CAEP-SG/20082-IP/02

International Civil Aviation Organization INFORMATION PAPER

21/08/08 English only

COMMITTEE ON AVIATION ENVIRONMENTAL PROTECTION (CAEP)

STEERING GROUP MEETING Seattle, 22 to 26 September 2008 Agenda Item 3: Forecasting and Economic Analysis Support Group (FESG)
FESG CAEP/8 TRAFFIC AND FLEET FORECASTS (Presented by the FESG Rapporteurs)

SUMMARY
This report presents the FESG CAEP/8 traffic and fleet forecasts developed for passenger and cargo services over the period 2006 to 2036. It also outlines the methodology, the assumptions and the inputs used to develop the forecasts, including a description of the approach used to add a 10-year estimate to the 20-year based forecast, to develop the aircraft retirement curves and to conduct the sensitivity analyses around the forecasts.

1.

INTRODUCTION

1.1 At the CAEP/7 meeting held in Montreal (Canada) in February 2007, the FESG was assigned several tasks, including the task to produce a new traffic and fleet forecast over a 30-year time horizon1. Based upon the discussions that took place at that meeting, it was concluded that the forecast had to be available by the end of 2007 to allow for all the CAEP-related work requiring the FESG forecast to be completed within the CAEP/8 cycle. 1.2 At its first meeting held in Toulouse (France) in May 2007, the FESG has formalised a task group to carry out the task of developing the new forecast for CAEP/8: the Forecast Task Group (FTG). The FTG is composed of forecasting experts from ICAO, (aircraft and engine) manufacturers, government as well as airlines and airports representatives. 1.3 In preparation for the update of the forecast, the FESG had prepared in CAEP/7 a document outlining the methodology to be used to develop the new air traffic and fleet mix forecasts, including a
1

Ref: [CAEP/7 WP/68]. Final Report of CAEP/7 held in Montreal from 5 to 16 February 2007. Appendix F. Forecast and Economic Analysis FESG, Work Items, p. 4F-1. Task F.01. 1).

(59 pages) CAEPSG.20082.IP.02.3.en.doc

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description of the method to add a 10-year estimate to the 20-year base forecast, and to conduct a sensitivity analysis around the forecast. This document was submitted as an information paper to CAEP/72. The CAEP/8 traffic and fleet forecasts have been developed following mainly this methodology. 1.4 Past FESG forecasts3 were developed solely for the scheduled operations of commercial civil aviation aircraft4. In response to a request made by the MODTF5 to take into account non-scheduled operations as well, FESG has included charter flights in the development of the CAEP/8 forecast. However, other non-scheduled operations (that is general aviation and military operations) have not been included. 1.5 In addition, past FESG forecasts did not comprise aircraft with less than 20 seats. As a number of engines considered in the analysis of the NOX stringency options for CAEP/8 are fitted to these aircraft, at the Steering Group meeting held in Zurich (Switzerland) in November 2007, FESG was asked to reflect this category of aircraft in its analysis. The MODTF indicated that a forecast was needed for these aircraft in order for the environmental goals to be developed. 1.6 Furthermore, as significant growth has been observed in business aviation in recent years (in terms of number of flights) and sustained growth is expected in this segment of general aviation, FESG has also been asked to try to develop a forecast for business jets6. 1.7 Since the last Steering Group meeting7, the FESG has completed the development of the CAEP/8 traffic and fleet forecasts (both for passenger and cargo services). The forecasts cover an overall time horizon of 30 years. New aircraft retirement curves have been developed and sensitivity analyses were conducted around both the passenger and freighter forecasts. As requested, a forecast has also been developed for aircraft with less than 20 seats. Finally, to ensure the transparency and the reproducibility of the forecasts, the methodology, the inputs as well as the assumptions used in the development of the CAEP/8 traffic and fleet forecasts have been documented. 1.8 The forecast results as well as the assumptions and inputs used in the development of the FESG CAEP/8 forecasts were passed on to the MODTF at the beginning of the summer 2008. 1.9 The reconciliation8,9 of the 2006 baseline of the adjusted OAG (Official Airline Guide) database used in the development of the FESG CAEP/8 forecast and the MODTF Common Operations Database

3 4 5

7 8

Ref. Report of the FESG Forecast Task Group, [CAEP/7-IP/3] submitted to the CAEP/7 meeting held in Montreal (Canada), February 5-16, 2007. Forecasts developed in CAEP/4, CAEP/5 and CAEP/6. Defined as aircraft operated by airlines. Former WG2 TG2 (WG2 Operations, TG2 Modelling and Assessment) established as the Modelling and Database Task Force [MODTF] under the CAEP/8 structure. The use of the wording scheduled and non-scheduled operations of commercial civil aviation aircraft to describe the universe covered by the FESG forecast has generated some issues (at the Steering Group meeting held in Zurich, (Switzerland) in November 2007) as it is believed that some business aviation could fall under this definition of the universe. In the context of the FESG forecast, commercial civil aviation aircraft is defined as aircraft flown by airlines, while business aviation is considered, as in many countries, as a segment of general aviation. Held in Zurich (Switzerland), November 26-30, 2007. In response to a request made by the MODTF at the beginning of the CAEP/8 cycle, the FESG Forecast Task Group evaluated the possibility of using the MODTF Common Operations Database (COD) in the development of the CAEP/8 forecast (instead of the Official Airline Guide (OAG) database used in the development of past FESG forecasts). After reviewing a sample of the COD, the FESG FTG came to the conclusion that it would not be possible to make the CAEP/8 forecast available in early 2008 if the COD was to be used. Ref. [CAEPSG/20071-IP/1] Position Paper on the Use of the MODTF Common Operations Database in the Development of the FESG CAEP/8 Forecast. Information paper submitted at the Steering Group meeting held in Zurich (Switzerland) on November 26-30, 2007. As the Steering Group was concerned with the possible gaps and inconsistency that might be generated by the use of two databases (OAG/COD) the meeting agreed that it was very important to understand the differences resulting in the use of these two databases and identify areas where reconciliation was needed. The FESG and MODTF were therefore jointly tasked to examine the issue. Ref. [CAEP-SG/20071-SD/1] Summary of Discussions and Decisions of the First Meeting of the Steering Group, Monday, 26 November 2007, p.5. paras 4.7 and 4.8.

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(COD) has been initiated with the delivery of the forecast. FESG and MODTF have been working in coordination towards the completion of this task before the fall. 1.10 This report presents the FESG CAEP/8 traffic and fleet forecasts developed for passenger and cargo services over the period 2006 to 2036. The forecast results are summarized in Section 2. The methodology, assumptions and inputs used in the development of the forecasts are outlined in Section 3. For ease of reference a table of contents has been appended on page 4.

Ref. FESG CAEP/8 work programme. Task F.06. Examine and reconcile, if appropriate, the differences between the 2006 baseline data in the MODTF Common Operations Database (COD) and the baseline data in the FESG fleet forecast.

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1. INTRODUCTION 2. CAEP/8 TRAFFIC AND FLEET FORECASTS 2.3 2.4 Passenger Traffic Forecast Passenger Fleet Mix Forecast Passenger aircraft retirement curves Issue with the forecast for the 20-50 seat category Fleet growth and replacement Forecast of Aircraft with less than 20 seats Freighter Forecast Freighter traffic forecast Freighter fleet forecast

2.5 2.6

3. METHODOLOGY, INPUTS AND ASSUMPTIONS USED IN THE DEVELOPMENT OF THE FESG CAEP/8 FORECAST 3.4 Passenger Traffic Forecast Methodology used to develop the passenger traffic forecast Inputs and assumptions Process followed to develop the global air traffic (demand) forecast Sensitivity analysis around the passenger traffic forecast Passenger Fleet Mix Forecast Methodology used to develop the passenger aircraft fleet mix forecast Inputs and assumptions Process followed to develop the passenger aircraft fleet mix forecast Forecast of Aircraft with less than 20 Seats 2006 Year-end fleet Scope of coverage Forecasting approach Freighter Forecast Methodology used to develop the freighter forecast Inputs and assumptions Process followed to develop the freighter forecast Sensitivity analysis around the freighter forecast Definition of the route groups and geographical areas used in the development of the CAEP/8 forecast Assumptions underlying the passenger traffic forecasts by route group Detailed forecast of business jets Breakdown of the conversions and new freighter fleet Freighter forecast by stage length and trips/day Stored passenger aircraft as of August 2007 Airbus frequency/capacity split model Evolution of the turboprop fleet of aircraft with less than 20 seats operated by commercial air carriers, 1990-2007 List of FESG Forecast Task Group members

3.5

3.6

3.7

APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G APPENDIX H

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2.

CAEP/8 TRAFFIC AND FLEET FORECASTS

2.1 Air traffic and fleet forecasts form a basic requirement for the various analyses related to aviation environmental protection developed by CAEP working groups. Such analyses include the estimation of engine emissions and of the population around the world airports affected by aircraft noise (by noise level) as well as the economic and financial assessment of available policy options to limit or reduce the impact of international civil aviation noise and emissions. 2.2 The traffic and fleet forecasts developed by FESG in support to the work of CAEP working groups for CAEP/8 are presented in the following sections. The FESG CAEP/8 forecast, developed both for passenger and freight services, comprises the following elements: Passenger traffic forecast Passenger fleet forecast Forecast of aircraft with less than 20 seats Freighter traffic and fleet forecast 2.3 Passenger Traffic Forecast

2.3.1 The FESG consensus-based passenger traffic forecast is an unconstrained10 forecast that has been developed over a 20-year time horizon (from 2006 to 2026). A 10-year estimate has been added to the 20year base forecast to extend the forecast time horizon to year 2036 (to cover an overall time horizon of 30 years). 2.3.2 The passenger traffic forecast, expressed in terms of average annual growth of revenue passengerkilometres, has been developed for 23 major route groups. The main factors influencing the traffic growth on each of these route groups are described in Appendix B of this report. 2.3.3 The FESG CAEP/8 passenger traffic forecast pertains solely to the scheduled and chartered operations of commercial civil aviation aircraft, defined as aircraft operated by airlines. 2.3.4 For presentation purposes, the forecast has been broken down in two 10-year periods (plus the extension). A sensitivity analysis has also been conducted around the passenger traffic forecast providing high and low scenarios of passenger traffic growth. 2.3.5 The total international and domestic passenger traffic forecasts are presented in Table 1, expressed in terms of average annual growth rate, and in Table 2, in revenue passenger-kilometres. In the most likely scenario (central forecast), the world passenger traffic, expressed in revenue passengerkilometres, is expected to grow at the average annual growth rate of 4.9 per cent over the forecast period and at 4.4 per cent over the extension period. These growth rates fall to 4.2 per cent and 3.6 per cent respectively under the low scenario (pessimistic) and increase to 5.4 and 4.8 per cent respectively under the high scenario (optimistic). 2.3.6 Tables 3, 4 and 5 illustrate the detailed forecast by major route group for the most likely (central forecast), high (optimistic) and low (pessimistic) scenarios respectively.

10

That is, there are no physical or operational constraints that limit the growth of traffic at airports (implicitly assuming that sufficient investment is made over time in the infrastructure (e.g. airports and air traffic management systems), the technology, the operational measures, etc. to accommodate the traffic growth).

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Table 1. CAEP/8 Passenger Traffic Growth Rate Forecast [1] Central Forecast and Sensitivity Analysis Most likely, High and Low Scenarios Scenario / Sector High Scenario (Optimistic) Total International Total Domestic Global [International + Domestic] Most Likely Scenario (Central Forecast) Total International Total Domestic Global [International + Domestic] Low Scenario (Pessimistic) Total International Total Domestic Global [International + Domestic] 4.8 3.6 4.3 4.4 3.2 4.0 4.0 2.8 3.6 4.6 3.4 4.2 4.4 3.2 4.0 5.4 4.5 5.1 5.0 4.3 4.8 4.6 4.1 4.4 5.2 4.4 4.9 5.0 4.3 4.8 5.9 5.0 5.5 5.5 4.7 5.2 2006 -2016 2016 -2026 2026 -2036 [% growth] 5.0 4.4 4.8 5.7 4.9 5.4 5.5 4.7 5.2 2006 -2026 2006 -2036

Table 2. CAEP/8 Passenger Traffic Forecast Central Forecast and Sensitivity Analysis Most likely, High and Low Scenarios Revenue passenger-kilometres [RPKs] Scenario / Sector High Scenario (Optimistic) Total International Total Domestic Global [International + Domestic] Most Likely Scenario (Central Forecast) Total International Total Domestic Global [International + Domestic] Low Scenario (Pessimistic) Total International Total Domestic Global [International + Domestic]
[1] Average annual growth rate of revenue passenger-kilometres.

