China blinks; Boeing deliveries can restart

There is no other way to see it; China blinked and the "Tariff Truce" is a convenient offramp. Here's how we see it. Backdrop The chart below lists the domestic air traffic for the top markets, those with over 10 million annually. We set January 2019 (pre-pandemic) as 100 for a base year. The chart shows the traffic drop-off during the pandemic and the struggle for recovery. Remember the revenge travel period? The US and Europe immediately saw the effects; by 2022, they were over the 100 line. China and India struggled for much longer. [caption id="attachment_91189" align="aligncenter" width="640"] AirInsight[/caption] The 2025 curves are lower because we have data through 1Q25 for those reported. EU data reporting is much slower. The chart shows that China and India are competing in a sense. The Chinese domestic air travel market is far larger than India's. Indeed, the data shows the Chinese market is four times that of India. India's power is its rapid growth rate. India appears to have an insatiable demand for aircraft. The typical news flow highlights Indigo and the fact that it has the most significant amount of aircraft in Airbus' backlog. For us, the more interesting issue is Air India Express and Akasa. When the MAX was first grounded, China made that move. It was China that "un-grounded" the MAX last, too. We have seen that many MAXs in the inventory were Chinese orders that went undelivered (NTU). Boeing had a problem, and India had a solution. India Jumps In Ambitious new airlines like Akasa jumped on the opportunity. Take a look at this table. [caption id="attachment_91191" align="aligncenter" width="563"] AirInsight[/caption] Akasa came from nowhere to become one of India's fastest-growing airlines—all because of undelivered MAXs. The following chart shows just how quickly Akasa has grown. It now has the highest number of passengers/flight on domestic flights among India's airlines. [caption id="attachment_91192" align="aligncenter" width="640"] AirInsight[/caption] Here's the Air India Express story—rapid growth because of the Chinese NTU MAXS. [caption id="attachment_91193" align="aligncenter" width="587"] AirInsight[/caption] A rapidly growing fleet enabled Air India Express to drive its business. [caption id="attachment_91194" align="aligncenter" width="640"] AirInsight[/caption] What About China? As noted in the first chart, China has the world's second-largest domestic air travel market after the US. Demand has recovered, and China is a large geographic area. Even with a fabulous high-speed train network, air travel is the most helpful way to get around quickly. That means Chinese airlines need capacity. The following chart illustrates two key issues: China kept ordering aircraft, but Boeing was left out long before tariffs were a "thing. [caption id="attachment_91197" align="aligncenter" width="640"] AirInsight[/caption] As you see, China stopped ordering Boeing aircraft several years ago. This had nothing to do with Trump. Boeing made deliveries, but these were slow because of the MAX grounding. The following chart shows another vital set of data points. Boeing's 737NG is the most delivered single-aisle aircraft. That makes the MAX a natural successor. The early period of 2017 and 2018 shows more MAX deliveries than NEO deliveries, supporting the above statement. However, China followed the global trend by upsizing, and the A321 was all there was to acquire. [caption id="attachment_91198" align="aligncenter" width="640"] AirInsight[/caption] Was it politics that pushed Boeing out of China? Probably not initially. More likely, it was Boeing's missteps with the MAX 10 that we have seen across the global market. Politics became a convenient reason later. However, like the rest of the industry, China's airlines need a lift. They only have Airbus to turn to. COMAC's delivery rates are anemic. Like all airlines, Chinese operators want better fuel burn. The MAX offers that - if you can get it. Chinese airlines are aware of their lost delivery slots. They see India's explosive growth with the aircraft they ordered. Airbus cannot supply enough aircraft, so what are they to do? As expected, we do not hear a peep from them. But even the state realizes that taking the off-ramp is necessary. China needs as many Boeing's as they can get. This move was inevitable, and we are pleased that the tariff fight is over. Everyone is a winner China can claim a win; the US can claim a win. Whatever, it's all political theatre. The bigger picture here is the recovery of a crucial market for Boeing. Boeing can now get back to delivering its inventory at better pricing. India's pricing holiday is over. And, yes, Airbus is grateful for all this, too.

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

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