Global Market Forecast - AirInsightGLOBAL MARKET FORECAST 2004-2023 I 3 Frequencies will double The...

Global Market Forecast2004-2023

Contents

Page .6

Current marketenvironment

Page .16

Demand for air travel

I 1

Page .30

Traffic forecast Page .34

Demand for passengeraircraft

Page .56

Air cargo forecast

2 I GLOBAL MARKET FORECAST 2004-2023

Forecast highlights

The economic recovery, the return of business confidence and corporate

investment, the sustained trade in commodities and a pent-up demand in world-

wide leisure travel, have all resulted in a much stronger rebound of air traffic in 2004

than previously anticipated.

Over the 2004-2023 period, world passenger traffic is forecast to increase

by 5.3% per annum. This traffic growth, combined with fleet renewal, will require

delivery of 16,601 new passenger aircraft.

17,328 new passenger and freighter aircraft deliveries

The number of passenger aircraft in service will double from a fleet of 10,838 at year

end 2003 to 21,759 in 2023.

Passenger airlines will replace 9,200 aircraft, of which 3,520 will be recycled back

into passenger service, 2,412 will be converted to freighters, with the remaining

3,268 aircraft permanently withdrawn from service over the forecast period.

Freight traffic is expected to grow at 5.9% per annum over the 2004-2023 period.

Traffic growth and fleet renewal will create a demand for 3,139 freighter deliveries,

of which 727, or 23%, will be factory-built freighters.

The world’s airlines are forecast to take delivery of 17,328 new passenger and freighter

aircraft over the next 20 years, equating to average annual deliveries of 866 aircraft.

GLOBAL MARKET FORECAST 2004-2023 I 3

Frequencies will double

The number of frequencies offered on passenger routes will more than double,

whilst the average seats per aircraft will increase 20% from 181 to 215.

Despite current levels of congestion and delays, this will represent a more rapid rise

than that seen in previous years, and will present a challenge to the world’s airports

and air traffic management systems.

The Airbus GMF assumes that all planned and required infrastructure improvements

will be undertaken over the forecast period. Given the substantial investments

and time required to carry out such developments, there is the possibility that not

all the changes necessary may be achieved. Should this be the case, average

aircraft size could go higher than the anticipated level of 215 seats per aircraft

by 2023 shown in the GMF. Airlines could consequently be forced to acquire larger

aircraft in order to meet demand.

17,328new passenger

and freighter deliveries overthe 2004-2023

period

16,601

Delivered17,328

Retired4,297

Recycled3,520

Converted2,412

PassengerFleet

FreighterFleet

��

3,268 1,029

��

�

727


The emergence of the successful low cost airlines in recent years will add more

single-aisle aircraft on domestic and intra-regional flows than in previous forecasts.

Two thirds of new deliveries will be single-aisle types in nominal size categories from

100 to 210 seats.

By 2023, the world’s airlines will be operating 1,262 very large passenger aircraft

and 996 large freighter aircraft. 62% of the world fleet of very large passenger

aircraft will be operated by the airlines of the Asia-Pacific region alone.

Passenger and freighter deliveries worth $1.9 trillion

These 17,328 new passenger aircraft and freighters represent a business volume

of approximately $1.9 trillion at current list prices.

The largest volume of business will be generated from deliveries of single-aisle

aircraft, with the demand for 1,648 large passenger and freighter aircraft,

accounting for 22% of total aircraft delivery value.

The greatest demand for passenger aircraft will come from airlines in the United

States, the People’s Republic of China and the United Kingdom.

Almost half of all the passenger aircraft delivered, accounting for 41% of the total

dollar value, will be needed by airlines in these three nations alone.

Including recycled aircraft, deliveries to Europe will represent 32% of total deliveries

during the forecast period, with the US and Asia-Pacific taking 28% and 27%

respectively.

Forecast highlights


New passengerand freighter

aircraft deliverieswill average

866per year

Passenger and freighter

business worth

$1.9 trillion

Business volume 2004-2023

World-wide demand will be more even betweenmajor regions

Aircraft deliveries 2004-2023

Latin America

810 413 6%

2004-2013 2014-2023 % of worlddeliveries

Middle East

396 299 4%


Africa

411 230 3%


Asia-Pacific

2,928 2,587 27%


Europe

3,290 3,113 32%


North America

3,048 2,596 28%


Top Ten end-user nations

Passenger aircraft delivered By $ value (2004 $ billion)

1. United States 5,210 United States 412.7

2. People’s Republic of China 1,790 People’s Republic of China 241.7

3. United Kingdom 1,150 United Kingdom 119.2

4. Germany 989 Japan 106.4

5. Japan 640 Germany 96.6

6. Italy 543 France 57.5

7. France 482 Republic of Korea 52.5

8. Spain 446 Italy 52.1

9. Canada 434 Spain 47.5

10. Malaysia 380 Singapore 44.4

12,000

10,000

8,000

6,000

4,000

2,000

0

Number of new aircraft

1,9862,792

10,902

1,648

Single-aisle & Small jet freighters

63%

Small twin aisle & regional

freighters11%

Large aircraft & large

freighters10%

Intermediate twin aisle &

long-range freighters16%

250

476416

Single-aisle & Small jet freighters

40%

Small twin aisle & regional

freighters13%

Large aircraft & large

freighters22%

Intermediate twin aisle &

long-range freighters25%

761

1,000

800

600

400

200

0

$ (billion)

Current marketenvironment

+11%Strong traffic recoveryin 2004.

Global Market Forecast 2004-2023

I 7

CURRENT MARKET ENVIRONMENT


Traffic Recovery

Traffic rebounded strongly in 2004

After three years of recovery, worldwide air traffic rebounded

strongly in 2004, increasing at a much faster pace than

anticipated. Traffic for the first nine months of 2004 for European,

Asia-Pacific and US airlines moved to 3% above 2000 levels.

All regions and most traffic flows regained their end-2000 traffic

levels by the middle of the year.

Load factors were back to all-time highs, being in excess of 75%

on the transpacific market, a level rarely attained in the 1980s

and 1990s.

Domestic US traffic, which represents 20% of world traffic, was

stimulated by intense competition, especially on the transcontinental

market, over the important summer period. As a result, unlike

most other traffic flows, US domestic yields remained 15% lower

than their 2000 levels. Fare pressure on domestic markets is

expected to continue. In response, US network airlines have

embarked on radical cost cutting efforts, which today are starting

to bear fruit. However, elevated fuel prices, hurricanes in the

Mexican Gulf and competition have all served to hinder the return

to profitability of the network airlines in 2004.

Conversely US airlines’ international routes have fared much

better, with yields and passenger demand well above their 2000

levels in most of 2004.

Like the European airlines, whose traffic was 6% above 2000

levels, Asian and Pacific airline’s international traffic rose to a bullish

9% above 2000 levels. Transpacific traffic was particularly dynamic,

whilst tight capacity control pushed load factors to historical

highs. All this enabled yields to increase for the first time in three

years and even to surpass their pre-downturn levels.

Strong rebound

for Asianairlines traffic

50

Billion RPKs

45

40

35

30

25

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.20

2004 2003 2002 2001 2000 Airbus estimate

220

Billion RPKs

200

180

160

140


2004 Airbus estimate2003 2002 2001 2000

2004 passenger traffic well above 2000 level Asian airlines traffic recovery

Source: AEA, ATA, AAPA (covers 61% of total world passenger traffic in 2003). Source: AAPA.

2004 worldpassenger

traffic growth anticipated

at 11.4%over 2003

Recovery strongest in Asia

Regional Asian traffic reported the best growth rates, boosted

by Chinese routes, swollen with the pent-up demand resulting

from the SARS driven dip in demand in early 2003.

Meanwhile, traffic demand in the Middle East, particularly

in the Gulf, continued to grow at a high rate, helping to consolidate

Dubai as a major worldwide hub.

Freight traffic led the recovery

Worldwide cargo traffic, fuelled by the surge in manufacturing

activity in China and by a steady US and South East Asian

economic recovery, had already surpassed its 2000 level as early

as mid 2002. Historically, cargo traffic growth has been viewed as

an early indicator of air transport recovery.

International Asian airlines’ freight traffic was particularly healthy

with a growth of 4.3% in 2003 and 14.6% for the first nine

months of 2004. Latin American traffic surpassed all other

regions, with nearly 20% growth for the first half of 2004.

Fully-integrated freight carriers, as well as the major airlines’

dedicated freight operations reported healthy results in 2003,

which continued into 2004. The profitability of airlines with strong

dedicated freighter fleets clearly benefited from this robust cargo

demand.


12

4

6

8

10

2

0

-2

-4

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04E-6

% year over year change

ASK RPK

12

Billions FTKs

11

10

9

8

7


2004 2003 2002 2001 2000 Airbus estimate

Cargo traffic recovery Passenger traffic growth

Source: AEA, ATA, AAPA (covers 86% of total world cargo traffic in 2003). Source: ICAO, 2004 Airbus estimates.

2004 cargotraffic already

at +15%vs 2000



The crisis will shift long-term demandby one year

For the full year of 2004 Airbus forecasters anticipate that RPKs

will grow at a rate of 11.4%, helped by a year on year comparison

with a SARS affected 2003, followed by a 6.3% growth in 2005.

Given the strong 2004-2005 recovery the 2004 traffic level

anticipated in the pre-2001 forecast will be regained by the third

quarter of 2005. Airbus anticipates that over the long term, the

3.3 year difference between our current and pre-downturn 2000

forecast seen today, will reduce significantly over the coming

years and will show just a one year lag by 2023.

Passenger traffic to grow 5.3%

After this strong rebound, global passenger traffic will follow

a more normal long-term growth trend, with growth averaging

5.3% per year, over the twenty-year period 2004-2023.

Considering the magnitude of the successive events that severely

interrupted the development of air travel over the last three years,

anticipated healthy growth in 2004 confirms that the

fundamentals driving air travel remain strong. Traffic demand

has proven to be resilient to 9/11, the Iraq war, SARS, and the

uncertainty over oil supply seen in the second half of 2004.

Following 9/11, governments, aviation authorities, airlines

and aircraft manufacturers were prompt in working together

to maximise security. Later, with the onset of SARS, there

was again prompt action by stakeholders, and traffic recovered

as quickly as it was affected, resulting in a perfect V-shaped

recovery.

10

Trillions RPKs

8

6

4

2

1990 2000 2010 20200

GMF 2004 GMF 2000 ICAO total traffic

3.3 years1.9 years

1 year

World annual traffic

Fundamentalsdriving air travel

are strong


A dynamic industry

The air transport industry has evolved

The air transport industry has evolved during the slow down and

recovery process. The major events that have unfolded to shape

these changes include:

– large airline operating losses in North America for the last three years

– chapter 11 leading to restructuring

– 1,800 old and mid generation aircraft parked

– revenue premium from business traffic greatly reduced

– a new breed of profitable LCCs in the US and Europe

and emergence of the model in Asia

– increased pricing transparency through the Internet

– two major mergers in Europe (cross border) and in Asia

– major cost-cutting initiatives at network airlines

– renewed dynamism in Asia-Pacific region

– burgeoning Chinese economy, economic recovery in the US

– renewed strength of the top three European airlines

– a higher fuel price.

The airlines have responded

Challenging times have forced airlines to restructure, transform,

and even attempt to re-invent themselves. Most airlines in

Europe, Asia and the Middle East have done a remarkable job of

undertaking such changes. Although high fuel prices are affecting

their bottom line, airlines are in a much stronger position than

in 2000 and will fully benefit from the unfolding upturn. Others

in North America are still faced with major cost-cutting exercises

in order to reach new levels of efficiency. There is no doubt that

air transport has once again overcome its most recent challenges,

as indeed it has at difficult times in the last 30 years, a period

when air travel actually grew eight-fold. Air travel has become

a basic human need.



Focus on costs

Impact of higher fuel price

The return of traffic, the drastic cost-cutting efforts and restructuring

have been challenged by the rise in fuel price. In September 2004

a barrel of crude oil passed the historic level of $50 in New York.

Although higher than had been experienced for some time,

this was still well below (about half) its inflation-adjusted height

of the late 1970s and early 1980s.

The oil price surge in mid 2004 was due to three main concurrent

factors: (1) a rising demand, (2) a small global surplus of production

capacity and availability, and (3) the fear of a possible disruption

of supply. Current world oil prices do not entirely reflect the pure

economic fundamentals of market supply and demand.

It is estimated that the fear of supply disruption has resulted

in a risk premium of up to $15 per barrel. Burgeoning Chinese

manufacturing activities and the US recovery account for more

than 70% of the growth in worldwide demand. Energy economists

from Global Insight forecast that oil prices could stay above

$40/barrel until mid 2005 and will decrease thereafter as stock

increases and Chinese and US economic growth moderates,

to reach $35/barrel by year-end 2005.

Most developed countries have become less dependent on oil,

and it will take a much larger oil price increase to overwhelm their

economies. According to the US Energy Department, it required

about half of the energy to produce a dollar of GDP in 2004 that it

did 30 years earlier, and even less in Europe.

