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March 3, 2024
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While demand for air travel will remain solid, lower than expected economic growth in the next decade will affect new aircraft deliveries until 2041. In its latest Commercial Market Outlook (CMO) that was released today, Boeing forecasts 41.170 deliveries of new commercial and freighter aircraft until 2041. That’s 2.500 down on last year’s forecast. One of the factors is that Boeing has excluded the Russian market in its latest outlook. Boeing deletes 2.500 deliveries in the latest market outlook.

The 41.170 aircraft deliveries between 2022-2041 compared to 43.610 in the 20-year CMO for 2021-2040. By comparison: Airbus predicts 39.490 new deliveries in its latest Global Market Forecast that was released last week.

By segment, single-aisle aircraft account for 30.880 aircraft versus 32.660 in the previous Boeing outlook. Interestingly, the OEM projects a significant drop in widebody deliveries: to 7.230 from 7.670. Regional jets, a market in which Boeing isn’t present, accounts for 2.120 aircraft, down from 2.390. The only segment in which the US airframer sees growth is that of freighters: 940 aircraft compared to 890 last year.

“We think single aisle will be the area of the largest amount of fleet growth: the number of single-aisle passenger aircraft fleet doubles over the next 20 years. And we see widebodies growing by about 80 percent in terms of how these aircraft grow the fleet over the next 20 years”, says Darren Hulst, Vice President of Commercial Marketing.

By region, North America will be the biggest market at 23 percent market share, with Europe, China, and Asia Pacific equally split at 21 percent each. The Middle East accounts for seven percent, Latin America for six, and Africa for two percent.

The CMO also includes a 10-year outlook, which at 19.575 new deliveries compared to 19.330 in last year’s version is slightly more positive on the short-term prospects. Here, the forecast is for 14.620 single-aisle aircraft, 3.300 widebodies, 1.170 regional jets, and 485 freighters. North America accounts for 25 percent of the market, Asia Pacific for 21 percent, China and Europe for 20 percent each, the Middle East for seven percent, Latin America for six percent, and Africa for two percent.

By 2041, the world’s fleet would grow to 47.080 aircraft, of which 21.180 are coming from growth, 19.990 from replacement, and 5.910 aircraft in current service will be retained. Again, this is lower than Boeing’s previous CMO, which saw the world’s fleet grow to 49.405 by 2040, including 23.505 for growth, 20.105 for replacement, and 5.795 to stay active.

Russia no longer included

One of the reasons for the lower projections has to do with Russia and the former CIS states, which accounted for three percent of all deliveries in the previous CMO. Following the sanctions on Russia, the country is excluded (“not addressable”) from the outlook. This affects the 10-year forecast by 710 aircraft and the 20-year outlook by 1.540, said Darren Hulst.

Yet, he remarked in a pre-Farnborough media briefing on the CMO: “Our 10-year view is above last year’s, even if you exclude Russia. That’s a function of the depressed environment in 2021 falling off and a new trend year in 2031 being added into the 10-year view probably follows logic. So the dynamics of the 10-year view really follow what you would expect in a recovering market and a very resilient market in the near term on the 20-year side.”

Lower GDP impacts growth next decade

As one of the fundamentals of Boeing’s CMO, it uses a Gross Domestic Product (GDP) or annual growth rate of 2.6 percent, identical to what Airbus forecasts in its GMF. But GDP is 0.1 percent lower compared to the previous outlook, especially in the next decade. Boeing is slightly more optimistic about traffic or Revenue Passenger Kilometers (RPK), projecting 3.8 percent annual growth versus 3.6 percent by Airbus. 

“Our demand for deliveries over the next 20 years is down about 2.500 jets compared to last year. You can see there’s a tremendous amount of resilience in the first 10 years. We see that the 20-year view is impacted by a slight reduction in our assessment of global GDP for the long term. And then the geopolitical and sustainability issues that will face the market as we see a much more a much larger and more mature market in the second decade.”

Hulst said that the CMO takes the costs of sustainable aviation into account. That includes the use of more expensive sustainable aviation fuels (SAF), mandates, or other effects on airfares that could impact the appetite for air travel. “We evolve how we look at sustainability and the impact it has on demand. You saw, obviously that we had some demand impact in our long term view, especially over the next two decades. And we’ll continue to incorporate more and more fidelity as we get more and more detail on what those measures are carrying that a little bit further.”

Many economists and analysts are expecting major world economies like that of the US and Europe to slip into a recession by the end of the year. How does that impact the CMO, Hulst was asked. “Our long-term commercial market outlook has always assumed a cyclical environment where you have periods of strength and periods of more demand impacted by either recessions or slowdowns in the economy. We’re not discretely projecting a recession in the near term, but we’re taking into consideration the indicators that we see in the near term as part of our forecasts. If there were to be a recession, it probably isn’t for the normal reasons, meaning this isn’t demand-driven. This is a supply-constrained recession, which is driven by inflation and some of the impacts that we’ve seen macroeconomically and on the demand for aircraft side. We’re also in a supply-constrained environment, whether it’s because of labor or because of capacity. And so that would, in my opinion, probably lessen the impact to aviation if there were to be recession one recession would be relatively mild.”