Actual 2006 2 682.6 1 588.4 4 271.0 2 682.6 1 588.4 4 271.0 2 682.6 1 588.4 4 271.0

CAEP/8 Forecast 2016 [billions] 4 744.9 2 585.0 7 329.8 4 551.3 2 474.3 7 025.6 4 276.8 2 257.2 6 533.9 8 075.8 4 098.8 12 174.6 7 416.1 3 782.5 11 198.6 6 559.6 3 091.3 9 650.9 13 216.7 6 314.1 19 530.8 11 592.6 5 657.2 17 249.8 9 672.6 4 074.3 13 747.0 2026 2036

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Table 3. CAEP/8 Passenger Traffic Growth Rate Forecast [1] Most likely scenario (Central forecast) Sector / Route Groups International 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. North Atlantic South Atlantic Mid Atlantic Transpacific Europe Asia/Pacific Europe Africa Europe Middle East North America South America North America Central America and Caribbean Middle East Asia / Pacific Intra Africa Intra Asia/Pacific Intra Europe Intra Latin America Intra Middle East Intra North America Other International Routes Total International Africa Asia/Pacific Europe Latin America Middle East North America Total Domestic 4.8 5.8 5.8 6.4 5.8 5.5 6.4 5.4 4.7 6.5 6.0 6.3 4.3 6.0 5.8 3.8 5.2 5.4 5.8 7.4 3.8 6.1 4.6 3.0 4.5 5.1 4.3 5.6 5.3 5.6 5.3 5.5 5.6 4.6 4.7 5.7 6.0 5.8 3.8 6.0 5.3 3.3 5.2 5.0 5.6 6.6 3.3 5.9 4.4 2.5 4.3 4.8 2006 -2016 2016 -2026 2026 -2036 [% growth] 3.8 5.3 4.8 4.9 4.8 5.5 4.9 3.9 4.7 5.0 6.0 5.3 3.3 6.0 4.8 2.8 5.2 4.6 5.3 5.9 2.8 5.6 4.1 2.0 4.1 4.4 4.5 5.7 5.5 6.0 5.5 5.5 6.0 5.0 4.7 6.1 6.0 6.0 4.0 6.0 5.5 3.5 5.2 5.2 5.7 7.0 3.5 6.0 4.5 2.7 4.4 4.9 4.2 5.6 5.2 5.6 5.2 5.5 5.6 4.6 4.7 5.7 6.0 5.7 3.7 6.0 5.2 3.2 5.2 5.0 5.6 6.6 3.2 5.9 4.4 2.4 4.3 4.8 2006 -2026 2006 -2036

Domestic 18. 19. 20. 21. 22. 23.

Global [International + Domestic]

[1] Average annual growth rate of revenue passenger-kilometres.

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Table 4. CAEP/8 Passenger Traffic Growth Rate Forecast [1] High Scenario (Optimistic) Sector / Route Groups International 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. North Atlantic South Atlantic Mid Atlantic Transpacific Europe Asia/Pacific Europe Africa Europe Middle East North America South America North America Central America and Caribbean Middle East Asia / Pacific Intra Africa Intra Asia/Pacific Intra Europe Intra Latin America Intra Middle East Intra North America Other International Routes Total International Africa Asia/Pacific Europe Latin America Middle East North America Total Domestic 5.0 6.5 5.9 6.5 6.5 6.3 8.1 5.6 5.0 7.0 6.9 6.4 4.7 6.4 7.4 4.8 5.2 5.9 5.9 7.5 4.5 6.7 5.6 3.6 5.0 5.5 4.5 6.3 5.4 5.7 6.0 6.3 7.3 4.9 5.0 6.2 6.9 6.0 4.2 6.4 6.9 4.3 5.2 5.5 5.7 6.7 4.0 6.5 5.4 3.1 4.7 5.2 2006 -2016 2016 -2026 2026 -2036 [% growth] 4.0 6.0 4.9 5.0 5.5 6.3 6.6 4.2 5.0 5.5 6.9 5.5 3.7 6.4 6.4 3.8 5.2 5.0 5.4 6.0 3.5 6.2 5.1 2.6 4.4 4.8 4.7 6.4 5.6 6.1 6.3 6.3 7.7 5.3 5.0 6.6 6.9 6.2 4.4 6.4 7.2 4.5 5.2 5.7 5.8 7.1 4.3 6.6 5.5 3.3 4.9 5.4 4.5 6.3 5.3 5.7 6.0 6.3 7.3 4.9 5.0 6.2 6.9 5.9 4.2 6.4 6.9 4.3 5.2 5.5 5.7 6.7 4.0 6.5 5.4 3.1 4.7 5.2 2006 -2026 2006 -2036

Domestic 18. 19. 20. 21. 22. 23.

Global [International + Domestic]

[1] Average annual growth rate of revenue passenger-kilometres.

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Table 5. CAEP/8 Passenger Traffic Growth Rate Forecast [1] Low Scenario (Pessimistic) Sector / Route Groups International 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. North Atlantic South Atlantic Mid Atlantic Transpacific Europe Asia/Pacific Europe Africa Europe Middle East North America South America North America Central America and Caribbean Middle East Asia / Pacific Intra Africa Intra Asia/Pacific Intra Europe Intra Latin America Intra Middle East Intra North America Other International Routes Total International Africa Asia/Pacific Europe Latin America Middle East North America Total Domestic 4.0 4.4 4.9 5.8 5.7 4.9 5.0 5.3 4.0 6.2 5.5 5.6 3.3 5.1 4.5 3.2 4.6 4.8 5.5 5.5 2.7 5.1 4.2 2.6 3.6 4.3 3.5 4.2 4.4 5.1 5.1 4.9 4.2 4.5 4.0 5.4 5.5 5.1 2.8 5.1 4.0 2.7 4.6 4.4 5.3 4.7 2.2 4.9 3.9 2.1 3.2 4.0 2006 -2016 2016 -2026 2026 -2036 [% growth] 3.0 3.9 3.9 4.3 4.7 4.9 3.5 3.8 4.0 4.7 5.5 4.6 2.3 5.1 3.5 2.2 4.6 4.0 5.0 4.0 1.7 4.6 3.7 1.6 2.8 3.6 3.7 4.3 4.7 5.5 5.4 4.9 4.6 4.9 4.0 5.8 5.5 5.3 3.1 5.1 4.2 3.0 4.6 4.6 5.4 5.1 2.5 5.0 4.0 2.3 3.4 4.2 3.5 4.2 4.4 5.1 5.2 4.9 4.2 4.6 4.0 5.4 5.5 5.0 2.8 5.1 3.9 2.7 4.6 4.4 5.3 4.7 2.2 4.9 3.9 2.1 3.2 4.0 2006 -2026 2006 -2036

Domestic 18. 19. 20. 21. 22. 23.

Global [International + Domestic]

[1] Average annual growth rate of revenue passenger-kilometres.

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2.4

Passenger Fleet Mix Forecast

2.4.1 The FESG CAEP/8 passenger fleet mix forecast has been developed over a 30-year time horizon (2006 to 2036) using the corporate model of Airbus, specially calibrated with assumptions and inputs provided by the FESG11. 2.4.2 The passenger traffic forecast is an input in the development of the fleet mix forecast. A number of key assumptions have also been made regarding among others, the generic seat categories, the evolution of the load factors and the average aircraft utilization over the forecast time horizon. 2.4.3 The FESG CAEP/8 passenger fleet mix forecast has been developed for nine (9) generic seat categories: 20-50, 51-100, 101-150, 151-210, 211-300, 301-400, 401-500, 501-600, and 601-650. Aircraft with less than 20 seats have been treated separately. 2.4.4 A maximum load factor has been established for each of the 23 defined route groups. It is expected that load factors will continue to increase as air carriers enhance the management of the capacity offered. The overall maximum has been set at 85 per cent. 2.4.5 The average daily aircraft utilization of the world scheduled commercial air carriers in the year 2006 is estimated at 9.4 hours. This average utilization had been increasing in the past but not steadily. It has been assumed that air carriers would continue to increase their aircraft utilization by 5 per cent by the year 2026. The pace of improvement will however flatten out over the 2026-2036 period at the end of which the average aircraft utilization is expected to be 6 per cent higher than the 2006 average. 2.4.6 The CAEP/8 passenger fleet mix forecast by seat category is presented in Table 6 for the most likely scenario. The fleet of passenger aircraft is expected to grow by an average annual rate in the range of 3.0 to 3.2 per cent between 2006 and 2036. As a result, the size of fleet will almost double by 2026 and the size of the 2036 fleet is expected to be more than 2.5 times that of 2006.
Table 6. CAEP/8 Passenger Fleet Mix Forecast by Seat Category Most Likely Scenario (Central Forecast) Seat category 20-50 [1] 51-100 101-150 151-210 211-300 301-400 401-500 501-600 601-650 Total 2006 4 053 1 813 5 896 3 984 2 003 824 159 41 18 773 2016 2 975 4 152 7 542 6 294 3 040 1 314 405 120 65 25 907 2026 3 042 5 697 9 309 8 593 4 446 2 048 950 307 394 34 786 2036 3 643 7 650 11 445 11 375 6 499 3 261 1 723 938 969 47 503

[1] The issue with the decline observed in this seat class is discussed in paragraph 2.4.11.

11

In 2007, Airbus has extended the capabilities of its model to convert traffic into a fleet over a 30-year time horizon. Therefore there was no need to develop an approach (based on expert judgment) to extend the fleet forecast time horizon.

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2.4.7 Although the fastest growth is expected to be observed in the fleet of aircraft with more than 400 seats, their share in the total fleet (in terms of number of aircraft) will be about 5 and 7.5 per cent in 2026 and 2036 respectively. The lowest growth is expected to be in the 101-150 seat category that will still represent 27 and 24 per cent of the total in 2026 and 2036 respectively. The fleet of aircraft in the 51-100 seat category is expected to grow at an average annual rate of about 5 per cent up to 2036, making the 2050 seat-category shrink slightly from its 2006 size. Passenger Aircraft Retirement Curves 2.4.8 Four (4) retirement curves have been developed to project the retirement of the in-service passenger aircraft fleet. One for each of the following technologies: Newer generation aircraft (Narrow-body two person flight crew aircraft) Wide body aircraft (excluding MD-11 aircraft) Boeing 707 and 727 aircraft [B707/B727]12 McDonnell Douglas MD-11 aircraft 2.4.9 These retirement curves are shown in Figure 1.
Figure 1. CAEP/8 FESG Passenger Aircraft Retirement (Survivor) Curves
110%

Percent Remaining in Passenger Service

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 5 10 15 20 25 30 35

Narrow Body aircraft (2-man flt crew) Wide Body Aircraft (Less MD-11) B707 / B727 MD-11

40

45

50

Aircraft Age (years)

2.4.10 Figure 1 shows that the wide-body aircraft are retired from passenger service faster than the narrow-bodies. About 60 per cent of the narrow-body aircraft remain in passenger service for 30 years compared to a little more than 10 per cent for the wide-bodies. Although, the Boeing 707 and 727 average life in passenger service is longer than that of the other wide-bodies, it is shorter than that of the narrowbodies. For simplicity purposes and due to their declining number, it has been assumed that the retirement of MD-11 of passenger service was following almost a linear trend. Issue with the forecast for the 20-50 seat category 2.4.11 In Table 6, there is an abrupt decline in the number of aircraft in the 20-50 seat category from 2006 to 2016, from 4 053 to 2 975 aircraft. This can be explained by the following two factors:

12

Narrow body three person flight crew aircraft.

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The use of aircraft in the 20-50 seat category by air carriers is limited. As traffic grows, air carriers switch to bigger aircraft as reflected in the fast growth of the 51-100 seat category. The existing fleet remained in passenger service for a longer period of time than usual, as illustrated in Figure 2 due to the non-availability of replacement aircraft.13
Figure 2. Retirement of the 20-50 seat-category aircraft

110% 100% 90%

Narro w Body aircraft (2 -man flt crew ) Wide Body Aircraft (Less MD -11) B707 / B727 MD -11 Russian Built TP/Jet aircraft Aircraft with 20-50 seats

Percent Remaining in Passenger Service

80% 70% 60% 50% 40% 30% 20% 10% 0%

0 5 10 15 20 25 30 35 40 45 50

Aircraft Age (years)

Fleet growth and replacement 2.4.12 The number of passenger aircraft remaining in service over the forecast time horizon was determined by applying the retirement curves to the year-end 2006 in-service fleet. Figure 3 illustrates the results obtained. 2.4.13 A total of about 11 500, 26 300 and 44 500 new aircraft will be needed by 2016, 2026 an 2036 respectively, between 60 and 65 per cent of which will be for growth and the remainder for replacement. This represents an average annual number of new aircraft of about 1 150, 1 480 and 1 815 aircraft for each decade respectively. 2.4.14 Of the year-end 2006 fleet of aircraft in service, about 77, 45 and 16 per cent are expected to remain in passenger service in the 2016, 2026 and 2036 respectively.

13

Although it was initially suggested to develop a specific retirement curve for aircraft in this seat category to address the issue, it did not turn out to be feasible. On the one hand, aircraft retirement curves are developed by type of aircraft (technologies) not by seat category. On the other hand, the dispersion of the observations (data on retirements of aircraft in the 20-50 seat category) is too wide to allow for a curve to be fitted into the scatter plot (Ref. Figure 2). Therefore, the decision was made not to make an adjustment to the retirement curves, simply to note the issue.

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Figure 3. Passenger Aircraft Fleet Forecast Growth and Replacement Central Forecast

Number of passenger aircraft

50,000 45,000 40,000 35,000 30,000

25 906 34 787

47 503

28 730 16 014

Growth

25,000
7 133

20,000 15,000 10,000 5,000 0

18 773 14 416 8 480 3 037 4 357 10 293 15 736

Replacement

Retained in service

2006

2016

2026

2036

2.5

Forecast of Aircraft with less than 20 seats

2.5.1 FESG was asked to develop a forecast for aircraft with less than 20 seats. However, due to the lack of information available on the operations of these aircraft, it has not been possible to develop a forecast at the same level of details as for the other seat categories. 2.5.2 The forecast was developed over the same time horizon as the other forecasts (2006 to 2036) for the number of departures, hours flown and fleet in service. 2.5.3 FESG had initially considered developing a forecast for the following two types of aircraft: Turboprops and piston aircraft
(aircraft operated by airlines commercial civil aviation operations)

Business jets (business aviation) 2.5.4 Due to the lack of information on aircraft with less than 20 seats used for commercial civil aviation operations (i.e. aircraft operated by airlines) and the non-availability of global forecasts for turboprop and piston aircraft, it has not been possible to produce a forecast for these aircraft. 2.5.5 The impact of excluding these aircraft from the scope of coverage of the forecast is not believed to be critical (due to their declining number and typically short-range operations) and their contribution to global emissions, not likely to be significant. 2.5.6 The FESG business jet forecast has been developed for 6 regions, assuming an average annual aircraft utilization of 400 hours and average trip length of 1.3 hours per aircraft movement.

