Chile - Civil Aerospace: High volume to fuel growth (Strategy, Performance and Risk Analysis)
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Chile is the most competitive country in the South American region. According to the Global Competitiveness Report 2015-16, Chile was ranked 35th out of 140 economies. The civil aviation industry in Chile witnessed steady growth in the number of air passengers owing to increased disposable incomes. Moreover, the total active fleet size witnessed growth due to a rise in the procurement of narrow-body and wide-body aircraft. The procurement of aircraft increased due to the launch of several new regional and long-haul routes, along with the procurement of used aircraft. The aviation sector contributes significantly to the country’s economy, generating 3.0% of GDP and 190,000 jobs. Moreover, the industry’s foreign direct investments valued US$210.0 billion in 2015.
Increasing business and leisure trips to drive the number of passengers
The number of air passengers in Chile increased significantly at a rate of 9.1%, from 15.0 million in 2015 to 16.4 million in 2016, and is forecast to increase at a CAGR of 5.2%, from 17.3 million in 2017 to 21.2 million by 2021. Growth in the number of air passengers has significantly influenced expenditure on aircraft.
Optimum number of aircraft in market will lead capital expenditure to decline
Capital expenditure (CAPEX) on aircraft grew from US$1,330.0 million in 2015 to US$2,721.7 million in 2016 owing to procurement measures by airlines and aircraft leasing companies, primarily driven by the rise in demand for regional jets. However, it is forecast to decrease at a CAGR of -1.9%, from US$2,756.7 million in 2017 to US$2,556.7 million by 2021, owing to an anticipated decline in new aircraft deliveries.
Growth of the active fleet size
In Chile, the number of aircraft deliveries increased at rate of 22.2% from nine in 2015 to eleven aircraft in 2016. However, it is forecast to decrease at a CAGR of -14.3%, from fourteen in 2017 to twelve aircraft by 2021 primarily driven by a significant fall in the delivery of wide-body aircraft.