What does the aerospace sector plan to offer? In the recent time, the rapid level of modernization and the technological boom has opened gates for emerging and evolving trends which will continue to impact growth in the upcoming years. Let us analyze the striking aerospace sector market trends which are gaining momentum to transform the look of this industry.
Continued Technological Advancement
Presently, the customer demand is pushed due to the radical improvements in advanced avionics, operating efficiency as well as noise reduction capabilities and striking interior cabin designs. However, the wider use of composites, conversion to new electrical systems and progressive manufacturing technology requirements are working to rapidly change the method in which aircraft are manufactured. As a proof, advanced platforms are already in progress which includes- the A320 neo and Boeing’s 787. Moreover, the future staging might also offer 737 MAX, the A330 neo, the 777x and Bombardier’s C-Series.
Robust Replacement Demand
Looking at the mature markets of the aerospace sector, the growing demand from airlines as well as fleet operators for an advance generation comprising more technologically advanced, fuel-efficient aircraft, has shifted the focus on replacing older fleets. It is estimated that, in the next 20 years, around 40% of all the fresh aircraft deliveries would be only for replacement purposes.
Tilting Supply and Demand Balance
There had been serious concerns regarding oversupplying of the market by the OEMs, however, evidence indicates that supply and demand might be balanced soon. Moreover, according to forecasts until 2020, there is a significant increase in build rates, with seat deliveries expected to outrun demand for air travel. Since the OEMs are likely to deliver seats at a rate close to 8% to 9% of the active fleet, the various airlines are expected to swap about 2.5% to 3% of their mounted capacity while fresh growth is expected to rest at around 5% of capacity, thus creating an oversupply of 1% to 2% of the active fleet. According to global aerospace sector industry analysis, Boeing and Airbus will measure back announced build-rates, especially in the wide-body sector, due to continued weakness in global economies, braking in global air traffic and low oil prices.
Lower Oil Prices Swaying Both Demand and Growth
It is no surprise that the persistent level of lower oil prices active since late 2014 has stimulated airline profitability. However, the industry analysts are wondering if the sustained depressed levels will displeasure short-term replacement demand primarily for the next generation aircraft. While long-run expectations have dropped dramatically, there are several signs of its influence on the active fleet, that is, there have been few signs of different airlines interested in the higher application of older generation aircraft, as per latest airline fleet schedules. On the same ground, it is broadly believed that lower oil prices will cause higher growth in air traffic since fuel savings decipher into lower fares.
Constant Gratitude of the U.S. Dollar
The aerospace sector is quite thankful towards the currency strength of the U.S. dollar. Since June 2014, the valued of the greenback has increased 20% in comparison to the currencies of the U.S.’s major trading partners. Moreover, it has also risen more than 50% in contrast to emerging-market currencies such as Russia and Brazil. Looking at the current trends, as the U.S. dollar acquires power, it will continue to develop challenges for non-U.S. players and small fluctuations in short-term rates might reduce demand.
The aerospace sector is growing every day, be it in terms of technology or market network. The inclusion of hybrid versions as well as massive jets are being considered and might soon be introduced to become a part of this thriving sector. The above-mentioned trends are shaping this sector to become more stable & flexible. It is a great insight for the readers to understand these points, as it enlightens them about the vibrant world of aerospace on a thicker canvas.