As Airbus Looks Forward to $4.6 Trillion Future, Boeing says more like $5.2 Trillion

After releasing its 2014-2033 Global Market Forecast, Airbus predicts that commercial aviation will need 31,000 new aircraft with 100-seat or greater capacity, a market worth $4.6 Trillion over the next twenty years.  It attributes this demand to growing passenger traffic.

Airbus expects that 12,400 existing older and less fuel efficient aircraft will need to be retired and replaced and that the world’s passenger and freighter fleet will double from today’s 18,500 aircraft to 37,500 by 2033.

The economic growth rates in emerging markets such as Asia, Latin America, Africa and the Middle East, are outstripping more economically developed regions. One significant effect is that the middle classes in Asia are expected to quadruple in size by 2033 whereas globally they will double from 33% to 63% of world population. As a result of increased urbanisation and concentration of wealth, the number of aviation mega-cities* worldwide will double to 91. These cities will be centres of world wealth creation with 35% of World GDP centred there, with more than 95% of all long haul traffic going to from or through them.

The manufacturer expects the largest demand in widebody aircraft: 7,800 twin aisle aircraft (250-400 seats) and 1,500 very large aircraft (over 400 seats) will be needed for the busiest routes, for a total of 9,300 new wide body passenger and freighter aircraft over the next 20 years, valued at $2.5 Trillion.  “Almost Half of the new passenger wide bodies will be delivered to carriers based in the Asia-Pacific region, then the Middle East (16%), Europe (15%) and North America (9%),” the manufacturer states.

Airbus also predicts 22,000 new single aisle aircraft will be needed worth $2.1 trillion over the next twenty years, with demand remaining high in Europe and North America (22% and 21% of total demand respectively) but Asia overtaking both these regions, primarily in China and India, and the low-cost segment in South East Asia, all generating 37% of single aisle deliveries.  According to the manufacturer, single aisle aircraft will represent 70% of all new units sold and 45% of the value of all deliveries.

Boeing’s View

These predictions are somewhat conservative compared to those presented by Boeing earlier this month.  Boeing projects new commercial aircraft demand to be worth $5.2 Trillion over the next twenty years, consisting of 36,770 new aircraft broken down as follows:

Long-Term Forecast 2014/Boeing
Long-Term Forecast 2014/Boeing
long_term_forecast_large_3
Long Term Forecast 2014/Boeing

Boeing also foresees the largest growth in Asia, which is no surprise from either manufacturer as this prediction is already well established.

Boeing has asserted that China will lead the Asia Pacific Region in new aircraft deliveries, generating demand for 6,020 new aircraft valued at $870 billion.

China’s aviation market is going through dynamic changes,” said Randy Tinseth, Boeing Commercial Airplanes vice president of Marketing. “New business models like low-cost carriers and airplane leasing companies, a new generation of fuel-efficient airplanes and evolving consumer needs are driving demand for more direct flights to more destinations.”

New Airplane Deliveries to China: 2014-2033

Airplane type

Seats

Total deliveries

Dollar value

Regional jets

90 and below

200

$10B

Single-aisle

90-230

4,340

$430B

Small wide-body

200-300

780

$200B

Medium wide-body

300-400

640

$210B

Large wide-body

400 and above

60

$20B

Total

6,020

(16.4% of world total)

$870

(16.7% of world total)

Chart of China Demand by Boeing

It goes without saying that both manufacturers assert that they are ideally positioned to capitalise on all this growth. We’ll let Leahy and Tinseth battle it out in their own words here:

John Leahy/Airbus

“Aviation is growing impressively and our latest forecast confirms its long term growth. While mature aviation regions such as Europe and North America will continue to grow, Asia will stand out along with emerging markets for dynamic development,” said John Leahy, Airbus Chief Operating Officer, Customers. “This growth trend is confirmed by Chinese domestic traffic becoming the world’s number one aviation market within the next 10 years”.

“We see especially strong growth in widebody twins such as our A350 XWB and A330neo. Demand exceeds supply for these new generation aircraft, especially in the 2017 to 2022 time period and beyond, so naturally we are studying production increases on both models,” said John Leahy. The first A350 XWB will be delivered later this year while the first A330neo in 2017.”

Randy Tinseth/Boeing

China’s aviation market is going through dynamic changes,” said Randy Tinseth, Boeing Commercial Airplanes vice president of Marketing. “New business models like low-cost carriers and airplane leasing companies, a new generation of fuel-efficient airplanes and evolving consumer needs are driving demand for more direct flights to more destinations.”

Boeing airplanes such as the 737 MAX, 777X and 787 Dreamliner are well positioned to take passengers directly to their destinations and help airlines generate more revenue.

The new CMO also shows how the emergence of start-up airlines and low-cost carriers stimulates traffic and allow more people to fly. Tourism in China and intra-Asia travel support a strong demand for single-aisle airplanes, with total deliveries reaching 4,340 through 2033. Tinseth said both the Next-Generation 737-800 and new 737 MAX 8 offer the airline customers the most revenue potential in this segment.

“To compete in the tough long-haul international market, our Chinese customers are focused on evolving new business models, adding new destinations, increasing their capacity and resources,” said Tinseth. “These trends will shape market demand for an airplane lineup that has high efficiency, low operating costs, environmentally progressive technologies and a great passenger experience. We believe Boeing’s comprehensive widebody portfolio is perfectly aligned to meet those needs.”