Unlikely to severely affect world traffic

Given the oil price outlook and the sustained world economic

growth anticipated in 2005 and 2006, macroeconomists believe

that the surge in fuel price does not represent a threat to the

unfolding world recovery. In the unlikely event that oil price stays

above $45 a barrel throughout 2005, it would not affect world

GDP growth by more than 0.4% compared with the most likely

scenario of a return to $35-$39.

The elasticity of traffic to GDP and the current oil price scenario

do not suggest a significant reduction of air travel demand in

2004 and 2005. In the US, some of the RPK decrease could be

partly mitigated by the return of the short haul air travel that has

migrated to the roads in recent years.

The airline sensitivity to any oil price surge mainly depends on

(1) the revenue loss from lower demand, (2) the ability to impose

a fuel surcharge on tickets, (3) the importance of fuel cost relative

to other costs, (4) the fuel hedging in place, and (5) the fuel

efficiency of the fleet.

At $1.20/gallon of jet fuel, a $6 short-haul and $19 long-haul per

flight surcharge is enough to cover the fuel price increase from

the 85 cents per gallon of 2003. With the exception of some

LCCs and the network US airlines on their domestic operations,

airlines have responded promptly to the oil price hike by adding

a fuel surcharge on tickets. Fuel hedging also varies widely from

airline to airline, from a 75% hedging at $27/barrel for 2004

and 2005 for some, to no hedged positions for others.

Fuel pricesare currently

well below thoseof the 70s-80s,when inflation-

adjusted

90

50

60

70

80

40

30

20

10

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04E

in constant 2004 $

0

in current $

$US per barrel of crude oil (Brent)

Crude oil price

Source: International Energy Agency, 2004: full year average estimate.


Designedto deliver benefits

New aircraft will help

Fuel costs represented 14% of total airline expenses in 2003 for

worldwide airlines. Assuming an average of $42 per barrel oil

price for the full year of 2004, the current hedging level and the

same fleet mix, fuel cost could reach 18% of total expenses

in 2004.

For a fleet with a large new-generation aircraft type, fuel costs can

represent as little as 10% of their total operation cost, compared

with as much as 30% for the least efficient fleet in fuel price

controlled countries.

A fuel efficient new-generation aircraft, such as the A319,

consumes typically 20% less fuel per seat than a mid-generation

aircraft mostly delivered in the 1980s, and 40% less than an old-

generation aircraft. A new wide-body aircraft, such as the A330,

consumes typically 55% less fuel than an older-generation aircraft

such as the DC10. On a present value basis over 15 years,

the difference in fuel consumption between a new and mid-

generation single-aisle aircraft translates into a $5 million saving,

$9.5 million when compared with an old-generation aircraft.

+ 21%

datum

+ 42%

New-generationA320 Family

Mid-generation Old-generation

45

25

30

35

40

20

15

10

5

0

% difference

30

10

15

20

25

5

66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04E0

Fuel cost as a % of total airline expenses

Block fuel consumption per seatFuel cost in total airline expenses

Source: ICAO + Airbus estimate for 2004.500 nm sector, 2 class seating

New-generationsingle-aisle

40% morefuel efficient



Opportunity to improve fuel efficiency

The potential for airlines to reduce their fuel cost is significant.

Of the 13,612 aircraft in service in 2004, 2,712 are old-generation

and 5,529 mid-generation types, like 737-300, MD80 and 757-200.

Historically, rapid oil price increases, such as the two oil shocks

and the Gulf War, have triggered the acceleration of aircraft

retirement. Although more modest, the current oil price increase

should also stimulate aircraft retirements and keep older, less

efficient parked aircraft on the ground. Current fleet in service by aircraft generation

Source: Airclaims.Includes: Western-built jets passenger (>100 seats) & freighters.

300

250

200

150

100

50

30 Fuel price (cents/USg) Today’s price 150

Old-generation

0

Mid-generation New-generation (A320)

PV per seat in k$

PV 15 years at 10% discount rate

Present value of fuel bill

30

10

15

20

25

5

66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04E0

2,5

1,5

2,0

1,0

0,5

0,0

Fuel cost as a % of total airline expenses

Aircraft withdrawn from permanent use as a % permanently of fleet in service

1st oil shock

2nd oil shock

Gulf war Sept. 11

% %

High oil prices trigger retirements

New Mid Old Total

North America 1,654 2,581 1,301 5,536

Europe 1,768 1,363 237 3,368

Asia 1,154 969 295 2,418

Latin America and Caribbean 238 259 393 890

Africa 162 111 316 589

Middle East 240 144 155 539

Pacific 155 102 15 272

World 5,371 5,529 2,712 13,612

Potential for

$10 millionfuel cost savingsper aircraft over

15 years


Candidatesfor returnto service

not to exceed

250units

90%return to service

after lessthan 2 yearsof storage

Future of parked aircraft

Parked or retired

The number of parked aircraft reached an all-time high in 2003;

although subsequently decreasing by 20% in 2004, parked

aircraft were still 50% above pre-2001 levels. New-generation

parked aircraft returned to revenue service, as well as 40% of the

560 mid-generation parked aircraft. Meanwhile less than 10% of

the 1,300 parked old-generation aircraft, which include the 727,

DC9 and 737-200, have temporarily returned to service, with the

remaining aircraft virtually retired. Historically 90% of aircraft

returning to service have been stored for less than two years and

75% are aged less than 20.

The number of aircraft remaining parked for less than two years

and aged less than 20 is 400, 280 of these being aged less than 15.

Given the small market appetite for some types and the lack

of building specification homogeneity that exists between many

stored aircraft, the maximum number of candidates for return

to passenger service should not exceed 250 units.

100

95

80

85

90

<1 <2 <3 <4 <5 <6 <7 <8 <9 <10 <11 <12 <1375

Cumulative % of de-storage events

Years spent in storage

140

40

60

80

120

100

20

02 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 4038

Number of aircraft parked

0 to 1 year spent in storage1 to 2 years2 to 3 years

Age

over 3 years

Worldwide aircraft storage Aircraft return into service

Source: Airclaims.Includes: Western built aircraft >100 seats.

Source: Airclaims.

I 17

Demand for air travel

Concentration of population, personal wealth and industrywill drive air traffic growth.


DEMAND FOR AIR TRAVEL


Emerging economieslead growth

Increasing propensity to travel in emerging nations

Comments made by IATA, during a recent “state of the industry”

address, highlight the potential for emerging markets: “China and

India have the potential to reshape the travel industry.” Indeed,

the two Asian giants have been in the midst of an economic

transformation that is anticipated to turn them into the world’s

largest consumer markets within 25 years. Their combined

purchasing power could be five times greater than that of the

United States of America today.

Today, every US citizen makes on average 2.2 air trips each year.

The corresponding figures are just 0.02 trips per year for India

and 0.06 for China. There is therefore huge potential for air travel

growth by these and other emerging and developing countries,

as wealth grows and air travel becomes affordable by more

and more people.

22 millionadditional Chinese

middle-classconsumers

per year

The Chinese route network

HLD

CGQ

DDG

PEK

TNA

CGOLYA

HZG

ZGC

XIY

ZAT

KMG

KWEKWL

NNG

HAK

SYX

ZHABHY

HKGMFMSZX

CANSWAMXZ

XIN

KOWCSX

KHNWUSJNZ

TXN YIW

HGH NGBWNZ

HSNHYN

FOC

XMN

JJN

WUH

SHSENHCKG

WXN

XFN

YIH

BSD

SYMLNJ

DLULJG

DIG

JHG

LUM

LZH

LLFCGDDYG

CTUMIG

LZO

AKANNY

FUG XUZLYGLYI

NKGCZX

HFE

CIH

TAOWEF

YNT

WEHTYN

TSNSJW DOY

DLC

SHE

SHAPVG

NTGYNZ

LHW

URC

INCUYN

BAVHET

LXA

BPX

YIN

KHGXNN

HRB

JMU

MDG

YNJJIL

JNZ

NDG

KRL

IQM

AKU KCA

AAT

TCG

DNHCHW

XIL

HLD

HLH

CGQTGO

PEK

TNA

CGO

SIAHZG

XICZAT

KMG

KWE

KWL

NNG

HAK

ZHA

HKGCAN

SWAXIN

KOWCSX

KHNJDZ

TXNHGH

FOC

JJN

WUH

SHSENHCKG

YIH

BSD

SYM

CTU

AKA

NNY

FUGNKG

HFE

CIH

TAOTYN

ENYIQN

TSNDLC

CIFSHE

SHALHW

URC

GOQ

INC

UYNBAV

HET

LXA

YINKRY

KHGXNN

HRB

KRL

IQMHTM

AKU

FYN

AAT

DNH CHW

XIL

Large potential for future growth in air travel

10

1

0,1

0,01

0,001

0,0001

Trips* per capita

Real GDP per Capita (US$)* Passengers carried by airlines domiciled in the country

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

World average

Nigeria

Slovakia

Brazil

Cambodia

IndiaUkraine

ChinaIndonesia

Egypt Poland

Mexico

PakistanCuba

Vietnam

Sri LankaColombia

ThailandCzech Rep. Oman

Malaysia

Malta

Portugal

Kuwait

Brunei

Spain

Israel

UAE Singapore Iceland

UK

AustraliaFrance Germany

Austria Sweden

Japan

Denmark

SwitzerlandNorway

USANetherlands

Korea

Peru

Zimbabwe

1985 2004


More wealth leading to more air travel

In China, the two primary drivers of traffic growth are income,

measured by GDP per capita, and exports. These two variables

alone explain 99% of the traffic variations of the last 20 years.

Other economic factors, more linked to social developments

such as the very high Chinese personal saving rate, have limited

the discretionary spending that would otherwise have been

allocated to travel. However, private consumption has increased

steadily over the last 5 years. Spending on cars and residential

housing, for example, has grown threefold, and is continuing to

grow at even higher rates. Transport and communications have

become the fastest growing items in the Chinese household budget,

representing 10% of their total consumption expenditure today.

According to the Chinese Academy of Social Science, middle-

income consumers, defined as households with US$18,000-

36,000 of assets, represent 250 million people, or 19% of the

2004 population, and are forecast to reach the 40% level by

2020. Already, 49% of the urban population are middle-income

consumers. These emerging middle-class consumers are

concentrated in the coastal provinces of the Beijing-Tianjin

corridor, Yangtze River Delta and the Pearl River Delta.

In many emerging nations there is often a disparity between regions

and urban/rural populations in terms of wealth. For example,

in China the top 5 regions, in terms of GDP, are responsible for

about 40% of total Chinese GDP, in France this number is 22%.

Growing Chinese expenditure on transport Wealth concentration

Chinese middle-class consumers per year

50

40

30

20

10

0

% of total population

20202004

600 million people

250 million people

450

250

300

350

400

200

150

100

50

Wealthiest region (Ile-de-France, Shanghai) Poorest region0

Regional GDP per capita as a % of the national average

(National average = 100)

France China

100

80

90

70

60

50

40

30

20

10

0

% of total household expense

1985 1990 1995 1999 2000 2001

Food, clothing, medicine, others Housing

Recreation and education Transportation and communication

Source: Chinese Academy of Social Science.

Source: INSEE & China Statistical Year Book 2003.



China takes off

First domestic, now international

Income is directly related to urbanisation, due to the higher

concentration of employment opportunities and the higher salary

levels in large cities. Industrial production in volume and especially

in value is concentrated in the coastal areas and around the 3 major

Chinese cities. Therefore, not only is the population concentrated,

but their own wealth, as well as the wealth they generate through

the country’s industrial production, is concentrated in urban areas.

The propensity to travel in emerging economy countries typically

starts with domestic trips, when income reaches a certain

threshold, and then develops into international trips when another,

higher, threshold is reached. Chinese disposable income has

grown tenfold in two decades and reached the first domestic

travel threshold in 1990. The Chinese government’s emphasis

on raising personal income and consumption, and its focus on

foreign trade as a major vehicle for economic growth, have served

to increase demand for air transport dramatically. Between 1980

and 1998 demand for travel on China’s domestic air routes, fed

by a sharp increase in disposable income, multiplied nearly twenty

times, growing at an average 16.5% per year.

China to followthe more efficient

hub and spokesystem

Concentration of population, wealth and manufacturing activities

China steady traffic growth driven by domestic routes

100

80

60

40

20

0

Average 16.5% per year

Total Regional International Domestic

84 85 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 0386

Passengers transported (millions)

GDP/capita ($US)

> 2,000

1,500-2,000

1,000-1,500

750-1,000

<750

Source: China Statistical Year Book 2003.


Planes, trains and …more planes

Hubs will be key

Faced with this booming growth, the Chinese transport

authorities recognized that it was necessary to restructure the

domestic route network on the more efficient hub and spoke

system, with Beijing, Shanghai and Guangzhou as the three major

mainland hubs. Today, some of the high density Chinese routes

have already become air shuttle type operations, with a departure

every hour. Anticipated international and domestic growth will be

challenging for the Chinese hub airports. Aircraft movements at

Beijing airport will grow from 250,000 today to about 700,000 by

2023, making it one of the world’s busiest airports.

