Back to the future - Part III

LONDON - Is it really possible that 1990 was 20 years ago? That’s when the above titled movie was released, closing out the popular film trilogy.

It’s a fitting way to bookend our discussion of the commercial airplanes market for the next 20 years.

In the movie they go back in time to the old American “west.” In our version, which we call the Boeing 2010 Current Market Outlook (CMO), we go west, east and all points in between to see into the future of our industry.

I just released our report here in London.

Clearly, we’ve been through a couple of very difficult years, but things are getting better and we see the industry growing again - both in terms of passenger traffic and cargo traffic. Passenger traffic declined about 2% during the worst recession in 60 years. But as we’ve said before, this industry is resilient and is already coming back strong.

So, as Doc Brown declares in BTTF Part III, “The future hasn’t been written yet - no one’s has.” But here’s what we see coming down the pike:

Current Market Outlook 2010 - 2029

  • Demand for 30,900 new commercial airplanes (passenger and freighter) valued at $3.6 trillion - a significant bump up from last year’s forecast.
  • Strength and resilience in the single-aisle market - demand for 21,000 single aisles valued at $1.6 trillion
  • Passenger traffic to grow 5.3% annually over the forecast period
  • World economies rebounding with strong demand for new and replacement airplanes
  • Increased traffic in emerging markets balancing airplane demand more evenly across the globe

We’ve been releasing our market outlook for 46 years now. It’s our analysis of both air travel and airplane demand. We happen to think it’s the most accurate and comprehensive forecast available for the commercial aviation market. Take a look at the graphic below:

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Boeing’s market outlook is in line with the realities of the market. Looking back to our 2000 - 2019 forecast, we accurately projected the demand distribution by airplane type and quantity of aircraft ordered and delivered.

As you can see above, we do tend to forecast conservatively. For example, we under-forecasted the number of single-aisles and twin-aisles while over-estimating large airplane (747, A380) and regional jet demand.

Going forward, we see the world fleet size nearly doubling by 2029. The need to replace older, less efficient airplanes accounts for 44% of the projected market for new airplanes. 13,500 airplanes will be replaced over the next 20 years. At that rate, 82% of the fleet operating in 2029 will have been delivered after 2010!

I think the headline for this year is the surging demand for single-aisles. Today, there are 11,580 single-aisle airplanes in operation. But that single-aisle fleet is forecast to more than double, reaching 25,000 airplanes by 2029

What’s happening is the continued proliferation of low-cost carriers as well as growth in emerging markets such as India, China and Southeast Asia. Boeing has already announced production rate increases on our 737 line to accommodate this demand, and we’re seeing early evidence of it in increased order activity this year.

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A visual indicator of the demand for single-aisles. Next-Generation 737s awaiting delivery at Boeing Field.

Demand will also come in the form of replacement needs as older aircraft such as the 737 Classics, A320s, and MD-80/90s are retired. We’ll see a wave of single-aisle aircraft retirements in the 2015 to 2017 time frame.

Yet, the fastest growing market will be for twin-aisles. The twin-aisle fleet will grow from 3,500 airplanes in operation today to 8,260 airplanes in 2029. In 20 years, much of the in-service fleet will be newer aircraft, such as the 787 and 777, offering more passenger comfort, improved efficiency, and better environmental performance than the airplanes they replace.

About 40% of the demand for twin-aisles will come from the Asia Pacific region. Also as you might expect, the Asia Pacific region in general shows the most robust market gains, with China leading the way.

The Middle East, where air travel is growing tremendously, is going to continue as another very strong market.

In North America and Europe, what we see is replacement demand as airlines update their fleets with newer, more efficient airplanes.

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We expect the world fleet to reach 36,300 airplanes by 2029. Regional jets will represent only 6% of the world fleet versus 16% today. Single-aisle airplanes will represent 68% versus 61% today. Twin-aisle airplanes will increase from 19% to 23%. Large airplanes will decline from 4% to 3%.

Worldwide we see that airlines are going to be responding to passengers’ preference for more flight choices, lower fares and direct access to a wider range of destinations. That means more flights using more efficient airplanes.

This is why we continue to see a small market for large airplanes (747 and larger) - just 720 aircraft over the 20-year period. It’s still an important segment, but largely (no pun intended) for replacement of existing airplanes, not additional growth.

A quick note about freighters. We see an increase in the world freighter fleet from the current 1,750 airplanes to 2,980 airplanes - an increase of more than two-thirds at the end of the forecast period. This will require 2,490 freighters - 740 new-production freighters and 1,750 airplanes converted from passenger models.

High freight traffic growth levels in 2010, following the recession is driving our cargo forecast upward. But fundamentals will drive the growth - speed and reliability, consumer product innovation and global industrial interdependence.

So, that’s a lot to digest, but there’s plenty more in our report. We’ve transitioned to a Web-based Current Market Outlook report with a detailed forecast database that allows you to select just the data or regions you’re interested and then download the data for that region.

The online version - launched in 2009 - has been very popular, with more than 700,000 visits and 260,000 downloads. Be sure to check it out.

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Here I am on the flight line at Boeing Field where I did a video and actually managed to walk and talk about our forecast. Click above to take a look.

By the way, we’ve also posted a interesting feature story you might call “the making of the CMO.”

Our 20-year forecast is really key to everything we do. It helps shape Boeing’s product strategy. We use the data and information from the forecast in developing our long-range business plan. And we share the data in the forecast with our suppliers and customers.

