Japan - Civil Aerospace: Progress towards an indigenous industry (Strategy, Performance and Risk Analysis)
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Japan has the world’s third largest economy, and is the fifth leading country in Asia-Pacific in terms of nominal GDP. In 2012, the Japanese Government introduced an economic policy, Abenomics, which focuses on monetary easing, flexible fiscal policy, and structural reforms, thereby helping the country to register strong economic growth. For instance, the countries nominal GDP increased with a rate of 12.6%, from US$4,382.4 billion in 2015 to US$4,936.3 billion in 2016. The country is at the forefront of developing advanced technologies for local needs. It also focuses on co-developing products with foreign players to help create new businesses that will lead to self-reliant economic growth. Japan will also undertake various initiatives to advance its infrastructure projects in the coming years. The Japanese Government has announced several initiatives to increase airline capacities in order to meet the growing demand for the 2020 Tokyo Olympic Games. The country has leveraged its strong supplier base, which supports the manufacturing of civil aircraft through collaborations. Boeing is the leading provider of commercial jetliners to Japanese airlines.
Expansion initiatives to drive the number of air passengers
In Japan, the number of air passengers increased at a rate of 3.1%, from 114.1 million in 2015 to 117.7 million in 2016, and is forecast to increase at a CAGR of 4.0%, from 125.3 million in 2017 to 146.8 million in 2021, primarily due to government initiatives to expand the country’s international and domestic routes. Service expansions by airline operators will also support growth. In July 2017, Vietjet partnered with Japan
Airlines to upgrade its offerings in order to improve its service quality.
Capital expenditure on aircraft to decline due to delayed deliveries
CAPEX on aircraft in Japan increased at a rate of 35.7%, from US$3,516.0 million in 2015 to US$4,771.1 million in 2016. Deliveries increased from 33 in 2015 to 46 in 2016, largely contributing to the segment’s capital expenditure. However, it is forecast to decline at a CAGR of -1.8%, from US$4,848.0 million in 2017 to US$4,506.0 million in 2021, due to the anticipated delays in deliveries and the rising usage of used aircraft.
Increased deliveries of narrow-body aircraft to drive growth
In Japan, aircraft deliveries increased with a rate of 39.4% from 33 in 2015 to 46 in 2016, and are further forecast to increase at a CAGR of 1.8%, from 40 in 2017 to 43 in 2021. Demand for narrow-body aircraft, which are forecast to grow at a CAGR of 2.4% from 20 in 2017 to 22 in 2021, will significantly contribute to the growth of the segment.