LONDON – Around five days ago, Boeing released their adjusted commercial market outlook (CMO). With this in mind, is the market too resilient to crumble under a pandemic?
The team at AviationSource has spent the last couple of days looking over the extensive data via digital infographics and documentation to determine the manufacturer’s confidence going into the future.
Brief Overview…
As Boeing lists on their commercial side of the website, the main highlights surrounding their latest CMO is as follows:
- While health and regulatory dynamics will continue to shape the near-term outlook, Boeing’s analysis of market dynamics shows that commercial airplanes and services are showing signs of recovery and resilience.
- Availability and distribution of COVID-19 vaccines will continue to be critical factors in recovery of passenger air travel. Countries with more widespread vaccination distribution have shown rapid air travel recovery, as governments ease domestic restrictions and open borders to international travel.
- Long term, market fundamentals and resilience drive demand through 2040 for more than 43,500 new airplanes valued at $7.2 trillion.
- The global commercial fleet will surpass 49,000 airplanes by 2040. China, Europe, North America and other Asia-Pacific countries each account for about 20% of new airplane deliveries, with the remaining 20% going to other emerging markets.
- The global freighter fleet in 2040 will be 70% larger than the pre-pandemic fleet due to sustained demand tied to expanding e-commerce and air freight’s speed and reliability.
The manufacturer also believes that recovery is still on track to be completed by 2023-24, particularly on the long-haul side of things too.
The Nitty Gritty…
The CMO
So in terms of the nitty-gritty, between 2021 and 2040, the manufacturer has forecasted around 43,610 deliveries due to a global traffic growth rate of 4% and a fleet growth rate of 3.1%.
Such delivery numbers have been dissected down to a per-region basis, which you can see broken down below:
- Africa – 1,030 deliveries.
- Asia-Pacific – 17,645 deliveries.
- China – 8,700 deliveries.
- Europe – 8,705 deliveries.
- Latin America – 2,530 deliveries.
- Middle East – 3,000 deliveries.
- North America – 9,160 deliveries.
- North-East Asia – 1,630 deliveries.
- Oceania – 760 deliveries.
- Russia & Central Asia – 1,540 deliveries.
- South Asia – 2,410 deliveries.
- Southeast Asia – 4,415 deliveries.
What these delivery numbers show us is that areas of Asia are going to be the areas where Boeing aims to hit the market hard and acquire as many sales as possible that will propel the company further into that region.
And that is of course due to the high market growth rates that we will see in that region, as dissected once again below:
- Asia-Pacific – 5.0% traffic growth and 4.2% fleet growth.
- China – 5.4% traffic growth and 4.4% fleet growth.
- North-East Asia – 1.7% traffic growth and 1.2% fleet growth.
- Russia & Central Asia – 2.9% traffic growth and 2.5% fleet growth.
- South Asia – 6.9% traffic growth and 6.6% fleet growth.
- Southeast Asia – 5.5% traffic growth and 5.0% fleet growth.
Market services value globally is forecasted to hit just over $9,540B as well, of which all numbers mentioned will increase GDP by around 2.7%.
The Cargo Side
Boeing predicts that over the next 20 years, around 2,610 freighter units will be needed to keep up with the 4.0% air cargo growth rate, meaning that freighter fleet growth will increase by 2.6% to 3,435 from 2,010 recorded in 2019.
However, such aircraft needed will mainly be from conversions as opposed to new deliveries, which is of course seen through the lack thereof of freighter aircraft in the Boeing arsenal, but rather the evolution of Passenger-to-Freighter conversion options (P2F).
Around 1,720 conversions will be needed, with only 890 aircraft being new deliveries. That being said, whilst such numbers appear to be low, the robust growth in East Asia as well as the acceleration of e-commerce worldwide, will continue to make the market stronger.
This Is Why Focus is Being Placed on Asia
As displayed by Tableau, passenger traffic flow ranks will change over the next 20 years, in the favour of regions across Asia.
In the top 10 for 2040, you can observe that five of those options have Asia within it, which represents where the traffic is growing, meaning where the aircraft needs to be delivered in order to accommodate this demand.
Even if you expand this into the top 20, Asia is mentioned 10 times, meaning it covers half of the list, which strengthens the case for the Asian travel market exploding exponentially over that period.
With a lot of low-cost carriers emerging across Asia as well, making air travel accessible for more catchment areas, there really is nothing more to say to make this case as convincing as it already is.
Is The Market Too Resilient To Crumble Under a Pandemic?
As produced in the overall remarks surrounding the CMO, whilst the damage under this pandemic has been strongly significant, the way that the sector is set up means that recovery is of course inevitable, even if it does take a few years.
Boeing mentioned that such resilience has been caused by “single-aisle airplanes” continuing “to lead segment of passenger aircraft as they support the domestic and short-haul markets that are recovering more quickly”.
Even with long-haul forecasted to take longer to recover, Boeing, remains well-invested into that sector of the market by stating:
“Widebody airplanes remain critical to meet the demand for long-haul passenger travel and efficiently serve a rapidly expanding air cargo market”.
What they mean by that is definitely down to the mass increases in P2F conversions on a temporary basis, in order to deliver vaccinations, testing, and other medical equipment.
The industry will of course remain resilient as “people around the globe look to commercial air travel to stay connected with loved ones, conduct business face to face, and explore new places. Commercial air travel continues to serve as the backbone of global transport for passengers and cargo”.
Overall
So while the pandemic is still placing the industry in a negative state, recovery is beginning to take place.
Borders are slowly beginning to open up, routes are being reinstated, and traveling is becoming slightly easier.
What Boeing has eloquently reflected in this outlook is that the long-term benefits are still on track to be hit, and will most definitely outweigh the current negatives that this beloved industry is facing still.
It only takes time.
References:
- Boeing (2021), Commercial Market Outlook 2021-2040, https://www.boeing.com/commercial/market/commercial-market-outlook/ [Last Accessed 20th September 2021]