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The fleet forecast for business jet aircraft is presented in Table 714.
Table 7. CAEP/8 Forecast of aircraft with less than 20 seats Forecast of Business Jet Aircraft - Fleet in service Regions Africa Asia/Pacific Europe Middle East Latin America and Caribbean North America Total 2006 248 390 1 736 221 1 178 10 273 14 046 2016 429 980 3 631 296 2 190 12 872 20 398 2026 807 2 711 7 100 556 4 117 17 642 32 933 2036 1 445 5 334 11 566 906 6 706 23 709 49 666

2.5.8

Freighter Forecast

2.5.9 The freighter traffic and fleet forecasts were developed using a modified version of the methodology Boeing uses to produce its own corporate forecast. The development of the freighter forecast is a process that is reliant on the output of the passenger fleet mix forecast15. Freighter traffic forecast 2.5.10 The FESG CAEP/8 freighter traffic forecast has been developed over the same time horizon as the passenger forecast (from 2006 to 2036). High and low scenarios of growth have also been developed. 2.5.11 In contrast to the passenger forecast (developed by route groups), the freighter forecast has been developed for 6 regions16. The forecast, expressed in revenue tonne-kilometres, is presented in Table 8.
Table 8. CAEP/8 Freighter Traffic Forecast by Region of domiciliation[1] Most Likely Scenario (Central Forecast) Revenue Tonne-Kilometres [millions] Regions Africa Europe Middle East Latin America North America Asia Total 2006 3 321 46 833 9 834 5 035 61 315 58 553 184 890 2016 6 107 75 681 21 791 9 258 105 298 121 865 340 000 2026 10 823 120 115 38 769 16 408 176 068 240 378 602 560 2036 19 657 204 542 69 597 29 008 305 167 434 586 1 062 557

[1] Cargo carried in passenger services lower-hold and freighter services main deck.

14

15 16

The detailed forecast of business jet aircraft (less than 20 seats), covering the flight hours and the number of aircraft movements is appended as Appendix C. That is, for the number of passenger aircraft available for conversion into freighters as well as the aircraft cargo hold capacity. The freighter traffic forecast by stage length and trips per day for the central forecast, high and low scenarios is appended in Appendix D.

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2.5.12 The freighter traffic is expected to grow at an average annual growth of 6.0 per cent from 2006 to 2036, and at a rate of 5.4 and 6.8 per cent for the low and high scenarios, respectively. Figure 4 illustrates the growth of the world air cargo traffic for the most likely (central forecast), high (optimistic) and low (pessimistic) scenarios.
Figure 4. Freighter Traffic Forecast, 2006-2036
Millions of Revenue Tonne-Kilometres Low scenario High scenario Base forecast

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000 Historical 5.6% growth per year 200,000 Forecast (Base) 6.1% growth per year over 20 years 6.0% for 30 years

Freighter fleet forecast 2.5.13 The CAEP/8 freighter forecast was developed using essentially the same seating categories (in terms of aircraft size) as for the passenger forecast17. Assumptions have been made in regards to the load factors and the retirement age of freighter aircraft. 2.5.14 The load factor of passenger aircraft lower-hold has been established at 33% and at 50-70% of the main deck for freighter. 2.5.15 The average retirement age of freighters (express and general freighters combined) has been established at 40 years. 2.5.16 Tables 9 and 10 present the freighter fleet forecast for the most likely scenario by seat category and by region of domiciliation, respectively.

17

Aircraft within the less than 50 seat configuration (in terms of aircraft size) have been amalgamated into one seat category. In addition, it should be noted that no freighter forecast was developed for aircraft having more than 600 seats.

19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12 20 14 20 16 20 18 20 20 20 22 20 24 20 26 20 28 20 30 20 32 20 34 20 36

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Table 9. CAEP/8 Freighter Fleet Mix Forecast by Seat Category Most Likely Scenario (Central Forecast) Seat category <50 50-100 101-150 151-210 211-300 301-400 401-500 501-600 Total 2006 1 007 383 251 481 925 197 159 3 403 2016 1 035 445 425 640 1 107 371 320 25 4 368 2026 1 176 558 630 905 1 321 554 509 68 5 721 2036 1 333 793 827 1 264 1 596 839 786 184 7 622

Table 10. CAEP/8 Freighter Fleet Mix Forecast by Region of Domiciliation Most Likely Scenario (Central Forecast) Region Africa Asia Europe Latin America Middle East North America Total 2006 295 331 1 024 146 82 1 526 3 403 2016 403 602 1 137 221 188 1 817 4 368 2026 572 963 1 404 332 311 2 139 5 721 2036 886 1 574 1 721 514 444 2,483 7 622

Retained/converted and new freighter fleet breakdown 2.5.17 The freighter fleet is composed of retained aircraft, new aircraft and passenger aircraft that have been converted into freighter. Figure 5 illustrates the distribution of aircraft retained/converted from passenger services and the new freighters. It is projected that a total of about 1 160 and 2 100 new freighter aircraft will be delivered up to the years 2026 and 2036, respectively. A total of 3 170 and 6 300 aircraft will be converted from passenger services, over the same periods respectively.

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Figure 5. Retained/converted and new freighter fleet breakdown

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3.

METHODOLOGY, INPUTS AND ASSUMPTIONS USED IN THE DEVELOPMENT OF THE FESG CAEP/8 FORECAST

3.1 The development of the FESG forecast generates two main products: the production of a traffic forecast (demand side) for the whole world and of a fleet forecast (supply side), both for passenger and cargo services. 3.2 To ensure the transparency and the reproducibility of the forecasts, every attempt has been made to fully document and describe the inputs and various steps leading to the elaboration of the forecasts, that is the data sources used, the underlying assumptions, the methodology and the results. 3.3 The inputs and assumptions used and the process followed to produce the traffic and fleet forecasts for CAEP/8, both for passenger and cargo services, are outlined in details in the following sections. 3.4 Passenger Traffic Forecast Methodology used to develop the passenger traffic forecast 3.4.1 The FESG passenger traffic forecast is a consensus forecast, developed from forecasts produced by ICAO and the industry18. It is the agreed results of discussions and debates among the forecasting experts within FESG. 3.4.2 In its previous forecast, FESG did not use an econometric air transport demand model. The development of such a model to replace the current consensus approach was not considered an effective use of the groups limited resources, considering the level of effort and the additional resources that would be required. Past experience has shown that results obtained from this consensus method were consistent with actual experience to warrant using this approach. 3.4.3 In the development of the passenger traffic forecast for CAEP/8, FESG has therefore used a similar consensus approach. 3.4.4 The following sections describe the inputs and assumptions required, and the process followed to develop the global air traffic forecast (demand for passenger services) for CAEP/8. Inputs and assumptions 3.4.5 The development of the global air passenger traffic forecast requires a number of inputs that have been either derived through a consensus process within FESG, obtained from existing databases or from ICAO and (aircraft and engine) manufacturers. That is, Base year Regions and/or route groups Base year traffic data by route group Forecasts of passenger traffic growth rates from other sources Forecast time horizon Method to add a ten-year estimate to the consensus-based twenty-year forecast
18

ICAO forecast of the global demand for air services; Industry aircraft and engine manufacturers forecasts of passenger and freight traffic growth rates for the world and major route groups.

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Forecast break down and extension 3.4.6 Base year. The base year used in the development of the CAEP/8 forecast is the year 2006. It has been determined, through a consensus process within FESG, based on the availability of the year-end data at the moment the forecast was produced and the representational character of the most recent year (for which year-end data was available) in terms of aviation industry operations. 3.4.7 Regions and/or route groups. In the development of previous FESG forecasts, twenty-two (22) route groups were used: sixteen (16) major international route groups and six (6) major domestic regional route groups. As significant growth has been observed on the route group Other International Routes, the decision was made to further break down this route group to isolate the international sub-route for which the strongest growth in traffic had been observed. As a result, the international sub-route Middle East Asia / Pacific was isolated as a new major international route. 3.4.8 The CAEP/8 passenger traffic forecast (measured in revenue passenger-kilometres) has therefore been developed for twenty-three (23) major route groups: seventeen (17) international route groups and six (6) domestic regional route groups. The definitions19 of these route groups are the ones used by ICAO.

International 1. North Atlantic 2. South Atlantic 3. Mid Atlantic 4. Transpacific 5. Europe Asia/Pacific 6. Europe Africa 7. Europe Middle East 8. North America South America 9. North America Central America and Caribbean 10. Middle East Asia / Pacific 11. Intra Africa 12. Intra Asia/Pacific 13. Intra Europe 14. Intra Latin America 15. Intra Middle East 16. Intra North America 17. Other International Routes

Domestic

18. 19. 20. 21. 22. 23.

Africa Asia/Pacific Europe Latin America Middle East North America

3.4.9 Base year traffic data by route group. The passenger traffic (measured in revenue passengerkilometres [RPK]) for the base year (2006) for each defined route group has been derived by applying the average passenger load factors20 by route group provided by ICAO (for that year) to the available seatkilometres [ASK] retrieved from the adjusted OAG database 21. 3.4.10 The base year passenger traffic by major route group, as well as the available seat-kilometres, used in the development of the CAEP/8 traffic forecast are presented in Table 11.

19 20 21

The definition of the route groups is appended in Appendix A. The aircraft load factor is the ratio of the revenue passenger-kilometres to the available seat-kilometres on a given flight. Please refer to paragraph 3.5.5 and those following for further information on the adjusted OAG database.

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Table 11. Base Year Passenger Traffic and Available Seat-kilometres 2006 Sector / Route Groups International 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. North Atlantic South Atlantic Mid Atlantic Transpacific Europe Asia/Pacific Europe Africa Europe Middle East North America South America North America Central America and Caribbean Middle East Asia / Pacific Intra Africa Intra Asia/Pacific Intra Europe Intra Latin America Intra Middle East Intra North America Other International Routes Total International Actual RPK [billions] 454.4 82.9 58.6 312.3 371.2 129.4 73.2 49.9 93.9 108.9 19.5 304.4 484.5 27.5 19.6 35.0 57.4 2 682.6 563.8 98.4 72.9 391.3 461.1 173.0 104.0 66.3 127.7 140.9 32.7 427.0 710.4 39.3 29.6 49.3 75.5 3 563.3 ASK

Domestic 18. Africa 19. Asia/Pacific 20. Europe 21. Latin America 22. Middle East 23. North America Total Domestic Global [International + Domestic]
RPK Revenue passenger-kilometres. ASK Available seat-kilometres.

24.5 396.2 180.2 77.5 19.7 890.2 1 588.4 4 271.0

33.2 546.5 259.3 117.7 25.3 1 122.5 2 104.5 5 667.8

3.4.11 Forecasts of passenger traffic growth rates from other sources. Forecasts of passenger traffic growth rates by the twenty-three (23) major route groups were obtained from ICAO and (aircraft and engine) manufacturers (that is, Airbus, Boeing, General Electric, Pratt & Whitney and Rolls-Royce)22. 3.4.12 Forecast time horizon and methodology to add a ten-year estimate to the twenty-year base forecast. At the end of the CAEP/6 cycle, the (adequacy/relevance of) decision to develop the CAEP forecast over a 20-year time horizon was questioned. It was argued that although the costs resulting from the implementation of new stringencies could be fully taken into account over a 20-year time horizon, it

22

Manufacturers specially rearranged their market forecasts to tally with the twenty-three (23) ICAO route groups.

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was not the case for the environmental benefits, as the latter take more time to realise. It was therefore suggested to extend the forecast time horizon by an additional 10-year to fully capture these benefits. 3.4.13 However, practical considerations related to the approach used to develop the consensus traffic forecast restrict the ability of the FESG to produce a 30-year forecast. The different forecasts from which the consensus traffic forecast is drawn all have a 20-year time horizon. This time horizon cannot be easily changed by the different organizations producing the forecasts (i.e. ICAO and aircraft and engine manufacturers) due to cost and data considerations. It was therefore decided to maintain the time horizon of 20 years for the base forecast and to develop an approach to estimate an additional 10-year extension, based on professional judgment. 3.4.14 Forecast time horizon and extension. The FESG CAEP/8 consensus-based traffic forecast was developed over a 20-year time horizon: from 2006 to 2026, and a ten-year estimate has been developed to extend the forecast time horizon to year 2036. 3.4.15 Forecast break down and extension. For presentation purposes, it has been decided to break down the 20-year forecast time horizon into two ten-year periods: 2006-2016 and 2016-2026. The forecast extension covers the period 2026-2036. Results of the FESG CAEP/8 forecast are therefore presented for the years 2006, 2016, 2026 and 2036. 3.4.16 Methodology to add a ten-year estimate to the twenty-year base forecast. Several approaches (based on professional judgment) were considered to add a ten-year estimate to the 20-year base passenger traffic forecast, such as: Adopt for the 10-year extension an approach similar to the one used for the 20-year base forecast, that is to develop consensus-based traffic forecast growth rates by route group (for the period 2026-2036) Extend the forecast time horizon based on GDP growth ratios. 3.4.17 While the first approach did not turn out to be feasible due to the unavailability of traffic forecasts by route group over the extension period23, the second approach was tested and was not found to generate sensible results, as there was no maturity effect observed over time. 3.4.18 The decision was therefore made to apply a certain decline, in terms of percentage points, to the consensus-based traffic growth rate forecast on a given route group to reflect the maturity effect. This decline has been established on the basis of the expected evolution of the market over time, that is, on its status (over the period 2006-2026) and the anticipation of how it will mature (over the period 2026-2036). This decline has been applied to each decade (2006-2016, 2016-2026 and 2026-2036). 3.4.19 The table below shows the decline, in terms of percentage point, that has been applied by route group to each ten-year period as well as to the forecast extension.

