Frost & Sullivan: New Fleet That Adheres to Environmental Norms Drives Global Commercial Aircraft Programmes

LONDON, August 25, 2010 - From the aircraft integrator's perspective, fuel-efficient and light
aircraft that adhere to environmental norms and have low operational costs
are the key market drivers for global commercial aircraft programmes. Airline
operators have been under immense pressure to reduce operational costs and
adhere to environmental norms, resulting in the systematic replacement of
existing fleets. Aircraft integrators either replace an existing model or
fill the gaps in their product line.

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New analysis from Frost & Sullivan (www.aerospace.frost.com),
ROSM-Global Commercial Aircraft Programs-Revenue Opportunities and
Stakeholder Mapping, finds that the market earned revenues of US$2.35 billion
in 2010 and estimates this to reach US$27.59 billion by 2020. The market is
likely to grow at a compound annual growth rate (CAGR) of 31.48 per cent
during this period and the highest revenue is likely to be generated in 2020.
The end-user markets covered in this research service are single aisle and
twin aisle.

"Boeing is planning to start delivery of the 787 (B787) by the end of
2010, with around 50 per cent of the aircraft built from composites," says
Frost & Sullivan Team Leader (Aerospace & Defence Practice) John Siddharth
C.P. "Although it is meant to compete with Airbus 350 (A350), the B787 will
have an edge due to its early entry into service three years before the
A350."

In the last decade, legislative norms have significantly impacted the
aviation industry. The major norms include caps on emissions and noise
reduction. Such stringent norms will drive this market as airline operators
will be impelled to procure new, quieter and more fuel efficient fleets.

However, the cash-in-hand (CIH) factor is gaining importance from the
suppliers' perspective due to the development of a risk-sharing partnership
model. The suppliers also prefer to get involved in risk partnerships to
secure the higher margins given to risk-sharing partners by aircraft
integrators in the first five to ten years of production.

"The cost of development of a new aircraft programme costs billions of
dollars," explains Siddharth. "Besides the allocated budget, the cost of
development exceeds - referred as cost overrun, this has been a major
challenge for the industry."

Aircraft integrators other than Boeing and Airbus need to prove their
credibility in terms of future models and attract suppliers for risk-sharing
partnerships. As the market segmentation becomes more niche, airplane
integrators should focus on their expertise.

"Suppliers need to ensure higher margins in the initial years of new
aircraft delivery so that there is optimum cash flow for continuous
investments," concludes Siddharth. "Tier 3 suppliers and the design segment
suppliers should also get equipped with greater CIH to sustain the change in
business models."

If you are interested in more information on this study, please e-mail
Monika Kwiecinska, Corporate Communications, at monika.kwiecinska@frost.com,
with your full name, company name, title, telephone number, company e-mail
address, company website, city, state and country.

ROSM-Global Commercial Aircraft Programs-Revenue Opportunities and
Stakeholder Mapping is part of the Aerospace Growth Partnership Services
programme, which also includes research in the following markets: ROSM-
Global Aircraft Avionics Systems Development Programs- Revenue Opportunities
and Stakeholder Mapping, ROSM- Global Green Aircraft Engine Programs- Revenue
Opportunities and Stakeholder Mapping, and ROSM- Global Aircraft Material
Programs- Revenue Opportunities and Stakeholder Mapping. All research
services included in subscriptions provide detailed market opportunities and
industry trends that have been evaluated following extensive interviews with
market participants.

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      ROSM-Global Commercial Aircraft Programs-Revenue Opportunities and
                              Stakeholder Mapping
                                     M596

    Contact:
    Monika Kwiecinska
    Corporate Communications - Europe
    P: +48-22-390-4127
    F: +48-22-390-4160
    E: monika.kwiecinska@frost.com

www.frost.com

Monika Kwiecinska, Corporate Communications - Europe, Frost & Sullivan, +48-22-390-4127, Fax, +48-22-390-4160, monika.kwiecinska at frost.com