LONDON - It’s hard to believe, but the movie of the above title is celebrating its 20th anniversary this year. So I think it’s kind of appropriate to have a little fun with it as we get set to take our own annual adventure 20-years into the future which we call the Boeing Current Market Outlook.
We don’t really have an almanac from the future detailing the aviation market from 2009 to 2028, or a DeLorean time machine, but we do have resources and tools to helps us forecast commercial aviation in the next 20 years.
In the movie, Marty McFly and “Doc” Brown travel to the far-off year of 2015. While there, an almanac of “future” statistics ends up changing their history.
They have to go back to the past as well as “back” to the future to set things right.
Now, when I first went back to the future just two years ago, it was seemingly a different future we were predicting.
Or to put it another way, the “future” (or at least our view of it) seems to have changed since then. Or has it? Let’s discuss this a bit.
It’s true we’re facing an extremely dynamic situation today compared to a couple of years ago – a global economic recession, declining passenger and cargo traffic, and unpredictable fuel prices. Some would argue these conditions call for a dramatic change in our forecast. Well, this year’s outlook definitely takes these current realities into account.
But there’s always going to be a need to transport passengers and freight via our global aviation system, and time has proven the industry is extremely resilient. As I’ve said here before, this is a long-term forecast – one that points to a 20-year period in which the basic factors underlying the need for new airplanes are strong.
And by the way, we’ve had a pretty good record of our forecast turning out to be in line with the realities of the market. Take a look at the chart below:
Our 2000 forecast accurately projected demand distribution by airplane type and quantity of aircraft ordered. Historically, Boeing has been conservative in our estimate, depending on aircraft type. We under-forecasted the number of single-aisles needed. But we over-estimated demand for large airplanes (747, A380). The table reflects passenger jet deliveries from 2000 through May 14, 2009, plus backlog - excluding regional jets.
Something else comes to mind when I look at this chart. It would seem that the competition has a very challenging task ahead to meet its forecast. In the first 10 years of their projection, Airbus will have delivered a total of 27 A380s. Their forecast in 2000 was more than 1,200 A380s. My math might be wrong, but that means that in the next 10 years they will have to deliver about 120 A380s a year to meet their goal.
That’s all very heavy stuff, you might say. Why are things so heavy in the future?
Anyway, did you know that we’ve been publicly issuing our Boeing Current Market Outlook for 45 years? Talk about “back to the future!” The Boeing CMO is the longest-running complete worldwide jet forecast. And during all that time our forecast has always reflected both upturns and downturns.
I did a little time traveling of my own this year, back to the 1950s - just like Marty McFly. Actually what I did was dust off a copy of a Boeing outlook from the past, which referenced forecasts we did from the 1950s on.
Our forecasts from 40+ years ago were used in much the same way as now – to help Boeing develop its strategy and long-range business plan. One key difference: Back then, we divided the world into only three markets: “US Domestic,” “U.S. International,” and “Foreign (rest of the free world).”
We’ve weathered a lot of significant market challenges. But after each downturn, we’ve seen airline growth rates rise above average, with peak traffic levels above those suggested by the long-term trend. That’s why our 2009 forecast sees a future airline fleet large enough to accommodate these peaks in demand, and flexible enough for airlines to adjust or relocate capacity to meet changing demand conditions.
So let’s get to the outlook as I presented it before a group of journalists for the first time earlier today in London.
First, we see long-term passenger growth worldwide remaining strong - at 4.9% annually - driven by global economic growth, world trade, tourism, new airplane capabilities and liberalization.
Second, air cargo will also be strong - with 5.4% annual growth – reflecting the continuing need for speed, delivery reliability, product innovation and global interdependence.
Here’s some big picture data for the Current Market Outlook 2009 - 2028:
- 29,000 new aircraft (a slight decline from last year’s forecast) valued at $3.2 trillion
- Regional jet market “shrinking” due to “up-gauging” into the 90+ seat segment
- Single-aisles will have the largest market share by number of units – driven by large domestic markets in Europe and North America, and growing domestic Asian markets
- Twin-aisles will have the largest market share by investment dollars – with nearly 40% of the demand coming from Asia
- The large airplane segment will be small, with a high proportion of freighters
- Strong growth in China, India and emerging markets will lead toward a more balanced airplane demand worldwide – what we call demand diversity
There’s a lot more to the CMO report, and this year for the first time you can delve into the data right now online. That makes it a truly Current Market Outlook in an entirely Web-based format – with all of the forecast data available through a new set of interactive tools. Data tables are available in Excel, and you download the entire site, including all the tables, in PDF format.
All of the the forecast detail is available now in our enhanced Current Market Outlook Web site. Click on the image to go directly to the site.
I want to leave you with a couple of thoughts as we head into the Paris Air Show and all of the questions around the market we’re bound to hear. What does this year’s forecast have in common with all the Boeing forecasts through the years? Resilience. Over decades of tracking, despite several economic downturns, the industry grew by an average of around 5% per year.
Clearly, during the next 20 years there will be periods of recovery mixed with setbacks. But we see a similar growth trend going forward. As George McFly would put it, it’s our density!
And here’s a little perspective for the next time you think about our 20-year forecast and how far into the future that seems. For those of you who remember the film, think back to 1989 and when you first watched Back to the Future, Part II. It doesn’t seem all that long ago, does it?
Finally, I just want to mention the use of the word “current.” It’s in the title of our forecast each year because, in a sense, we tear up the old forecast and start fresh with new analysis.
It’s how we make sure that our new forecast takes current market conditions into account. We’ve got a great team working on this every year, and every year they start – virtually - from scratch.
In 2009 our CMO team started from the basis of our current economic downturn. From there they looked ahead at how airline strategies are being adjusted to account for these conditions. Ultimately it takes months of analyzing data from a multitude of sources, even as the data itself is dynamic and changing by day. It takes a lot of hard work and long hours.
So kudos once again to our team of tireless and dedicated market analysts who devote their time and energy to this project – because they care very much about getting it right each year.
Or as I like to put it, that’s the power of love.