Airbus Revises Up Jet Demand Forecast Amid Higher Energy Costs

Europe's Airbus has revised up its forecast for jet deliveries over the next 20 years as soaring fuel bills prompt airlines to seek new, more fuel-efficient planes.

Despite the war in Ukraine and a spike in inflation, Airbus edged up its average forecast for annual GDP growth to 2.6% from 2.5% in its latest 20-year outlook published on Monday.

But it saw passenger traffic growing more slowly than before, by 3.6% a year rather than 3.9% forecast in November.

That's partly the result of higher energy and carbon prices that push up fares.

But it believes a spike in energy costs will also encourage many airlines to accelerate deliveries of fuel-saving models.

Airbus predicts total deliveries of 39,490 jets over the next 20 years, up from 39,020 forecast previously.

The increase is partly due to 2021 dropping out of the rolling 20-year forecast period, an exceptionally weak year depressed by the pandemic.

It expects deliveries to include 38,600 passenger jets - up from 38,140 previously forecast - and 890 freighters, up from 880.

Airbus still expects air traffic to recover to pre-pandemic levels some time between 2023 and 2025, as the industry faces pressures from inflation to rises in energy prices as well as the risk of further outbreaks of variants of COVID-19.

However, the planemaker expects its best and worst case scenarios for traffic to regain 2019 levels some six months later than its previous forecast, according to charts supplied with the data.

CARBON COST

For the second time in three years, Airbus has changed the way it breaks down jet demand, this time into two categories - "typically single-aisle" which includes its A320neo or Boeing's 737 MAX and accounts for 31,620 projected deliveries, and "typically wide-body" jets which account for 7,870 units.

It had previously tracked "small, medium and large" sizes.

For the first time, Airbus is building in the transition to sustainable aviation fuel and recognising the cost of carbon in its forecasts, which may subject airlines to growing differences in energy bills depending on where they operate.

Still, it expects upward pressure on energy prices and inflation to ease somewhat by the middle of the decade.

Demand from Asia, which has been a driving force in aerospace for over a decade, is fractionally lower than in the planemaker's previous forecast. But it still makes up 45% of the projected 20-year deliveries at 17,580 passenger and cargo jets.

China remains poised to overtake the United States as the world's busiest aviation market in coming years.

But the pace of growth is dominated by India, whose domestic market is seen growing by an average 6.6% a year over the next two decades, more than three times the U.S. average of 2.1%.

With aviation growing from a low base, however, Indian consumers will still be making fewer trips by air in 2041 than Americans took in 2019, according to Airbus data.

Also leading growth in the next 20 years will be travel between the Indian Subcontinent and Africa and between the world's two largest economies, China and the United States.

The Indian Subcontinent is also home to the fastest growing air freight markets, with traffic to or from both China and the United States expected to grow by at least 7.3% a year.

About half the world's cargo by value goes by air and the sector has been booming as companies shore up supply chains. Airbus sees freight traffic growing on average by 3.2% a year.