Singapore Air Show

OEMs Still See Massive Market for Commercial Turbofans in Asia

 - February 15, 2022, 1:50 AM
CFM Leap-1B turbofans hang from stands at GE's test facility in Peebles, Ohio. (Photo: CFM)

All four major commercial-turbofan engine manufacturers expect the Asia-Pacific region to provide a vast market for new commercial jet aircraft over the next two decades and strong sales opportunities for engines that power single-aisle and widebody aircraft alike.

CFM International and Pratt & Whitney reckon the region as a whole—including the massive single-country markets of China and India—could provide almost half of the entire global commercial-aviation market over the next 20 years.

According to Gael Méheust, CEO of the GE-Safran joint venture CFM International, his company's market analysts dissect the region into two distinct segments, distinguishing China as an individual market because of its huge expected future requirement for aircraft to meet growing Chinese domestic and international air travel demand.

For CFM, the Asia-Pacific region—including the Indian sub-continent but not China—will provide about 20 percent of all future aircraft and engine demand. India itself will account for about 5 percent of the demand and the rest of the region—the 10 member countries of the Association of Southeast Asian Nations (ASEAN) plus Japan, Korea, Australia, New Zealand, and the South Pacific island nations—will account for 15 percent. CFM sees particularly strong aircraft demand from Indonesia, Vietnam, Malaysia, and the Philippines as a result of strong economic growth in those nations.

Greater China will account for 19 percent of global demand for aircraft on its own, according to Méheust. Providing CFM-specific context for those percentages, Méheust said India’s 5 percent share of the total global aircraft market should result in sales of more than 1,000 CFM-powered aircraft there in the next 20 years.

CFM reckons that the region—not including China—will take delivery of more than 5,000 new aircraft by 2042. More than 3,000 will involve aircraft of seat capacities in the 105- to 250-seat range, according to Méheust. CFM thinks the Greater China market will also see about 5,000 new aircraft delivered in the same period.

Single-aisle Aircraft To Dominate

Pratt & Whitney projects a similarly bullish view of the Asia-Pacific region’s aircraft demand. In the next decade, P&W forecasts a requirement for almost 8,000 new aircraft, 3,300 of which the region will need within the next five years, said Mary Ellen Jones, vice-president for Pratt & Whitney’s Asia-Pacific customer business.

“We anticipate about two-thirds of those will be single-aisle aircraft, where the [PW1000G Geared Turbofan] GTF is well-positioned,” Jones added. “Currently, we have more than 20 GTF customers, with over 500 GTF-powered aircraft, in the region. Pratt & Whitney currently powers more than 1,700 commercial aircraft based in Asia-Pacific. In terms of the single-aisle segment over the next five to ten years, we foresee strong growth in China, India, Australia, Japan, Vietnam, and parts of Southeast Asia.”

As a joint-venture partner in CFM International, GE Aviation thinks the Asia-Pacific region (not including China) will account for 20 percent of total global aircraft demand over the next decade. “Specifically, ASEAN countries and India will form the bulk of regional market growth,” said Hadley Bowling, vice president of Asia-Pacific sales for GE Aviation.

“We project India will be one of the biggest growth drivers in the near and medium-term and could contribute up to 5 percent of the global market,” said Bowling. “In the ASEAN region, we see Indonesia and Vietnam as growth countries. Vietnam will be driven by its manufacturing industries. Indonesia, like India, will be driven by the need to travel and connect as its economy grows…In the near term, we see strong narrowbody demand in Japan and South Korea as native operators renew their fleets. In the medium term, India, Indonesia, and Vietnam could garner the majority of the narrowbody deliveries in the Asia Pacific region.”

GE projects that narrowbodies will account for 70 percent of the Asia-Pacific market, where domestic and regional traffic growth continues to outperform long-haul flying. “Demand for medium narrowbodies (aircraft with 160 seats) and large narrowbodies (aircraft with 180-plus seats) will be particularly strong,” said Bowling. “[As a result], higher-thrust engine families such as the Leap-1A33 and Leap-1B28 will generate the most demand, powering larger narrowbody aircraft.”

GE thinks some of the demand for larger-narrowbodies will arise because of a growing trend for long-haul, low-cost carriers. But there will still be room for widebodies, noted Bowling: “The widebody market will make up about 20 percent of the market, and medium-widebody aircraft—the [Boeing] 787-9, the [Airbus]. A350-900—will have strong demand in this market. The GEnx engine will continue to generate demand for widebody aircraft.”

