Paris Air Show

Boeing Market Forecasters Unshaken by Current Crises

 - June 17, 2019, 9:30 AM
Boeing Commercial Airplanes vice president of marketing Randy Tinseth briefed reporters on the 737 Max crisis, China, and much more.

Boeing’s slow sales year so far has not shaken v-p of marketing Randy Tinseth’s confidence in the company’s outlook for the long term. In fact, data he cited from Boeing’s Current Market Outlook for 2019 suggests that airline traffic growth over the next 20 years will support a market for 44,040 airplanes worth $6.8 trillion.

While Tinseth did concede that the 737 Max crisis has suppressed Boeing’s narrowbody sales and that trade tensions with China certainly have caught the company’s attention, he expressed a sanguine view of this year's widebody sales performance and insisted that economic trends and demographic shifts will ensure more than enough demand to support manufacturers’ growth aspirations beyond the next two decades.

“In terms of orders, you know we are where we are with the Max,” conceded Tinseth. “Our focus there is to get that airplane back flying safely in the marketplace. In terms of widebodies...it’s not been a bad widebody year. We’ve had key wins with the triple-seven at British Airways. We’ve had key wins on the 787, specifically at Lufthansa as well as Air New Zealand.”

On the threat of a trade war between the U.S. and China, Tinseth emphasized the importance of the Chinese market, to which Boeing exported one out of four airliners it manufactured last year and one out of three 737s. “So it’s an incredibly important market,” he said. “The challenge you have with trade is how will that...affect the economies of both countries, and we are watching that closely.”

Whether Comac’s C919 could pose any real competition for Boeing and realistically help satisfy China’s narrowbody demand at the expense of the 737 appeared less concerning to Tinseth, however. “Frankly they’re struggling, as they have on the ARJ21, to bring the airplane through the flight-test program and into market,” he noted. “I have confidence that they’ll get this right at some point, but my guess is it will probably be later rather than sooner.”

In the long term, added Tinseth, a demand for 32,000 single-aisle airplanes over the next 20 years will not only keep Boeing and Airbus busy enough but support the emergence of “one or two” other manufacturers.

Tinseth pointed to trends over the past 10 years toward more nonstop markets as one predictor of future single-aisle demand. According to Boeing’s statistics, the industry has seen a 60 percent increase in new nonstop city pairs served by narrowbodies over the past decade, equating to 7,000 new markets. “To put that into perspective, that means that two new markets open every single day in the single-aisle market,” said Tinseth.  

Meanwhile, over the same period, 30 percent of all long-haul markets involved new city pairs, resulting in 550 additional markets. That bodes well for the 787 in particular, said Tinseth. “I think most of people think, ‘Well, it’s all going to be about Asia,’ but a majority of those markets have actually been opened in the European and North American marketplaces,” said Tinseth.

Overall, however, the Asia-Pacific market ranks as the largest over the next 20 years, accounting for 40 percent of all demand, according to Boeing. Meanwhile, China will account for half of all Asian demand. “That means in the next 10 to 15 years, the China market will not only be the largest market in the world, but it will be the largest domestic market, surpassing the U.S. domestic market,” said Tinseth.

Of course, the growth of China’s middle class will continue to create an expanding need for air travel, and similar patterns in Indonesia and India will do the same for those developing countries, he noted. The resulting emergence of low-cost carriers has generated still more demand, causing sort of a multiplier effect. Separately, as more and more people move from the countryside to urban areas, GDP grows along with personal income. “So as I look at the market today in terms of resiliency, I see a market that is broader, deeper, and more balanced than we’ve seen in the past. And we expect that to continue,” concluded Tinseth.