Italy - Civil Aerospace: Passenger and freight growth to drive demand (Strategy, Performance and Risk Analysis)
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Italy, with a GDP of over US$1,848.9 billion in 2016, has the fourth largest economy in Europe. It is also one of the founding nations of the European Union. Italy has a diversified economy that is known for its high end products. The country has a well-developed manufacturing sector, with motor vehicles, machinery, chemicals, pharmaceuticals, fashion and clothing being the key areas. The Italian Civil Aviation Authority is the regulatory body that frames policies and supervises the implementation of the mandates to which operators have to adhere. It also protects passenger rights and assesses the impact of activities on the environment in order to minimize pollution. Short-haul travel and low-cost carriers to drive the demand for narrow-body aircraft. Air Dolomiti and Meridiana are among the low-cost airline operators in Italy which fly aircraft across Europe.
Number of air passengers to decline owing to the high tax burden
In Italy, the number of air passengers increased at 2.8% in 2016, from 28.1 million in 2015 to 28.9 million. However, this is forecast to decline at a CAGR of -4.1%, from 26.0 million in 2017 to 22.0 million in 2021. The high tax burden on passengers is a major growth restraint in terms of the number of passengers using air travel. Moreover, inefficient government policies and the continuing poor performance of the financial sector are other major reasons which will stifle growth.
Offshore transportation and remote location access are expected to help drive capital expenditure on helicopters
In Italy, capital expenditure on helicopters increased at 6.1%, from US$33.0 million in 2015 to US$35.0 million in 2016, and is expected to increase at a CAGR of 3.4%, from US$38.5 million in 2017 to US$44.0 million in 2021. The forecast period growth is primarily due to the increased procurement of helicopters for use by executives, to access remote locations and provide offshore transportation
The procurement of used aircraft is expected to affect new aircraft deliveries growth
In Italy, there were no new aircraft deliveries during 2015-2016. It is expected that the country will take delivery of 26 new aircraft over 2017-2021. However, the number of deliveries is expected to witness a CAGR of -3.8% over the forecast period, from seven aircraft in 2017 to six in 2021. Cost controlling initiatives to maximize profits will shift airline operators’ preferences towards the procurement of used aircraft over new ones. Narrow-bodied aircraft are expected to account for 84.6% of the total number of new aircraft deliveries over the forecast period.
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