Farnborough Air Show

Reduced RJ demand marks Boeing forecast

 - July 14, 2008, 7:14 AM

Boeing Commercial Airplanes forecasts a $3.2 trillion requirement for some 29,400 commercial jetliners with capacity for more than 29 passengers from 2008 to 2027, driven by increasing demand for new efficient designs.

All sectors of the market except that for regional jets will require more aircraft than it expected a year ago, according to the company’s current market outlook, published last week. The forecast sees a positive long-term prospect for the industry, while accommodating short-term challenges such as declining global economy, rapidly rising fuel prices, reduced traffic growth in some regions, and concerted airline efforts to cut costs in line with falling income.

“We’re facing a very dynamic situation,” said marketing vice president Randy Tinseth. “[The] forecast is rooted in today’s realities, but recognizes the long-term outlook.”

The company predicts a slightly smaller global fleet in 2027 than it foresaw 12 months ago for 2026–35,800 compared with 36,400–but it represents an increase of 3.2 percent per year, matching Boeing’s estimate for worldwide economic growth.

The U.S. manufacturer expects the average size of aircraft to increase slightly, with one third fewer RJs in the mix, offset by higher numbers in all other market sectors. Boeing notes that recent record numbers of orders means that over 30 percent of the predicted demand already exists in manufacturers’ backlogs.

Another development is the greater proportion of new jetliners being acquired to replace existing stock. Replacements are seen as comprising 43 percent of new-aircraft deliveries against the 36-percent share seen in 2007, a reflection of the rising operating cost of older aircraft as fuel prices increase. The new aircraft will be needed to support an expected 5- percent annual increase in air travel, and a 5.8-percent-per-year growth in air freight activity.

Long-term global demand draws support from a foundation of strong fundamentals, such as air transport deregulation (or liberalization), economic growth, new-aircraft capabilities and trends in world trade, according to Boeing. “What we’ve learned [in more than 40 years of market forecasting] is that our industry is extremely resilient,” said Tinseth.

Driving the average 6.5 new-aircraft-per-week demand for single-aisle aircraft that will comprise the largest consignment will be strong domestic and intra-regional travel growth in Asia-Pacific and continued worldwide growth in requirements for low-cost carriers. Among very large aircraft, essentially Airbus A380s and Boeing 747s, Tinseth said there would be orders for about 30 per year. The outlook excludes demand for turboprop equipment, which is enjoying something of a renaissance as fuel prices edge ever higher.

Overall, Tinseth sees a greater balance in aircraft demand between geographic regions as Asia- Pacific, the Commonwealth of Independent States, Latin America and the Middle East increase their market shares. “The result is a more stable long-term market, less vulnerable to swings in regional economies or other variations in demand.”

Boeing believes its publications provide a reasonable forecast. Having reviewed its past seven such documents, Tinseth said they have proved in line with market realities.

That is, the growth trends for air travel, service frequency and average aircraft size given in succeeding years for 2007 have broadly coincided with the outcome, although Boeing slightly over-estimated growth in aircraft size and air travel, and underestimated flight frequency.

Tinseth concluded that the mix of actual orders during the past seven years showed that its 20-year forecast published in 2000 had been “about right.”