LONDON — Chicago-based airframer Boeing forecasts demand for 39,260 new jet aircraft over the next 20 years in its latest Current Market Outlook (CMO), including more than 70% (71.6%) or 28,140 in the mainline narrow body category that encompasses aircraft seating anywhere from 90 to 230 passengers.

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Boeing also forecasts that airlines will need 9,100 wide body aircraft over the same period worth nearly as much ($2.8 trillion) as the narrow body planes ($3 trillion).

The balance of power has shifted to Asia

The geographic distribution of this demand is of course heavily weighted towards Asia-Pacific both the world’s largest air traffic market and the fastest growing.

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Over the 2016-2035 period, Boeing expects a plurality of aircraft deliveries by volume and market value, nearly 15,130 deliveries worth a cumulative $2.4 billion. And of course the core of the Asian market is China, which Boeing VP of Marketing (and lead salesman) Randy Tinseth noted is well on its way to becoming the biggest domestic and outbound international air travel market in the world.

Relative distributions feel right but overall figure seems bullish

At a high level, the overall breakdown by market category in terms of overall share makes a lot of sense, though Boeing pointedly declined to break down its future projections between smaller and mid-size single aisle jets (the 737 MAX 8 and A320neo) and the larger (A321neo and 737 MAX 9). However, it continues to overreach in calling the 737 MAX 8 the “heart” of the narrow body market for the next 20 years, though it appears to have pulled back some from that characterization (it is no longer a feature of the CMO) as it realized some of the powerful factors pushing in favor of dense aircraft. That comparison that has not been favorable to Boeing and its 737 MAX 9 over time versus Airbus and its A320neo.

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In fact, while Tinseth maintains that the CMO, which has been forecast since 1961, is primarily a tool used to help shape Boeing’s product strategy and long range business plan, it has long since evolved into a key PR document that doubles as corporate messaging. But returning to the core figures in the forecast, Boeing has rightly “bulged” the market in the central space of narrow body and small to medium wide body aircraft, with demand for just under 2,400 regional jets and only 530 very large aircraft (VLA) seen over the next two decades. Here the definitions of each class is key, as Boeing classifies only the 747-8 and Airbus A380 as large wide body airplanes whereas we would also classify the 777-9X as a VLA.

Boeing has more or less distilled down the market trends that drive major demand, and there are a myriad of trends ranging from long run economic growth to replacement. Tinseth stated that Boeing expects 43% of the existing global fleet will be replaced over the period covered in the CMO, with the key replacement markets including Europe, the United States, Japan, and South Korea. Between core demand and positive demand shocks like the re-emergence of Cuba and Iran into global aviation, there’s a lot to be bullish about.

But the CMO’s figure of 39,260 is contingent on global economic growth (GDP) of 2.9% per year, which feels a little high given some of the economic choppiness that is present in the world today. In fact our view is that said figure is unattainable if global societies give into their current mood of protectionism. And given the close correlation of GDP growth to demand growth (and thus fleet needs), that bodes poorly for the CMO’s figure.

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If fuel prices remain low for most of the 20 year period (as we have seen over the last couple of years), that might also depress demand for new airplanes, and many of the market dynamics of the oil market (read millions of barrels of daily shale oil production that will be restarted if prices get too high) point to a period of reasonable oil prices. And none of this prices in idiosyncratic risks like ISIS rendering the Middle East megahubs too dangerous to transit through or changing regulations in Western nations banning business class travel for corporation executives. All in all, Boeing’s figures feel 20% too optimistic.

There is still a ton of business for Boeing and Airbus to win

But the reality is that even that reduced figure will be a continued bonanza for Airbus and Boeing, at least until some other manufacturer rises up to challenge the current aerospace hegemony. 80% of Boeing’s projection is still more than 31,000 new aircraft over the next 20 years. As John Wojick, Boeing’s SVP of Global Sales & Marketing noted, Boeing’s record backlog of 5,740 aircraft is worth $424 billion, and throughout the industry (including competitors) only 40% of the addressable market over the next 20 years is accounted for. Even with some risk priced in, the aerospace business is very, very good.