Premium #236 – China, The Land of Great Promise

Last week, Boeing’s Marketing VP Randy Tinseth said that Boeing expects China to become a market worth a trillion dollars as it requires 6,810 aircraft over the next 20 years.  Driving this breath taking number is the expectation that passenger traffic in China to grow by an average of 6.4% per year over the next 20 years.  Boeing expects two-thirds of the aircraft required will be single aisle models.

China has been great hope of the aviation industry OEMs for years.  Has it lived up to its promises so far?  The following chart that shows that China is indeed a growing market. But still in the early stages of growth, it does not look quite that impressive on the chart below, as it started from a small base.  In 2000, China was 4% of the world passenger fleet and by 2Q16 has grown to 11% of the world fleet.  More importantly, since 2010, China accounts for 3.1% and 9.4% of the 2015 order book at Airbus and Boeing respectively, indicating substantial future growth (especially since leasing companies may account for a portion of Chinese demand).