asia map
There is no doubt that Asia will be the future of commercial aviation. The combination of India and China is moving the industry’s center of gravity in that direction. While Airbus has an FAL in China, Boeing does not. For now, but what about the future?
Look at this chart from our MAX delivery tracker. It shows MAX deliveries in all markets, excluding Asia.
The upper chart shows the quarterly production volume and the lower diagram shows the delivery age. The trend is declining steadily as Boeing addresses the program’s various challenges. It has been a monumental battle, unlike any other battle that Boeing or OEM has faced. Remember that the period includes the exogenous shock from the pandemic and the long-tail supply chain stress. Boeing has been making progress through this challenging period.
Now, let’s look at the data for Asia. The result is quite different.
- Asian deliveries have been far slower than other markets.
- India has been a salve for frozen China deliveries. Air India Express and Akasa took many aircraft produced for Chinese customers.
- However, not all of them, so Boeing’s inventory decline is better than it might have been, but it is not what it should have been if China had approved the MAX earlier. There is an argument that politics between China and the US played a role. Whatever the reason, the outcome did not help Boeing.
- Notice that the average days in the second chart have not declined as in the other markets. There was a brief respite, but then the trend went up again.
It won’t be a popular idea with the IAM, but Boeing might need to consider an FAL in Asia—at least one that produces the MAX. Asia is the future of commercial aviation. The biggest airlines will be based there, and they will need lots of aircraft. Moreover, Boeing will almost certainly get the same support from the governments it gets in the United States.
We think India would leap at the opportunity to have such a facility. Its relationship with the United States is less politically charged than China’s. Of course, US-based labor will shriek about such a move.
Consider Boeing’s choices
- It needs capital for a new airplane, specifically a new single-aisle. India would enable that in ways that the US market might not.
- Establishing a FAL in India would also bring in much of the supply chain, something the Indias would deeply appreciate.
- That airplane will be aimed at Asia more than the North American or European market.
- It is likely Boeing would suffer fewer labor disruptions in India.
- Airbus’ experience in Tianjin is a helpful model that allows for delivery to non-Asian customers.
Who loses from such a decision? The IAM, of course. Boeing’s white-collar workers can continue to perform their design and other functions from their current locations. Who else loses? Not Boeing’s stockholders and, crucially, not Boeing’s customers.
If Boeing cannot close the gap with its labor strife, it might have to bend more now and the Puget Sound workers back. But almost certainly, it must consider an Asian FAL. Boeing’s history is such that the next labor unrest is a few years away. History shows a strike approximately once every 12 years.
