ICF Aerospace in Asia Pacific
Transcript of ICF Aerospace in Asia Pacific
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Aerospace in Asia Pacific - Webinar
November 2015 - Singapore
Presented by:
David StewartGlobal LeadAerospace & MRO
Hosted by:
US Commercial Service
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The global airline industry has returned strongly to profitability since the recent economic/financial recession
AVIATION OVERVIEW
Global Airline Profitability
Source: IATA Central Forecast June 2015
$USD Billions
Asia Pacific Airline Profitability$USD Billions
$29.3B
-$30
-$20
-$10
$0
$10
$20
$30
$40
$5.1B
-$10
-$5
$0
$5
$10
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The aircraft OEM* production backlog is at historical record levels and demonstrates strong industry confidence looking forward
0%
10%
20%
30%
40%
50%
60%
70%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Note: includes narrowbody, widebody, and regional jets in commercial service. Excludes Russian-manufactured aircraft. Only includes passenger, freighter, quick change and combi operational rolesSource: ICF research. OEM = original equipment manufacturer
Order Backlog
Backlog/Active Fleet
Commercial Aircraft OEM Production Backlog
Driven by High oil prices Low interest rates Emerging market growth New Technology aircraft/engines
AVIATION OVERVIEW
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The Asian fleet will see robust growth over the next decade and the second fastest growth globally of 4.7% CAGR*; +4,200 aircraft
FLEET OUTLOOK
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2014 2024
Africa
Middle East
South America
Europe
Asia Pacific
North America
Air Transport Fleet Growth 2014–2024
Source: ICF International, ACAS September 2014; CAGR = compound annual growth rate
3.8%
2.7%
4.7%
1.4%
5.3%
4.8%
27,500
37,900CAGR
3.2% Average
~7,15025%
~11,35030%
ICF Insight
Air travel growth of ~4%
~19,000 aircraft deliveries
~8,600 aircraft retirements
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The current air transport MRO* market is $62.1B of which engines account for 40%; Asia Pacific drives for ~27% of global demand
MRO MARKET
Engines
Components
Line
Airframe
Modifications
15%
17%
22%
40%
6%North
America
Asia Pacific
Europe
Middle East
South America
Africa
29%
27% / $17B
27%
7%
6% 4%
2014 Global MRO Demand
Source: ICF International * MRO = maintenance repair and overhaulForecast in 2014 $USD, exclusive of inflation
$62.1BTotal
$62.1BTotal
By MRO Segment By Region
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Over the next decade, MRO growth will be 3.8% with Asia Pacific & China driving this growth….
MRO MARKET
Source: ICF analysisForecast in 2014 $USD, exclusive of inflation * absolute growth in annual spend
US$ Billions
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
2014 2024
Africa
Eastern Europe (Incl. CIS)
Latin America
Middle East
China
Asia/Pacific (Excl. China)
Western Europe
North America
2014-2024 Annual MRO Spend By Region
6.8%
1.7%
1.2%
CAGR
3.8% Average
$62.1B
$90.1B
6.7%
5.2%
6.1%
6.4%
4.9%
Africa
E. Europe
L. America
M. East
China
APAC (ex. China)
W. Europe
N. America
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…especially in absolute $ terms
MRO MARKET
Source: ICF analysisForecast in 2014 $USD, exclusive of inflation
Difference in $ MRO Spend, 2024 vs. 2014 – By Global RegionUS$ Billions
$6.9
$5.4
$4.2
$2.6 $2.5 $2.3 $2.3$1.8
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
Asia/Pacific(excl China)
China Middle East EasternEurope (incl
CIS)
WesternEurope
Latin America NorthAmerica
AfricaAsia/Pacific(excl. China)
China Middle East
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There are four key MRO industry trends to watch…
Industry Trends
MRO MARKET TRENDS
MaterialStrategies
Airframe MRO
E-enabled Aircraft
Greater OEM Centricity
• Airframe, component and engine OEMS are increasingly focused on the MRO market and will likely gain market share and position
• New aircraft are increasingly data intensive and e-enabled, and growth of the related fleet will be dramatic
• Outsourcing of airframe related MRO to Asia Pacific from other regions has likely peaked
• Growing volumes of aircraft retirements is generating significant availability of surplus parts, providing new cost reduction opportunity to airlines and MROs
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Whilst opportunity clearly exists, whether/where to locate depends (partly) on the nature of the business and what it takes to succeed
Aerospace and MRO ActivitiesValue-added vs. Labour intensity
Labour Intensity
Value-
Added
High
High
Low
Low
Repair development
& engineering
Airframe
heavy maintenance
Parts repair
Engine & component
overhaulModifications
* touch labour
Modifications
engineering
IMPLICATIONS
Business
Aviation MRO
Position of activities on chart are illustrative only
Engineering & Design
Manufacturing
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IMPLICATIONS
Drive for lower cost and access to markets has led to new aerospace clusters emerging in southern latitudes
Source: ICF International
* Note – Russia is emerging for Western certificated equipment
Southern California
Eastern Canada
Southeast US
Central US
Mexico
Washington
Brazil
North Africa
France
United Kingdom Germany
Eastern Europe
UAE
Malaysia
Singapore
China
Established Clusters
Emerging Clusters
Connecticut
Russia*
Spain
IndiaJapan
Global Aerospace Manufacturing Clusters
Aerospace suppliers concentrated
In North America and Europe…
…and labor intensive activities
are shifting South
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Recent research spoke to Singapore being the top and most competitive MRO hub for air transport and business aviation in Asia
IMPLICATIONS
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Example growth opportunities might include....
IMPLICATIONS
Big Data
Composite NDT and
Repair
Logistics Support
Training
Additive Manufacturing
Engineering and Design
Services
High Tech Repairs
Selective Manufacturing
Aircraft Surplus Supply
Chain
Business Aviation
Support
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Outside looking in, questions to investigate and address include…
KEY CONSIDERATIONS
Whether to enter the market – a function of e.g., size of available market, extent of local competition?
How to enter market ?
Where to locate – which country?
What value proposition (Asia operators buy differently) ?
Separate strategy and approach for China?
Key
Qu
est
ion
s
13© ICF International 2015
Thank you!For questions regarding this presentation, please contact:
David StewartVice PresidentAerospace & MRO Advisory
+44 (0)7770 410011 [email protected]
icfi.com/aviation