LONDON — Airbus released its 2016 Global Market Forecast (GMF) earlier today at the Farnborough Airshow, projecting demand for 33,070 new aircraft over the next 20 years representing $5 trillion in cumulative market value. That figure was about 14% less than the demand for 37,240 new airplanes projected by Boeing after netting out the 2,380 projected sales for regional jets in Boeing’s current market outlook (CMO).
GMF Reflects Airbus Focus on Emerging Markets
Airbus’ projections for new aircraft demand in the 2016-2035 period included 23,530 single aisle aircraft (seating 100-210 passengers), 8,060 twin-aisle aircraft (seating 250-400 passengers), and 1,480 very large aircraft (seating more than 400 passengers).
Like Boeing, Airbus expects a plurality of new orders, 40.6% to be exact, in the next two decades to come from Asia-Pacific, the world’s fastest growing region for air travel.
During a GMF briefing at Farnborough earlier today, John Leahy, Airbus COO – Customers, touched on the importance of Asia, noting that “There is massive growth concentrated in Asian emerging markets over next 20 years. We expect 30 percent of new growth from those markets.”
In his presentation, Leahy cited a variety of statistics to show the scale of the expected Asian passenger travel boom, including propensity to fly in China (from 0.3 trips per capita today to 1.3 by 2035, or current European propensity) and domestic traffic in India (increasing five times over in the next two decades).
Airbus projects fewer narrow bodies than Boeing
Interestingly, the key volume difference between the Airbus and Boeing forecast comes in the narrow body space, where Boeing projects nearly 4,000 more sales than Airbus. This is not an accident, as Airbus is focused on the middle of market (MoM) space where its A321neo reigns ascendant over competing Boeing products. Just today, Boeing’s John Wojich poured cold water on a stretched 737 MAX 9 (737 MAX 10X) to compete with the A321neo, leaving Boeing without a solution for MOM.
As Leahy noted during the briefing in his trademark pithy manner, “Our competitors [Boeing] talk about the MoM but we don’t need to do anything about it [the segment]. We already have it with the A321LR and A330neo.”
Indeed it would make sense that Airbus would expect to sell less narrow bodies overall, as it expects a higher percentage of narrow body sales during the period to be in the MoM space. This would allow a similar level of overall narrow body capacity to be delivered on fewer frames, consistent with the figures in Airbus’ projections.
Despite the smaller figure, we don’t feel that Airbus was actually that conservative in its projections, it is merely banking on a different product mix.
Difference in VLA demand comes down to segment definition but Airbus banking on Aviation “Mega-Cities”
The other key area of difference is demand in the VLA space, but that is a difference mainly on paper, as Boeing’s definition of VLA space excludes the Boeing 777-9X and a hypothetical A350-2000 whereas Airbus includes those planes in the market segment.
We are actually quite comfortable with 1,500 planes above 400 seats worth of demand over the next 20 years as a figure, we just expect that 1,000 of the 1,500 will come from the 777X and larger A350 variants.
The more interesting point Airbus makes is that it is still confident in the future of the A380 superjumbo. “We will need bigger aircraft to serve mega cites,” noted Leahy, “but the case for the A380 neo isn’t as solid right now with fuel prices being low.”
Leahy also confirmed that Airbus is studying the A350-2000 stretch to compete with the 777X, but also reiterated that the studies have not returned anything conclusive. Our view is that the megacities argument is a compelling one but increased fragmentation of the market by LCCs.
John Leahy Jabs at Boeing
Of course it would not be a John Leahy presentation without a series of pithy jabs aimed at Airbus’ biggest rival. “I took a flight on a 787 and couldn’t believe how loud it was,” said Leahy. “The A350 is 6 db quieter than the noisy 787, and even our A330 is quieter [than the 787].”
He finished with a classic: “It’s a lot harder for the guys in Seattle to sell airplanes than it is for us because we have the better aircraft.” No doubt his counterpart Tinseth at Boeing would say the same about the Chicago-based manufacturer’s programs.
Chris Sloan reported from Farnborough and Vinay Bhaskara from Boston.