Canada’s Aircraft and Aircraft Parts Industry: Industrial Outlook Summer 2006

Global economic growth vastly improves the outlook for airlines. As well, cost-reduction efforts have been effective, and passenger numbers are increasing. The air transport industry is gradually restructuring in America and Europe, and there is unprecedented airline growth in China and India.

Air carriers around the world have been hard pressed to keep pace with increasing fuel bills, which have increased by an annual average of US$20 billion since 2003. As their bottom lines have taken an additional hit from the strong loonie, they have delayed purchasing aircraft and aircraft parts from the Canadian aerospace sector. However, shipments of aircraft and aircraft parts are expected to increase by 8.3 per cent this year as airlines see the results of their cost-cutting efforts.

Even as it loses ground in the regional jet segment, Bombardier continues to dominate the business jet market. The company has been able to take advantage of the renewed interest in turboprops resulting from high oil prices to gain further market share.

Revenues are expected to expand again in 2007. Sustained growth for Bombardier, Pratt & Whitney, CAE, and new companies in Canada will lead to greater output. Revenue growth will remain strong over the medium term, thanks to sustained output and price growth.