Younger, more efficient fleet
The commercial aviation market in the Commonwealth of Independent States (CIS) continues to grow as the region's airlines add new airplanes to their fleets. We are forecasting that the CIS will acquire 1,080 new airplanes, valued at US$110 billion, over the next 20 years. Of that total, 32 percent of the airplanes are in current backlog and expected to be delivered in the next five years.
The freighter market is also growing, with 60 new airplanes-as well as 130 converted airplanes-needed to meet demand in the region. More than 65 percent of the new freighters will be in the large category.
Economy recovering
The region's economies had moderate growth in 2010. GDP was up 4.2 percent, compared to the substantial decline of 4.1 percent in 2009. Overall, we expect the GDP to grow at an average annual rate of 3.4 percent over the next 20 years. Russia continues to be the largest driver of the economy, accounting for 70 percent of GDP in 2010, followed by Ukraine and Kazakhstan.
Passenger traffic remains strong-up 10.1 percent in the first quarter of 2011, according to Russia's Federal Air Transport Agency. Domestic passengers account for nearly 60 percent of this traffic. Over the next 20 years, air travel is expected to grow at an annual rate of 4.2 percent.
Potential for domestic growth
A projected 680 new single-aisle airplanes will be needed over the next 20 years to support anticipated domestic growth. Given the diverse geography of the region, airline travel is expected to become more attractive as liberalization occurs and personal incomes increase.
Market growth is being supported by government programs to upgrade airports. In Russia, there are plans to replace a runway at Moscow's Domodedovo airport in 2015. This will help the airport to reach its planned capacity of 50 million passengers.
The budget travel market is especially underserved in the CIS, because low-cost carriers serve only a small percentage of the domestic market. Currently, low-cost carriers account for less than 4 percent of domestic airline seats in the CIS, which is well below market share in most regions. With only 5 percent of Russia's population using air services, there are substantial opportunities for airlines to stimulate the market and win new customers.