Boeing more bullish than Airbus about freighter market

Boeing is more bullish about the freighter market than Airbus. Where the European airframer upped its projections to 3.070 full freighters by 2041 (including deliveries of 2.440 new and/or converted aircraft), Boeing sees the world’s freighter market grow to even 3.610 aircraft. This compares to 3.435 freighters in the previous CMO.

Deliveries are up to 2.795 aircraft versus 2.610 in last year’s outlook. By type, Boeing thinks 1.300 will be standard-body/single-aisle passenger to freighter conversions and 555 widebody conversions. The market for new full freighters is estimated at 940 (Airbus: 900), of which 515 are large widebodies in the 777-8F/A350F class and 425 medium widebodies in the 767 segment.

“We see an 80 percent increase in the freighter fleet over the next 20 years. And it’s really driven by continued dynamics in the E-commerce market. Our biggest change relative to last year in terms of forecasting is continued growth and standard body conversions, which really help airlines and companies create those short and medium-haul logistics networks. And you can see the rest of the mix between new widebodies. (…) We think that the Asia Pacific market is the largest growth market for air cargo and its freighter fleet in Asia Pacific is roughly going to be the size of what North America’s freighter fleet is today, so you can kind of get a sense of what the scale and what the scope of freighter growth is in various emerging markets”, says Darren Hulst.

The medium freighter segment is down by fifteen aircraft on the 440 in the previous CMO, but Hulst says this doesn’t mean that there is a shift toward larger freighters: “A difference of fifteen aircraft over 20 years is pretty consistent in terms of the comparison year to year. It probably reflects the way that the CMO team has looked at demand overall in terms of trades that airlines and companies and business models are making between new build freighters, converted freighters, and the size of those freighters. So it probably reflects a little bit of the move into the large space, potentially some tradeoffs between new and converted freighters. But overall, I would say the change 15 on a 440 base is probably relatively small on a year-to-year basis.”

Long-haul single aisle

Except for some limited PR-speak to demonstrate how great their own aircraft models are, Boeing’s and Airbus’ market forecasts are “agnostic of aircraft types”, as Airbus Chief Commercial Officer Christian Scherer said last year. So they don’t include projections for current or projected aircraft.
However, between the lines, there is some reference to the Airbus A321XLR in the Boeing CMO. With a slide, Darren Hulst demonstrated that the market for long-haul single-aisle aircraft is very much a niche market. They account for just 0.2 percent of all long-haul frequencies until this year, he said.

Boeing thinks that long-haul, single-aisle services will remain a niche market, even after the Airbus A321XLR enters service. (Richard Schuurman)

But will this change when some 500 A321XLRs on order are set to enter service from 2024? Darren Hulst doesn’t think so: “A lot of these airplanes are actually replacements for aircraft like the 757 and others. The A321XLR is going to add some capability at the fringes of single-aisle networks in what we call long hauls. But let’s just give you a little bit of perspective on that point. 0.2 percent is about 1.300 monthly frequencies. Even if that were to double with the XLR entering the market, you’re still talking about somewhere in the neighborhood of 0.3 to 0.4 percent. (…) While the aircraft may have a little bit more capability, there are still the tradeoffs of the lack of baggage capacity, the lack of cargo capacity, and how it doesn’t integrate with the rest of single-aisle or wide body networks. It’s definitely an interesting niche, but probably still a fraction of the market.”

Emergence of new city pairs

As he did in June during Boeing’s media days in Seattle, Hulst presented a few interesting observations of the current recovery and market. While full recovery to pre-pandemic numbers is not expected until late 2023 or early 2024, the industry is already back to on average seventy percent of 2019 levels. Initially, it was domestic and leisure travel that spurred the recovery, but more recently, international traffic, business travel, and emerging markets are leading the way. The strict zero-tolerance Covid policy in China has slowed down the recovery in the Asia Pacific region, although other countries in the region have been opening up. In the US and Europe, capacity and labor constraints are having an impact on the rate of recovery.

The Covid crisis saw a reduction of single-aisle city pair connections by some 4.000, but 3.500 new city pairs that weren’t served before the pandemic have been added to the network. The effect: single-aisle city pairs are at 97 percent of pre-Covid levels. The same is evident in the widebody city-pair market, which is back to 77 percent of pre-pandemic levels thanks to 22 percent of new routes. This demonstrates the versatility of the market, said Hulst. He said that 98 percent of all single-aisle aircraft are active again, with utilization at 85 percent, while 78 percent of widebodies are back in action. Airlines have also been apt in adjusting their products: Premium Economy has grown by 3.1 percent whereas Business and Economy have grown by just 0.1 percent and First Class offerings have dropped by 6.4 percent.

Boeing has also updated its Global Services outlook. “We think that over the next 20 years, the demand for commercial services to support this growing and resilient market is about 3.5 to 3.6 trillion. Of this, 70 percent is in maintenance, repair and overhaul, and modifications. So spare parts, freighter conversions, interior conversions, as airlines shift as fleets grow and as inventories need to be replaced. This really kind of follows the resurgence and the recovery of the fleet on the digital solutions and analytics I think airlines as they move forward and transform their business. That makes up roughly 20-25 percent of demand. The last piece is training and professional services,” said Hulst. Later this month at the Oshkosh Airshow, Boeing will release the pilot and technicians outlook, which reflects the demand for over two million technicians and pilots and maintenance specialists over the next 20 years.

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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