Talk of production “bubbles” again colored the discourse at the March 16 to 18 International Society of Transport Aircraft Trading (ISTAT) Americas 2014 conference in San Diego, even while OEMs in attendance insisted that record backlogs fully justify their planned rate increases. Manufacturers highlighted a strong backdrop for aircraft demand fueled by aging replacement needs, a 20-seat increase in the capacity of narrowbodies since 2007, emerging-market long-term capacity requirements and the global expansion of low-cost carriers, according to a research note from Sterne Agee. OEMs also cited statistics showing air traffic growing faster than capacity, “robust” utilization rates accompanied by high load factors and net delivery growth of some 3 percent a year. However, soft demand within the air cargo market and weaker GDP growth within the Asian and emerging markets tempered the optimism somewhat.