It is anticipated that, within the next 10 years, the Chinese network

could resemble the Japanese system, with its busy hubs and high

density routes. Today in Japan, as many as 100 domestic flights

per day are operated by aircraft with more than 470 seats.

It is thought unlikely that high-speed trains will divert a significant

portion of air traffic, as in Japan or Europe, due to the much

greater distances between China’s main cities. The rail/air

competition experience in Japan and Europe suggests that rail

trip time in excess of 3 hours does not significantly divert traffic

from air to high-speed train. At best, the high-speed train from

Beijing to Shanghai will take 5 hours to cover the 1,100 km, whilst

Beijing to Guangzhou will take more than 9 hours.

More than

700,000aircraft

movementsat Beijing Airport

by 2023

High Speed train competition decreasing with trip time

100

40

60

80

20

1 1,25 1,5 1,75 2 2,25 2,5 3,5 3,75 4 4,25 4,5 4,752,75 3 3,25 50

Rail market share (%)

Paris-BrusselsParis-Lyon

Madrid-Seville

Tokyo-Osaka

Paris-London Stockholm-Gothenburg

Tokyo-Akita

Tokyo-Aomori

Rome-Milan

Paris-Amsterdam

Rail travel time (hours)



From the US to China 90%of final destinations areconcentrated on 3 major cities

International tourism will grow

Although the income threshold that should have accelerated the

propensity to travel internationally was reached in the late 1990s,

the level of such travel has been constrained by the limited

number of countries in the Approved Destination Status (ADS) at

that time.

Today, with the rapid increase in countries on the ADS list,

together with the growing number of air service agreements, such

as those with the US and UK in 2004, a large pent-up demand

for international travel exists. In September 2004, an additional

27 European countries were added to the list of approved destinations,

ringing the total number of countries to 55. According to the

Worldwide Tourism Organization, as many as 100 million Chinese

tourists will travel internationally by 2020. China will become

the 4th largest country in terms of outbound tourists.

France, for example, anticipates as many as one million Chinese

tourists by 2008, a threefold increase over 2003. The Paris

Tourism Office expects China to become either the first or second

nation in terms of tourists, ahead of the UK, the US and Japan.

The economic benefit is expected to be significant as Chinese

tourists spend an average of $430 compared with $350 for

a visitor from the US, although a Japanese tourist spends $650.

Chinese long-haul international tourists are less interested in visiting

Manchester, Denver or Houston, than Paris, London, Rome,

San Francisco or New York.

Today Chinese travel agencies are concentrating their European

travel packages on France and Italy because of the high interest

in these destinations.

Similarly, the final destination of 90% of passengers travelling from

the US to mainland China is concentrated on the three largest

cities, with as many as 50 cities making up the remaining 10%.

Very few of these 50 cities will have a demand large enough

to justify a non-stop service to North America or Europe. Similarly

the origin of US passengers is concentrated on major cities,

70% of travellers’ true origins being either Los Angeles, San

Francisco or New York.

China’s Approved Destination Status (ADS)

1980 1990 2000 2003 2004

Pace of international travel to accelerate

MacauHong KongThailand

PhilippinesSingapore Malaysia

LaosVietnam AustraliaNew Zealand

Korea Cambodia MyanmarBruneiJapanIndonesia

TurkeyNepalIndiaMaldivesMaltaEgyptMorocco

CubaColombiaSri LankaSouth AfricaCroatiaHungaryPakistanSeychelles

KenyaEthiopiaTanzania TunisiaZambiaZimbabweMauritiusAustriaBelgiumFinlandFrance

GermanyGreeceIcelandItalyLuxembourgLichtensteinNetherlandsNorwayPortugalRomaniaSpainSwedenSwitzerland


Demand is simply where people want to go

Air travel in China is no longer the preserve of elite or business

travellers. It is attracting an increasing number of international

price-sensitive leisure travellers, from fast-growing urban areas, who

want to visit large tourism centres in Europe and North America.

These factors are driving the major airlines serving China to

introduce the A380. Two years before the A380’s entry into service,

current A380 customers have already announced flight plans that

will result in 130 weekly A380 frequencies to China by 2010.

The geographical concentration of population, consumers, wealth

and industry, including high-value manufacturing, in major urban

centres is driving demand for air transportation in this dynamic

Asian market.

130 weekly A380frequencies

to China by 2010

Bulk of passenger first origin and final destinationconcentrated on major cities

SeattleWashington

Boston

Chicago

Honolulu

Origin/destination passengers to mainland China from USA

Shanghai

Beijing

Guangzhou

USAFirst origin cities

Mainland ChinaFinal destination cities

Los Angeles

New YorkSan

Francisco

Source: MIDT.



Expansion through bothfragmentation andconsolidation…

Profitable new routes to open

We anticipate intercontinental traffic to continue growing, partly

through the development of new services between major cities

(fragmentation), and through the further development of traffic

on existing hub to hub routes (consolidation). The future pace

and share of fragmentation and consolidation varies from region

to region, largely depending on the evolving equilibrium of a wide

range of factors. These factors not only include the passengers

penchant for non-stop flights but also, and most importantly,

factors such as passenger route selection based on ticket price

and convenient schedule, demographics, location of trade

centres, real origin and destination demand, aircraft, airline

and hub economics, liberalisation, airline alliances, congestion

and the environment. Opportunities will continue to emerge

for profitable new routes to develop, with aircraft like the A330

and A340. These new long-haul routes are largely centered

on the Trans-Pacific, with some on the more developed Europe

to Asia markets, helped by the growth of Asian economies

and the strong expansion of the international traffic to and from

emerging economies.

This development also coincided with the availability of aircraft

with better range and economics, such as the A330 and A340,

which offer airlines new market opportunities.

Indeed, over the last 10 years, the A340 alone has been used to

open 32 new routes on the Europe to Asia flow. On July 1st,

2004, for example, a new Trans-Pacific polar route was opened

between Hong Kong and New York with the A340-600, whilst

at the same time maintaining existing 747 and A340-300 service

to Vancouver with same airline. More ground breaking A340

Family flights to be inaugurated in 2004, included non-stop flights

using the A340-500 from Singapore to New York and Los

Angeles.

Over the next 10 years, Airbus forecast that up to 60 long-haul

routes could be opened profitably on the transpacific market

and between Europe and Asia, these in addition to the 250 routes

in operation today. Almost all of these potential new routes

will involve a major hub airport at either one end or the other.

International air traffic will grow throughfragmentation and consolidation

• Hub by-passing

• Market development

• Frequency on thin routes

• The business traveller’s preference

• More cost-effective

• Hub dominance

• Global network

• Linking major hubs

• The logic behind alliances

FRAGMENTATION CONSOLIDATION


Hubs key to new routes success

We anticipate that overall new route development will also continue

to follow its historical pattern, which is characterised by a substantial

amount of “churning”, or the addition and removal of routes.

From the 39 new city-pairs across the Pacific opened by North

American airlines since 1990, 29 have been from their hubs.

Of the remaining 10 non-hub routes, only one has survived.

Over time, many such new routes opened on the transpacific

market have subsequently been dropped, leading to a relatively

stable total number of routes in recent years.

This has also been the case on the Europe-Asia market, where

almost 80% of traffic is carried to and from a total of 17 primary

cities. These are major centres of population and business,

whose relative importance, from an air travel perspective, has

hardly changed over time.

Routes linking smaller cities have a higher failure rate. From the

75 routes opened during the past twenty years between a

primary city in Asia and a primary city in Europe, almost 90% have

proved successful and are still in operation today. Conversely,

of the 47 routes opened between secondary or tertiary cities,

only 40% have been lucrative enough to survive.

80%of Europe-Asiatraffic carriedto and from

17 primary cities

Number of city pairs served maturing on the Trans-Pacific

12

10

8

6

4

2

0

-2

-4

-6

-8

-10

90

80

70

60

50

40

30

20

10

0

New city pairs Dropped city pairs Total city pairs

Number of routes Total city pairs

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

High failure rate on routes linking smaller cities

50

40

30

20

10

0

Number of routes

(%) represent share of transpacific seats

% share of transpacific seatsRoutes tried in the last 20 years Routes operated in 2003

Primary Primary (70%)

Primary Secondary

(21%)

Primary Tertiary (9%)

Not linked to a primary city

(0%)

Source: OAG.



… but bulk of traffic growthfrom consolidation

The largest routes will grow

According to the US Department of Transportation, the Trans-

Atlantic deregulation of the 1990s promoted airline alliances,

stimulated new, rather than diverted existing traffic, reduced fares

and encouraged traffic through hubs to a greater extent than

point to point. Indeed, large routes between “primary” cities,

such as New York – London or Paris – Chicago, have easily

maintained a stable share of capacity over 40%. Once established,

new routes not linking primary to primary cities have grown at

a much slower pace (+21% over 1994 to 2004) than those linking

primary to primary cities (+87%).

North Atlantic network evolution

100

70

80

90

60

50

40

10

20

30

0

% of seats growth 1994-2004

32%of lost seats

47% of additional seats

21% of additional seats

(+2,700 monthly seats per route)

87% of additional seats(+14,500 monthly seats per route)

10-year growthstructure of Primary-Primary routes

10-year growthstructure of other routes

Seats added after the route is opened

Seats offered at the opening of a new route

Seats lost when routes are dropped

Consolidation of the Atlantic market

100

80

60

40

20

0

Cumulative share of seats

Number of airlines1993 2003

1 5 9 13 17 21 25 29 33 37 41 45 49

Europe USA

Consolidation &Alliance effect

Deregulationand alliances

resulted inconsolidation

on transatlanticmarket

Airline alliances have also influenced consolidation over

the Trans-Atlantic, as the top 10 carriers have increased their

share of capacity by 5 points since the first US-European bilateral

agreement.

Although new routes will open, network development has been

largely driven by growing O&D markets between major population

centres, with future growth making these flows even more

important.


Growing urbanisation

Bulk of air travel generated by concentration of populations

Today, only five cities worldwide have more than 20 million

inhabitants. Based on current projections, by 2020 this number

will have grown to sixteen – including ten in the dynamic Asia-

Pacific region. GDP in the countries where these mega-cities are

located is expected to double by 2020.

The bulk of air travel will continue to be generated by these

concentrations of population and the associated business and

industry in and around them. This is where most of the people

with a high propensity to travel are and where they want to go.

The concentration of the demand on large O&D markets will even

accelerate as Asian urbanisation continues. For example, the

urban share of the Chinese population evolved from 20% in 1990

to 30% in 2000. By 2010, more than 40% of the anticipated

1.4 billion people will be concentrated in urban areas. By 2030,

the Chinese urbanisation rate could be approaching Japan’s.

GDP per capita in the 3 major Chinese cities is 3 to 4 times

greater than that of the country as a whole.

By 2020,

50%of Chinese

population will beconcentratedin urban areas

Bulk of air travel generated by concentration of population

2002 2020

34.9

44.0

TOKYO

2002 2020

21.15

31.85

SEOUL

2002 2020

20.25

27.4

SAO PAULO

2002 2020

21.624.9

NEW YORK

2002 2020

20.75

29.6

MEXICO

2020

20.8

LOS ANGELES

2020

20.4

ISTANBUL

2020

30.6

CAIRO2020

29.1

KARACHI

2020

21.0

DACCA

2020

28.8

MUMBAI

2020

20.8

KOLKATA

2020

36.0

DELHI

2020

23.7

MANILA

2020

23.9

JAKARTA

2020

20.8

OSAKA

Cities with population > 20 million

Origin-destination traffic between Asia and London

O&D73%

O&D76%

Connecting 27%

Connecting 24%

TokyoHong Kong

Acceleration in Chinese urbanisation

60

50

10

20

30

40

0

Urban population as % of total

1950 1970 1990 2010 2030

Source: CAA survey.

Source: United Nations.



Concentrated trade and commercedrive freight

As well as the concentration of passenger demand, large centres

of population are often a focus for wealth, trade and commerce.

This in turn drives the need for international freight, which is also

concentrated around the major population and industrial centres,

particularly in Asia. In China for example, exports to North

America have more than tripled in value since 1995, mostly driven

by a sharp increase in high-technology goods. As much as three

quarters of the high-value final assembly of computers and other

electronics manufacturing is concentrated around the three main

Chinese cities of Beijing, Shanghai and Guangzhou.

China to North America exports: threefold increase in value, high-tech goods number one

35

20

25

30

15

10

5

0

US$ BN

20031995

OtherPrimaryIntermediateHigh techFoodConsumerCapital

+430%

Fivefoldincrease of

high-tech goodstransported

by air

Source: MGI.


When less is better than more

Passengers prefer lower fares

In mature markets, although economic growth remains the key

driver, demand for air travel is increasingly driven by ticket price

and consumer confidence. As markets have progressively

matured and become more leisure-orientated, the GDP elasticity

of air travel demand has declined. In the US for example,

a 1% growth in GDP will typically result in a 1.2% growth

in domestic air travel, compared with a growth of almost 2%

in air travel some 20 years ago. In emerging markets, ticket price

is obviously a key element, as the ratio of income to international

ticket price is lower in developed countries.