The better our forecast, the better our strategy, the better our business plan and the better advice we can give our customers and suppliers.

It’s quite a journey into time for our Current Market Outlook team.

Or, as Doc Brown would say in answer to Marty McFly’s question at the end of our featured film, “Where you goin’ now, back to the future?”

Nope. Already been there!

Comments (8)

Chris C (South Africa):

Randy, Boeing’s CMO is simply phenomenal, period. Well done to the entire Boeing Team who are involved in compiling this highly interesting and accurate CMO. This is something to be certainly proud of and no doubt involves copious amounts of work...work that will ultimately pay-off and see Boeing remain at the forefront of innovation and remain the market leaders in offering market-preferred, highly-advanced commercial airplanes, period!

For me, I was particularly interested to see that the VLA market forecast has remained pretty much stable. I’m pleased to see that the VLA Freighter market (>80,000kg payload) has increased by 30 units from 490 to 520. As Boeing ultimately “commands” this market segment with the 777F and phenomenal 747-8F, this is good to see an increase in this forecast. I’m also inclined to believe that we’ll see a launch of a 777BCFx program soon as there’ll no doubt be huge demand for that size/capability airplane, and the efficient/capable A330F needs a viable competitor.

With the somewhat perceived “dearth” of interest in the VLA passenger market, I somehow thought the VLA forecast would’ve decreased by more than 20 units, but at the same time I’m pleased to see that it didn’t as that means Boeing is still confident that there’s a good market size for the 747-8 Intercontinental to compete in.

Excellent CMO and well done again! All the best for Farnborough!

Dave (Eagan, MN):

Randy,
This is exciting stuff, excellent post and congrats on the forecast - looks like Boeing will be flying high for years to come!

Norman (Long Beach, California, United States):

The boost in the world economy and the demand for new aircraft to replace older aircraft and form new destinations is a great opportunity for new orders to come essentially boosting the local economies where the aircraft parts are made and where the aircraft is assembled. This is a great way to begin a new decade.

In the lower chart I see a growth in twin-aisle aircraft and single aisle aircraft but not a huge "VLA" type aircraft, all of this is evident on the sales that we see today in the huge orders for the 787 and even the slightly larger A350 as planes like the 767, older models of the 777 and the A340 and older A330 models are in the market for replacement so the sales of the A350 and especially the 787 are expected be in high demand. The 787 has the added advantage of its size because it can replace 767s as well as it can be a part in forming new markets, the A350 being significantly larger than the 767 and even the A330-300 will have a harder time replacing various aircraft so it will find itself more often than not complementing the 777 like the 300ER than replacing it. As for the 'VLA" I expect the market demand to be small and used only on the busiest sectors and sectors where is little or no competition from other airlines, one A380 per month down from the projected 40 per year is not a good sign of progress.

For the narrow bodies like the 737, sales are outstanding and it won't be too long that the current line of 737s will just replace older A320 types and 737 classics but replace older 737 next generation aircraft in airlines around the world. The seating capacity of aircraft that sells the best is the 190 seat aircraft similar the 737-800 and A320 followed by the 150 seat category that fits the 7737-700 and the A319, these seating types are what sells best. The 110 to 130 seat category sector of the single aisle segment are the slow sellers the 737-600 and the A318 are not hot sellers as they are believed to be too heavy and the C-Series is not selling well, this market with the growth of larger and lighter regional jets like the CRJ900 and E-190 is finding itself in greater market obscurity.

The regional jet sector seems to be the only size sector that is shrinking. Virtually all 50 seat and under regional jets like the CRJ-200 and the ERJ 135/140 are not in current production and the ERJ 145 is nearly out of production. The future of regional jets is in the 70 to 110 seat category as they are more economical for the market than the smaller regional jets.

As the economy all over the world recovers the market outlook looks great.

P.Sumantri (Montreal, Québec):

I've been waiting for this CMO since some time (read this in my blog). So here you go! You've just opened the "Forecast Season". Now, I am impatient to read Airbus' GMF.

Guillermo G Gomez (Dubai, UAE):

Randy, I am a follower of your interesting blog. You bring an excellent insight of a true giant, we love your product and hoping that you will enjoy Farnborough!!!
We are planning to have a wonderful time!!!!

All the best.

Tom (Germany):

Randy,

you used the movie to lead us to your forecast - (perhaps even very important one).
"Making a movie" is at least as thrilling as watching the movie. But there is the beef!
Without asking for all ingredients - where do you see the - sorry - some risks (apart from fuel)?

Tom


Mark Goldhamer (Seal Beach):

I think it would be interesting to translate this forecast of additional and replacement aircraft into a total fuel consumed per year forecast.

Each additional plane adds demand for fuel but each replacement (in theory) reduces demand for fuel because of the advanced features.

Each new route and each increase in aircraft utilization per day adds fuel demands....but each improvement in air traffic control reduces fuel demands.

If the new planes fly faster or slower than the old planes, that affects how many miles they could cover which affects fuel consumption.

So is the total fuel use forecast even possible given the forecast for refinery production or does it tell the fuel industry they need to step it up?

Samit:

Hi Uresh, Thanks for the new info on the production list. Just cuuoirs, what is the reason for the out of sequence positioning of LN44 for Ethiopian. I would have thought it should be in final assembly position #3 rather than in Stall #120. thanksjohn

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