MIAMI — Boeing’s 2015 Current Market Outlook (CMO) has forecast demand for 38,050 new airplanes valued at $5.6 trillion in the next 20 years, up 3.5 percent from last year’s forecast. The company does a 20-year forecast based on traffic growth and aircraft demand for all regions of the world.
The CMO covers jets 30 seats and above, but does not include turboprops, business jets or military aircraft, and covered scheduled and nonscheduled flying.
“There’s solid demand in the market,” said Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes. “As we look forward, we expect the market to continue to grow and the demand for new aircraft to be robust.”
The CMO found that while global economic growth was below average in the past five years, at 2.7 percent a year, the passenger market was resilient, growing at 6 percent a year, while the cargo market was recovering, growing at 1.3 percent a year. “Over the last two years, we’ve seen trade come back and passenger traffic has been robust,” said Tinseth. “For our airline customers, the marketplace has become more efficient, recording $59 billion in profits in the past five years. We’re coming from a very strong base as we look into the future.”
With market trends, growth is being driven by airlines in emerging and developing economies and low-cost carriers, said Tinseth. “This has become a diverse and balanced marketplace, proving to be very resilient,” he said. “Where we see challenges in one part of the world, we see strength in others.”
Aircraft are being replaced, with 42 percent of demand coming from the replacement of older models to new, more fuel-efficient ones, said Tinseth. By the end of the forecast period, the commercial airplane fleet will double, from 21,600 airplanes in 2014 to 43,560 airplanes in 2034, he said. Fifty-eight percent of the 38,050 airplanes delivered over that time will be to accommodate growth, he added.
The single-aisle market continues to be the fastest-growing, largest overall segment, requiring 26,730 airplanes in the coming two decades. These aircraft are the foundation of the world’s airline fleet, carrying up to 75 percent of passengers on more than 70 percent of the world’s commercial aviation routes.
Boeing does the CMO for three reasons, said Tinseth: product strategy, long-range business planning and sharing the information with suppliers and customers. “We shared our first CMO in 1961. How accurate is our forecast?,” he asked. “It’s the most comprehensive and most accurate. Our numbers have been conservative and we’ve always seen more airplanes delivered than forecast.”
By the end of the forecast period, the commercial airplane fleet will double, from 21,600 airplanes in 2014 to 43,560 airplanes in 2034. Fifty-eight percent of the 38,050 airplanes delivered over that time will be to accommodate growth.
About 35 percent of the single-aisle market will go to low-cost carriers, Tinseth noted. “Low-cost carriers will require airplanes that combine the best economics with the most revenue potential. With 20 percent lower fuel use, the 737 MAX 200 will be the ideal machine for them.”
Boeing forecasts that the widebody segment will require 8,830 new airplanes, led by small widebody airplanes in the 200- to 300-seat range such as the 787-8 and 787-9 Dreamliner. This year’s forecast reflects a continued shift in demand from very large airplanes to efficient new twin-engine products such as the 787 and new 777X.
While airline growth still accounts for the majority of new demand, a large and growing number of aging aircraft will require replacement. About 2 to 3 percent of the installed fleet will require replacement each year. “The 737 MAX, 777 and 787 are perfectly positioned to capture this important wave of replacement,” Tinseth said.
The air cargo market continues to strengthen, and will drive demand of some 920 new airplanes over the 20-year forecast. “We’ve seen two years of solid growth in the air cargo market and we expect that growth to continue,” Tinseth said. “That’s great news for our line of production freighters, including the 747-8, 767 and 777.
“As we were pulling data on this forecast, we looked at the 1995 CMO. We expected load factors to be 70 percent this year, it was actually 80 percent,” said Tinseth. “Airlines are using airplanes more efficiently than we ever imagined.”
Market growth is driving increased requirements. “Three billion passengers will travel by air this year. By 2024, it will be at seven billion passengers,” said Tinseth. “We’re now looking at how the market has changed from a network perspective and how airlines are accommodating this growth.”
As traffic grows, airlines get more airplanes to more places, said Tinseth. “But passengers want more flights at reasonable fares and airlines are providing that,” he said. “Between 2013 and 2014, we look at how airlines were accommodating growth in their networks. Seventy-eight percent of increases in capacity in routes were met by additional frequencies, 14 percent were new direct routes and only 8 percent were larger airplanes on existing routes.”
The largest market in terms of regions is Asia-Pacific, at 39 percent, which will need 14,330 planes valued at $2.2 trillion during the forecast period. That’s followed by North America at 7,890, valued at $920 billion; Europe at 7,300 at more than $1 trillion; and the Middle East at 3120 planes valued at $720 billion.
During the question and answer period, Tinseth was questioned if there were Boeing’s plans for a 757 replacement. “As we look at a 757 replacement, I call it the middle of the market space between the 737 and the 787. We’re still engaging with our customers,” he said. “It’s coming back fairly consistently for an aircraft bigger than the 757.”
Boeing is asking what the true demand is for that product and the technology needed to produce it, said Tinseth. “We have time to make a decision, and we will take that time,” he said.