Analyst sees narrowbody bubble market

The long wait for new narrowbody aircraft types is an indicator of a bubble market, an analyst said today.

Speaking Monday at the International Society of Transport Aircraft Trading (ISTAT) Americas 2012 conference in Scottsdale, Ariz., Avitas senior VP Adam Pilarski said this bubble was among the bad indicators for the airline industry market outlook that potentially could lead to a perfect storm situation.

“With narrowbodies, if you want to buy a new airplane today you have to wait years for it, and that’s a sign to me of a bubble,” Pilarski said.

Other concerns are the potential for a flare up over Iran as well as the European recession combined with a slowdown in China’s growth and lack of financing. The world uncertainty caused by three leaders—Iran’s Mahmoud Ahmadinejad, Venezuala’s Hugo Chavez, and Russia’s Vladimir Putin—is causing oil price spikes even if nothing changes, Pilarski said.

On the plus side, Pilarski pointed out that while Chinese oil consumption increased 54.3% between 2005 and 2011, China’s economy grew by 86.2% over the same period and world GDP grew 14.7%, so there is still growth. World oil consumption, meanwhile, grew by 0.5%, so was essentially stable despite China’s greater demand.

“We are definitely not running out of oil. We have well over 50 years left of it at today’s production, which is more than we had in 1956,” Pilarski said.

Article Source : ATW Daily News