Emerging Trends Shape Our 10-Year Market Outlook

By Arjan Meijer — Embraer Commercial Aviation President & CEO

We just published our 10-year forecast for new commercial aircraft deliveries. The numbers reflect the effect from the global pandemic on aircraft manufacturing and the airline business.

Historically, we’ve bounced back relatively quickly from market contractions. But this cycle is different. First, because the impact on our industry is orders of magnitude greater than any previous crisis. We estimate demand in 2029, measured in RPKs, to be 19% lower than our previous forecast. Second, because there are new trends reshaping the future of air travel. I believe the more drawn out the recovery, the more permanent these changes become.

We have identified four emerging trends that influence our forecast:

Rightsizing

With fewer projected RPKs, our industry will be smaller in the coming years. Uncertainty remains. Airlines will want to be better prepared for any volatility in demand and, perhaps, another crisis in the future. It’s why a more versatile fleet with aircraft of different capacities will help mitigate one major impact of the pandemic: slower traffic growth.

Regionalization

We now see how easily global supply chains are disrupted when commercial aircraft capacity is cut. That strain has put new focus on “nearshoring,” a trend to redirect production locally and transport output via more controllable networks. That initiative will strengthen domestic markets, require better regional air connectivity, and influence the type of aircraft serving those new links.

Passenger Behavior

New factors are emerging that will influence a passenger’s decision to travel. The rise of digital communications, working from home, and a shift from centralized urban offices to remote locations will reduce the volume of business travel. Those, in turn, will give preference to shorter-haul travel.

Consumers need to feel safe throughout their travels, on the ground and in the air. Health issues associated with foreign travel and quality of experience at their destination may lead to more short-haul flights and the development of less crowded domestic destinations.

Passengers are more concerned than ever about travelling responsibly on aircraft that leave a smaller footprint on the environment.

The Environment

Our forecast shows that 75% of new deliveries in the up-to-150 seat segment will be to replace older aircraft. Airlines will face pressure to have more fuel-efficient fleets that produce less noise and fewer emissions. A consequence of the pandemic is the accelerated retirement of old, inefficient jets.

Embraer has helped the industry recover from previous crises. And we’re here to help it recover again.

I hope you enjoy reading our 2020 Market Outlook.

Download Embraer’s 2020 Market Outlook

This article is sponsored by Embraer.