France - Civil Aerospace: Volume driven industry (Strategy, Performance and Risk Analysis)
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France is the sixth-largest economy in the world and offers attractive propositions for several industries. It ranked high on World Bank’s Doing Business 2017 report with only 3.5 days required to start a business; the OECD average od 8.3 days. The country’s economy is primarily driven by exports and its nominal GDP rose from US$2.4 trillion in 2015 to US$2.5 trillion in 2016. France is a global air transport hub with 500 airports; the two largest, Charles de Gaulle and Orly in Paris, manage a large number of passengers annually. A world-class infrastructure network enables France to offer international investors excellent conditions and drives the nation's economic engine.
LCC expansion to drive passenger traffic
In France, passengers recorded a marginal growth of 0.5%, from 65.0 million in 2015 to 65.4 million in 2016. It is expected to post a forecast-period CAGR of 0.3%, to reach 65.8 million in 2021 as the introduction of new long-haul international routes drives passenger volumes. Air France KLM has launched nine new long-haul routes, increasing its operating capacity.
Capital expenditure growth in France to show fluctuating trend
France’s capital expenditure recorded an annual growth rate of 28.4%, rising from US$2.0 billion in 2015 to US$2.6 billion in 2016. However, it will post a CAGR of -2.1%, to reach US$2.7 billion in 2021. The decline will be partly attributed to the young fleet maintained by France, diminishing expenditure on new equipment and capital expenditure of twin-aisle aircraft.
Deliveries expected to increase over the forecast period
Aircraft deliveries registered an annual growth rate of 41.7%, from 12 units in 2015 to 17 in 2016, and are anticipated to post a CAGR of 4.3%, from 11 units in 2017 to 13 in 2021. Growth will be driven by the proliferation of LCCs and their flight frequency expansion on key regional routes.
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