Independent surveys consistently show that what really matters

to passengers is not necessarily whether the flight is direct

or from a hub, but rather the ticket price. A factor which is

becoming ever more apparent with the advent of the Internet,

low-cost carriers and the increasing numbers of business travellers

who either have their travel booked for them or are guided

by corporate travel policy.

A recent US Commerce Department survey shows that ticket

price is the number one criterion for passengers when selecting

a flight, well ahead of the availability of a non-stop service.

The survey showed, for example, that for the Japanese market,

six other factors were more important to passengers, with ticket

price first. Another recent survey conducted by IATA showed that

41% of respondents identified lower fares as the factor that now

motivates them to fly more often.

Passengers motivated by lower fares

45

35

40

30

25

20

15

10

5

0

in %

Upgrades Schedules Safety on ground

Lower fares FFP’s Safety on board

Other

17

68

41

811 11

What would motivate you to fly more frequently?

Airline criteria of choice on transpacific flights

40

30

20

10

0

% of respondents

What is your main reason for flying on this airline?

Price Frequent flier Convenient schedule Non-Stop flights Previous good experience

30%

17%14%

9%7%

Source: US Commerce Department survey (ITA). Source: IATA online survey 2003.

Ticket pricenumber one

criterion whenselecting flights

I 31

Traffic forecast


Three fold increaseof air traffic by 2023

Two fold increasein frequencies

TRAFFIC FORECAST


Traffic growth

Airbus models each major traffic flow

Airbus analyses and forecasts a total of 140 distinct domestic,

regional and intercontinental passenger sub-markets, and a total

of 145 directional air cargo sub-markets.

This is achieved using the latest projections of economic

growth and other indices (including oil prices) from the Global

Insight Forecasting Group. The cargo forecast also incorporates

analysis of historical multidirectional exports and imports by

country and commodity.

Each traffic forecast model differs for each individual flow,

depending on the best fit of the different sets of economic and

air transport variables. These models, although based on

econometric modelling techniques, also integrate various

analyses of the regional and structural changes that are expected

to influence the dynamics and development of the current

and future air transport system. The growing importance

of the low-cost carriers (LCC) in the US and Europe, as well as

the Asia-Pacific region, is an example of a development that must

be taken into account when forecasting traffic.

In order to reflect these new market developments as accurately

as possible in the forecast, analysis must be carried out to

measure LCC traffic stimulation or diversion from network

carriers, the new route potential for LCCs and the subsequent

growth potential of these airlines through the development of

either new or existing routes.

Other structural changes that must also be considered include

the pace of liberalisation of markets to and from developing

countries, the growing importance of regional airlines, increasing

environmental and congestion constraints, and the subsequent

impact on airports or regions.

The results of careful analysis in these areas allows Airbus

forecasters to develop every traffic flow forecast, taking into

account the precise circumstances prevailing on every flow

and region studied.

The combination of these individual “bottom-up” traffic forecasts

is then compared to a “top-down” global forecast in order to

confirm the initial findings.

Average annualtraffic growth

5.3%to 2023

Top 20 passenger markets in 2023 Growth by domiciled airline

Domestic USAWest. Europe – USA

Intra West. EuropeDomestic PRC

Asia – USADomestic West. Europe

Asia – West. EuropeAsia – PRC

West. Europe – Middle EastIntra Asia

West. Europe – South AmericaJapan – USA

West. Europe – JapanCanada – West. Europe

West. Europe – PRCPRC – USA

Domestic JapanAsia – Japan

Asia – Australia/NZWest. Europe – Caribbean

2003 traffic 2004-2023 growth

2000 400 600 800 1,000 1,200

2004-2023RPKs (billions)

3.2% 4.9% 5.0% 8.7% 6.3% 5.0% 5.9% 9.1% 7.6% 6.9% 5.8% 5.8% 5.6% 6.1% 6.9% 7.9% 3.0% 5.9% 6.6% 6.9%

% of 2023 World RPKs

13.5% 8.6% 7.8% 5.9% 4.1% 3.0% 2.9% 2.2% 2.1% 2.0% 1.9% 1.7% 1.6% 1.5% 1,5% 1.4% 1.4% 1.4% 1.4% 1.3%

Latin America

5.3% 4.5% 4.9%

2004-2013 2014-2023 20-yeargrowth

Middle East

10.7% 3.6% 7.1%

2004-2013 2014-2023 20-yeargrowth

Africa

5.3% 3.8% 4.5%

2004-2013 2014-2023 20-yeargrowth

Asia-Pacific

6.7% 5.3% 6.0%

2004-2013 2014-2023 20-yeargrowth

China

9.1% 7.4% 8.2%

2004-2013 2014-2023 20-yeargrowth

Europe

5.8% 4.6% 5.2%

2004-2013 2014-2023 20-yeargrowth

World

6.0% 4.6% 5.3%

2004-2013 2014-2023 20-yeargrowthNorth America

4.8% 3.5% 4.2%

2004-2013 2014-2023 20-yeargrowth


In the absence of any major exogenous disruption, outside the

normal business or economic cycles, traffic for the next 20 years

is anticipated to grow at an average pace of 5.3% per annum.

Emerging markets grow in importance

The widely varying growth rates seen in different air passenger

markets largely reflect their degree of maturity. Airbus foresees

a twenty-year average annual growth of 3.2% for the mature

domestic US market and 8.7% for the domestic Chinese market.

The airlines domiciled in Asia will experience the fastest growth

rates, to the extent that by 2023 the North American domestic

market will have lost its historical dominance, having been

overtaken by both Europe and the dynamic Asia-Pacific region

as the world’s largest air travel markets.

The Middle East is also expected to grow rapidly, with 7.1%

average annual growth forecast over the next 20 years. This

growth is driven by the region’s unique geographical advantages,

combined with today’s new aircraft capabilities in terms of range

and size, for example the A380. The region growing importance

as a tourist destination from within the Middle East and India

and the airlines and airports strategy to position the major airports

as international hubs are also contributing to the strong growth.

Emerging markets will become increasingly important. Routes to

China, for example, represent five of the top 10 fastest growing

traffic flows. Airlines domiciled in China will grow 9.1% per year in

the first 10 years, whilst airlines in North America and Europe will

grow 4.8% and 5.8% respectively, over the same period.

Chinese traffic growth Shares of world traffic

Europe 32%

Asia-Pacific 31%

World trafficat end 2023

9.0 trillion RPKs

World trafficat end 2003

3.2 trillion RPKs

Europe 32%

Asia-Pacific 25%

North America26%

North America 33%

Middle East 5%

Middle East 3%

Africa 2%

Africa 3%

Latin America & Caribbean

4%


4%

China – Asia9.1%

Domestic China 8.7%China – Europe

6.9%

China – North America 7.9%

World

6.0% 4.6% 5.3%

2004-2013 2014-2023 20-yeargrowth

China

9.1% 7.4% 8.2%

2004-2013 2014-2023 20-yeargrowth

I 35

Demand for passenger aircraft

830New passenger aircraftdemand per year.


DEMAND FOR PASSENGER AIRCRAFT


Frequency and capacity growthwill vary with market

Forecast frequencies grow 4%per year, capacity 0.9%

The combined productivity parameters will deliver 0.8%

of the yearly growth in RPKs. Consequently, to accommodate

the forecast average annual growth of 5.3% in traffic, the world’s

airlines will have to increase the number of mainline seats they

operate at an average annual rate of 4.5%.

These additional seats will be provided partly by an increase

in the number of aircraft operated, and partly by an increase

in the number of seats per aircraft.

Frequency and capacity needed

Frequency or capacity is distributed depending on the specific

characteristics of every single city pair within each of the 140

traffic flows forecast, with the observed development of all

worldwide city pairs in different stages of maturation and

liberalisation.

In reality, as service starts on a particular route, airlines will typically

offer one frequency per day as soon as possible and then

increase frequencies to capture market share and stimulate

demand. The benefits of convenient schedules, however, reach

a point of diminishing return, as a satisfactory level of passenger

service is attained, and the additional cost associated with more

frequencies grows faster than the additional revenues. There

is a “maximum” level of frequency beyond which any further

increase will not in itself generate any more travel demand.

Today, there are a handful of examples of domestic city pairs with

60 daily flights, equivalent to one every 12.5 minutes, in mature

markets. A fact that can be demonstrated when flights from such

markets are plotted, showing actual frequency and range for each

city pair.

+4.5%seats per year

Seat productivity & capacity growth will varybetween regions

2 1 0 1 2 3 4 5 6

Average annual growth (%)

RPK per seat Capacity (seats in service)

4.5

3.8

5.6

3.7

3.0

5.6

4.8

1.1

0.8

1.2

0.8

1.0

1.5

0.4

World traffic (RPK) 5.3%

Latin america & Caribbean 4.9%

Asia-Pacific 6.6%

Africa 4.5%

North America 4.2%

Middle East 7.1%

Europe 5.2%

The GMF assumes liberal frequency development

60

40

20

108

6

4

2

1

Total daily flights (all airlines combined)

200 400 600 800 1,000 2,000 4,000 6,000 8,000 10,000 Distance (km)

Capacity growth only

Maximumservice levels

Cap

acity

shar

eFr

eque

ncy

shar

e

Satisfactoryregionalservice levels(Europe-Asia shown)

Capacity/frequency split

Frequencygrowth only


The GMF models real behaviour

As traffic grows on any particular route, the extent to which it will

be accommodated by an increase in aircraft seat capacity, as

opposed to an increase in frequency, will depend upon where

it is situated between the two thresholds.

This analysis for each airport-pair leads Airbus to predict that

overall, assuming that the infrastructure is able to cope with the

increased volume of flights, airlines worldwide during the next

twenty years will increase the number of departures they offer

at an average annual rate of 4.0%, with 0.5% of that growth

generated by an increase in departures per aircraft. This is

significantly higher than the 2.5% per annum increase achieved

since 1980, and will present a major challenge to the world’s

airports and ATC systems.

Meanwhile the number of seats per aircraft will increase by 0.9%

per year, from an average of 181 in 2004 to 215 in 2023. This

compares with a 0.5% yearly increase since 1980.

A limit to frequency growth

10

1

60

987654

3

2

100

0,1

Daily flights

100 1,000 10,000

Intra-EuropeUS Domestic Domestic Japan

Maximum service level

Distance (km)

Traffic component development

600

500

400

300

200

100

700

800

900

0

Index 100 in 1980

202020152010200520001995199019851980

Frequency growthAir travel growth Average aircraft size

History Forecast

History Forecast Seat growth: 0.5% per year 0.9% per yearFrequency growth: 2.5% per year 4.0% per year

Frequencyto double over

20 years



Aircraft replacement

Aircraft replacement is accelerating

Airlines will need to acquire aircraft not only to accommodate

traffic growth, but also to replace their older, noisier and less

efficient aircraft, as their age increases, utilisation falls and

maintenance costs rise.

The replaced aircraft will be either recycled into the active fleet

with another airline or retired from passenger service, to be either

definitively withdrawn from use or converted to freighters.

The Airbus forecast is based on each individual airlines actual

fleet replacement plans. If an airline plan is not available, a default

replacement age is used based on a thorough analysis of

the aircraft replacement behaviour of the airline and the region

in which it is based. This varies from 20 years for airlines

in Asia-Pacific or the People’s Republic of China, to 27 years for

airlines in Eastern Europe.

Aircraft replacement is largely driven by historical patterns of

aircraft delivery, and tends to take place in a series of “waves”,

which can also be influenced by economic cycles and product

developments. Fuel prices have historically triggered or

accelerated aircraft retirements. The capacity shortfall of the late

90s prevented normal attrition, resulting in a wave of retirements

starting in 2002, further exacerbated by the 2001/2002 slowdown

in traffic.

Airlines willcontinue

to replacepassenger aircraft

before the endof their

economic life

Aircraft replacement

REPLACEMENT(Passenger & combi aircraft released by an airline)

RETIRED(leaving passenger or combi services)

RECYCLED(resuming passenger service within another airline)

Converted into freighter

Withdrawn from use

Default replacement ages by region

30

25

20

15

10

5

0

Default replacement age (years)

EasternEurope

WesternEurope

NorthAmerica

Asia-Pacific

IndianSubcontinent

P.R.China

Africa MiddleEast

Latin America& Caribbean


In recent years, market conditions, including depressed traffic

and yields, the effects of aircraft noise legislation, combined with

increased competition, have driven the need for ever more efficient

operations and aircraft. Retirements have not only come from old-

generation aircraft, but now include numbers of mid-generation,

single-aisle aircraft such as MD80s and 737-300/400s. A trend

further stimulated as airlines seek additional efficiencies, through

the rationalisation of fleet types, with some of these out of

production “orphan” types, obvious candidates for replacement.

As a result of these retirements, combined with the growing

importance of the low cost airlines, whose business model today

is largely based on operating efficient new aircraft, the single-aisle

fleet has become younger. However there are still some 5,500

mid-generation aircraft in service worldwide that will need to be

replaced, many over the forecast period.

