Aircraft purchases by South Korean and Japanese airlines will continue to grow rapidly over the next two decades on strong demand for air travel in the Northeast Asian region, an executive from Boeing Co. said Tuesday.
"The Northeast Asian market will have demand for 1,250 new aircraft valued at US$200 billion (over the next 20 years)," said Randy Tinseth, vice president of marketing at Boeing, in a press conference in Seoul.
Demand for a total of 1,250 planes, including 830 new units and 420 replacements, will be created between 2010 and 2030 in the two countries thanks to a rise in air traffic, he said, adding Boeing considers South Korea and Japan the Northeast Asian market, while China is regarded as a separate market.
Tinseth said the region's air traffic will grow at an annual rate of 4.3 percent over the next 20 years and cargo traffic will grow 6 percent per year.
"The combined effect of liberalization and rapid economic growth is driving passenger traffic in the region," he said.
"In Korea, Incheon International Airport serves as a major hub in the region and the Korean Peninsula is perfectly situated between Japan and China, allowing it to continue as a gateway to key markets in Asia."
With more than 110 aircraft already on order from South Korea, the fleet in Northeast Asia will increase from 690 planes in 2010 to 1,520 units in 2030, he said.
The U.S. aviation giant predicted that Northeast Asia would be a big market for twin-aisle and large aircraft in the next two decades, partly because South Korean air carriers are expected to deal with a possible increase in passengers and cargo in the face of implementations of free trade deals with the European Union and the United States.
These two kinds of wide-body aircraft account for 45 percent of the region's future demand in terms of units and 70 percent in terms of investment, compared with the world's average of 24 percent and 50 percent, respectively.
"There are many, many wide-body airplanes here on order, airplanes such as the 747 and 777," said Tinseth. However, Boeing refused to disclose the exact number of orders it received from each country.
Tinseth said that demand for single-aisle aircraft such as 737 series planes are not negligible in South Korea and Japan due to a boom of low-cost carriers in the region.
Budget airlines took up 6 percent of air traffic of Northeast Asia in 2010, and it will rise to 9 percent in 2020, according to Boeing.
According to local industry data, South Korea's budget carriers had a combined share of roughly 40 percent of the domestic air market in the first half of this year, up from a mere 0.1 percent in 2005.
South Korea's leading flagship air carrier Korean Air Lines Co. has a fleet of 103 Boeing aircraft, while Asiana Airlines has a fleet of 33 Boeing aircraft.
Meanwhile, the European aviation company Airbus predicted that the South Korean aviation market would have demand for 382 new aircraft over the next 20 years, worth around US$67 billion.