Boeing’s 20-year, $3.6 Trillion Market Forecast

Boeing has released its 2010 Current Market Outlook (CMO), which predicts a need for as many as 30,900 new commercial aeroplanes—valued at US$3.6 trillion—over the next 20 years as the world economy recovers, and the demand for new and replacement aircraft encourages growth.

Boeing says its CMO reflects improving—although still unstable—conditions facing the industry.

Randy Tinseth, the vice president of marketing for Boeing Commercial Airplanes, believes that the world market is doing much better than last year, but he says there are still challenges ahead. “Looking at 2010, we see a world economy that continues to recover. We expect the world economy to grow above the long-term trend this year,” he said. “As a result, both passenger and cargo travel will grow this year. Airline revenue and yields are up, but fuel prices remain volatile.”

According to Boeing, because of economic growth in regions with diverse aeroplane needs, global passenger traffic is expected to grow at an annual rate of 5.3% over the long term. Not surprisingly, the company says that the single-aisle segment will continue to dominate growth worldwide because of the proliferation of low-cost carriers; emerging markets such as India, China and Southeast Asia; and the continuing instability of fuel prices. The single-aisle market will continue to dominate as it has during the last decade, and will continue to expand further as increasing numbers of older aircraft are retired.

Boeing says that the Asia-Pacific region has shown the greatest increase, with China leading the way. At present, around one-third of all airline traffic “touches the Asia-Pacific region,” according to Tinseth. Boeing predicts that by 2029, that figure will be around 43%.

Despite the predominance of single-aisle sales globally (including Asia-Pacific), the greatest number of twin-aisle sales will also be in the Asia-Pacific region. Boeing predicts a figure for the region of around 40% of total twin-aisle sales.

Boeing says the Middle East, which has been one of the fastest growing regions for air travel in recent years, is another very strong market.

In North American and Europe, Boeing says there will be substantial demand for replacement aircraft as airlines retire ageing, less efficient jets.

Boeing still predicts that air carriers will focus on offering more flights using more efficient aeroplanes, rather than using significantly larger ones, and believes airlines will grow by responding to their passengers’ preferences for more flight choices, lower fares and direct access to a wider range of destinations. As a result, Boeing predicts a market for no more than 720 large aeroplanes (747 and larger). Despite the relatively low number of aircraft (compared to the single-aisle market), with a value of $220 billion, this remains an important market segment. The company says the large aircraft market is largely one of replacements for existing aircraft rather than new growth. Boeing believes 45% of the demand for large aircraft will come from Asian customers and 23% from Middle East customers.

In the global freighter market, Boeing predicts an increase in the world fleet from 1,750 to 2,980 freighters—an increase of more than two-thirds. According to Boeing, this growth will require 2,490 freighters, which, it predicts, will include 740 new-production freighters (worth $180 billion at today’s prices) and 1,750 aeroplanes converted from passenger models. Boeing says large freighters (those with more than 80 tonnes capacity) will account for 520 new-build aircraft. Medium freighters (40–80 tonnes) will total 210 aircraft. Boeing believes that virtually all of the standard-body freighters (less than 45 tonnes’ capacity) will come from conversions of passenger aeroplanes.

The recession resulted in significantly reduced air cargo traffic in 2009, which is the base year for the Boeing forecast. From this base, Boeing forecasts that world air cargo traffic will increase at an annual average rate of 5.9% until 2029. This figure includes the current strong year traffic growth that Boeing estimates will be nearly 14% greater than in 2009, which it says is a significant spike in the 20-year growth projection.

“The inclusion of the high-traffic growth levels in 2010, following the recession, is driving our cargo forecast upward,” said Randy Tinseth. “However, the strength of the industry and its growth will continue to be driven by sound fundamentals—speed and reliability, consumer product innovation and global industrial interdependence.”

Boeing’s full report, including an interactive database of forecast numbers, can be found online at www.boeing.com/cmo.