transportation
alternatives unsatisfactory. It does so
at reasonable financial cost and with
environmental impacts that are already
small and getting smaller every day.
Modern aircraft that help their operators
serve their customers at significantly lower
cost, with lower fuel burns, lower emissions
and more operational flexibility are clearly
part of the solution and will help today’s
most enlightened, most forward-thinking
air carriers not just survive today’s challenges,
but actively prepare themselves to prosper
and grow in a changed world. Bombardier
is bringing such aircraft to market.
Air travel remains a
central building block of
future prosperity and
continuing development.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 40GEOGRAPHIC DETAIL
NORTH AMERICA (EXCLUDING MEXICO)
North America, the world’s largest aircraft
market, will maintain its leadership position
over the course of the 20 years covered by
the Bombardier Commercial Aircraft Market
Forecast. This market is expected to require
more than 4,700 new commercial aircraft,
37% of total world demand in the 20- to
149-seat segments, which is unchanged
from last year’s forecast.
Economic growth, at just 2.6% CAGR, is
forecast to lag most of the rest of the world,
which will average 3.26%, as GDP generation
leadership continues to shift to economies
such as India and China – traditionally viewed
as emerging.
In a further departure from global trends,
less than half of the new aircraft required in
North America (45% or approximately 2,150
units) will be in the 100- to 149-seat segment.
Instead, most of the deliveries (52% or ap-
proximately 2,450 units) will be in the 60- to
99-seat segment, the traditional domain of
regional airlines.
According to data from IATA, passenger
air travel grew only modestly in 2011, 1.7%
compared to 9.9% growth in 2010. IATA sees
continuing slow growth of passenger air travel
in 2012, at 0.5%.
Regional airlines operating in partnership
with mainline carriers continue to play an
important role in North American passenger
air travel. According to industry statistics,
regional airlines accounted for 48% of 2010
departures from the top 10 U.S. airports, rep-resenting approximately 24% of passengers
enplaned and 21% of domestic airline revenues.
Approximately 74% of U.S. airports with
commercial airline service are served only
by regional carriers.
The financial arrangements for regional part-
ners are typically based on a fixed fee-for-
flying or capacity purchase agreement (CPA)
that is not based on the number of passen-
gers carried. Regional airlines operating under
contract to their mainline partners are a vital
part of making the air travel system function
efficiently by enabling the mainline carriers to
right-size the equipment offered throughout
their networks. They also enable access to
some small market airports that can’t handle
the mainline carriers’ larger aircraft.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 41GEOGRAPHIC DETAIL
Bombardier believes that the scope clauses,
which have constrained both the size and
number of regional aircraft operating in the
mainline carriers’ systems, will continue toease over the forecast period and that this
will drive demand for larger capacity regional
aircraft in greater numbers.
North America’s large installed fleet base
requires constant replenishment and renewal.
As air carriers here regain financial strength
following a period of declining passenger
loads, financial failures, bankruptcies,
restructurings and consolidations, their
attention will focus on cost control strategies
that include expanding scope clauses to
cover larger aircraft, capacity planning andoptimizing their asset use.
One key will be fleet renewal that delivers sig-
nificant improvements in operating efficiency
and flexibility. New aircraft that burn less fuel
and deliver other operating efficiencies are
certain to be in high demand in the coming
cycle of fleet renewal.
5
10
15
20
25
30
35
U . S .
$
b i l l i o n
U.S. CARRIERS TOTAL CASH AND CASH EQUIVALENT
Source: Bureau of Transportation Statistics, Schedule B-1.
DEMAND DISTRIBUTION
BY SEAT SEGMENT,
NORTH AMERICA, 2012-2031Total: 4,730 Units
3%
52%
45%
20- to 59-seat
60- to 99-seat
100- to 149-seat
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
One key will be fleet
renewal that delivers
significant improvements
in operating efficiency
and flexibility.
BOMBARDIER COMMERCIAL AIRCRAFTGEOGRAPHIC DETAIL
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 42GEOGRAPHIC DETAIL
EUROPE (INCLUDING RUSSIA & CIS)
Europe, including Russia & CIS, remains a
strong market for aircraft in 20- to 149-seat
segment, accounting for approximately 18%
of expected worldwide deliveries from
2012-2031.
Anticipated deliveries for Europe, including
Russia & CIS, are unchanged from Bombardier’s
2011 forecast, as a significant increase in
expected Russian & CIS deliveries is offset
by a projected decline in deliveries in the
financially troubled Eurozone.
Airline strategies have focused on cost
reduction as well as consolidation through
acquisition among larger airlines, which
reduces demand for new aircraft. In addition,
Europe’s population density, comparatively
short travel distances and extensive airport
security measures also mean that both rail
and road provide significant competition
to air travel.
Tightening environmental regulations arealso increasing the pace at which older, less
fuel-efficient aircraft are being retired.