Over the next 20 years, 9,200 of today’s aircraft will be replaced.

Of these, 3,520 will be “recycled” back into passenger service

through sale, lease or lease extension. The remaining 5,680 will

be replaced by new aircraft and will leave passenger service,

either to be scrapped, converted into freighters or to other non-

airline roles.

Converted & withdrawn passenger aircraft

2,000

4,000

6,000

0

2004-20231984-2003

2,179

1,176

3,268

2,412

Definitively withdrawn from useConverted to freighters

Number of aircraft

Higher fuelprices triggerretirements



The return of stored aircraft, the high traffic growth of 2004 and

2005, combined with the lack of available new single-aisle aircraft

slots from manufacturers and leasing companies, will contribute

to relatively low aircraft replacement in 2004 and 2005. However,

high fuel prices, the effective withdrawal from use of many stored

aircraft, a desire by airlines to further reduce costs through

operation of new-generation aircraft and a pent-up need to retire

aircraft from the US network airlines, will all contribute to an

acceleration of aircraft retirement thereafter.

Based on the announced fleet replacement plans of airlines

throughout the world, we expect the next wave of single-aisles

replacement to start in 2006 with its peak in 2007/2009. This will

coincide with the replacement of the last delivered old-generation

aircraft, largely driven by North American aircraft, and the less

efficient mid-generation aircraft delivered during the early years

of the mid 1980s delivery upswing.

The GMF’s annual replacement forecast for European airlines, has

clearly-defined “peaks” in 2007, 2013 and 2021/22, exhibiting a

classic “wave” pattern, which implies that the region’s airlines will

behave in a more or less homogeneous manner.

In contrast, the forecast for the North American airlines suggests

more heterogeneous behaviour, and will be largely driven by the

replacement decisions and network strategies of the major US

network carriers, involving mostly single-aisle types.

In Asia-Pacific, the mix will be more even between single-aisle

and twin-aisle aircraft, with 43% over the period being wide-body

replacements. As in Europe, more distinct peaks in replacement

activity are expected.

Airbus forecasters predict that by 2023 only 15% of the current

active fleet will still be in service with their current operators.

Only

15%of aircraft willremain with

currentoperators

Jet aircraft delivery cycles influence retirements

1,000

800

900

700

600

500

400

300

200

100

0

New aircraft deliveries

04E030201009998979695949392919089888786858483828180797877767574


Europe and Asia-Pacific aheadof North America by 2023

The fleets in Asia and the Middle Eastwill grow more

At the end of 2003, the airlines in the GMF were operating some

10,838 passenger jets with 100 seats or more. With an average

of 181 seats per aircraft, this provided a little more than 1.9 million

installed seats. By 2023, the number of aircraft will double, while

the number of installed seats will reach 4.7 million.

These numbers represent global average rates of growth of 3.5%

per year in numbers of aircraft and 4.4% per year in installed

seats. The airlines domiciled in the different regions show

considerable variation around these world averages. High traffic

growth on routes to, from and within the region will drive the

dynamic Asia-Pacific airlines to achieve the most rapid increase

in both average seat capacity and installed seats. The most rapid

increase in fleet size will be achieved by airlines in the Middle

East. In contrast the airlines of North America, with their high

exposure to the mature US domestic market, will have the

slowest growth in installed seats.

Consequently the North American airlines will progressively lose

their dominance. By 2023, they will be operating fewer seats than

the airlines of Europe or Asia-Pacific.

High aircraft size and fleet growth in Asia-Pacificand the Middle East

2 1 0 1 2 3 4 5

Average annual growth (%)

Avg. a/c size Number of aircraft in service

3.5

3.5

4.5

3.0

2.4

4.5

4.3

0.9

0.7

0.6

0.9

1.1

1.0

0.5

World capacity 4.4%

Latin america & Caribbean 4.4%

Asia-Pacific 5.6%

Africa 3.7%

North America 3.0%

Middle East 5.5%

Europe 4.8%

Airlines in Europe & Asia-Pacificwill operate more seats than in North America

Europe 29%

Asia-Pacific 33%

World total at end 2023

4.69 million seats


1.96 million seats

Europe 27%

Asia-Pacific 26%

North America26%

North America 34%

Rest of world 12%

Rest of world 13%



Twin-aisle and large aircraft takea bigger role

As an inevitable response to intensifying cost pressures,

infrastructure capacity constraints and fast growing international

markets, the composition of the world fleet will shift towards

larger aircraft. By 2023 mainline single-aisles will make up 69%

of the fleet, compared with 77% in 2003. At the same time very

large aircraft will account for 6% of the world passenger fleet;

approximately the same percentage as represented by 747s today.

The role played by very large aircraft is more clearly seen in terms

of capacity. By 2023, these aircraft will provide 15% of all seats

in service.

By 2023,

15%of seats will be

provided by largeaircraft

More twin-aisles


21,759 aircraft


10,838 aircraft

Small twin-aisle

9%

Small twin-aisle

10%

Mainline single-aisle69%

Mainline single-aisle 77%

Intermediate twin-aisle

15%

Large 6%

Large < 1%


14%

Very large aircraft will provide a significant shareof world airline capacity


4.69 million seats


1.96 million seats

Small twin-aisle

12%

Small twin-aisle

12%

Mainline single-aisle50%

Mainline single-aisle 62% Intermediate

twin-aisle 23%

Large 15%

Large 1%


25%


Europe, more aircraftdelivered – Asia, more seats

16,600 new aircraft will be delivered

During 2004-2023, to accommodate traffic growth and renew

their fleets, the world’s major airlines will require delivery of a total

of 20,121 passenger jets with 100 seats or more.

Of these deliveries, 3,520 represent demand that will be satisfied

by aircraft replaced by their current operator and recycled back

into the fleet of another airline. The remaining 16,601 will be new

aircraft, an average of 830 deliveries per year.

Two thirds of the new aircraft delivered will be for growth and one

third for fleet renewal.

Of the 5,680 aircraft replaced, 2,412 will be converted to

freighters (see freighter section) and 3,268 will be definitively

withdrawn from airline service.

The new aircraft will include:

• 10,900 mainline single-aisle aircraft, like the Airbus A320 Family;

• 1,800 small twin-aisle aircraft, like the A300, A310 and A330-200;

• 2,650 intermediate twin-aisle aircraft, including the A330/A340 Family;

• 1,250 very large aircraft, today the A380.

Total demand will be met by 16,601 newand 3,520 recycled aircraft

5,000

10,000

15,000

20,000

25,000

0

Fleet size

20232003

10,838

+3.5% per annum 21,759

3,520

1,638

10,92116,601 new aircraft

5,680

Recycled GrowthReplacedStay

}

More than 16,600 new passenger aircraft deliveries

4,000

6,000

8,000

12,000

10,000

2,000

0

Mainline single-aisle

Small twin-aisle


Large aircraft

10,902

1,250

2,650

398

1,799

Total demandwill be met by

16,600 newand 3,520

recycled aircraft



Large aircraft demand will driveAsia-Pacific seat growth

European airlines will constitute the largest single regional market

in terms of numbers of aircraft delivered during the next twenty

years, but the Asia-Pacific airlines greater appetite for very large

A380-type aircraft means that they will account for the largest

share of seats delivered.

With the already well developed demand for short to medium

range operations in the US and Europe, the need for a greater

proportion of single-aisle deliveries is evident. In the Asia-Pacific

region, with its relatively few, and regionally dispersed centres of

population, a greater proportion of larger, longer range aircraft will

be delivered to meet the regions needs. Although the emerging

low cost airlines of Asia will drive the expansion of the single-aisle

fleet in the region.

Meanwhile, in the Middle East, the domiciled airlines geographical

advantage and new competitive strategies will largely drive

demand for an even greater proportion of these aircraft.

Most deliveries to Europe, most seats to Asia-Pacific A greater proportion of twin-aisles will be neededin Asia-Pacific and the Middle East

100

80

90

70

60

50

40

30

20

10

0

Aircraft delivered (%)

Europe North America Asia-Pacific Latin America Middle East Africa

Single-aisle Intermediate twin-aisleSmall twin-aisle Large aircraft

3.8 million new seats delivered

2004-2023

16,601 new passenger aircraft deliveries

2004-2023

Asia-Pacific 27%

Asia-Pacific 35%

North America23%

Europe 30%

Europe 32%

North America 28%

Latin America & Carribbean

5%

Middle East 4%

Africa 3%

Middle East 4%

Africa 3%

Latin America & Carribbean

6%

Includes recycled aircraft.


Single-aisles

A fleet of 15,100 aircraft will beneeded

By 2023, the world’s major airlines will need 13,800 single-aisle

passenger aircraft to accommodate traffic growth and renew their

fleets. Of these, some 2,900 will be provided by aircraft recycled

back into the fleet after being replaced by their current operator.

The demand for mainline single-aisle aircraft will be largely

focused in North America and Europe, although deliveries

to the Asia-Pacific region with its growing low cost presence will

total 2,650 deliveries, or 19% of total worldwide single-aisle

deliveries. Latin America, the Middle East and Africa will between

them take a significant 12% of deliveries.

10,902new single-aisles

needed

The fleet will grow to more than 15,000 aircraft

2,000

6,000

4,000

10,000

8,000

14,000

12,000

16,000

0

Fleet size

20232003

8,347

+3.0% per annum15,111

2,897

1,312

6,764

10,902 new aircraft

4,138


}Mainline single-aisle passenger demandconcentrated in North America and Europe

Single-aisles demand

1,000

1,500

2,000

2,500

3,000

3,500

500

0

210175150125100

834

2,463

2,023

3,123

2,459


Seat size

Latin America

743 252 7%


Middle East

121 128 2%


Africa

303 138 3%


Asia-Pacific

1,787 863 19%


Europe

2,630 2,051 34%


North America

2,678 2,105 35%




Single-Aisles, the industry workhorse

By 2023, the active fleet of 15,111 mainline single-aisles will be

operating at 1,502 airports, linking 8,290 airport-pairs.

Unsurprisingly operations will be largely focused on domestic US

routes; all of the Top 10 airports served by these aircraft

(measured in terms of aircraft utilisation), except Roissy-Charles-

de-Gaulle in France, will be in the US. 12% of the world’s single-

aisle fleet will be operated at these Top 10 airports by 2023.

Compared with the total world fleet, the use of single-aisles will be

relatively dispersed. Flights from the Top 25 airports, led by Atlanta

and Chicago O’Hare, will absorb the productive capacity of just

24% of the aircraft, and 50% of the single-aisle fleet will be used

on flights from the Top 88 airports.

9 out of the Top 10single-aisleairports are

in the US

Mainline single-aisle operations will be concentratedon US domestic routes

6 LAS (171)

3 PHX (215)

5 LAX (184)

4 DFW (200)

7 DEN (158)

8 IAH (149)

1 ATL (236) Rank

(n° of a/c)

2 ORD (230)

10 MSP (144)

9 CDG (146)

In 2023, 12% of the world mainline single-aisle fleet will be used on flights from just the Top 10 airports.

In 2023, mainline single-aisles will be largely flownon short routes…

25%

20%

15%

10%

5%

0%

Percent of aircraft operated at range

Range band (200 nm steps)

2023

200 2,200 4,200


Single-aisle aircraft will be flown overwhelmingly on short flights;

by 2023, 47% of the aircraft will be used on flights of less than

600 nm, equivalent to Paris to Rome.

By 2023, 32 North American airlines will each be operating

an average of 178 mainline single-aisles, compared with 110

European airlines operating an average of 45 aircraft each.

Asian low costairlines to drive

single-aislesdemand in Asia

… with 38% flown by airlines in North America

15,111 aircraft291 airlines

Asia-Pacific 21%

Asia-Pacific 18%

North America38%

Europe 32%

Europe 38%

North America 11%


7%

Middle East 2%

Africa 3%

Middle East 5%

Africa 12%


13%

GMF mainline single-aisle fleet in 2023.



Small twin-aisles

1,800 deliveries over 20 years

Demand will develop for a total of 2,173 aircraft in this category.

With 241 to be replaced by recycled aircraft, this will leave

a need for some 1,800 new aircraft to be delivered during

2004-2023.

Unlike the single-aisle category of aircraft, the North American

market represents only 14% of worldwide demand, with the

airlines of Europe and Asia-Pacific taking 70% of all deliveries

in this class, some 1,444 aircraft. Most 767s currently in operation

in the US and Canadian domestic markets will be replaced

by single-aisle aircraft within the forecast period.

Two thirds willgo to Europe

and Asia

1,799new small

twin-aisles willbe needed

A fleet of 2,173 small twin-aisles will be needed

1,000

500

1,500

2,000

2,500

0

Fleet size

20232003

951

+4.2% per annum 2,173

241133


577


}Small twin-aisles passenger demand concentrated

Latin America

27 68 5%


Middle East

78 42 6%


Africa

58 46 5%


Asia-Pacific

283 415 34%


Europe

274 472 36%


North America

130 147 14%



Europe will be an important market

By 2023, the active fleet of 2,173 small twin-aisle aircraft will be

operating at 592 airports, linking a total of 2,497 airport-pairs.