23

Since neither ICAO nor manufacturers produce forecast extending beyond 20 years.

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Percentage point of decline [Maturity effect] 0 0.25 0.50 0.75

Status of the market Period: 2006-2026 Flat No change expected Developing market Maturing market Developing market

Expected evolution Period: 2027-2036

Developing market Maturing market Maturing market

3.4.20 Applying these percentage points of decline to the consensus-based traffic growth rates (both for the base forecast and the extension) by route group has allowed to introduce a variation in the maturity factor from one decade to the other and to reduce gradually the traffic growth over the forecast time horizon (and the 10-year extension). 3.4.21 The decline, in terms of percentage points, applied to each individual route group over each tenyear period (including the forecast extension) are presented in Table 12.
Table 12. Passenger Traffic Forecast. Forecast Breakdown and Extension to Year 2036 Percentage point of decline applied by route group to each ten-year period Status of the market Sector / Route Groups International 1. North Atlantic 2. South Atlantic 3. Mid Atlantic 4. Transpacific 5. Europe Asia/Pacific 6. Europe Africa 7. Europe Middle East 8. North America South America 9. North America Central America and Caribbean 10. Middle East Asia / Pacific 11. Intra Africa 12. Intra Asia/Pacific 13. Intra Europe 14. Intra Latin America 15. Intra Middle East 16. Intra North America 17. Other International Routes Domestic 18. Africa 19. Asia/Pacific 20. Europe 21. Latin America 22. Middle East 23. North America 2006-2026 2026-2036 Percentage point of decline [Maturity effect]

Maturing Maturing Developing Developing Maturing Maturing Developing Maturing Maturing Maturing No Change Developing Maturing Developing Maturing No Change Developing Maturing No Change Maturing Maturing Maturing Maturing No Change Maturing Maturing Maturing Maturing No Change

0.50 0.25 0.50 0.75 0.50 0.00 0.75 0.75 0.00 0.75 0.00 0.50 0.50 0.00 0.50 0.50 0.00

Developing Developing Maturing Developing Developing Maturing

Developing Maturing Maturing Developing Developing Maturing

0.25 0.75 0.50 0.25 0.25 0.50

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Process followed to develop the global air traffic (demand) forecast 3.4.22 A consensus process was used within FESG to define the traffic growth rates on major route groups over the horizon of the forecast, through the following steps: 1. 2. 3. 4. 5. Estimate historical growth rates on each defined route group Collect forecasts for each route group from various forecasting sources Summarize forecasts and determine maximum and minimum growth for each route group Discuss the forecast for each route group as well as the main underlying assumptions Agree on a consensus forecast for each route group covering the forecast time horizon including the intermediate years 6. Determine the resulting global traffic forecast 7. Document the forecast 3.4.23 The consensus-based traffic growth rate forecasts by major route group are presented in Table 13. Sensitivity analysis around the passenger traffic forecast 3.4.24 This section describes how the sensitivity analysis around the consensus-based passenger traffic forecast was conducted. 3.4.25 The process by which the consensus traffic forecast is developed limits the number of inputs and/or assumptions that can be directly varied to perform a sensitivity analysis. Many of these key inputs and assumptions (such as GDP, fuel price, etc.) are imbedded in the different forecasts used in the consensus process. 3.4.26 After reviewing all the critical assumptions that have an influence on the forecast and evaluating the practicability of varying them, the FESG came to the conclusion in CAEP/724 that the sensitivity analysis around the forecast was to be conducted by varying the assumption on the passenger traffic growth rates by major route. Varying these growth rates assumes an implicit variation of the exogenous key variables (e.g. GDP, yield, etc.) leading to these growth rates. 3.4.27 The sensitivity analysis was conducted at the time the consensus-based traffic forecast was developed. It was decided to do low and high scenarios using respectively for each defined route group, the minimum and maximum traffic growth rate forecasts used in the development of the consensus-based traffic forecast. It should be noted that although the resulting distribution is not symmetrical, it reflects the span of views (most pessimistic vs. most optimistic) expressed by forecasters regarding future traffic growth on each market. 3.4.28 Figure 1 shows for each route group the spread of the low and high scenarios with respect to the central forecast. The traffic growth rates by route group used to conduct the sensitivity analysis around the passenger traffic forecast are reported in Table 14.

24

Ref. Report of the FESG Forecast Task Group, [CAEP/7-IP/3] submitted to the CAEP/7 meeting held in Montreal (Canada), February 5-16, 2007.

CAEP-SG/20082-IP/02
Table 13. CAEP/8 Passenger Traffic Growth Rate Forecast

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Revenue Passenger-Kilometres Sector / Route Groups International 1. North Atlantic 2. South Atlantic 3. Mid Atlantic 4. Transpacific 5. Europe Asia/Pacific 6. Europe Africa 7. Europe Middle East 8. North America South America 9. North America Central America and Caribbean 10. Middle East Asia / Pacific 11. Intra Africa 12. Intra Asia/Pacific 13. Intra Europe 14. Intra Latin America 15. Intra Middle East 16. Intra North America 17. Other International Routes Total International Domestic 18. Africa 19. Asia/Pacific 20. Europe 21. Latin America 22. Middle East 23. North America Total Domestic Global [International + Domestic] Actual 2006 454.4 82.9 58.6 312.3 371.2 129.4 73.2 49.9 93.9 108.9 19.5 304.4 484.5 27.5 19.6 35.0 57.4 2 682.6 24.5 396.2 180.2 77.5 19.7 890.2 1 588.4 4 271.0 CAEP/8 Forecast 2016 2026 [billions] 1 097.2 723.1 146.1 251.5 102.5 171.2 579.4 1 002.6 649.2 1 083.2 221.0 377.6 135.8 234.8 84.4 132.8 148.6 235.2 204.0 356.0 34.9 62.5 558.2 976.3 734.7 1 061.9 49.3 88.3 34.2 57.0 50.6 69.7 95.3 158.2 4 551.3 7 416.1 43.3 807.3 260.2 140.6 31.0 1 191.9 2 474.3 7 025.6 74.5 1 533.8 358.4 248.9 47.6 1 519.3 3 782.5 11 198.6 2036

CAEP/8 Passenger Traffic Growth Rate Forecast 2006 -2016 4.8 5.8 5.8 6.4 5.7 5.5 6.4 5.4 4.7 6.5 6.0 6.3 4.3 6.0 5.8 3.8 5.2 5.4 5.8 7.4 3.7 6.1 4.6 3.0 4.5 5.1 2016 -2026 4.3 5.6 5.3 5.6 5.3 5.5 5.6 4.6 4.7 5.7 6.0 5.8 3.8 6.0 5.2 3.3 5.2 5.0 5.6 6.6 3.3 5.9 4.4 2.5 4.3 4.8 2026 -2036 [% growth] 3.8 5.3 4.7 4.9 4.7 5.5 4.9 3.9 4.7 5.0 6.0 5.3 3.2 6.0 4.8 2.8 5.2 4.6 5.3 5.9 2.8 5.6 4.1 2.0 4.1 4.4 2006 -2026 4.5 5.7 5.5 6.0 5.5 5.5 6.0 5.0 4.7 6.1 6.0 6.0 4.0 6.0 5.5 3.5 5.2 5.2 5.7 7.0 3.5 6.0 4.5 2.7 4.4 4.9 2006 -2036 4.3 5.6 5.3 5.6 5.2 5.5 5.6 4.6 4.7 5.7 6.0 5.7 3.8 6.0 5.2 3.3 5.2 5.0 5.6 6.6 3.2 5.9 4.4 2.5 4.3 4.8

1 586.3 422.8 272.3 1 613.8 1 722.6 645.0 377.9 195.1 372.3 578.5 112.1 1 628.6 1 462.0 158.4 90.7 91.4 262.7 11 592.6 125.3 2 715.8 470.3 430.5 71.3 1 844.0 5 657.2 17 249.8

Traffic growth rates [%]

3.5 5.5 7.5 3 2.5 4 6 8 5 4.5 7 6.5 2 North Atlantic South Atlantic Mid Atlantic Transpacific Europe <-> Asia/Pacific Europe <-> Africa Europe <-> Middle East North America <-> South America North America <-> Central America/Carib. Middle East<->Asia/Pacific Intra Africa Intra Asia/Pacific Intra Europe Intra Latin America Intra Middle East Intra North America Other International Routes Africa Asia/Pacific Europe Latin America Most likely Middle East North America Optimistic Pessimistic

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Figure 1. Consensus-based Passenger Traffic Forecast. Central Forecast and Sensitivity Analysis Central forecast [Most likely], Low [Pessimistic] and High [Optimistic] scenarios

Route Groups

CAEP-SG/20082-IP/02

CAEP-SG/20082-IP/02

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Table 14. Consensus-based Passenger Traffic Forecast. Sensitivity Analysis Scenarios. Sensitivity Analysis Central 2006 -2026 2006 -2036

Low Scenario Sector / Route Groups International 1. North Atlantic 2. South Atlantic 3. Mid Atlantic 4. Transpacific 5. Europe Asia/Pacific 6. Europe Africa 7. Europe Middle East 8. North America South America 9. North America Central America and Caribbean 10. Middle East Asia / Pacific 11. Intra Africa 12. Intra Asia/Pacific 13. Intra Europe 14. Intra Latin America 15. Intra Middle East 16. Intra North America 17. Other International Routes Total International Domestic 18. Africa 19. Asia/Pacific 20. Europe 21. Latin America 22. Middle East 23. North America Total Domestic Global [International + Domestic] 2006 -2026 2006 -2036

High Scenario 2006 -2026 2006 -2036

3.7 4.3 4.7 5.5 5.4 4.9 4.6 4.9 4.0 5.8 5.5 5.3 3.1 5.1 4.2 3.0 4.6 4.6 5.4 5.1 2.5 5.0 4.0 2.3 3.4 4.2

3.5 4.2 4.4 5.1 5.1 4.9 4.2 4.5 4.0 5.4 5.5 5.0 2.8 5.1 3.9 2.7 4.6 4.4 5.3 4.7 2.2 4.9 3.9 2.0 3.2 4.0

4.5 5.7 5.5 6.0 5.5 5.5 6.0 5.0 4.7 6.1 6.0 6.0 4.0 6.0 5.5 3.5 5.2 5.2 5.7 7.0 3.5 6.0 4.5 2.7 4.4 4.9

4.2 5.6 5.2 5.6 5.2 5.5 5.6 4.6 4.7 5.7 6.0 5.7 3.7 6.0 5.2 3.2 5.2 5.0 5.6 6.6 3.2 5.9 4.4 2.4 4.3 4.8

4.7 6.4 5.6 6.1 6.3 6.3 7.7 5.2 2.0 6.6 6.9 6.2 4.4 6.4 7.2 4.5 6.5 5.7 5.8 7.1 4.3 6.6 5.5 3.3 4.8 5.4

4.4 6.3 5.3 5.7 6.0 6.3 7.3 4.9 5.0 6.2 6.9 5.9 4.2 6.4 6.9 4.2 6.5 5.5 5.7 6.7 4.0 6.5 5.4 3.0 4.7 5.2

3.5

Passenger Aircraft Fleet Mix Forecast Methodology used to develop the passenger aircraft fleet mix forecast

3.5.1 The CAEP/8 passenger fleet mix forecast was developed using the corporate model of Airbus, specially calibrated with the parameters (i.e. data, inputs and assumptions) provided by the FESG. 3.5.2 At the FESG meeting held in Montreal (Canada) in February 2006, Airbus representatives indicated that the manufacturer had decided to devote the resources necessary to extend the capabilities of its fleet mix forecast model to produce a 30-year forecast. This model

