Canada - Civil Aerospace: A volume driven market (Strategy, Performance and Risk Analysis)
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The Canadian Transport Ministry has been funding the development of small airports under the airport capital assistance program since 1995. The government has invested US$785.9 million1 since 1995, which led to the construction of 13 new airports, further increasing the passenger handling capacity of airports in the country and improving the security and safety standards of airports. Canada’s household disposable income increased with a rate of 3.3% over the historic period which, combined with the introduction of new routes and growing trade ties between Canada and several countries worldwide, is driving air passenger growth in the country.
Canada’s active fleet size is expected to increase
The active fleet size in Canada increased with a rate of 11.8%, from 755 in 2015 to 844 in 2016, and is forecast to increase at a CAGR of 7.3%, from 898 in 2017 to 1,190 in 2021. The burgeoning number of air passengers is driving growth of the active fleet size as airline operators procure more aircraft in order to meet increasing demand and frequency of flights on existing popular routes.
Aircraft deliveries and billing amount to rise
In Canada, the number of deliveries stood at 38 in both 2015 and 2016, and is forecast to increase at a CAGR of 8.4%, from 42 in 2017 to 68 in 2021. The increase is primarily attributed to fleet expansion initiatives by airlines due to the high number of air passengers on international and domestic routes. Billing declined with a rate of -11.9%, from US$2,433.3 million in 2015 to US$2,143.8 million in 2016. However, due to the increased procurement of narrow-body aircraft, it is forecast to increase at a CAGR of 17.0%, from US$3,050.5 million in 2017 to US$5,728.3 million in 2021.
Operational and MRO expenditure to decline
In Canada, operational expenditure increased with a rate of 1.2%, from US$15.6 billion in 2015 to US$15.8 billion in 2016. However, due to employee layoffs and the expected fleet reduction by Air Canada, it is forecast to decline at a CAGR of -7.0%, from US$14.9 billion in 2017 to US$11.1 billion in 2021. Similarly, though MRO expenditure increased with a rate 8.1%, from US$1,001.2 million in 2015 to US$1,082.5 million in 2016, it is forecast to decline at a CAGR of -1.1%, from US$1,025.2 million in 2017 to US$981.5 million in 2021 due to the increased procurement and leasing of new aircraft.
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