The Teal Group Vice President of Analysis Richard Aboulafia discussed aerospace market trends, including continued growth in the commercial aviation segment, during the Mentor Graphics Integrated Electrical Solutions Forum (IESF) 2013 in Dallas earlier this month.
Commercial jetliners are a “serious anomaly” and make up more than half of the entire market in terms of industrial output and revenue—with both Boeing and Airbus growing by an amazing 59 percent from 2008 to 2012. While the rest of the world saw myriad businesses folding and houses foreclosed upon, these two airline behemoths lumbered on essentially unscathed by and despite the global economic collapse. The knowledgeable Aboulafia’s theory on the steady growth of the commercial airliner market involves two trends: oil prices and interest rates.
The price of fuel continues to climb, and one of the best ways to save on jet fuel costs is to operate a fleet of more fuel-efficient aircraft. The latest commercial jetliner models sport a variety of system improvements, such as design changes that include winglets; advances in construction material, such as carbon fiber; and more efficient engines, such as the General Electric GEnx employed on the Boeing 787 Dreamliner.
The second factor contributing to commercial airline market growth: the falling interest rates that often go hand in hand with a challenging economic environment. Roughly 15 to 20 percent of commercial jets are financed, Aboulafia estimates, and that number is expected to rise given that the low cost of financing makes passenger jets more affordable and banks currently consider increased investment in commercial airliners to be a good business practice. This geek loves a booming aerospace segment!
Posted March 30th, 2013, by J VanDomelen
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