The Flight Chic Reality-Check

There is no doubt aviation is headed for growth: it’s a highly reliable, efficient, economical and safe form of transport.  We’ll see more aircraft and more people on them.  The key issues to look out for to balance all this optimism will be the economic stability of carriers in Asia.  We’re increasing the number of aircraft, but we’ll also be increasing cabin density, especially in these regions, to make the aircraft pay off.

The question isn’t really whether all these aircraft are needed eventually, but whether they are indeed needed in this time-frame, whether other socio-economic and political factors will support that growth, whether the aviation infrastructure can support that traffic, and how all these aircraft can be delivered by 2033.

It requires a doubling of production capacity over the next twenty years and, while that sounds like a long time frame, it isn’t for this purpose.  The two large manufacturers are already challenged to ramp-up capacity, especially for popular mid-range single-aisle aircraft.

It would no doubt require well-established NextGen infrastructure to manage all these aircraft in the sky, and the current prediction is that NextGen won’t be fully up and running in the states until 2020 in Europe around that time too, and in the rest of the world–who knows.

We should also be cautiously optimistic on these numbers based on how historic predictions have panned out–hindsight is 2020, and in this case that’s very useful.

It’s worth pointing out that the pre-millennium 20 year outlook, published in 1999 by Boeing, stated that the world’s fleet would double in twenty years from 13,670 in 1999 to 31,755 by 2019.  All credit due to Airbus for a more realistic prediction at the time that passenger aircraft in service would increase to 19,170 by 2019.  One of the key reasons for Airbus’ better accuracy on growth was that Airbus predicted a lot of the necessary traffic growth would be covered by greater aircraft capacity and cabin density, rather than by aircraft units.

The results of the GMF flow directly from the assumptions made regarding not just traffic growth but also such operational parameters as speed, aircraft utilisation, load factor and average flight distance. The values of these parameters also provide an excellent “test of reasonableness” of the forecast results.

During the past twenty years the overall values of all these elements have been increasing as route networks have evolved and airlines have responded to global competition. Airbus forecasters predict that during the next twenty years these historical trends will continue, within the constraints of airport and air traffic management capacity. For the GMF passenger airlines, they expect that:

  • Average flight distance will increase from 1,370 km in 1999 to 1,414 in 2009 and 1,444 in 2019;
  • Average block speed, severely constrained by congestion, will increase from 611 km/h in 1999 to just 616 in 2009 and 620 in 2019;
  • Average passenger load factor will increase from 70.3 per cent in 1999 to 72.1 in 2009 and 73.5 in 2019, and
  • Aircraft annual utilisation will increase from an average of 3,502 block hours in 1999 to 3,636 in 2009 and 3,736 in 2019.

Given that both Airbus and Boeing are closer in their predictions this time round, I’m more inclined to believe the numbers, but I can’t help noticing that the total number of aircraft predicted for 2033 is very similar to Boeing’s more gung-ho prediction from 1999: 31,755 then and 36,770 now.  Airbus’ prediction now of 31,000 for 2033 is close to Boeing’s prediction from 1999 for 2019, and a nice round number; perhaps it is once again more tempered and achievable.

We should also not forget that there are other aircraft manufacturers, besides A & B.  While Ilyushin is also capable of supplying aircraft to China to meet excess demand, I won’t get into a prediction of how likely that is to happen.  For one thing, I don’t know; and for another China seems focused on sorting out its own needs.

The Commercial Aircraft Corporation of China, Ltd. (COMAC), has been working quietly and determinedly on development and production of its short-to-mid-haul C919 and ARJ21 aircraft.  The company recently announced that it had started structure assembly of the C919 aircraft,and that the ARJ-21-700 had flown to Chengdu Shuangliu Airport for minimum flight crew test.  So, they’re coming along.

Perhaps COMAC will not be able to meet all Chinese demand, and it’s unlikely that COMAC will be overrun by orders from Western airlines trying to acquire those aircraft over the next twenty years, but the next two decades may allow the manufacturer to grow its own manufacturing capacity and take a decent slice of the domestic pie.

Structure assembly of first C919 aircraft started/Source News Center of COMAC
Structure assembly of first C919 aircraft started/Source News Center of COMAC

Looking forwards twenty years, and coming up with the right answers is a special gift.  My respect goes to all of those who try, my everlasting admiration to those who come pretty close to getting it right.  I prefer to predict the past myself, or at least to base any views about the future on what has already happened–even when my mind turns to Science Fiction.  History is repetitive.  Sadly, PK Dick is not around to ask for a sanity-check on these and all other tech predictions I run into as I work from day to day–wish he were, he always came darned close to right.

In conclusion, I’ll bet on crowded planes, not crowded skies. If I’m wrong, more’s the better.

For aircraft interiors and component manufacturers, especially for seating manufacturers, this is all good news.  There will be a steady growth in demand for new products for many more years to come and all these new aircraft would further accelerate the push for new cabin innovations.  Even if the numbers for aircraft are not quite as high as predicted, if the passenger figures are right then capacity demand will increase–still more seats to sell.

Regardless of who wins the new aircraft predictions gamble for 2014, Airbus is the clear winner in the Best Market Forecast Cover Picture of the Decade Award.  This kid is just precious!

800x600_1411113815_GMF_2014_Big_Book_Cover

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