Boeing is first out of the blocks this year with a new commercial market outlook or CMO.
The remarkable thing about these ritual releases is that despite predicting demand patterns which uniquely fit what Boeing or Airbus happens to make in terms of capacity or range, they always agree to within tenths of a percentage point on overall growth in travel globally and by regions.
Artist impression of the passenger version of the 747-8©Boeing
Boeing this year is forecasting a market for 29,000 new passenger or freighter jets worth $US 3.2 trillion by 2028, which compares modestly over that period with the trillions in new greenbacks the US looks like printing in the next 12 months just to ’stimulate’ a dead American economy which is missing a robust or willing retail banking and finance sector.
So, no one could accuse Boeing of being over ambitious or using outlandish sums. It is one of the saner items of economic prediction one can pick up when individual companies are begging to be socialised with hundreds of billions of dollars or euros.
If there is anything flaky about the Boeing CMO, and at a wild guess, the soon to be released Airbus equivalent, it will be the assumption that there will be all that many airlines still flying who need their super efficient new jets to survive in a competitive market in which finance is for the short to medium term problematical, demand is cactus, and even the aircraft leasing companies smell of near death experiences.
Just look at ILFC threatening to cancel an order for Airbus A380s. It has almost no chance of getting any aircraft out of Airbus or Boeing without flashing the cash. No bets here, ILFC could indeed cancel its A380s. It may have to cancel all sorts of orders. And since some of its customers are running out of money and passengers, its major expenditure in the next year might end up being on repo pilots, seizing delinquent assets that realistically, are no longer assets no matter how good they are at cheaply flying people who suddenly aren’t flying any more.
Nevertheless, Boeing has a good story to tell anyone who does not have their most sensitive body parts stapled to the fortunes of the air transport sector, and has put up a very useful interactive website for the CMO itself.
Here are the essentials of its read-while-tranquillised press release.
Boeing forecasts a $3.2 trillion market for new commercial airplanes over the next 20 years and takes into account the industry’s near-term realities, including a global economic recession, declining passenger and cargo traffic, and unpredictable fuel prices. The Boeing 2009 Current Market Outlook (CMO) foresees a market for 29,000 new commercial passenger and freighter airplanes by 2028.
The report, now in its 45th year of public release and widely regarded as the most comprehensive and respected analysis of the commercial aviation market, reflects the extremely dynamic situation the industry is facing today.
“While the commercial aviation industry is facing a significant downturn, it is cyclic and has a long history of declines and upturns,” said Randy Tinseth, vice president Marketing, Boeing Commercial Airplanes. “Over the past 30 years, through both tough and good times, traffic growth has averaged more than 5 percent per year, demonstrating the resilience of the market. The long-term outlook points to the next 20 years as being a time in which we see fundamental underlying factors supporting a strong need for new airplanes.”
Boeing analysis shows that over time, the commercial airplanes market will stabilize and economic growth will return. Boeing expects passenger traffic to grow at an average rate of 4.9 percent each year for the next 20 years. Demand globally remains strong for new, more efficient commercial airplanes in response to high fuel prices, aging fleets and environmental concerns. The U.S. and European markets will see more replacement airplanes as less-efficient jets are retired. Robust growth in China, the Middle East, India and other emerging markets with dynamic populations and growing incomes will lead toward a more balanced airplane demand worldwide.
Boeing predicts that airlines will grow by responding to their passengers’ preference for more flight choices, lower fares and direct access to a wider range of destinations. This means that they will focus on offering more flights using more efficient airplanes, rather than on using significantly larger airplanes.
Single-aisle airplanes will have the largest market share (67%) by number of units, driven by the large European and North American domestic markets and growth in local markets in Asia Pacific.
Twin-aisle airplanes will have the largest market share by investment dollars, with 40% percent of demand coming from Asia Pacific and 23% from Europe.
The growing Asia Pacific region will command the largest market in both units and value with 31% (8,960) of the units and 36% of the value ($1.13 trillion). Air travel to, from and within the Asia Pacific region will grow from a 32% share of the world air travel market to 41% over the 20-year period.
Global Freighter Fleet Forecast Updated
The Boeing Current Market Outlook includes updated freighter forecast numbers, accompanying the highly detailed World Air Cargo Forecast, which is published in even-numbered years.
Boeing projects long-term global air cargo traffic to grow at an average annual rate of 5.4 percent over the next 20 years. In line with anticipated long-term trade growth, this will lead to overall cargo traffic nearly tripling over the period. A shift toward larger freighters and new, more efficient airplanes will help keep air cargo transport affordable.
This year’s forecast reflects near-term contractions in both world industrial production and overall international trade. World air cargo traffic fell about 6 percent in 2008 compared to 2007 levels. An expected 11 percent drop in global industrial production likely will lead to a further cargo traffic reduction in 2009.
“Despite the near-term slowdown, we remain confident in the strength of the global air cargo market over the long haul,” said Tinseth. “The air cargo industry is supported by sound fundamentals – the imperative for speed, consumer product innovation and global industrial interdependence are key drivers – and new air trade routes will expand service coverage.”
During the forecast period, the world freighter fleet is expected to increase from 1,940 to 3,250 airplanes – an increase of two-thirds. This growth will require 2,760 freighters worth $170B at today’s catalogue prices.
Additions to the fleet will include 710 new-production freighters and 2,050 airplanes converted from passenger models.
Large (more than 88.2 tons/80 tonnes capacity) freighters will account for 490 new-build airplanes. Medium (44.1 to 88.2 tons/40 to 80 tonnes) freighters will total 210 airplanes.
Demand for new freighter airplanes is driven by gains in operational efficiency and reliability, improved environmental performance and response to regulations governing noise, emissions and aging airplanes.
Over the next 20 years, passenger and cargo airlines will take delivery of:
* Regional Jets: 2,100 units ($70 billion) — Declining segment as airlines “up-gauge” to single-aisles due to capacity, economic and environmental restraints.
* Single-Aisles: 19,460 units ($1.42 trillion) — Largest segment by units
* Twin-Aisles: 6,700 units ($1.51 trillion) – Largest segment by investment
* Large: 740 units ($220 billion) – Mostly replacement demand
