The Group operates in four long-term global markets – civil and defence aerospace, marine and energy. These markets create a total opportunity worth in excess of US$2 trillion over the next 20 years and:
The size of these markets is generally related to world Gross Domestic Product (GDP) growth, or in the case of the defence markets, global security and the scale of defence budgets.
The Group publishes a 20-year global market outlook, which covers passenger and cargo jets, corporate and regional aircraft. We predict that over the next 20 years 141,000 engines, worth over US$800 billion, will be required for more than 65,000 commercial aircraft and business jets. The forecast predicts faster growth rates for long-haul markets and those markets to, from and within Asia. These markets will continue to benefit from more liberal air service agreements, which boost demand. Factors affecting demand include GDP growth, aircraft productivity, operating costs, environmental issues and the number of aircraft retirements. While the market can be temporarily disrupted by external events, such as war, acts of terrorism, or economic downturns, it has, in the past, always returned to its long-term growth trend. In addition to the demand for engines, the Group forecasts a market opportunity worth US$600 billion for the provision of product-related aftermarket services.
The Group forecasts that demand for military engines will be worth US$170 billion over the next 20 years. The largest single market is expected to be the US, followed by Europe and the Far East. Within Asia, demand will be dominated by Japan, South Korea and India. Trends are driven by the scale of defence budgets and geopolitical developments around the world.
As in the Group’s other business sectors, programme lives are long and there is a significant opportunity to support equipment with aftermarket services estimated at US$280 billion over the same period. Customers’ budget constraints and their need to increase the value they derive from their assets have accelerated the move in this direction.
The Group forecasts a demand for marine power and propulsion systems valued at more than US$200 billion over the next 20 years. Demand will be greatest in the commercial sector, where the shipping of raw materials, finished goods and people, in addition to oil and gas exploration and production activity, play crucial roles in the world economy. These activities require large fleets of specialised and increasingly sophisticated ships, which have to be continually renewed and supported to remain operationally efficient.
Merchant and offshore markets are rarely at the same stage of the business cycle, which helps to reduce overall volatility. Whilst naval markets are driven by different considerations, customers are similarly seeking to get more from their budgets, leading to increasing demand for integrated systems and through-life support arrangements. As in the Group’s other markets, marine aftermarket services are expected to generate significant opportunities, with demand forecasted at US$120 billion over the next 20 years.
The International Energy Agency has forecast that over the next 20 years, the worldwide demand for oil will grow by more than 20 per cent, for gas by 35 per cent and for power generation by more than 60 per cent. To satisfy this demand, there will be a growing requirement for aero derivative gas turbines.
The Group’s 20-year forecast values the total aero-derivative gas turbine sales in the oil and gas and power generation sectors at more than US$70 billion. Over this period, demand for associated aftermarket services is expected to be around US$50 billion.
While the oil and gas market is large and growing, demand for aero-derivative gas turbines in the power generation segment is twice that of oil and gas.
Note: A long-term conversion rate has been used where necessary in order to present all figures in US$.