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has been made available to CAEP and has provided FESG with a tool to convert traffic into a fleet over a 30-year period for the development of the CAEP/8 fleet mix forecast. 3.5.3 The following sections describe the inputs and assumptions used and the process followed to develop the passenger aircraft fleet mix forecast (supply of passenger services) for CAEP/8. Inputs and assumptions 3.5.4 The development of the passenger aircraft fleet mix forecast requires a number of inputs that have been either defined through a consensus process within the FESG, obtained from existing databases or from ICAO and (aircraft and engine) manufacturers: Base year operational data by route group Forecast time horizon Traffic demand forecast Generic seat categories Average load factor assumptions Average aircraft utilization assumptions Productivity improvement assumptions Parked aircraft Backlog Passenger aircraft retirement/survival curves 3.5.5 Base year operational data by route group. In the development of its previous forecasts, FESG has used the Official Airline Guide (OAG) as the primary source of information on the fleet of aircraft currently in service and their operations. 3.5.6 The OAG provides detailed flight information for the major airlines operating commercial scheduled (passenger and cargo) services in the world, that is: schedule, aircraft type and capacity (actual seats offered). 3.5.7 The OAG database has a number of shortcomings: Not all airlines offering commercial scheduled services are covered. Only those that have accepted to submit their flight information to the OAG. Not all civil aviation flights are included. Non-scheduled services are not covered, that is charter flights as well as general aviation, military or state aircraft movements. No correction is made in the database for cancelled flights or aircraft replacement. 3.5.8 In order to compensate for some of these shortcomings and include charter flights in the development of the CAEP/8 passenger traffic forecast, adjustments have been made to the original OAG data in the base year. The version of the database that is used in the development of the FESG forecast is therefore an adjusted OAG database. Adjustments made by Airbus to the raw OAG data are done on a per airline basis. The adjustment process can be described as follows:

CAEP-SG/20082-IP/02

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3.5.9 Step 1. For a given airline, the equivalent number of aircraft is computed from OAG operations. The number of aircraft is a function of block time and frequency. The computation is done: from the calibration done the previous year if a forecast was done for this airline; from the default value for a given region (airline domiciliation), computed from an average of the previous year forecast for airlines in the region. 3.5.10 Step 2. The number of aircraft computed from the OAG is then compared with the fleet in service extracted from Airclaims25. If the discrepancy is high then additional information is gathered (i.e. does the airline perform charter operations, is there a problem of declaration in the OAG like for Air Asia not in the 2003 OAG): If flight hours and cycles are available (Airclaims or ACAS26) additional operations are added according to these parameters; If flight hours and cycles are not available then reports from WATS27 (issued by IATA) are used; If the airline is not included in these reports other sources may be used (e.g. Web sites, airports reports, etc.); If no information is available at all it is assumed that the airline has a low utilisation of their fleet and additional operations are added by using discounted averages of utilisation for a given region. 3.5.11 For all these additional operations, it is assumed that the aircraft perform a mission with an average distance. In all these cases, the split between flows where the aircraft is flying is done from information collected on the Web, from Airclaims or from other sources. 3.5.12 Another adjustment is made for capacity in the OAG with CASE, JP Fleet or airlines Web sites in some cases. The OAG database used is for the month of September. 3.5.13 No adjustment is made to account for cancelled flights, as their number is considered negligible. 3.5.14 Forecast time horizon. In 2007, Airbus has extended the capabilities of its model to convert traffic into a fleet over a 30-year time horizon. Therefore there was no need to develop an approach (based on expert judgment) to extend the fleet forecast time horizon. The passenger fleet mix forecast has been developed over the period 2006 to 2036.

25

26

27

Airclaims is a database that provides information on all types and age of aviation operations (from general aviation to rotor wing and heavy aircraft). It contains histories, accident data, technical data, hours and cycles, addresses, deliveries, storage information, etc. Source: www.airclaims.co.uk. ACAS AirCraft Analytical System: Aviation market information system database covering Western built fixed wing civil aircraft from 8 seats up to 747 / A380, including business jets, plus military transports. The ACAS application provides details of fleets, utilization (hours/landings), history, orders, addresses, maintenance capability, inspection intervals, and forecasts for fleet utilization and maintenance. WATS World Air Transport Statistics. Comprehensive digest that provides information on over 300 airlines. It contains analyses on each airline, including performance indicators on passenger and cargo traffic, capacity, load factors for international, domestic, and system wide operations, scheduled and charter services. It also provides information on IATA's members' settlement activities, regional and service demand, forecast, safety, fleet utilization, environmental impact, etc. Source: www.iata.org.

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3.5.15 Traffic demand forecast. The traffic demand forecast, defined through a consensus process within FESG, that delimits the traffic growth rates for each of the twenty-three (23) predefined major route group over the horizon of the forecast.28 3.5.16 Generic seat categories. A consensus process has been used within FESG to define the generic seat categories (seating capacity) used to categorize the global fleet of aircraft and the break point of each of seating category. 3.5.17 For the development of the CAEP/8 forecast, nine (9) seating categories have been used: 20-50 (i.e. aircraft having from 20 to 50 seats), 51-100, 101-150, 151-210, 211-300, 301-400, 401-500, 501-600, 601+ (for aircraft having more than 600 seats)29. 3.5.18 The Airbus fleet mix forecast model has been used, with frequency/capacity considerations, to assign a number of aircraft to each seat category needed to serve the forecasted traffic demand. 3.5.19 Average load factor assumptions. The assumptions on the evolution of aircraft load factors used on each route group over the forecast horizon have been defined through a consensus process, based on existing data and their evolution. 3.5.20 The process followed can be described as follows:

1. Estimate historical load factors on each defined route group

2. Discuss the assumptions regarding the future load factors over the forecast horizon for each route group 3. Agree on consensus assumptions regarding the future load factors over the forecast horizon for each route group 4. Document the results 3.5.21 The objective was to associate the demand (traffic) growth rates expressed in revenue passenger-kilometres (RPK) to the industry response in terms of available seat-kilometres needed to meet this demand. 3.5.22 The assumption was made that on any route group, the maximum load factor could not exceed 85% over the forecast time horizon. The load factors used in the development of the CAEP/8 forecast are presented in Table 15. These factors were applied over the forecast time horizon (up to year 2036).

28 29

Including the low and high scenarios of the sensitivity analysis conducted around the passenger traffic forecast. These seat categories are the same as the ones used in the development of the CAEP/6 forecast except for the first three (3) that were set at the time at 20-49, 50-99 and 100-150. The break points of these three categories have been modified by one seat to be consistent with the requirement regarding the number of cabin attendants on airplanes.

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Table 15. Passenger Fleet Forecast. Passenger aircraft load factor assumption. Sector / Route Groups International 1. North Atlantic 2. South Atlantic 3. Mid Atlantic 4. Transpacific 5. Europe Asia/Pacific 6. Europe Africa 7. Europe Middle East 8. North America South America 9. North America Central America and Caribbean 10. Middle East Asia / Pacific 11. Intra Africa 12. Intra Asia/Pacific 13. Intra Europe 14. Intra Latin America 15. Intra Middle East 16. Intra North America 17. Other International Routes [1] Total International Domestic 18. Africa 19. Asia/Pacific 20. Europe 21. Latin America 22. Middle East 23. North America Total Domestic Global [International + Domestic]
Note:

2006

Maximum

80.6 84.3 80.3 79.8 80.5 74.8 70.4 77.3 75.3 73.5 59.6 71.3 68.2 70.0 66.1 70.9 76.0 76.0

85 85 85 85 85 80 74 80 80 78 65 78 78 78 70 75 79

73.9 72.5 69.5 65.9 78.0 79.3 75.8 75.8

75 80 78 75 78 83

85

[1] Weighted average of the load factors of all the international routes.

3.5.23 Average aircraft utilization assumptions. Assumptions on the number of hours per day aircraft are flown. The utilization of an aircraft depends on the type aircraft and how it is operated. 3.5.24 A consensus process has been used within FESG to define the growth in the average aircraft utilization over the forecast time horizon, based on existing data and their evolution. 3.5.25 The average aircraft utilization in 2006 was 9.4 hours per day. It has been assumed that the overall improvement in aircraft utilization would be 5% over the period 2006-2026 and 6% over the period 2006-2036 (resulting respectively in an average utilization of 9.9 and 10 hours per day over these periods).

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3.5.26 Productivity improvement assumptions. A consensus process within FESG is to be used to define the aircraft productivity improvements (seating capacity and flight frequency) by route group over the forecast horizon. 3.5.27 The growth in the available seat-kilometres requirements is accompanied by increases in aircraft productivity (seating capacity and flight frequency). These productivity improvements may result from higher aircraft utilization, the evolution of non-stop air services, and expected improvements in load factors. 3.5.28 Two of these key productivity improvement factors have previously been discussed: the load factors and the aircraft utilization. 3.5.29 The traffic growth is split between the existing network and the creation of new routes. The frequency/capacity split allocates the growth in available seat-kilometres, using a combination of additional frequencies and increases in average seat size per aircraft (larger aircraft). 3.5.30 For the development of the CAEP/8 forecast, the split between capacity and frequency was based on an analysis of: Historical data Airlines operational (competitive) environment on each route group The effect of capacity constraints or airport saturation as well as on the minimum and maximum level of service desirable on each route group. 3.5.31 Frequency levels for the newly introduced (20-49) regional generic seat category, and the (50-99) regional categories were assigned higher frequency limits than the rest of the fleet greater than 100 seats. 3.5.32 Parked aircraft. Airlines are likely to ground a number of aircraft within their fleet in order to reduce capacity when faced with a significant decline in demand or sharp increases in fuel prices. 3.5.33 At the time the forecast was developed, the composition of the fleet that was currently in storage was reviewed. There were about a thousand parked aircraft30 (i.e. aircraft in storage or temporarily out of service). As these were mostly old aircraft31, the probability of their return to passenger services was found to be very limited. As the number of parked aircraft that could potentially return to service was low and would not have a significant impact on the overall inservice fleet (and therefore the forecast), they were not included in the development of the forecast. 3.5.34 If at the time the forecast was produced, a significant number of aircraft with still some remaining useful life existed, it would have been necessary to determine the percentage of these aircraft returning to passenger service by type of aircraft within a near future. This would have involved the following steps:

30 31

The list of stored passenger aircraft as of August 2007 has been appended as Appendix C. There were about a hundred aircraft having less than thirteen (13) years of age.

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1. Determine the number of parked aircraft by type. 2. Discuss the assumptions on the probability of return to passenger service of those aircraft. 3. Agree on assumptions on the probability of return to passenger service of those aircraft. 4. Document the results 3.5.35 Backlog. Airlines renew their fleet over time with new aircraft. Known firm orders of new aircraft at the end of the base year have been considered in the development of the forecast, as these aircraft will be placed in service within the forecast period. 3.5.36 Passenger aircraft retirement curves32. The passenger aircraft retirement curves projecting future retirements have been developed based on existing aircraft age and an analysis of the historical and actual aircraft retirements. These curves have been applied to the existing inservice fleet. 3.5.37 The process used to develop the aircraft retirement curves can be described as follows: 1. Define the level of detail at which retirement projections are to be done33. 2. Extract from commercially available aircraft fleet databases, for each aircraft type or group of aircraft types, actual historical aircraft retirement dates from passenger services and its original delivery date. 3. Sort the data by aircraft type and original delivery date. If aircraft have been grouped by technology types (or some other means of grouping aircraft), complete the grouping next, still sorted by original delivery date. 4. For each delivery year, determine the percentage of aircraft still in passenger service. From the original delivery year determine the current age of the aircraft for each original delivery year. 5. Plot the percent of aircraft remaining in passenger service versus the age of the aircraft. 6. Through regression analysis, apply a best-fit curve through the data of plotted in step. The results are the new passenger aircraft retirement/survival curve. 7. Apply the survival curves to the existing base year fleet used to develop the new fleet mix forecast by using the curves to project the percentage of surviving aircraft in passenger service. The curve needs to be applied to the existing aircraft for each of the original delivery years. For each forecast year, sum up the number of surviving aircraft projected by the retirement curve applied to each of the original delivery years. The result is the profile of the passenger aircraft remaining in-service for the forecast period. 8. Document the results. 3.5.38 For the development of the CAEP/8 passenger aircraft retirement curves, FESG has relied upon the BACK/Lundkvist aircraft fleet database for the historical and base year fleet data. The aircraft retirement curves have been developed by regrouping aircraft by technology level.
32 33

The passenger and freighter aircraft retirement curves have been developed by Pratt & Whitney. Theoretically, retirement curves could be developed for each aircraft type. However this would result in an excessive amount of work that may not improve the accuracy of the fleet forecast. For the development of the CAEP/8 forecast, grouping aircraft by type of technology level for the aircraft retirement projections made the development of the overall fleet mix forecast a manageable process.

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CAEP-SG/20082-IP/02

3.5.39 Four (4) different survival curves were developed to project the retirement of the inservice passenger aircraft fleet: one for each of the following technologies: Newer generation aircraft (Narrow-body two person flight crew aircraft) Wide body aircraft (excluding MD-11 aircraft) Boeing 707 and 727 aircraft [B707/B727]34 McDonnell Douglas MD-11 aircraft 3.5.40 Theses retirement curves are shown in the following figure:
CAEP/8 FESG Pa ssenger Aircraft Retirement (Survivor) Curve s
110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 5 10 15 20 25 30 35 40 45 50 Aircraft Age (years)

Percent Remaining in Passenger Service

Narrow Body aircraft (2-man f lt crew) Wide Body Aircraft (Less MD-11) B707 / B727 MD-11

3.5.41 The passenger aircraft to which the retirement curves have been applied are reported in the Table below:
Passenger aircraft retirement curves Newer generation aircraft (Narrow-body two person flight crew aircraft) Wide body aircraft [1] (excluding MD-11 aircraft) Boeing 707 and 727 aircraft McDonnell Douglas MD-11 aircraft
Note: [1] Narrow body three person flight crew aircraft

Passenger aircraft assigned to each retirement curve 717, 737, 757, A320 Family, DC9, MD80, MD90, CRJ100 to -1000, EMB-135 to -195, F28, F70, F100, BAC111, BAe146, AvroRJ, DO328JET, all turboprops 747, 767, 777, A300, A310, A330, A340, A380, DC10, L1011, Russian built aircraft, any newly introduced wide body aircraft 707, 727, DC8 MD-11

Process followed to develop the passenger aircraft fleet mix forecast

34

Narrow body three person flight crew aircraft.

