J.B. Groh, vice-president and senior researcher, at D.A. Davidson & Co., gives some insight into the continuing demand for commercial aircrafts.
TWST: What’s driving it[the demand for commercial aircrafts]? Is it just the need to replace aircraft?
Mr. Groh: It is a mix of business, but it is being driven more by growth markets. Higher fuel costs have compressed the economic life of an aircraft, so carriers have started to replace inefficient models. But most of the demand is coming from growth markets, places like India, China and the Middle East. Thus far you haven’t seen a lot of participation from the domestic carriers or more mature markets. I think of the market for new aircraft in two segments. The first is mature travel markets like North America, where most demand is driven by replacement. That’s highly cyclical. And the second is growth markets like India, China, etc., where purchase decisions are being driven by the need to expand the travel infrastructure.
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