...a significant increasein expected Russian & CIS
deliveries is offset by a
projected decline in
deliveries in the financially
troubled Eurozone.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 43GEOGRAPHIC DETAIL
Overall deliveries in this region reflect the
broader industry’s shift to larger aircraft, as
52% of the total deliveries are expected to be
in the 100- to 149-seat segment. Deliveries ofaircraft in the 60- to 99-seat segment domi-
nated by regional carriers are expected to
account for 45% of deliveries, while the 20- to
59-seat segment will make up the remaining
3%.
Russia & CIS are expected to grow more
rapidly than the rest of Europe, at an average
3.4% CAGR for the 20-year forecast period.
It is expected that approximately 300 new air-
craft in the 100- to 149- seat segment will be
needed, representing 26% of total European
demand for aircraft in this segment.
The Russian aviation authority announced
the grounding of a number of domestically-
built aircraft fleets in 2011. This action has
advanced the retirement of these alreadyageing fleets, thereby creating an immediate
opportunity for both new and used aircraft
for the replenishment. As a result, we revised
our forecast to increase the demand of 60-
to 99-seat aircraft by approximately 180 units
from last year forecast to 320 units. This is
considered a moderate increase, when taking
into account the low utilization of current
fleets, even though the grounded fleet is
much larger.
DEMAND DISTRIBUTION
BY SEAT SEGMENT, EUROPE
(INCL. RUSSIA & CIS), 2012-2031Total: 2,240 Units
3%
45%
52%
20- to 59-seat
60- to 99-seat
100- to 149-seat
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 44GEOGRAPHIC DETAIL
ASIA/PACIFIC (EXCLUDING CHINA)
Delivery expectations for Asia/Pacific,
excluding China, remain largely unchanged
from Bombardier’s Commercial Aircraft
Market Forecast from a year ago. Economic
forecasts predict annual GDP growth of
approximately 3.4%, which is close to the
world average over the forecast period.
This region is expected to account for
approximately 13% of new aircraft deliveries
over the forecast period, representing approx-
imately 1,710 aircraft against retirement of
790 aircraft, resulting in fleet growth of
920 aircraft, to a total of 2,090 in 2031.
In Asia/Pacific, connections between
countries are expected to increase in both
number and extent over time. Larger, longer
range aircraft are increasingly required for
international routes and, as in most other
regions addressed by Bombardier’s forecast
and the industry generally, the 100- to 149-
seat segment is expected to account for
more than half the deliveries (57%) over the
period. Smaller, short-haul aircraft will be
required for growth and fleet replacement
in domestic markets.
SUB-REGION OF ASIA/PACIFIC
Northeast Asia
South Asia
Southeast Asia
Oceania
In Asia/Pacific,
connections between
countries are expected to
increase in both number
and extent, over time.
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 45GEOGRAPHIC DETAIL
In India, despite the continuation of strong
economic growth, the airline industry has
been hard hit by the devaluation of the rupee
and overcapacity, with the result that consoli-dation is now under way. More broadly, fa-
vourable aviation policies continue to
stimulate demand for regional aircraft in order
to meet the growing desire for air travel from
the burgeoning middle-class.
In common with other emerging economies,
notably China, the growth of commercial
aviation in India is expected to be limited by
infrastructure shortcomings. India currentlyhas four international airports operating at or
above optimum capacity, three of which have
identified expansion plans in place, while the
fourth cannot be expanded, due to physical
encroachments. Fourteen airports have been
identified for construction, conversion or
expansion, while an additional 35 airports
have been identified in India’s 10th Five Year
Plan (2002 – 2007), although many projects
have been delayed due to financing or
bureaucratic delays.
Most of the 14 airport projects underway are
located in southwestern India and there are
incentives for carriers to add service, which
could see these facilities approach optimum
capacity utilization. More specifically, financial
incentives for operating aircraft with fewer
than 80 seats include waived landing fees and
lower jet fuel taxes, which encourages the
operation of regional aircraft.
AIRPORT CONGESTION AND EXPANSION PLAN
India
49
Existing airportsat or above optimum
capacity
India’s scheduledairports for expansion
/construction
Sources: CAPA and Bombardier anlaysis.
LambertAzimuthalEqual AreaP rojectionBasedon2. 5 arc-minute resolutiondata
0 200km
BANGLADESH
CHINA
MYANMAR
NEPAL
BHUTAN
S RI L ANKA
PAKISTAN
1
1
1 2
5
9
1
7
1 1
3
8
64 Persons per km2
0
1-5
6-25
26-250
251-1,000
1,001+
BOMBARDIER COMMERCIAL AIRCRAFTGEOGRAPHIC DETAIL
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BOMBARDIER COMMERCIAL AIRCRAFTMARKET FORECAST 2012-2031 46GEOGRAPHIC DETAIL
Despite fall-off in demand from many parts
of the world following the financial crisis of
2008 – 2009, India’s manufacturing sector
has remained robust. Air travel is expected tosee a significant period of growth as the gov-
ernment addresses substantial infrastructure
deficits over the next five years in particular,
with overall spending set to increase to more
than $1 trillion. India has a large land mass and
a very large and incre