Strong Market Positions

P&W and CFM already enjoy strong market positions with their engines for single-aisle aircraft and they expect the region to create still more opportunities to build upon those positions in years to come.

CFM’s existing Asia-Pacific order book for Leap-powered aircraft exceeds 1,500 aircraft, not including customers in China or India, said Méheust. It holds orders from AirAsia, Lion Air, VietJet, and Jetstar, to name a few, as well as from “emerging customers” such as South Korea’s Jeju Air and Vietnam’s Bamboo Airways. (CFM JV partner GE Aviation also holds a $2 billion order from Bamboo Airways, for GEnx-1B engines to power Boeing 787-9s.)

In India, CFM’s customers include IndiGo (which switched from the PW1100G engines chosen for its first major A320neo order to Leap-1A engines for a follow-on order), SpiceJet, Vistara, and forthcoming new low-cost entrant Akasa Air.

“[Pratt & Whitney has] more than 20 GTF customers with over 500 GTF-powered aircraft in the Asia-Pacific region,” said Jones. “Pratt & Whitney powers more than 1,700 commercial aircraft based there. We have a diverse portfolio of GTF customers, ranging from network carriers like Air China, Sichuan, China Airlines, Vietnam Airlines, and Korean Air to LCCs like Cebu Pacific, IndiGo, Go First, Scoot, Tigerair, and VietJet.” Importantly, said Jones, many operators acquired their aircraft through lessors.

Rolls-Royce, meanwhile, views the market from the perspective of a maker primarily of high-thrust powerplants for widebodies. “The Asia-Pacific is one of the most diverse markets in the world,” noted Chris Davie, Rolls-Royce Civil Aerospace’s vice president for Asia-Pacific customers. “With two of the largest archipelagos—Indonesia and the Philippines—air travel remains essential for transporting cargo and passengers. Rolls-Royce powers approximately 500 aircraft in the Asia Pacific region, and we expect this to remain largely the same, with retirements offset by deliveries of the latest generation of Trent-powered aircraft.”

Pandemic Recovery

The Covid-19 pandemic hit the region hard, particularly during the rise of the Delta variant of the coronavirus, and traffic at one point in 2021 fell to just 3 percent of its equivalent 2019 level, according to Méheust.

However, by the end of 2021, the region’s passenger traffic had recovered to 61 percent of its 2019 level and Asia’s air transport industry now has returned to a slow and steady growth track, said Méheust. “We expect it to continue to grow because of high and growing vaccination levels” in many Asia-Pacific nations. For instance, more than 80 percent of Japan’s population has received vaccines, he noted.

Utilization, however, remains down but to varying extents depending on region, explained Jones. “Asia-Pacific recovery continues to be challenged,” she said. “International travel restrictions are still very much in play and changing with some frequency. Countries with large domestic segments have recovered better, and in some cases have bounced back to pre-Covid levels or better.”

For example, she referred to South Korea as “a bright spot,” where domestic travel exceeds pre-pandemic levels. “China is also a good example of a large segment that has recovered well,” she noted. “It is down year-over-year but is doing well compared to other segments in Asia-Pacific. For international travel, vaccination rates are ultimately key to a full recovery.”

The pandemic’s effects continue to have implications for airline operating efficiency, according to Davie. “As we move in the next phase of the recovery, the pressure on airlines to control their operating costs remains high. Airlines are adapting to this by returning the most efficient aircraft types to service first,” he said.

“The Trent XWB is the most efficient large engine in service today and we have seen operators return this fleet ahead of others due to its performance and reliability, especially in Singapore, Japan, and Korea,” said Davie. “I also see an opportunity for more operators to take advantage of depressed lease rates and introduce the Airbus A330-300 and Airbus A330-200, particularly for regional markets and intra-Asia-Pacific markets.”

Covid-19’s persistence has driven many changes to restrictions, both domestically and internationally, he added. “It is costly for airlines to constantly change operational plans based on the prevailing restrictions,” he explained. “Airlines are already operating at reduced capacity at a network level, but this has resulted in more scrutiny on which fleets are best-suited. Having a versatile aircraft-engine combination is essential, given the fluctuating requirements.”

For Rolls-Royce, that translates into expectations of a strong recovery for the Trent XWB-powered A350, which Davie said provides the right balance of capability and efficiency on both regional and long-haul markets. “Recently, I have also been in touch with airlines that have been looking at expanding capabilities from their existing narrowbody fleets into aircraft that have more range and capacity,” such as the Trent-powered A330, he noted.