Small twin-aisles operating today in the US domestic market will

to a great extent be replaced by large single-aisle types over

the next decade. The Top 10 airports include five in Europe, three

in the US as well as Kuala Lumpur and Beijing in Asia featuring

prominently.

As a measure of concentration, flights from the Top 25 airports

will use the productive capacity of 35% of the fleet, and 50%

of the fleet will be used on flights from the Top 47 airports, led

by Paris Roissy-Charles-de-Gaulle and Frankfurt

European airlines will constitute the largest single regional

market for these aircraft, with 46 airlines operating an average

of 16 aircraft each. Fifteen North American operators, however,

will have a larger average fleet of 24 aircraft each.

NorthAmerica

to replace mostsmall domestictwin-aisles with

single-aisles

Operations of small twin-aisle aircraft will mainly bein the US & Europe…

6 KUL (33)

9 PEK (28)

7 LAX (30)

10 ATL (28)

8 JFK (30)

3 LHR (45)

1 CDG (59)

5 MAD (34)

2 FRA (49)

Rank (n° of a/c)

4 FCO (35)

… with European airlines the main users


Asia-Pacific 26%

North America 17%

Asia-Pacific 32%

Europe 32%

Europe35%

North America 11%


4%

Middle East 7%

Africa 5%

Middle East 6%

Africa 15%


10%

GMF small twin-aisle fleet in 2023.



Intermediate twin-aisles

300-seater deliveries are 50%of twin-aisle demand

The world’s major airlines will need a total of 3,020 aircraft in this

category; a market segment covered by the A330-300 and the

A340 Family. 2,650 of these aircraft will be new, leaving 370 to be

satisfied by recycled aircraft. Almost half of the new aircraft will be

300-seaters, with the remainder split between 350-seaters and

400-seaters.

With the distances and type of operations involved in the region,

Asia-Pacific will need the bulk of the aircraft to be delivered in this

category, 1,393 aircraft representing 46% of all deliveries. Europe

will take 723 aircraft or 24% and the growing Middle Eastern

market 8%.

2,650new

intermediatetwin-aisles

needed

2,650 new intermediate twin-aisles needed

1,500

1,000

500

2,500

2,000

3,000

3,500

0

Fleet size

20232003

1,510

+3.8% per annum3,213

370193


947


}300-seaters, the most significant demand

400

600

800

1,000

1,200

1,400

200

0

400350300

533

797

1,320


Seat category


Operations concentrated in Europeand Asia-Pacific

By 2023, the active fleet of 3,213 intermediate twin-aisles will be

operating at 498 airports, linking a total of 2,087 airport-pairs.

Operations will be spread globally, with only a small proportion

of flights on US domestic routes. Of the Top 10 airports served, six

will be in the Asia-Pacific region, and the remaining four in Europe.

3,213aircraft operated

by 132 airlinesby 2023

Intermediate twin-aisle operations will beconcentrated largely in Asia-Pacific & Europe

9 AMS (57)

3 CDG (84)

1 LHR (105)

5 FRA (79)

6 SIN (72)

8 BKK (65)

2 PEK (87)

4 NRT (81)

7 HKG (65)

Rank (n° of a/c)

10 SYD (55)

Intermediate twin-aisle demand by region

Latin America

40 90 4%


Middle East

140 98 8%


Africa

43 36 3%


Asia-Pacific

629 764 46%


Europe

271 452 24%


North America

228 229 15%




Compared with the world fleet as a whole, operation of

intermediate twin-aisles will be relatively concentrated – led by

London Heathrow and Beijing airports. Half the aircraft will be

used on flights from the Top 28 airports.

The deployment of the intermediate twin-aisle fleet shows a similar

pattern to that of the smaller twin-aisle aircraft, but with

a substantially greater use on long-range routes. Half the fleet will

be used on flights of no more than 2,200 nm (roughly equivalent

to Perth to Singapore), but more than a quarter will be used on

flights over 4,000 nm (roughly equivalent to Hong Kong to Sydney).

The 37 Asia-Pacific operators will constitute the largest single

regional market, with an average of 38 aircraft each.

Asia-Pacific will be the largest market

3,213 aircraft 132 airlines

Asia-Pacific 28%

North America 18%

Asia-Pacific 43%

Europe 34%

Europe24%

North America 11%


4%

Middle East 8%

Africa 3%

Middle East 8%

Africa 9%


10%

GMF intermediate twin-aisle fleet in 2023.

67%of intermediate

twin-aisle demandwill be in Asiaand Europe


Large aircraft

Demand for 1,250 large passengeraircraft

By 2023, in order to maximise the profit potential of operations

in an environment characterised by continuing severe price

competition and increasingly stringent infrastructure and

environmental constraints, major airlines will need 1,250 very large

and economical aircraft like the A380.

64% of the new large aircraft delivered will be in the 500- and

600-seater categories. The remaining 36% of demand will be

satisfied by some 240 450-seaters. The average capacity of all

deliveries will be 575 seats.

Regional demand for very large passenger aircraft, including

the existing backlog of 112 passenger A380s, will be centred

in the Asia-Pacific region, with 774 aircraft or 62% of world’s

demand. Europe’s airlines will need 20% of these aircraft to meet

growing demand to the Asia-Pacific region, with North America

and the Middle East taking 17% or 215 aircraft between them.

1,250 new large passenger aircraft will be needed

800

600

400

200

1,000

1,200

1,400

0

Fleet size

20232003

30

1,262

120

1,232

1,250 new aircraft

18


}80% of demand will be 500 seats or above

200

300

400

500

600

100

0

1,000800600500450

239

45

166

283

517


Seat category

Large aircraft passenger demand concentrated

Latin America

0 3 <1%


Middle East

57 31 7%


Africa

7 10 1%


Asia-Pacific

229 545 62%


Europe

115 138 20%


North America

12 115 10%




52% of the aircraft to be centredon ten airports

By 2023, these large aircraft will be serving 213 airports, linking

513 airport-pairs.

As well as operating on a diverse set of markets, large aircraft

such as the A380 are expected to operate to many of the airports

which operate the 747. Today, 69% of 747s are operated to the

Top 20 airports. Similarly, we anticipate that flights from just these

Top 20 airports will use the productive capacity of 945 aircraft,

or 75% of the 2023 fleet of large aircraft. London, Tokyo and

Hong Kong will require 308 large aircraft. Although Los Angeles is

the only North American city within the Top 10, San Francisco

New York and Chicago will use the productive capacity of 120

large aircraft. This is already confirmed by the announced routes

of the current A380 customers.

In 2023,

75%of the world’s fleetof 1,262 very largeaircraft will be usedon flights from just

the Top 20airports

12 of the Top 20 large aircraft airportswill be in Asia-Pacific

1 LHR (117)

10 FRA (37)

14 CDG (34)

20 KUL (15)

4 SIN (64)

6 DXB (51)

5 BKK (51)

7 PEK (50)

2 NRT (109)

10 PVG (41)

3 HKG (82)

12 TPE (35)

13 HND (34)

8 ICN (49)

18 KIX (18)

15 SYD (34)

17 SFO (28)

9 LAX (47)

Rank (n° of a/c)

19 ORD (16)

16 JFK (30)

In 2023, 75% of the world’s fleet of 1,262 very large aircraft will be used on flights from just the Top 20 airports.

Announced routes by current A380 customers in 2008


The very large aircraft will be used on the complete range of domestic,

local, regional and intercontinental routes. Nearly one third of the

fleet will be used on routes of up to 1,200 nm, equivalent to Sapporo

to Okinawa. At the top end, one third of the fleet will be used on

flights over 4,800 nm (roughly equivalent to Paris to Los Angeles).

With many of the top routes being centred in the region, it is

therefore understandable that most of the airlines and aircraft

deliveries in this category will be made to the Asia-Pacific region.

However with the strength of traffic between Europe and Asia,

and demand on some Trans-Pacific routes for example, other

regions’ airlines will take a significant share of large aircraft

deliveries over the next 20 years.

Asia-Pacific will dominate demand


Asia-Pacific 53%

North America 10%

Asia-Pacific 62%

Europe 20%

Europe20%

North America 9%


<1%

Middle East 7%

Africa 1%

Middle East 11%

Africa 5%


2%

GMF very large aircraft fleet in 2023.

Eight of the Top 10 large aircraft routes will serve Asia

19 (495)

25 (683)

21 (571) 20 (891)

16 (814)

18 (601)

18 (631)16 (699)

15 (779)

16 (711)

HNL

LAX

TPEHKG

SIN

HND

NRTCTS

LHR

ORD

JFK

Number of aircraft (avg. seats)

In 2023,the Top 10 airport-pairs alone will use

184 out of

1,262 verylarge aircraft

I 57

Air cargo forecast

More than 3,100freighters needed.

Large demand for new large freighters.


AIR CARGO FORECAST


Freight goes fromstrength to strength

Hi-tech exports drive growth

Cargo traffic has fully recovered from the 2001 and 2003

disruptions without any lingering effects. The underlying positive

fundamentals, such as the development of traffic from Asia, have

quickly reasserted themselves, with full year 2004 traffic forecast

to be 12% above 2000 levels.

Strong demand has kept cargo yields up and has translated into

solid operating profits for most integrators and the dedicated

freight divisions of major airlines.

Airbus forecasts freight traffic for 145 individual domestic and

international flows on the basis of historical traffic, economic data

and bi-directional country-to-country trade statistics.

The analysis of the type of goods exchanged (sub-segments

of high-tech, consumer goods, food, perishable goods, etc.)

is critical to traffic development, as the time sensitivity and the

value of goods influence the shippers’ selection of the appropriate

transport mode: road, rail, sea or air.

The export of more time sensitive, high-value and high-tech

goods, has grown fastest among globally traded commodities,

largely contributing to the growth of air freight and explaining

the fact that it has grown faster than global trade. For example,

although high-tech goods from Asia to North America and Europe

represent 40% of total exports in tonnage, they also account for

nearly 75% in value. High-tech exports from China to Europe and

North America transported by air have grown steadily from a 25%

share in value in 1995, to 60% of today’s total.

High-tech goodsaccount for

75%of Asian air freight

by value

500,000

400,000

300,000

200,000

100,000

0

Tonnes

20031995

+ 4.4% per annum

OtherPrimaryIntermediateHigh TechFoodConsumerCapital

500

100

150

200

300

350

400

450

250

50

0

FTKs (billions)

2322212019181716151413121110090807060504030201009998979695

International Domestic

5.9%

History Forecast

4.4%

Cargo traffic development Air freight intra-Asia by commodity/volume

Source: MGI.


Due to the often bulky, but necessarily secure packaging

employed on high-tech goods, and the growth in the exports

of these articles, the average density of freight being carried

by air has been reduced. This makes cargo aircraft with good

volumetric payload particularly attractive.

Large freighters, such as the A380F, can not only provide the

volumetric payload necessary, but also stimulate traffic by lowering

the cost per tonne threshold below which other modes are more

economical.

On long-haul routes, the extended range capability of large

freighters, such as the A380F, provides the ability to fly over

previously necessary technical stops, thereby saving time

and allowing next-day delivery of high yield express packages

to a wider market base or territory, thus increasing revenues.

Air freight intra-Asia by commodity/value Top 20 freight markets in 2023

80,000,000

70,000,000

50,000,000

60,000,000

30,000,000

40,000,000

20,000,000

10,000,000

0

1,000 US$

20031995

+ 7% per annum

OtherPrimaryIntermediateHigh TechFoodConsumerCapital

Domestic USPRC – North AmericaAsia – North America

Europe – North AmericaNorth America – Europe

Asia – EuropeDomestic PRC

North America – AsiaPRC – EuropeEurope – AsiaEurope – PRC

Japan – North AmericaNorth America – Japan

North America – PRCEurope – JapanJapan – Europe

South America – North AmericaAfrica – Europe

Europe – South AmericaSouth America – Europe

2003 traffic 2004-2023 growth

100 20 30 40 50

2004-2023FTKs (billions)

4.2% 7.7% 6.2% 4.8% 5.0% 6.4%

10.1% 5.9% 7.1% 6.2% 7.8% 6.1% 5.9% 7.4% 5.2% 5.9% 5.3% 6.2% 6.1% 4.7%

% of 2023 World FTKs

11.3% 7.9% 7.0% 5.5% 4.2% 4.2% 4.2% 3.5% 3.5% 3.4% 3.1% 2.4% 2.4% 2.2% 2.2% 2.0% 1.7% 1.7% 1.4% 1.3%

Source: MGI.

Domestic PRCfreight traffic

to grow at

10.1%per annum

Share of 2023 freight traffic

11.5% (+4.3%)

10.2% (+7.3%)

0.5% (+5.0%)

(FTKs growth: average per annum 2003-2023)

Other flows: 9.9%

9.8% (+4.9%)

26.2% (+6.5%)2.8%(+5.5%

)

2.7%(+5.7%

)3.6%

(+5.