CAEP-SG/20082-IP/02

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3.5.42 The Airbus fleet mix forecast model is a bottom-up forecast model by airline, by route, by flight and by aircraft type. The fleet mix forecast process of this model is illustrated in the following diagram.

Traffic growth & cap/frequency model Current operation (OAG schedules)

Ideal aircraft size

Future operation

Aircraft utilisation

Future utilisation

Future fleet (generic categories)

AIRBUS S.A.S. All rights reserved. Confidential and proprietary document.

GMF experience (13 regions) Replacement & backlog

Fleet evolution

Fleetmix (existing & generic)

(Global fleet)

3.5.43 In terms of steps, this process can be described as follows: 1. Apply the traffic growth rate (evolution of the load factors taken into account) to the base year operational data. 2. Calculate the next year demand of seats 3. Apply the frequency/capacity model based on historical analysis35 Minimum service level > all growth into frequency Maximum service level > all growth into capacity For most sectors somewhere in between 4. Calculate number of aircraft required based on utilization as function of block time and region of domicile of the airline. 5. Store detailed results in database: operations-unit, forecast year, flights, aircraftcapacity, number required. Before determining the required delivery of new generic aircraft by seat category, consideration would have to be given to The fate of parked (stored) aircraft The firm backlog 6. Apply the aircraft retirement forecasting methodology to determine the number of base year in-service passenger aircraft remaining in passenger service for each forecast year. 7. Fill the remaining "gap" between capacity required and the remaining in-service fleet with new generic aircraft by seat category.
35

More details on the Airbus frequency/capacity split model are provided in Appendix B.

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3.5.44 For example, for aircraft of more than 100 seats, when two manufacturers have competing models, the split would be 50-50 between them. The same would apply for the existing different engine types. 3.6 Forecast of Aircraft with less than 20 Seats

3.6.1 FESG has been asked to develop a forecast for aircraft with less than 20 seats. This seat category was not covered by previous FESG forecasts. The inclusion of these aircraft in the analysis for CAEP/8 has been justified by the fact that some of the engines fitted to these aircraft may be subject to environmental stringencies. The intent being to include the environmental impact of these aircraft in the long term projections carried out within the framework of CAEP/8 environmental goals assessment. 2006 Year-end fleet 3.6.2 The 2006 year-end global fleet of aircraft with less than 20 seats was about 28 700 aircraft including jets and turboprops. These aircraft were operated by non-airline corporations (11 305), government and military organizations (6 512), non-scheduled airlines (6 480), scheduled airlines (1 634), fractional ownership schemes, leasing companies, brokers and part dealers, overnight package carriers, private individuals and financial institutions. Executive aircraft (jets) and turboprop aircraft accounted for 14 046 aircraft and 13 761 aircraft respectively. The rest were regional jets and piston aircraft. 3.6.3 The main operators of the Executive aircraft (business jets) category comprise non-airline corporations (8 626), non-scheduled airlines (2 599), government and military organizations (997) and fractional ownership schemes (925). The main operators of turbo-props include government/military organisations (5 339), non-scheduled airlines (3 483), non-airline corporations (2 588), scheduled airlines (1 483) and overnight package carriers (369). Scope of coverage 3.6.4 Past FESG forecasts were developed solely for the operations of commercial civil aviation aircraft (i.e. aircraft operated by airlines). However, as business aviation has been a fast growing segment of the industry in recent years (accounting for a steadily increasing number of flights at airports), it has been agreed to consider, in addition to turboprops and piston aircraft, business jets in the development of the forecast of aircraft with less than 20 seats. 3.6.5 The consensus-based forecast developed by FESG for the less than 20 seat aircraft would therefore cover aircraft operated by commercial air carriers and by business aviation operators. It would exclude aircraft operated by government and military organizations. Business aviation operators (non-airline corporations, fractional ownership schemes and private individuals) operate mainly jet aircraft while commercial aviation operators (scheduled airlines, non scheduled airlines and overnight package carriers) operate mainly turbo-prop aircraft. The Very Light Jets (VLJs) were excluded from the forecast at the outset, due to limited availability of information on these aircraft.

CAEP-SG/20082-IP/02 Forecasting approach

- 36 -

3.6.6 Approaches to develop the forecast have been explored for commercial air carriers and business aviation separately. 3.6.7 As there was very little information available on the operations of aircraft with less than 20 seats, it has not been possible to produce a consensus-based forecast at the same level of details (i.e. by available seat-kilometres, revenue passenger-kilometres, etc.) as for the one developed for the larger seat classes. Producing a forecast for the number of aircraft (units), the number of hours flown and the number of aircraft movements was found to be a more realistically feasible task. 3.6.8 Commercial air carriers. These carriers include scheduled airlines, non-scheduled airlines and overnight package carriers, and mainly operate turboprop aircraft. 3.6.9 An analysis of the 1990-2007 data on the turboprop fleet operated by commercial air carriers36 showed that overall the size of the fleet is more or less constant (between 5 000 and 5 500 aircraft) over the period. There is, however, a significant decline in the number of aircraft operated by scheduled carriers combined with an increase (of the same size in absolute terms) in the number of aircraft operated by non-scheduled carriers. 3.6.10 Consequently and due the non-availability of global forecasts for the turboprop aircraft with less than 20 seats, it was decided not to include these aircraft in the development of the forecast. The impact of excluding turboprops operated by airlines from the scope of coverage of the forecast was not believed to be critical (due to their declining number and typically shortrange operations) and their contribution to global emissions not likely to be significant. 3.6.11 Business aviation. In order to develop a consensus-based forecast for business jet aircraft (with less than 20 seats), a number of existing forecasts were reviewed. Forecasts were provided by Rolls-Royce (2016-2026-2036), Embraer (deliveries 2008-2017) and the U.S. Federal Aviation Administration (2008-2025 for the United States only). 3.6.12 After discussions and given the fleet forecast coverage, it was decided to use the RollsRoyce forecast37 as the baseline business jet forecast, after cross-checking it with the 2008-2017 Embraer delivery forecast. 3.6.13 The forecasts of deliveries provided by both manufacturers were close except for North America. The U.S. FAA delivery forecast for the United States market for the same period (20082017), at 7 145, was about 15 per cent higher than Rolls-Royce forecast for the same period. The Rolls-Royce forecast fell in the middle of a range of forecasts reviewed the U.S. FAA forecast being on the high side and the one of Embraer on the low side. 3.6.14 Table 16 provides the comparison of deliveries between Rolls-Royce and Embraer.
36

37

The evolution of the turboprop fleet of aircraft with less than 20 seats operated by commercial air carriers over the period 19902007 is presented in Appendix F. The Rolls-Royce forecast of the fleet of business jet aircraft has been developed by forecasters of their North American office. No detailed information could be obtained on the methodology used to develop this forecast (as this information is proprietary). In broad terms, Rolls-Royce has used a top down approach to split the world into separate geographic regions. In the short term, the forecast is driven by known or inferred order backlog information. In the longer term, the growth in the number of business jet aircraft deliveries is mainly driven by the evolution (growth) of a basket of stock market indices (e.g. S&P500 Standard and Poors 500), as a correlation was found between the demand for business jet aircraft and these stock market indices.

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Table 16. Deliveries of business jet aircraft Embraer and Rolls-Royce Region North America North America + Caribbean Latin America Latin America + Caribbean Europe Middle East Asia Pacific Africa Total Embraer 4 600 650 2 550 250 1 450 150 9 650 1 522 2 480 206 899 298 11 721 Rolls-Royce 6 221

3.6.15 In order to determine the number of hours flown and the number of departures, assumptions have been made on the average number of hours per aircraft and the average trip duration. After examining a variety of sources (including survey data, discussions with industry experts, and flight data provided by the U.S. FAA and Eurocontrol), an annual utilization of 400 hours per aircraft was assumed along with an average trip length of 1.3 hours per aircraft movement. 3.7 Freighter Forecast38 Methodology used to develop the freighter forecast 3.7.1 The FESG CAEP/8 freighter (traffic and fleet) forecast was developed using a modified version of the methodology Boeing uses to produce its own corporate forecast39. Furthermore, the development of the freighter forecast is a process that is reliant on the output of the FESG passenger fleet forecast. 3.7.2 The following sections describe the inputs and assumptions used and the process followed to develop the freighter forecast (demand and supply of cargo services) for CAEP/8. Inputs and assumptions 3.7.3 The development of the freighter forecast requires a number of inputs that have been either defined through a consensus process within the FESG, obtained from existing data sources or provided by (aircraft and engine) manufacturers: Base year and forecast time horizon Regions and/or route groups Base year traffic data by regions Average load factor assumptions Generic seat categories Number of passenger aircraft available for conversion into freighters
38 39

The freighter forecast has been developed by Boeing in collaboration with Rolls-Royce and FedEx. Some of the inputs, assumptions and methodology used in the development of the freighter forecast constitute proprietary information (as it is part of Boeing corporate model) and could not be disclosed. The GDP (Gross Domestic Product) and international trade forecasts used in the development of the freighter forecast were obtained from Global Insight.

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Aircraft cargo hold capacity Average aircraft utilization assumption Freighter retirement assumption Freighter forecast extension 3.7.4 Base year and forecast time horizon. The freighter fleet and cargo traffic forecasts have been developed over the same time horizon as the passenger traffic and fleet forecasts, that is, over the period 2007 to 2026, using year 2006 as the base year. 3.7.5 Regions and/or route groups. In contrast to the passenger forecast (developed by route group), the CAEP/8 freighter forecast has been developed for six (6) regions40: 1. Africa 2. Europe 3. Middle East 4. Latin America 5. North America 6. Asia

3.7.6 Regions of domicile were preferred over regional flows as cargo demand is typically directionally dependant making directional predictions complex and prone to significant error since cargo schedules and data by route group are neither widely available nor comprehensive on a global basis. 3.7.7 Historical and base year traffic data by regions. The base year data on freighter traffic (measured in revenue tonne-kilometres) as well as the historical data have been gathered from various sources: airlines, airline associations, industry bodies (e.g. ATA, IATA, AEA, etc.41) and Boeing primary research. 3.7.8 Average load factor assumptions. The assumptions on the freighter load factors have been defined through a consensus process. The load factor of passenger aircraft lower-hold has been established at 33% and at 50-70% of the main deck for freighter target42 (depending on carrier and airplane type). 3.7.9 It has been assumed that with increasing passenger load factors, increased security concerns and further specialization in the freight industry, cargo aircraft load factors for belly loads will decrease over time helping increase demand for main deck loads. 3.7.10 Further more, it was assumed that small freighters (especially in the less than 50 seat size category) were not truly converted in terms of structural airframe modifications (such as addition of cargo doors as is typical in larger types) but rather use is redefined, although the expectation is typically that passenger seat/ accommodation is largely removed. 3.7.11 Generic seat categories. The CAEP/8 freighter forecast was developed using essentially the same seating categories (in terms of aircraft size) as for the passenger forecast, that is: less than 50, 51-100, 101-150, 151-210, 211-300, 301-400, 401-500, 501-600.

40

41 42

Although the freighter forecast was initially generated on a per region basis, the MODTF requested to obtain the results by stage length (in order to be able to input the freighter forecast into the Flight and Operations Module (FOM)). As this information (forecast results by stage length) was already available in the model of Boeing, there was no need to bring any modification to the methodology used to develop the freighter forecast. ATA Air Transport Association. IATA International Air Transport Association. AEA Association of European Airlines. That is an assumption of productivity and efficiency gains for each airline in a given region/domicile expressed as an improved freight load factor used in the check and balance of fleet to allocated traffic.

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3.7.12 While a passenger fleet forecast was developed for aircraft with less than 20 seats and for aircraft with seat configurations ranging from 20 to 50 seats, no such distinction has been made for the freighter forecast. Aircraft within the less than 50 seat configuration (in terms of aircraft size) have been amalgamated into one seat category. In addition, it should be noted that no freighter forecast was developed for aircraft having more than 600 seats. 3.7.13 Number of passenger aircraft available for conversion into freighters. The retirement from the passenger aircraft, an output of the FESG passenger fleet forecast, has determined the available conversion market. 3.7.14 The freighter fleet has been developed with a combination of retirements of existing fleet, conversion of passenger aircraft and delivery of new purpose built freighters. Retirements from the passenger fleet are the basis of supply of donor airframes for conversion. Crosschecks with passenger forecast retirements for availability (by size category) of donor aircraft feedstock has been employed in the process. 3.7.15 Aircraft cargo hold capacity. The amount of belly hold available has been determined from the total passenger / combi aircraft43 forecast, an output of the FESG passenger fleet forecast. 3.7.16 Average aircraft utilization assumption. Assumption on the number of hours per day cargo aircraft are flown. 3.7.17 AirClaims44 is the source of the world's current freighter fleet data in the process used by Boeing. The utilization of the in-service fleet in the base year is based on actual reported hours and cycles data. 3.7.18 Utilization assumptions have been based on current fleet utilization and trends in productivity improvement reflecting more capable aircraft entering the fleet. It has been assumed that new freighters added during the forecast period have utilization rates that are generally above those for the existing fleet, reflecting more capable aircraft and higher carrier productivity. 3.7.19 Freighter aircraft retirement assumption45. The average retirement age of freighters (express and general combined) has been established at 40 years. 3.7.20 Unlike the passenger forecast, the freighter forecast has not been based upon survivor curves for various aircraft types46, only upon a single average retirement age assumption for each of the two categories of freighter aircraft and by size. It was also guided by the airline "bottomup" analysis conducted in the Boeing Commercial Airplanes freighter forecast. 3.7.21 Freighter retirements have also been adjusted (either earlier or later) depending on carrier, business model, region/domicile, expected aircraft utilization rates, and relative competitiveness of airplane types.
43

44

45

46

Passenger / combi aircraft aircraft transporting both passengers and cargo on the same flight with the cargo held in the belly pit below the passenger cabin. Airclaims is a database that provides information on all types and age of aviation operations (from general aviation to rotor wing and heavy aircraft). It contains histories, accident data, technical data, hours and cycles, addresses, deliveries, storage information, etc. Source: www.airclaims.co.uk. The freighter aircraft retirement assumption has been developed by Pratt & Whitney in collaboration with the team that developed the FESG freighter forecast. It has not been possible to develop aircraft retirement curves for freighter following the same approach used for the passenger aircraft due to the limited availability of data on actual retirements for cargo aircraft and the lack of precision of this information.

