On The Bubble

Future Trends
Probably the biggest trend will be the growth of the Chinese aviation market with Hong Kong poised to receive the most attention as a primary hub for cargo and passenger transport. Fifty new airports are scheduled for construction within China over the next five years to meet the higher demand. Feeder traffic — that segment serviced by regional jets — could grow 12 percent annually over the next 20 years.

Brazilian regional jet builder Embraer has set up a US$25 million joint venture with China Aviation Industry Corp ll, to manufacture its 30 to 50 seat, ERJ145 aircraft under license. The new company, called Harbin Embraer, expects to produce 24 planes each year, with deliveries are scheduled to start in 2003.

In November, AVIC I Commercial Aircraft Co. Ltd. (ACAC) of China signed a cooperative Letter of Intent with GE Aircraft Engines (GEAE) selecting GE's CF34-10A engine to power the ARJ21 regional jet now in development. ACAC and GEAE see a potential market for 500 ARJ21s over the next 20 years, representing a potential value to GE of US$3 billion.

Same Song, Second Verse...
Development of electric and alternative fueled vehicles will continue but purchase of such equipment will hinge on slim budgets and the speed at which airport infrastructure will improve to accommodate the necessary accessories for this equipment.

Mergers, acquisitions, and alliances will continue but may have a more Eastern look to the resulting ventures.

Demand for GSE maintenance services as well as GSE parts and components will also continue as airlines remain in a "repair, not replace" mode.

Year 2003 will find the aviation industry "on the bubble" and poised for recovery. Let's hope the industry can rebound before that bubble bursts.