Embraer’s (NYSE: ERJ) 20-year market report released Monday offered optimistic growth predictions in passenger revenue amid an aviation industry increasingly influenced by environmental, digital, and regional pressures.
The report, titled “20-year Market Outlook,” forecasts commercial aircraft deliveries through 2040 for new jets and turboprops with capacity up to 150 seats. Overall global passenger volume will return to 2019 levels by 2024, the report said.
The Brazil-based airframer predicts revenue passenger kilometers (RPKs)—the number of kilometers traveled by paying passengers—will grow 3.3 percent annually to reach 17 trillion by 2040, according to the report. RPKs in 2019 totalled about 8.5 trillion.
“Although slightly more optimistic than our previous forecast, which only covered 10 years, the rate is still a notable deceleration compared to pre-COVID growth rates for the next two decades,” the report said.
Embraer’s outlook highlights three key trends that will influence future demand for travel and aircraft:
Environment: Airlines will acquire more fuel-efficient fleets.
Digitalization: Tech advances, including working-from-home and videoconferencing.
Regionalization: Localizing production and minimizing supply-chain disruption.
As commitments by carriers to achieve sustainable net-zero emissions goals gain momentum, pressure will be increasing on aircraft makers to support these new environmental goals. Disruptive propulsion technologies that decrease carbon emissions will “likely be implemented on regional aircraft platforms before seeing wider applications on larger jets,” the report said. Until then, the focus will be on using Sustainable Aviation Fuel (SAF) and improving operational efficiency.
Digital technology is allowing more people to work from home, which is leading to more people relocating away from large urban areas, the report said. “As populations are less concentrated, air transport will need to adapt to connect these consumers as efficiently as possible.”
Multinational companies are “being challenged to change their manufacturing and development strategies to better deliver value to customers while maintaining or reducing costs,” the report said. Companies will aim to “insulate themselves” by bringing production closer to home to minimize risks from supply chain disruptions.
Other key details in the report include:
Global demand for new aircraft (up to 150 seats):
- North America will account for an estimated 31.4 percent of jet deliveries (up to 150 seats); 25 percent in Asia Pacific and 20 percent in Europe, according to the report.
- The report says 42 percent of orders will be from market growth and 58 percent will replace aircraft that are aging out of their fleets.
- The report predicts Asia Pacific will account for 39.8 percent of turboprop deliveries; 19 percent in Europe, 19 percent in North America.
Market value of all new aircraft: $650 billion
Annual RPK regional growth rates 2021-2040:
- Asia Pacific: (including China) 4.2 percent
- Latin America: 4.2 percent
- Africa: 3.8 percent
- Middle East: 3.6 percent
- CIS: 3.5 percent
- Europe: 2.3 percent
- North America: 2.0 percent
RPK share by end of 2029:
- Asia Pacific: 41 percent
- Europe and North America: 36 percent