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3.7.22 Freighter forecast extension. The Boeing freighter forecast model is designed as a bottom-up process focused on primary research at airline and regional domicile level. The process matches the top-down cargo demand which acts as a check and balance for the bottom-up fleet development. It is designed as a 20-year forecast, making a 30-year forecast a projection of trends established over the twenty-year period covered by the forecasting tools and processes employed at Boeing. 3.7.23 The demand beyond 20 years was projected based on RTK per unit in each size category balanced with the cargo demand and consistent with the trends. Process followed to develop the freighter forecast 3.7.24 The diagram below illustrates the methodology used to develop the CAEP/8 FESG freighter forecast. 3.7.25 The process used to develop the freighter forecast can be described as follows: 1. Develop a consensus forecast of world cargo traffic (expressed in terms of revenue tonne-kilometres [RTK]) over the forecast time horizon in 5-year increments47. 2. Determine and remove passenger lower-hold cargo traffic based on full-up passenger fleet forecast and load factors48. 3. Spread the world freighter traffic (expressed in RTK) over domicile groupings and adjust the share percentages in 5-year increments (Domicile based fleets eliminate cargo flow directionality issues). 4. Spread the domicile freighter traffic among carriers or carrier groupings and adjust the share percentages in 5-year increments. 5. Starting with AirClaims freighter fleet for the base year, retire freighters based on retirement assumptions and begin adding fleet (by specific airplane type), using target load factor (based on assumptions about production and conversion freighters, range payload, utilization, speed, year of entry into service (EIS) of new freighter types and sunset years). 6. Adjust, balance and compare to ensure that capacity matches demand over time. Sensitivity analysis around the freighter forecast 3.7.26 As for the passenger forecast, a sensitivity analysis was conducted around the freighter forecast. Two scenarios were developed based on alternative demand profiles. For simplicity, these were derived from applying GDP projections at base plus 0.5% (high scenario) and base minus 0.5% (low scenario) resulting in GDP annual growth rates of 3.6% and 2.6% respectively. 3.7.27 These demand scenarios were then used to redefine the fleet demand, with crossreference to passenger fleet low and high scenarios for belly load and potential conversion donor feedstock from passenger retirements.

47

48

The revenue tonne-kilometre (RTK) forecast has been developed using econometric modelling to establish a base case RTK cargo forecast. Historical data was used in the model both as a reference and for regressions used in model algorithm. The global RTK forecast defines the total cargo demand. From the passenger fleet forecast, an allowance is made for cargo carried on passenger services, defined as belly-load. Airline reports and primary research for historical levels and the base year help establish trends of passenger belly load vs. all-freight or "main deck" loads.

A-1 APPENDIX A

CAEP-SG/20082-IP/02
Appendix A

Definition of the route groups and geographical areas used in the development of the CAEP/8 forecast Intra International traffic within a given region (between countries of a given region) Domestic Domestic traffic in each country with a given region Route Groups 1. North Atlantic Includes routes between, on the one hand, Bermuda, Canada, St. Pierre et Miquelon and/or the United States (including Alaska and Hawaii but excluding Puerto Rico and Virgin Islands) and, on the other hand, the geographical areas of Europe, Middle East and Africa (see definition of geographical areas below). 2. South Atlantic Includes routes between, on the one hand, gateway points in the following South American States: Argentina, Brazil, Chile, Falkland Islands (Malvinas), Paraguay and Uruguay and, on the other hand, the geographical areas of Europe, Middle East and Africa. 3. Mid Atlantic Includes routes between, on the one hand, gateway points in the geographical areas of Central America and the Caribbean and/or in the following South American States: Bolivia, Colombia (including the San Andres Islands), Ecuador, French Guiana, Guyana, Peru, Suriname and Venezuela and, on the other hand, the geographical areas of Europe, Middle East and Africa. 4. Transpacific Includes routes via the Pacific Ocean between, on the one hand, points in the Americas (Geographical areas of Central America/Caribbean, North America and South America) and, on the other hand, the geographical area of Asia/Pacific. 5. Europe Asia / Pacific Includes routes between, on the one hand, points in the Geographical area of Europe and, on the other hand, the geographical area of Asia/Pacific. 6. Other International Routes The remaining traffic is assigned to these routes.

CAEP-SG/20082-IP/02
Appendix A

A-2

Geographical Areas North America Bermuda, Canada, St. Pierre et Miquelon, United States including Alaska and Hawaii, but excluding Puerto Rico and the Virgin Islands. Central America / Caribbean Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Costa Rica, Cuba, Dominica, Dominican Republic, El Salvador, Grenada, Guadeloupe, Guatemala, Haiti, Honduras, Jamaica, Martinique, Mexico, Montserrat, Netherlands Antilles, Nicaragua, Panama, Puerto Rico, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands and Virgin Islands of the United States. South America Argentina, Bolivia, Brazil, Chile, Colombia (including San Andres Islands), Ecuador, Falkland Islands (Malvinas), French Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela. Middle East Bahrain, Iran (Islamic Republic of), Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates and Yemen. Europe Geographical Europe and Azores, Canary Islands, Cyprus, Greenland, Iceland, Madeira, Malta, Russian Federation (west of Urals) and Turkey. Africa The continent of Africa (including Algeria, Egypt, Libya, Morocco, Sudan and Tunisia) and offshore islands, but excluding Azores, Canary Islands, Madeira and Malta. Asia / Pacific Afghanistan, Australia, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Democratic People's Republic of Korea, Hong Kong S.A.R., India, Indonesia, Japan, Kazakhstan, Kyrgystan, Lao People's Democratic Republic, Macau, Malaysia, Maldives, Mongolia, Myanmar, Nepal, New Zealand, Pakistan, Papua New Guinea and all other islands of the Pacific (including American Samoa, Christmas Islands, Cocos (Keeling) Islands, Cook Islands, Fiji, French Polynesia, Guam, Kiribati, Marshall Islands, Micronesia, Nauru, New Caledonia, Niue, Norfolk Island, Northern Mariana Islands, Palau, Pitcairn Island, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, United States Minor Outlying Islands, Vanuatu, Wallis and Futuna Islands), Philippines, Republic of Korea, Russian Federation (East of Urals), Singapore, Sri Lanka, Taiwan (Province of China), Tajikistan, Thailand, Turkmenistan, Uzbekistan and Viet Nam. Latin America and the Caribbean Includes Central America/Caribbean and South America.

B-1 APPENDIX B

CAEP-SG/20082-IP/02
Appendix B

Assumptions underlying the passenger traffic forecasts by route group The following is a summary of forecast assumptions by route group (the forecast period refers to 20062026 and the extension period to 2026-2036): International routes 1. North Atlantic (mature market to mature market) Traffic growth on this route group is highly dependent on economic growth in both regions. Increased liberalization and wider market access resulting from the EU/US open skies agreement is also expected to impact traffic positively over the short to medium term. Based on the above, it is expected that traffic on the North Atlantic will grow at the average rate of 4.5 per cent per annum over the forecast period and only by about 3.8 per cent over the extension period. The decline in growth reflects the impact of market maturity. The level of traffic growth remains however higher than the level of economic growth of both regions. 2. South Atlantic (developing market to developing market) It is expected that traffic on this group of routes will grow at the average rates of 5.7 per cent per annum over the forecast period and of 5.3 per cent over the extension period. Trade and Tourism development between Europe and Latin America as well as family ties are thought to be the major growth factors. 3. Mid-Atlantic (mature market to mature market) Traffic growth on this route-group is expected to grow at the average rate of 5.5 per cent per annum over the forecast period. Growth on these routes is thought to be largely driven by the growth of tourism in the Central American and the Caribbean regions. It is expected that this traffic would continue to mature and grow at the rate of 4.8 per cent over the extension period. 4. Transpacific (developing market to mature) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast period driven by the economic development and trade growth between the Americas (North America, Central America and Caribbean and South America) and the Asia/Pacific region as well as the ongoing liberalization of air transport. Some markets on this route group have already shown some signs of maturity and the other are expected to start maturing over the extension period during which traffic is expected to grow only at the average rate of 5.6 per cent per annum. 5. Europe-Asia/Pacific (mature market to mature market) Traffic on this route-group is expected to grow at the average rate of 5.5 per cent per annum over the forecast period, driven by the economic and trade growth between the two regions as well as market liberalization and the resulting decline in yields. This market will however show some maturity and would grow by around 4.8 per cent per annum over the extension period.

CAEP-SG/20082-IP/02
Appendix B

B-2

6. Europe-Africa (no change in average growth) Traffic on this route-group is expected to grow at the average rate of 5.5 per cent per annum for the forecast period, driven by the growth of trade and tourism between Europe and Africa. No maturity is foreseen for this market expected to continue to grow at the same rate over the extension period. 7. Europe-Middle East (developing market to mature) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast period driven primarily by the economic growth of the Middle East and the strategies of the regions airlines and airports to expand and form major hubs for global international traffic. Traffic on this route-group will start maturing and continue to grow at an average annual rate of 4.9 per cent per annum over the extension period. 8. North America South America (developing market to mature) Traffic on this route group is highly dependent on the Latin American Economy and less so on that of North America. Capacity however is mainly supplied by North American carriers. The main destinations being Brazil, Argentina and Chile. As the economic prospects for South America are above average, traffic on this route-group is expected to grow at the average rate of 5.0 per cent per annum over the forecast period. It is anticipated that this market will start maturing and grow at the average annual rate of 3.9 per cent over the extension period. 9. North America-Central America Caribbean (no change in average growth) Traffic on this market is mostly originating from North America. It is highly dependent on the North American Economy and tourism development in the Central America/Caribbean region. It is expected to grow at the average rate of 4.7 per cent per annum over both the forecast and the extension periods. 10. Middle East Asia Pacific (developing market to mature market) Traffic on this route-group is expected to grow at the average rate of 6.1 per cent per annum over the forecast period. The growth on this route group will be driven by the fast economic growth of the two regions, a more liberalized regulatory framework and the strategies of the Middle Eastern airlines and airports to transform the region into a major hub for global international traffic. This market is expected to start maturing over the extension period and grow at the average rate of 5 per cent per annum. 11. Intra-Africa (no change in average growth) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast and the extension periods. Underlying this forecast is the assumption of a more stable political scene and sustained economic growth. 12. Intra Asia-Pacific (mature market to mature market) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast period, driven by the strong economic performance of the Asia-Pacific region and the ensuing improvement in personal income as well as the continued pace of liberalization and the resulting decline in airline yields. This market is expected to start maturing progressively and grow by about 5.3 per cent per annum for the extension period.

B-3 13. Intra-Europe (mature market to mature market)

CAEP-SG/20082-IP/02
Appendix B

Traffic on this route-group is expected to grow at the average rate of 4.0 per cent per annum over the forecast period, faster than the pace of economic growth. Most of the growth will occur in less mature markets (to, from and within Eastern European States) and also from the development of low cost carriers. Yield reduction is however likely to level off during this period. This market is expected to mature over the extension period and grow at the average annual rate of about 3.3 per cent. 14. Intra-Latin America (no change in average growth) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast and the extension periods. Underlying this forecast is the assumption of a stable macroeconomic environment. 15. Intra-Middle East Traffic on this route-group is expected to grow at the average rate of 5.5 per cent per annum over the forecast period and at of about 4.8 per cent per annum over the extension period. Growth is mainly driven by tourism among Middle Eastern States. 16. Intra- North America (mature market to mature market) Traffic on this route-group is expected to grow at the average rate of 3.5 per cent per annum over the forecast period and about 2.8 per cent per annum over the extension period. It follows a similar path as the North America domestic market albeit with different growth rates. 17. Other International routes Traffic on these routes, which include Africa-Middle East and Africa-Asia/Pacific, is expected to grow at an average annual rate of 5.2 per cent.

Domestic routes 18. Africa (Domestic) (developing market to developing market) Traffic on this route-group is expected to grow at the average rate of 5.7 per cent per annum over the forecast period and 5.3 per cent per annum over the extension period. This growth will be driven by economic and tourism development. South Africa, Egypt, Kenya and Nigeria are expected to be the major drivers. 19. Asia-Pacific (Domestic) (developing market to mature) Traffic on this route-group is expected to grow at the average rate of 7.0 per cent per annum over the forecast period. Growth will take place mainly in China and India, due the size of their respective population and geographical areas and also to the rise in personal income stemming from the fast economic growth. Airlines will be competing with the domestic rail lines in this market. Some maturity is expected in this market over the extension period during which the average growth will decline to 5.9 per cent per annum.

