Aboulafia addresses PNAA attendees

To paraphrase an old television commercial, when Richard Aboulafia talks, people in aviation listen. Aboulafia, vice president-analysis for the Teal Group, opened Wednesday sessions at the Pacific Northwest Aerospace Alliance (PNAA) conference, in Lynnwood, Wash. In a detailed, slide-laden, 90-minute presentation, Aboulafia reviewed, and provided an outlook for commercial aviation over the next ten years.

2014 was yet another record year for commercial aircraft deliveries, and “all the others have been record years, since 2006,” said Aboulafia. The market grew to over US$130 billion, driven by large, commercial jetliners. “We’re in an 11-year ‘supercycle,’ and the industry has a great deal of momentum. It was way less than half that 10 years ago,” he added.
The low cost of money and wide capital investment in airlines, combined with the dropping cost of oil, are the main contributors to the industry’s growth. “But the question we’re all asking is, ‘What’s the impact of $50 per gallon for fuel?’ There really isn’t an answer,” said Aboulafia. He doesn’t expect that airlines will change their approach to fleet planning based solely on fuel costs. 
Passenger and cargo traffic numbers are again showing strong numbers, in aggregate up 5.9 per cent. “This is an industry that seems to have gotten its act together. It’s the darndest thing,” said Aboulafia. But history has shown that there is an inverse relationship between international air travel growth and the size of aircraft on international routes. “In other words, as the system grows, the planes get smaller. I know it sounds paradoxical, but it’s reality,” he said. 
With that in mind, he expects that the Airbus A380 will cease production in 2021, in spite of Emirates’ demands that Airbus re-engine the aircraft. He also thinks that the last delivery of the Boeing 747-8 will be in 2019 or 2020, with the final few passenger planes to be for Air Force One.  “You’d have to see a far more aggressive cargo turnaround to save the program,” said Aboulafia. 
With massive order books at Boeing and Airbus, and a backlog of 13,000 aircraft worth almost $1 trillion dollars, Aboulafia doesn’t think that the current 10 per cent year-to-year growth is sustainable. “I’m very concerned about a self-inflicted bust,” he said.

He noted the industry trend away from “clean-sheet” designs, such as the Boeing 787 and Airbus A350. Manufacturers are now putting new engines on existing airframes, such as the Boeing 737MAX, and the Airbus A320neo and A330neo programs. Aboulafia believes that re-engined aircraft will make up 70 per cent of the market over the next 10 years, and points to the conservative technological approach of the airlines as the cause for this trend. “What does the customer want? New turbines. What else do they want? Really, nothing else.”
Aboulafia is uncertain about the future of Bombardier’s CSeries. “It’s one of the biggest mysteries in the business, whether it can be salvaged without a lot of damage to adjacent product lines, and the overall corporation’s health,” he explained. “It’s a good plane, but that’s really beyond the debate.”

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