Booming Brics set sights on aerospace industry

Boeing’s announcement last week, that it was raising its forecast of Chinese demand for new aircraft by 21% to a staggering 3,400 over the next 20 years, was just the latest confirmation that the global aerospace industry is reorienting itself towards high-growth emerging markets. But the Chinese, Indian and Russian governments are not satisfied with only being a market (albeit an important one) for passenger aircraft built by Airbus and Boeing. Instead, the three countries are seeking to leverage access to their booming air travel markets to attract the technology transfers needed to create their own, indigenous, aircraft manufacturing industries.
As incomes rise and middle classes expand, emerging markets, and the Bric countries in particular, are driving growth in demand for air travel. Between 2004 and 2005, the Bric countries’ share of annual aircraft orders jumped from just 5% to 35%, according to Airbus. One in every five aircraft deliveries in the next 20 years will go to emerging markets, with the Asia-Pacific accounting for the bulk of new commercial aircraft in service. Asia’s current 19% share of the world’s fleet of 18,000 planes is expected to rise to 28% of the 36,400 aircraft expected to be in operation by 2026, according to Boeing.
India’s market has exploded since aviation deregulation in 2003 and is growing at 9.8% annually. Airbus projects Indian demand for new aircraft will top 900 over the next two decades.
In their aerospace ambitions, China, India and Russia are following the path blazed by Brazil, whose regional jet manufacturer, Embraer, is a well-established brand.
India plans to develop a 70-seat regional jet by 2015. A 14-seat jet is expected to enter commercial production as soon as 2009.
For its part, India may be more successful as an outsourcing hub for aircraft manufacturing than as a manufacturer of indigenous products.
Another potential obstacle is the continued weakness in the regional jet market that Russia, China and India are all using as their entry point.
For now, however, the biggest test is the ability of the Bric countries to woo foreign aircraft manufacturers and encourage them to share technology.
26/09/07 Deepak Gopinath/The Business Magazine, UK

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Categories: Foreign Sep 2007, General Aviation Sep 2007