3%)

3.0%(+5.6%

)

19.8% (+6.3%)

AIR CARGO FORECAST


20-year freight growth

Higher growth than the passengermarket

Airbus forecasts that air freight expressed in terms of freight-

tonne kilometres (FTK) will grow at a 5.9% average annual rate

over the 2004-2023 period.

The US domestic market, still the largest with a 15.4% share

of world FTKs, is also the most mature. It will nevertheless grow

at a sustained 4.3% rate per year, remaining the largest market

in 2023, with an 11.5% share of world’s FTKs.

Traffic flows from Asia are expected to continue to grow

the quickest, with traffic from China to USA and Europe leading

average annual growth in excess of 7% over the next 20 years.

By 2023, traffic from China to North America and from Asia to

North America will have surpassed today’s second largest freight

market of Europe to North America. Domestic Chinese traffic will

increase eightfold over the next 20 years, from 2.7 billion FTKs,

to 16 billion FTKs.

The North American domestic market is currently served by a fleet

of 770 freighters, compared with less than 7 dedicated freighters

utilised in the Chinese domestic market, with the majority of air

freight carried below deck on scheduled passenger services.

China’s export and import of goods and services account for 75%

of their GDP. The growth of the domestic consumer market in

emerging countries such as China, India, Brazil and Russia

is boosting trade, not only in Europe and North America but

worldwide. For example, all of the Australian 2003 increase

in exports went to China, as did 45% of South Korean exports.

5.9%growth inair freight

traffic

Airbus freighter segmentation

Payload Aircraft Future deliveriestypes payload

Small jet < 30 tonnes BAe 146s, DC-9s, 22 tonnesfreighters 737s, 727s, Tu-204

Regional 30-60 tonnes 707s, DC-8s, 757s, 45 tonnesfreighters 767-200s, A300s,

A310s, DC-10-10s,L-1011s

Long-range 30-80 tonnes DC-10-30/40s, 60 tonnesfreighters 767-300s, 747 Combis,

MD-11 Combis

Large > 80 tonnes MD-11s, 747s, 120 tonnesfreighters A380s


Stimulated demandfor dedicated freighters

Dedicated freighter shareto increase

Usage of available under-floor volume in passenger aircraft will

remain an economic way of serving new or low-demand traffic

flows. However, due to the different growth rates of passenger

and freight traffic, the volume available for freight on a given route

is bound to become insufficient. This adds to the fundamental

appeal of dedicated freighters in terms of routes, schedule,

seasonality and service, which cannot be matched by passenger

aircraft under-floor areas.

Thus, the share of belly traffic is expected to reduce by 7% during

the forecast period.

1,500 active freighters worldwide

Today’s active world freight aircraft fleet consists of 1,415

dedicated freight aircraft and 91 Quick-Change or Combi aircraft.

As much as 65% of the installed fleet is operated by North

American carriers.

Of the 1,506 aircraft in service, 808 were converted from

passenger service and 698 are factory-built freighters.

Conversion rates have varied in the past, showing the adaptability

of conversion centres in meeting this fluctuating demand; we

expect that this flexibility will remain in future, in order to satisfy

operator and owner needs.

Passenger aircraft role in air freight to decrease

500

400

300

200

100

0

FTKs (billion)

20232003

442.7

141.1

59%

41%

66%

34%

Belly holds +4.8% p.a. Dedicaded freighters 6.5% p.a.

Total Cargo +5.9% p.a.

65% of current fleet in North America

Small Regional Long- Large TotalRange

North America 377 393 66 144 980

Europe 62 80 18 70 230

Asia-Pacific 25 2 27 119 173

Middle East/Indian Sub. 4 3 4 7 18

Latin America 38 16 13 0 67

Africa 9 16 9 4 38

Total 515 510 137 344 1,506

AIR CARGO FORECAST


Two thirds retired by 2023

Freight carriers will not only need to expand their fleet in order

to accommodate the sustained demand for air cargo, but also

to replace an increasingly aged fleet.

In the absence of announced retirement plans, the GMF assumes

that freighters are kept in service to the limit of their economic life,

taken as 37 years for small jets and 35 years for other types.

This retirement takes no account of possible more stringent noise

regulations beyond those in place today. The imposition of such

environmental regulations would be likely to hasten retirements,

thus increasing demand for freighters over and above our estimates.

Over the next 20 years, a total of 1,029 freighter aircraft are

expected to be withdrawn from active service. Attrition will be

highest in the small freighter category, of which 73% are operating

in North America. At an average of 27 years, the small freighters,

notably the 727F, are the oldest of all types, and are each

operated less than 2h30mn per day. In comparison, the large

freighters have an average age of 14 years and are operated

10h30mn per day.

Over the next20 years, a total

of 1,029freighter aircraft

are expected to bewithdrawn fromactive service

40

60

80

120

100

20

01984 1987 1990 1993 1996 1999 2002

Number of jets converted

LargeLong-rangeRegionalSmall jets

Passenger to freighter conversions

120

100

80

60

40

20

0

Aircraft retired

2322212019181716151413121110090807060504

Large freightersLong-range freightersRegional freightersSmall jet freighters

New replacement cycle starting

1,600

1,000

1,200

1,400

800

600

400

200

0

Aircraft in service

20232003

1,506

510

515

344

137

477

17254

20744

Regional Long-range LargeSmall jets

Two thirds of the current fleet will retire


Significant future demand

Freighter fleet to grow 2.4 times

The 253% increase in traffic carried by dedicated freighters over

20 years will be achieved through a combination of more large

aircraft, higher utilisation and higher load factors.

The freighter fleet is estimated to grow by 140%, with average

aircraft payload going up 18%, from 50.7 tonnes to 60 tonnes.

This average payload increase is due in part to the size of types

used, including the A380F, but also to the faster growth

of the networks on which they are used.

Beyond the aircraft themselves, we expect that operators will

manage to fly their aircraft more hours each year and will also be

able to modestly increase load factors. These two elements are

expected to contribute another 24% to the FTK increase.

The current active cargo fleet of 1,506 jet aircraft is expected

to grow to 3,616 by 2023. Of the 3,139 deliveries, 727 units,

or 23%, will be new factory-built freighters, while 2,412 will be

converted freighters. New-built deliveries are valued at 129 billion

US dollars (2004).

The North American fleet will still be the largest in terms of aircraft

and FTKs generated. The Asian dedicated freighter fleet will

increase by 419 units, or 3.4 times, over the next 20 years.

4,000

2,500

3,000

3,500

2,000

1,500

1,000

500

0

Number of aircraft

20232003

1,506

3,616

2,412

477

727

Conversions New freightersRetained in service

+4.3% p.a.

The world freighter fleet will more than double

AIR CARGO FORECAST


Large demandfor new large freighters

Small jet freighters

As these aircraft are largely deployed on the mature US domestic

market, we expect the small jet freighter fleet to exhibit the

smallest growth of all segments. Most of the replacements will be

needed in the North American market, while of the 458 aircraft

required for growth, almost 20% will be needed in the Asia-Pacific

region.

The mix of converted and new aircraft has been analysed on the

basis of their known or expected economics, for each operator

and each operation. Given the low utilisation of small freighters,

and the expected large supply of suitable single-aisle aircraft

in the future, including a possible A320 passenger-to-freighter

conversion, the GMF does not anticipate a need for new-built

freighters in this segment. This is a very different situation to that

seen in the 70s and 80s, when operators had no choice but

acquire new freighters.

Mixed passenger/cargo operations with Quick Change or Combi

aircraft have sometimes justified the purchase of new airframes,

and this may happen again in the future. However, we expect

that these operations will remain very limited in number.

Regional freighters

By 2023, the active fleet of regional freighters will have grown

to 1,272 aircraft from the 510 currently in service. Traffic growth and

replacement will create the need for the delivery of 1,100 aircraft.

The higher utilisation in the fast growing Asian market will largely

contribute to the requirement for 187 efficient and economical

new regional freighters over the 2004-2023 period.

In this segment, widebodies such as the new or converted A300-

600F, are replacing the long-serving 707F and DC-8Fs.

727new factory and

2,412convertedfreightersneeded

Regional freighter fleet

800

1,000

1,200

1,400

600

400

200

0

Fleet size

20232003

510

+4.7% p.a.

1,272

913

172

187


Small jet freighter fleet

400

600

800

1,000

200

0

Fleet size

20232003

515

+3.2% p.a.

973

919

54

ConversionsRetained in service


Long-range freighters

This segment includes the 747 Combi aircraft, which Airbus

believes will be converted into full-freighters long before the end

of their economic life. Meanwhile airlines fleet rationalisation

of passenger aircraft and the replacement of ageing types, are all

contributing to the conversion of a number of DC-10s.

Alternative new factory-built freighters in this class will become

available in the medium term. These new-built freighters will offer

good economics, greater flexibility and longer economic life.

This, combined with their high utilisation, will enable them

to compete effectively with converted types.

The increase in fleet size of 238 aircraft, together with the need

to replace 93 aircraft, will call for the delivery of 331 long-range

freighters over the next 20 years. Analysis of the high utilisation,

medium-volume markets and long-haul freight routes shows that

142 new factory-built freighters will be needed in that segment.

Large freighters

The large freighter segment is anticipated to see the highest

growth, with a yearly average increase of 5.5% over the forecast

period.

Large freighters are the aircraft of choice on the large and fast-

growing flows originating in Asia. Today, 62% of scheduled

747 freighter flights link Asia, PRC or Japan to the rest

of the world. This segment has the highest utilisations, averaging

over 3,600 flight hours per annum. These utilisations, combined

with the need for reliable service and high volumetric payload

will continue to drive the need for new aircraft in this class.

By 2023, an additional 652 large freighters will be needed

to replace 137 long-range 747s in service and carry the high

demand for air cargo. Airbus estimates that as many as 50%

of deliveries will be new freighters.

As in the passenger market, the appearance of the freighter

version of the A380F will set new standards in economics.

Long-range freighter fleet

100

200

300

400

0

Fleet size

20232003

137

+5.2% p.a.

375

189

44

142


Large freighter fleet

20232003

344

+5.5% p.a.

996

391

207

398


200

400

600

800

1,000

0

Fleet size

AIR CARGO FORECAST


Fleet size will more than double

Asian freighter fleet to growthe quickest

By 2023, the North American freighter fleet will still be the largest

with 2,250 aircraft in service, but the Asian freighter fleet will have

grown to produce an equivalent number of available tonne-

kilometres.

Asia, in particular China, is seeing the introduction of small and

regional freighter fleets, with very high initial growth. Equally

as dynamic is the growth of the large freighters fleet which, from

a respectable existing base, will more than triple during the

forecast period.

More than

3,100freighters willbe delivered

2004-2023 freighter deliveries by region

Total

North America 1,995

Europe 352

Asia-Pacific 500

Middle East 27

Latin America 178

Africa 87

Total 3,139

New/Converted 727/2,412

2003-2023 freighter fleet by region

Latin America

67 183

2003 fleet 2023 fleet

Middle East

18 37


Africa

38 88


Asia-Pacific

173 592


Europe

230 466


World

1,506 3,616

2003 fleet 2023 fleetNorth America

980 2,250



727 factory-built freighters will beneeded

Over the next 20 years, cargo operators will require a total

of 3,139 freighter deliveries, of which 727 will be factory built

and 2,412 will be passenger-to-freighter conversions.

Large freighter deliveries worth$85.5bn

The large freighter segment will dominate new deliveries, with

more than half of the airframes and two-thirds of the value.

