Boeing Reveals Updated Market Outlook

After weathering one of the worst financial crises to ever hit the commercial aviation industry the consensus of opinion among the world’s leading aircraft manufacturers is that the worst may now be over. The large number of deals at this week’s Paris Air Show supported this view, with airline and particularly specialist lessor orders serving to fertilise these first green shoots of recovery. However, it is impossible to predict what lies ahead for the industry.

Nobody could have foreseen how much disruption would be caused to airline operations around the globe last year when a long-time dormant Icelandic volcano erupted, so who would dare to forecast aircraft demand 20 years ahead? Well, all the aircraft manufacturers that’s who. Market outlooks play a key part in their long-term business models and investment in new aircraft programmes.

One of the most comprehensive and respected analyses of the commercial aviation market is produced by US manufacturer Boeing - its Current Market Outlook is now in its 47th year of issue and in its latest report, released last week ahead of the Paris Air Show, it has forecasted a $4 trillion market for new aircraft over the next 20 years with a significant increase in forecasted deliveries - a market for 33,500 new passenger and freighter aircraft between now and 2030.

"The world market has recovered and is now expanding at a significant rate," said Randy Tinseth, Vice President of Marketing, Boeing Commercial Airplanes. "Not only is there a strong demand for air travel and new airplanes today, but the fundamental drivers of air travel – including economic growth, world trade and liberalisation – all point to a healthy long-term demand."

Boeing forecasts that passenger traffic will grow at 5.1 per cent annual rate over the long-term and that the world fleet is expected to double by 2030. According to the manufacturer, the single-aisle market will continue to see “strong demand around the world” and is expected to “increase its share of the market” with Boeing suggesting that by 2030 single-aisle jets will constitute an estimated 70 per cent of the total operational fleet, up from 62 per cent today.

The widebody sector will continue to play a key role in the development of the business though as the current industry backlog of more than 2,000 twin-aisle airliners shows. The continued growth in long-haul connections will fuel the need for more twin-aisle jets, according to Boeing, as airlines look to open new, non-stop markets, particularly in Europe.

With 1,400 deliveries, twin-aisle aircraft will make up 19 per cent of the total European deliveries during the forecast period, says the manufacturer. Liberalisation, as well as fragmentation and proliferation of new mid-size, long-range aircraft such as the 787 Dreamliner, the 777-200LR (long range) and 777-300ER (extended range) and A350 models from rival Airbus, will increase the need for intermediate twin-aisle jets, it said.

Of particular note, Boeing has increased its forecast in the 400-seat plus sector where the new B747-8 and Airbus A380 are positioned. It estimates there will be a demand for 820 aircraft over the next 20 years. This may be a “small” demand, according to Boeing, but the sector remains “an important market segment” to the manufacturer in economic terms with a value of $270 billion. It forecasts the market to be dominated by replacement aircraft and not additional growth, with more than two-thirds of the demand coming from Asian and Middle Eastern customers.

Robust growth in China, India and other emerging markets will lead to a more balanced global demand. China, which has experienced double-digit growth in gross domestic product in recent years, is forecasted to grow at 7 per cent per annum, while South Asia, which includes India, is forecast to grow at 7.1 per cent. The Asia Pacific region as a whole is forecasted to need the most new aircraft over the next 20 years and will represent the largest market by value of deliveries at more than $1.5 trillion. As the table below shows, the region will account for more than a third of new deliveries worldwide, while the Middle East and Latin America will also continue to show very strong growth.

European and North American carriers will continue to see demand for replacement aircraft as they retire older, less fuel-efficient models, according to Boeing. In fact, it predicts that 94 per cent of the European fleet operating in 2030 will have been delivered after 2011, driven by environmental developments by airframe and engine manufacturers.

Looking in greater detail at the cargo sector, Boeing predicts the world freight fleet to more than double over the next 20 years from 1,760 to 3,500 aircraft. This growth will require 2,960 new deliveries, comprising 970 new-build models (worth around $250 billion) and 1,990 converted from passenger configuration. Of the new aircraft, 690 will be classified in the large airliner sector (more than 80 tonne capacity), 280 in the medium class (40 to 80 tonnes) but none in the single-aisle class – the demand in this last sector will be fulfilled by converting 1,240 used airliners, according to the manufacturer. According to Boeing, world air cargo traffic will increase at an average annual rate of 5.6 per cent through the 20-year period.