Demand for new airplanes is on the rise after several years of soft growth, the Conference Board of Canada is reporting today.
“Demand has been soft for years, due to the uncertainty in the world economy. But the new-order books are starting to look better, partially the result of rising orders for the CSeries, Bombardier’s upcoming aircraft, and renewed strength in the demand for high-end business jets,” said Maxim Armstrong, senior economist with the board.
“It will take years for the industry to fully benefit, but production is beginning to accelerate.”
The board notes that several factors complicate the potential for growth in the industry:
- demand for air cargo and passenger services remains weak due to continued global economic uncertainty;
- although orders have been increasing, they are spread over a long period, leading to a minor short-term impact; and
- high oil prices drive manufacturers to develop and produce, more fuel-efficient planes, but low oil prices mean that airlines aren’t as pressured to update their fleet.
The conference board reports that as of April, “the industry’s backlog of orders had reached $38.5 billion, surpassing its pre-recession peak.”
But annual production will not increase until next year, and it will take until 2017 for the industry to surpass 2008 production levels.