Almost

$130 billionworth of new

freighters will bedelivered

Freighter demand – units Freighter demand – value

400

600

800

1,200

1,000

200

0

Number of aircraft


Regional freighters


Large freighters

919

789

331

398

391142

189

1,100

187

913919

Total new a/c 727Total converted 2,412Total 3,139

30

20

40

50

90

70

80

60

10

0

2004 $ (billion)


Regional freighters


Large freighters

0

85.5

2122.6

187

APPENDICES


Passenger traffic forecast

Sub-market AAGR* 2004-2023

Africa Sub-Sahara - Asia 4.1%

Africa Sub-Sahara - Australia/New Zealand 3.2%

Africa Sub-Sahara - CIS 5.1%

Africa Sub-Sahara - Central Europe 4.3%

Africa Sub-Sahara - Western Europe 4.4%

Africa Sub-Sahara - Indian Subcontinent 3.6%

Africa Sub-Sahara - Middle East 4.8%

Africa Sub-Sahara - North Africa 3.8%

Africa Sub-Sahara - PR China 3.6%

Africa Sub-Sahara - South Africa 4.0%

Africa Sub-Sahara - South America 4.6%

Africa Sub-Sahara - USA 4.5%

Asia - Australia/New Zealand 6.6%

Asia - Canada 5.0%

Asia - CIS 5.8%

Asia - Central Europe 5.9%

Asia - Western Europe 5.9%

Asia - Indian Subcontinent 4.7%

Asia - Japan 5.9%

Asia - Middle East 5.8%

Asia - North Africa 3.2%

Asia - PR China 9.1%

Asia - Pacific 4.0%

Asia - South Africa 3.9%

Asia - South America 4.5%

Asia - USA 6.3%

Australia/New Zealand - Canada 6.3%

Australia/New Zealand - Western Europe 5.2%

Australia/New Zealand - Japan 6.2%

Australia/New Zealand - Middle East 4.4%

Australia/New Zealand - PR China 7.5%

Australia/New Zealand - Pacific 4.3%

Australia/New Zealand - South Africa 4.7%

Australia/New Zealand - South America 5.0%

Australia/New Zealand - USA 6.2%

Canada - Caribbean 5.0%

Canada - Central America 4.0%


Canada - CIS 5.1%

Canada - Central Europe 4.9%

Canada - Western Europe 6.1%

Canada - Indian Subcontinent 5.0%

Canada - Japan 4.7%

Canada - Middle East 4.1%

Canada - North Africa 4.8%

Canada - PR China 5.0%

Canada - Pacific 3.9%

Canada - South America 4.0%

Canada - USA 4.9%

Caribbean - Central America 4.6%

Caribbean - CIS 5.4%

Caribbean - Western Europe 6.9%

Caribbean - South America 3.6%

Caribbean - USA 4.0%

Central America - Western Europe 6.4%

Central America - Japan 4.6%

Central America - South America 5.0%

Central America - USA 4.5%

CIS - Central Europe 3.8%

CIS - Western Europe 6.0%

CIS - Indian Subcontinent 4.1%

CIS - Japan 5.0%

CIS - Middle East 5.3%

CIS - North Africa 4.5%

CIS - PR China 7.3%

CIS - USA 7.4%

Domestic Africa Sub-Sahara 3.3%

Domestic Asia 5.9%

Domestic Australia/New Zealand 5.4%

Domestic Brasil 5.7%

Domestic Canada 4.1%

Domestic Caribbean 2.8%

Domestic Central America 3.3%

Domestic CIS 5.9%

Domestic Central Europe 6.1%



Domestic Western Europe 5.0%

Domestic Indian Sub-continent 4.0%

Domestic Japan 3.0%

Domestic Middle East 3.8%

Domestic North Africa 5.8%

Domestic P.R. China 8.7%

Domestic Pacific 3.5%

Domestic South Africa 3.4%

Domestic South America 3.5%

Domestic USA 3.2%

Central Europe - Western Europe 6.9%

Central Europe - Indian Sub-continent 7.3%

Central Europe - Japan 6.4%

Central Europe - Middle East 5.2%

Central Europe - North Africa 4.4%

Central Europe - P.R. China 4.8%

Central Europe - USA 6.4%

Western Europe - Indian Sub-continent 6.5%

Western Europe - Japan 5.6%

Western Europe - Middle East 7.6%

Western Europe - North Africa 4.9%

Western Europe - P.R. China 6.9%

Western Europe - Pacific 4.9%

Western Europe - South Africa 5.5%

Western Europe - South America 5.8%

Western Europe - USA 4.9%

Indian Sub-continent - Japan 4.1%

Indian Sub-continent - Middle East 6.2%

Indian Sub-continent - North Africa 3.4%

Indian Sub-continent - P.R. China 4.1%

Indian Sub-continent - South Africa 4.7%

Indian Sub-continent - USA 7.2%

Intra Africa Sub-Sahara 3.4%

Intra Asia 6.9%

Intra Australia/New Zealand 5.1%

Intra Caribbean 4.8%

Intra Central America 3.9%


Intra CIS 7.7%

Intra Central Europe 5.4%

Intra Western Europe 5.0%

Intra Indian Sub-continent 3.0%

Intra Middle East 3.2%

Intra North Africa 5.9%

Intra Pacific 3.7%

Intra South America 3.5%

Japan - Middle East 5.2%

Japan - North Africa 4.7%

Japan - P.R. China 7.5%

Japan - Pacific 4.1%

Japan - South America 4.6%

Japan - USA 5.8%

Middle East - North Africa 5.1%

Middle East - P.R. China 3.8%

Middle East - South Africa 4.4%

Middle East - USA 4.3%

North Africa - P.R. China 3.5%

North Africa - South Africa 4.9%

North Africa - USA 4.4%

P.R. China - South Africa 5.9%

P.R. China - USA 7.9%

Pacific - South America 3.1%

Pacific - USA 4.5%

South Africa - South America 4.5%

South Africa - USA 5.1%

South America - USA 5.6%

Others & Charter 5.1%

World 5.3%

* Average annual growth rate

APPENDICES


Freight traffic forecast

Sub-market directional AAGR* 2004-2023

Africa to Africa 4.4%

Africa to Asia 4.4%

Africa to Central America 8.0%

Africa to CIS 5.3%

Africa to Europe 6.2%

Africa to Indian Subcontinent 6.6%

Africa to Japan 6.1%

Africa to Middle East 5.9%

Africa to North America 7.0%

Africa to Pacific 4.6%

Africa to PRC 6.7%

Africa to South America 5.0%

Asia to Africa 4.4%

Asia to Asia 6.4%

Asia to Central America 7.5%

Asia to CIS 4.0%

Asia to Europe 6.4%

Asia to Indian Subcontinent 4.9%

Asia to Japan 6.2%

Asia to Middle East 6.4%

Asia to North America 6.2%

Asia to Pacific 5.3%

Asia to PRC 6.7%

Asia to South America 5.2%

Central America to Africa 2.8%

Central America to Asia 8.7%

Central America to Central America 5.4%

Central America to CIS 5.3%

Central America to Europe 3.7%

Central America to Indian Subcontinent 4.3%

Central America to Japan 6.8%

Central America to Middle East 6.1%

Central America to North America 6.0%

Central America to Pacific 5.7%

Central America to PRC 9.2%

Central America to South America 5.2%

CIS to Africa 4.1%


CIS to Asia 5.6%

CIS to Central America 5.3%

CIS to CIS 6.6%

CIS to Europe 4.8%

CIS to Indian Subcontinent 4.5%

CIS to Japan 5.2%

CIS to Middle East 5.6%

CIS to North America 6.2%

CIS to Pacific 5.0%

CIS to PRC 8.6%

CIS to South America 5.5%

Domestic PRC 10.1%

Domestic US 4.2%

Europe to Africa 5.0%

Europe to Asia 6.2%

Europe to Central America 5.5%

Europe to CIS 8.3%

Europe to Europe 5.0%

Europe to Indian Subcontinent 6.0%

Europe to Japan 5.2%

Europe to Middle East 4.9%

Europe to North America 4.8%

Europe to Pacific 4.1%

Europe to PRC 7.8%

Europe to South America 6.1%

Indian Subcontinent to Africa 6.4%

Indian Subcontinent to Asia 5.4%

Indian Subcontinent to Central America 7.5%

Indian Subcontinent to CIS 4.8%

Indian Subcontinent to Europe 6.1%

Indian Subcontinent to Indian Subcontinent 6.6%

Indian Subcontinent to Japan 4.6%

Indian Subcontinent to Middle East 5.5%

Indian Subcontinent to North America 5.1%

Indian Subcontinent to Pacific 5.7%

Indian Subcontinent to PRC 9.4%

Indian Subcontinent to South America 6.8%



Japan to Africa 5.9%

Japan to Asia 4.9%

Japan to Central America 6.3%

Japan to CIS 3.9%

Japan to Europe 5.9%

Japan to Indian Subcontinent 5.5%

Japan to Middle East 5.5%

Japan to North America 6.1%

Japan to Pacific 5.9%

Japan to PRC 6.0%

Japan to South America 4.3%

Middle East to Africa 7.1%

Middle East to Asia 5.6%

Middle East to Central America 4.7%

Middle East to CIS 3.5%

Middle East to Europe 4.5%

Middle East to Indian Subcontinent 7.3%

Middle East to Japan 3.0%

Middle East to Middle East 4.7%

Middle East to North America 6.2%

Middle East to Pacific 4.6%

Middle East to PRC 8.2%

Middle East to South America 6.5%

North America to Africa 5.6%

North America to Asia 5.9%

North America to Central America 6.0%

North America to CIS 6.0%

North America to Europe 5.0%

North America to Indian Subcontinent 6.8%

North America to Japan 5.9%

North America to Middle East 3.9%

North America to North America 4.9%

North America to Pacific 4.3%

North America to PRC 7.4%

North America to South America 6.0%

Pacific to Africa 5.9%

Pacific to Asia 4.5%


Pacific to Central America 5.8%

Pacific to CIS 5.4%

Pacific to Europe 4.6%

Pacific to Indian Subcontinent 5.9%

Pacific to Japan 4.1%

Pacific to Middle East 5.0%

Pacific to North America 4.9%

Pacific to Pacific 4.8%

Pacific to PRC 6.5%

Pacific to South America 6.5%

PRC to Africa 8.5%

PRC to Asia 8.2%

PRC to Central America 6.3%

PRC to CIS 5.1%

PRC to Europe 7.1%

PRC to Indian Subcontinent 10.8%

PRC to Japan 6.8%

PRC to Middle East 7.2%

PRC to North America 7.7%

PRC to Pacific 8.3%

PRC to PRC 5.3%

PRC to South America 8.4%

South America to Africa 4.5%

South America to Asia 5.7%

South America to Central America 7.1%

South America to CIS 6.1%

South America to Europe 4.7%

South America to Indian Subcontinent 5.9%

South America to Japan 4.4%

South America to Middle East 5.5%

South America to North America 5.3%

South America to Pacific 6.0%

South America to PRC 7.0%

South America to South America 7.1%

World 5.9%

* Average annual growth rate

APPENDICES


Passenger fleet forecast

Aircraft type 2004 2023 Replacements Deliveries/fleet in service backlog

767-300 103 5 98

767-300ER 430 71 378 19

767-400ER 37 37

7E7-8 0 20 20

A300 41 41

A300-600 24 24

A300-600I 153 153

A330-200 145 164 106 125

A340-200 18 18

300 0 1,213 1,213

747SP 3 3

777-200ER 318 166 225 73

777-300ER 0 80 80

7E7-3 0 30 30

A330-300 128 98 111 81

A340-300 192 48 157 13

A340-500 6 21 3 18

DC-10 49 49

L1011 10 10

MD-11 48 48

MD-11ER 4 4

350 0 730 730

777-200 80 16 74 10

A340-600 24 94 10 80

400 0 663 663

747-100 8 8

747-200 67 67

747-300 54 54

747-400 456 37 437 18

747-400ER 6 6

777-300 53 17 47 11

MD-11C 4 4

450 0 239 239

500 0 417 417

747HD 27 27

747SR 3 3

A380-800 0 112 112

600 0 283 283

800 0 166 166

1000 0 45 45

Open Market 17,415

Backlog 2,706

Total 10,838 21,759 9,200 20,121

Open market neutral categoryAircraft in production (deliveries = backlog)Aircraft out of production or no orders

Aircraft type 2004 2023 Replacements Deliveries/fleet in service backlog

100 0 918 918

717 115 127 25 37

737-200 479 479

737-500 359 359

737-600 52 30 35 13

A318-100 9 82 73

Avro 100 51 1 50

DC-9-30 174 174

DC-9-40 12 12

DC-9-50 48 48

ERJ-190 0 100 100

ERJ-195 0 15 15

F100 168 168

MD-80-87 70 70

Yak-42 10 10

125 0 2,358 2,358

737-300 948 1 947

737-700 481 650 243 412

A319-100 518 545 357 384

150 0 3,537 3,537

707 3 3

727 73 73

737-400 432 4 428

737-800 730 683 418 371

A320-100 18 18

A320-200 1,141 728 921 508

IL-62 4 4

MD-80 564 564

MD-80-83 217 19 198

MD-80-88 154 154

MD-90 100 11 89

Tu-154 32 32

175 0 2,751 2,751

737-900 40 44 11 15

757-200 791 109 689 7

A321-100 85 2 85 2

A321-200 187 173 128 114

210 0 2,169 2,169

757-300 49 33 21 5

767-200 40 40

767-200ER 85 10 75

A310-200 20 20

A310-300 86 86

Tu-204 2 11 1 10

250 0 1,876 1,876

AIRBUS S.A.S.1, ROND-POINT MAURICE BELLONTE

31707 BLAGNAC CEDEX – FRANCEDESIGN AND CONCEPTION BY EURO RSCG C&O

PHOTOS BY: BOUDJELAL/SIPA, MARTIN BARRAUD, BRITT ERLANSON,SANNA LINDBERG, KAREN BEARD, GETTY IMAGES,

HEIN VAN DEN HEUVEL, ZEFA VISUAL MEDIA CORBIS,COMPUTER GRAPHICS BY I3M, IMAGE EXM, HERVÉ GOUSSÉ,SÉBASTIEN OGNIER, COMPUTER RENDERING FIXION – HCSM

PRINTED IN FRANCE© AIRBUS S.A.S. DECEMBER 2004

ALL RIGHTS RESERVEDCONFIDENTIAL PROPRIETARY DOCUMENTS

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