Boeing Forecast Confirms Trend Toward Bigger Aircraft

 - July 8, 2012, 7:00 AM

Boeing Commercial Airplanes is looking forward to continuing industry resilience, with its latest current market outlook (CMO) projecting a $4.5 trillion market for 34,000 new airplanes, for delivery 2012-31. This compares with a predicted 20-year requirement for just fewer than 24,000 units it forecast in 2002. Ten years later, Boeing’s annual forecast has seen a shift toward larger aircraft with a steady decline in perceived future demand for regional jets (fewer than 90 seats) and a volatile market for large jetliners (747 size or bigger).

“[The market] has proven to be resilient, even during very challenging years,” said marketing vice president Randy Tinseth. “[It] is broader, deeper and more diverse than we’ve ever seen it.” Pointing out that world air travel (measured in revenue passenger-miles/kilometers) has grown at 5 percent a year since 1980, Tinseth said this period included “four recessions, two financial crises, two Gulf wars, one oil ‘shock,’ one near-pandemic and [the] 9/11 [terrorist attacks].”

Nevertheless, air travel had continued to grow–with demand having been met by increased frequencies and more nonstop flights–and Boeing expects that rate to be sustained throughout the next 20 years. Passenger numbers are seen as increasing by 4 percent a year, as average journey lengths increase by almost a tenth.

The predicted demand comprises 23,240 single-aisle aircraft (68.4 percent); 7,950 twin-aisles (23.4 percent); 2,020 regional jets (5.9 percent); and 790 large jetliners (2.32 percent). Equivalent proportions in Boeing’s outlook 10 years ago were: 51.5 percent single-aisles, 20.8 percent twin-aisles, 17.7 percent regional jets and 3.95 percent large aircraft.

Tinseth said Boeing is watching the “very competitive” regional jet market, which now comprises five manufacturers. “I don’t think we’ll enter [that sector] in the future, but we are watching carefully because that is where the next competition will come from.” The substantial reduction foreseen among regional jets alongside growth in both the single- and twin-aisle sectors (and a less-predictable market for large aircraft) suggests that average aircraft size is increasing, despite Boeing’s long-proclaimed protests to the contrary.

Outlining the new forecast last week, Tinseth said, “[Historic] demand has been met by more flights to more places, rather than by bigger aircraft.” He conceded that in the coming 20 years size might increase by “four to five percent,” and he pointed out that the outlook figure for large-aircraft demand had fallen.

An indication of the challenge facing aerospace soothsayers is the very volatility of Boeing’s perception of the large-aircraft market over the past 10 years: in 2002, such models accounted for 3.95 percent of forecast 20-year requirements, compared with the latest 2.32 percent, while its estimates for unit numbers has swung between a high of 990 in 2006 and a 40-percent-lower 585 in 2004, the year before Airbus flew the A380.

In a thinly disguised jab at Boeing’s European competitor, Tinseth said, “The A380 has gone pretty much as we expected, [but] the CMO is a little more rosy than the market has been.” He expected deliveries of such aircraft to be divided evenly between Airbus and Boeing.

With the cargo market remaining “sluggish,” Boeing has revised its 20-year forecast for freighters downward, although it still projected the fleet will almost double from 1,740 aircraft to 3,200 by 2031. “Additions will include 940 new-production freighters (market value $250 billion) and 1,820 airplanes converted from passenger models.”

Boeing predicts that cargo traffic will grow at 5.2 percent per year during 2012-31, lower than the 5.5-percent growth forecast it had stuck with since 1980, but still above the forecast expansion in the passenger-jet market. “Growth [in the cargo sector] is tied very much to the [global] economy, so it is a little bit more vulnerable,” averred Tinseth.

The new cargo carriers will be either large (176,400 pounds) or medium-size (88,200 to 176,400 pounds) freighters, said Boeing. “No new standard-body freighters [99,225 pounds] will be required,” according to the forecast. “It’s no surprise that the lion’s share [72 percent] of the market will be taken by big freighters like the 747-8F and [the balance by] medium-size aircraft,” said Tinseth. There would be 1,120 standard-body conversions from passenger aircraft, which explains the lack of new-builds in this segment.

Of the 34,000 aircraft required, a little over 40 percent will serve as replacements, with just 5,780 current units seen as remaining in service in 2031 (many having been converted for freight operation). The next 20 years will see a change in airline business models, concluded Tinseth, as a continuing increase in low-cost carrier capacity eats further into traditional airline networks.