CAEP-SG/20082-IP/02
Appendix B

B-4

20. Europe (Domestic) (mature market to mature market) Traffic on this route-group is expected to grow at the average rate of 3.5 per cent per annum over the forecast period. Much of the growth is foreseen in the Eastern European States and will be primarily driven by economic growth. Yield reduction is expected to level off during this period. Over the extension period, average growth is expected to decline to 2.8 per cent per annum. 21. Latin America (Domestic) (developing market to developing market) Traffic on this route-group is expected to grow at the average rate of 6.0 per cent per annum over the forecast period. Brazil and Mexico represent the most important domestic markets in this region and are both expected to grow rapidly due to the size of their population, improvements in the average personal income and the decline in air fares due to increased competition the resulting from liberalization of air transport. These markets are expected to remain developing over the extension period and to grow at the average annual rate of 5.6 per cent. 22. Middle East (Domestic) (developing market to developing market) Traffic on this route-group is expected to grow at the average rate of 4.5 per cent per annum over the forecast period and 4.1 per cent per annum over the extension period. The biggest markets being Iran and Saudi Arabia. 23. North America (Domestic) (mature market to mature market) Traffic on these routes is expected to grow at the average rate of 2.7 per cent per annum over the forecast period. Traffic growth will continue to be driven by economic growth. Yields are expected to remain stable or even increase. This market is expected to continue maturing and to grow at the average rate of 2.0 per cent per annum over the extension period.

C-1 APPENDIX C Detailed forecast of business jet aircraft (with less than 20 seats)
2006 Regions Number of departures Hours flown Fleet in Service Number of departures 2016 Hours flown Fleet in Service Number of departures 2026 Hours flown Fleet in Service

CAEP-SG/20082-IP/02
Appendix C

2036 Number of departures Hours flown Fleet in Service

Africa Asia / Pacific Europe Middle East Latin America and Caribbean North America
Total

76 308 120 000 534 154 68 000 362 462 3 160 923
4 321 847

99 200 156 000 694 400 88 400 471 200 4 109 200
5 618 400

248 390 1 736 221 1 178 10 273

14 046

132 000 301 538 1 117 231 91 077 673 846 3 960 615
6 276 307

171 600 392 000 1 452 400 118 400 876 000 5 148 800
8 159 200

429 980 3 631 296 2 190 12 872

20 398

248 308 834 154 2 184 615 171 077 1 266 769 5 428 308
10 133 231

322 800 1 084 400 2 840 000 222 400 1 646 800 7 056 800
13 173 200

807 2 711 7 100 556 4 117 17 642

32 933

444 615 1 641 231 3 558 769 278 769 2 063 385 7 295 077
15 281 846

578 000 2 133 600 4 626 400 362 400 2 682 400 9 483 600
19 866 400

1 445 5 334 11 566 906 6 706 23 709

49 666

D-1 APPENDIX D Breakdown of the conversions and new freighter fleet Baseline scenario
BASE Size category <50 50-100 101-150 151-210 211-300 301-400 401-500 501-600 Grand Total 2006 UNITS 1 007 383 251 481 925 197 159 3 403 TOTAL 2016 UNITS Remain Converted >2006 New >2006 TOTAL 2026 UNITS Remain Converted >2016 New >2016 TOTAL

CAEP-SG/20082-IP/02
Appendix D

2036 UNITS Remain Converted >2026 New >2026

1 035 445 425 640 1 107 371 320 25

4 368

829 178 160 409 674 232 74 2 556

176 249 239 222 276 37 112 2

1 313

30 18 26 9 157 102 134 23

499

1 176 558 630 905 1 321 554 509 68

5 721

803 315 386 419 734 290 230 25

3 202

344 226 219 467 390 85 111 15

1 857

29 17 25 19 197 179 168 28

662

1 333 793 827 1 264 1 596 839 786 184

7 622

818 386 320 427 771 375 394 65

3 556

488 393 491 813 534 125 205 82

3 131

27 14 16 24 291 339 187 37

935

100%

58.5%

30.1%

11.4%

100%

56.0%

32.5%

11.6%

100%

46.7%

41.1%

12.3%

FESG CAEP/8 Freighter forecast (including average stage length and trips per day)
Size category <50 50-100 101-150 151-210 211-300 301-400 401-500 501-600 Fleet 2006 2016 2026 2036 2006 Average stage length [1] 2016 2026 2036 2006 Trips/Day [2] 2016 2026 2036

1 007 383 251 481 925 197 159 -

1 035 445 425 640 1 107 371 320 25

1 176 558 630 905 1 321 554 509 68

1 333 793 827 1 264 1 596 839 786 184

650 989 1 359 1 624 3 007 4 601 5 253 -

653 1 004 1 624 1 807 3 076 4 230 5 291 4 529

655 985 1 853 1 938 3 318 4 470 5 454 4 896

657 985 1 953 2 227 3 474 4 648 5 493 4 882

2.19 1.70 3.09 2.68 2.06 1.58 1.75 -

2.20 1.76 3.72 2.71 2.19 1.29 1.98 1.19

2.19 1.74 3.79 2.78 2.40 1.49 2.15 1.91

2.19 1.83 3.77 2.94 2.60 1.64 2.31 1.51

Notes: [1] Expressed in kilometres. [2] Average number of trips each aircraft in the fleet performs per day.

E-1 APPENDIX E Stored passenger aircraft as of August 2007

Aircraft type CV340 G159 BAC111 YS11 B707 HS748 N262 AN24 F27 YAK40 DHC6 B727 TU134 B200 L1011 DC10 EMB110 DC9 DHC7 B99 METRO B747 B737 IL62 F28 B767 A300 TU154 IL86 L410 REIMS406 DO228 BAE3100 AN28 A320 CN235 YAK42 SAAB340 ATP BAE146 ATR EMB120 B1900 B757 YUN7 DHC8 TU204 A330 B777 DO328 BAE4100 SAAB2000 EMB145 B717 DO328JET CRJ Total Number of aircraft 3 2 1 1 4 7 25 2 16 5 2 60 1 11 20 29 15 144 7 1 4 32 97 7 53 27 23 25 2 10 2 10 41 1 1 11 21 48 12 70 14 38 26 4 8 15 2 1 1 25 27 3 1 3 14 30 1 065 Average Age 51.4 44.8 41.7 39.3 38.5 36.4 35.8 34.2 32.4 32.2 31.5 31.1 29.2 28.5 28.3 27.8 27.5 27.4 25.8 25.4 25.4 24.8 24.6 24.5 23.1 22.7 22.6 22.1 21.5 21.4 21.2 21.1 19.5 19.1 18.6 18.0 17.8 17.6 17.2 16.8 16.7 16.7 16.2 16.0 15.0 14.5 14.1 13.5 12.7 12.5 12.3 11.1 8.3 7.8 7.5 7.5 23.2

CAEP-SG/20082-IP/02
Appendix E

F-1 APPENDIX F Airbus frequency/capacity split model

CAEP-SG/20082-IP/02
Appendix F

This appendix attempts to describe in detail Airbus frequency/capacity split model used to produce the FESG fleet forecast. The fleet mix forecast model uses the projected revenue passenger-kilometres (RPK) and load factors assumptions year by year provided by the FESG to determine: the available seat-kilometres (ASK) projected year by year the future seat requirements year by year The additional seats required are to be provided: partly by an increase in the number of operated aircraft (largely determined by an increase in the numbers of flights) and; partly by an increase in the average aircraft seat capacity. The method used by Airbus to determine the relative contribution of these two variables is derived from a detailed study of historical frequency/capacity changes by traffic flow. The frequency/capacity rule established by traffic flow is based on the analysis of the actual distribution of flight frequencies between many thousands of airport-pairs as a function of stage distance as illustrated in the chart below for the Intra Europe traffic flow.

For almost all routes the numbers of daily departures are no greater than those defined by the upper line (see chart below) which represents the maximum level of service. Beyond this level a further increase in daily departures will not in itself stimulate any additional travel demand. This maximum level depends on diminishing return on market share and passenger indifference from additional frequency.

CAEP-SG/20082-IP/02
Appendix F

F-2

The lower line is specific to each region-to-region sub-market (see chart below). It represents the minimum level of service. The longer the flight the fewer the number of departures required to provide an acceptable level of service. This minimum level depends on: cultural and geographical characteristics of the region size of market air travel maturity importance of frequency to passenger and distance.

F-3

CAEP-SG/20082-IP/02
Appendix F

As traffic grows on a particular sector additional capacity will be required. As long as the minimum satisfactory level of service has not been reached all additional capacity is provided by adding daily flights keeping the same aircraft seat capacity. For instance the chart below shows that for a specific market the increase in demand for air travel will be matched by an increase in frequency only up to 7 flights a day for flights below 1000 km range.

Beyond this point both frequency and aircraft seat capacity will be increased. The extent to which the additional capacity will be accommodated by an increase in aircraft seat capacity as opposed to an increase in frequency will depend upon where it is situated between the two thresholds. The closer it is to the satisfactory service level the higher the share of frequency in the frequency/capacity split. The closer it is to the maximum service level the higher the share of aircraft seat capacity in the frequency/capacity split.

CAEP-SG/20082-IP/02
Appendix F

F-4

Then once frequency reaches the maximum level all further increase in demand is accommodated by an increase in aircraft seat capacity.

The output of the frequency/capacity model is the ideal aircraft size and frequency.

G-1 APPENDIX G

CAEP-SG/20082-IP/02
Appendix G

Evolution of the turboprop fleet of aircraft with less than 20 seats operated by commercial air carriers, 1990-2007
Regions Categories of operator Non scheduled airline Africa Overnight package carrier Scheduled airline Non scheduled airline Asia/Pacific Overnight package carrier Scheduled airline Non scheduled airline Europe Overnight package carrier Scheduled airline Non scheduled airline Latin America and Caribbean Overnight package carrier Scheduled airline Non scheduled airline Middle East Overnight package carrier Scheduled airline Non scheduled airline North America Overnight package carrier Scheduled airline Non scheduled airline Total Overnight package carrier Scheduled airline General Total Source: Back Fleet Database 1990 126 0 85 153 3 330 396 12 2 049 110 0 199 2 4 15 466 229 1 049 1 253 248 3 727 5 228 1991 131 0 82 177 2 339 439 12 1 821 129 1 229 5 5 13 491 257 995 1 372 277 3 479 5 128 1992 157 0 84 218 2 389 824 3 1 147 151 1 264 15 6 14 508 281 952 1 873 293 2 850 5 016 1993 188 0 83 239 2 408 860 2 1 048 163 1 308 25 6 16 571 281 928 2 046 292 2 791 5 129 1994 206 0 80 264 3 432 856 2 997 156 1 329 24 6 15 622 281 894 2 128 293 2 747 5 168 1995 245 0 84 303 4 432 891 2 884 184 1 322 32 11 17 693 307 868 2 348 325 2 607 5 280 1996 260 1 83 343 3 428 878 1 835 204 1 361 45 10 22 775 310 731 2 505 326 2 460 5 291 1997 300 1 103 359 4 451 896 1 787 219 1 378 51 10 19 831 305 734 2 656 322 2 472 5450 1998 353 1 122 356 4 412 936 1 664 249 1 380 49 10 18 908 309 679 2 851 326 2 275 5 452 1999 404 7 127 370 4 379 954 10 570 282 1 396 42 10 15 968 307 674 3 020 339 2 161 5 520 2000 440 8 131 364 4 375 963 12 457 291 1 365 52 10 14 1 074 311 628 3 184 346 1 970 5 500 2001 440 19 158 382 4 353 975 13 398 300 4 334 50 11 13 1 103 316 537 3 250 367 1 793 5 410 2002 475 17 157 378 4 347 967 2 335 300 4 337 55 11 14 1 115 320 526 3 290 358 1 716 5 364 2003 512 15 158 385 8 345 980 2 291 310 4 320 51 11 16 1 112 339 526 33 50 379 1 656 5 385 2004 524 15 151 385 5 330 962 4 251 346 3 302 52 10 16 1 112 348 514 3 381 385 1 564 5 330 2005 536 11 147 422 5 306 953 10 244 355 3 306 63 10 17 1 104 330 517 3 433 369 1 537 5 339 2006 572 10 135 446 8 287 938 11 225 375 4 309 64 7 20 1 088 329 507 3 483 369 1 483 5 335 2007 585 9 126 481 7 283 924 11 218 394 5 337 66 7 20 1 091 321 490 3 541 360 1 474 5 375

H-1 APPENDIX H List of FESG Forecast Task Group members

CAEP-SG/20082-IP/02
Appendix H

Co-leaders Sylvie Mallet Chaouki Mustapha Transport Canada ICAO International Civil Aviation Organization

Members Ralf Berghof Andrew Chuang Steven Davis-Mendelow Richard C. Evans Philippe Fonta Larry Gray Michael G. Hurd Erik Alexander Jenichen David M. Jensen Ricky Mack Dick Marchi David Marsh Bengt-Olov Nas David Prevor Roger Schaufele Charles Schubert Fred Swanevelt German DLR German Aerospace Center GE General Electric Bombardier Aerospace Rolls-Royce Airbus Pratt and Whitney Boeing Embraer Aircraft FedEx Boeing ACI Airports Council International Eurocontrol SAS Scandinavian Airlines System (retired in February 2008) Airbus U.S. FAA United States Federal Aviation Administration American Airlines American Airlines

END