Narrowbody aircraft will make up most of the additions to the global commercial aviation fleet over … [+]
By Brian Prentice, Sam Sargent, Livia Hayes, and Carlo Franzoni
Brian is a partner and Sam, a principal, in Oliver Wyman’s aviation and aerospace practice. Livia and Carlo are on the Market Intelligence team at CAVOK Oliver Wyman that analyzed data for the Global Fleet and MRO Market Forecast 2023-2033.
The global commercial aviation fleet has finally recovered from the Covid-19 pandemic that forced thousands of aircraft into storage or early retirement. And while it took a three years for the industry to rebound, the fleet is now about to start growing again.
By January, the fleet reached 98% of where it stood three years ago when Covid struck. By the end of the year, it will surpass its former peak of almost 28,000 aircraft. Aviation is on a growth trajectory that will expand the fleet to over 36,000 aircraft by 2033, based on our analysis in Oliver Wyman’s recently released Global Fleet and MRO Market Forecast 2023-2033.
That’s less than where we expected it to be. Before the coronavirus reset expectations, the fleet was supposed to top 39,000 aircraft in 2030. Given current growth rates, the fleet will not reach 39,000 until 2034 at the earliest — representing a loss of four years of growth. Still, with the litany of crises over the last three years — from Covid and supply chain disruptions to labor shortages and the Ukraine war — the decade’s anticipated 2.9% compound annual growth rate for the fleet is a testament to the industry’s resilience.
Domestic dominance
First to recover around the world were domestic, narrowbody fleets. That’s because restrictions on domestic and short-haul, cross-border travel were limited and lifted faster than controls on long-haul international travel.
In the nine regions tracked by Oliver Wyman’s forecast, seven domestic fleets had recovered by the beginning of this year, including those in North America, China, India, and Eastern Europe. The domestic fleets in Western Europe and Asia Pacific (excluding China and India) will recover over the next 12 months.
The domestic fleets’ rebound is good news for narrowbody aircraft, like the Airbus A320neo and Boeing’s 737 MAX. Narrowbodies are the primary choice for domestic travel because of their fuel efficiency and number of seats. They represent most of the aircraft being brought back out of storage and new planes being delivered. Oliver Wyman anticipates 20,600 new aircraft to be delivered over the next 10 years — 77% of which will be narrowbodies.
While the fleets may have recaptured lost ground, demand recovery in domestic markets has trailed fleet recovery. For instance, demand — based on passenger headcount — in both North America and Europe is not likely to recover to pre-pandemic levels until later this year. In China, plagued in 2021 and 2022 with Covid outbreaks and government lockdowns, domestic demand is not expected to recover until the fourth quarter of 2024. Ironically, China’s domestic market was one of the first to rebound from the pandemic even before the end of 2020, but the subsequent outbreaks and lockdowns have caused that initial recovery to disintegrate.
International segment lags
International and widebody fleets, on the other hand, have been slower to return to pre-pandemic levels. By the beginning of 2023, international fleets in North America, Western Europe, and Eastern Europe had recovered to their year-end 2019 levels. These were helped by the continued strong demand for cargo and the return of those widebodies. Only China’s international fleet is expected to join them later this year. The international fleets in the Middle East, India, and Asia Pacific are expected to recover in 2024. The international fleets in Latin America and Africa will be the last to recover in 2025.
That sluggish international recovery has depressed demand for widebody aircraft, such as Boeing’s
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And there are other encouraging signs. Largely parked during the height of the pandemic, the superjumbo A380 fleet is beginning to return to service as operators like Lufthansa and Etihad Airways take them out of storage in anticipation of a busy summer 2023 international travel season.
The expanding cargo fleet, which represents one-quarter of the widebodies in service, has also contributed. The cargo fleet is expected to increase to 9% of the global fleet by 2033, up from 8%.
A decade of growth ahead for the commercial aviation fleet
Regions on the rise
India is currently the fastest-growing fleet with a compound annual growth rate (CAGR) of 8%. Amid a world of slowing economic growth, India remains a bright spot, according to the International Monetary Fund, which forecast 6.1% growth for that nation’s gross domestic product in 2023 and 6.8% in 2024. This compares with 1.2% in 2023 for advanced economies and 1.4% in 2024.
Recently, Air India placed the largest aircraft purchase order in history for 470 narrowbodies and widebodies. Airbus and Boeing essentially split the order. Air India has said it will pay $70 billion for the aircraft.
Despite recent setbacks, China’s fleet will also continue to expand through January 2033, with a CAGR of 5.2%. We expect the nation to take delivery of some 3,700 aircraft over that period. Other fast-growing fleets include those in Eastern Europe at 6.3% and the Middle East at 5.1%. Over the next 10 years, the concentration of the fleet will switch from North America and Europe to Asia.
A step change in production
Behind this growth are plans for massive production increases by the two dominant aircraft manufacturers. Airbus and Boeing have announced production plans for their massively popular narrowbody 737 MAX and A320neo that combined equal output of over 125 aircraft per month.
This level of aerospace manufacturing would be unprecedented. Before the pandemic, the peak of monthly narrowbody production for the two combined was a little over 100 aircraft. This proposed 25% increase is a step change at a time when the industry is plagued with supply chain delays and disruptions.
Yet these newer, more efficient aircraft are needed to help the industry become more sustainable and meet net-zero emissions pledges. The newer aircraft burn 15% to 20% less fuel than the aircraft they will eventually replace.
Utkarsh Mishra and Madeline Stelle are the other members of CAVOK’S Market Intelligence team that did the research for the latest edition of the Global Fleet and MRO Forecast and helped write the report.
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