Jetrader - September/October 2010 - 12

Commercial Outlook is Up
Boeing’s 2010 forecast reflects more demand for new, replacement aircraft

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Boeing’s Michael Warner on 2010 forecast increases: “This year, we are seeing the recovery and how resilient the market has been, and that’s reﬂected in the forecast and our business decisions.”

As global aviation market conditions improve, Boeing’s latest version of its wellrespected annual Current Market Outlook (CMO) offers a brighter view of commercial aircraft over the next two decades. It calls for a $3.6 trillion market for new jetliners through 2029, which translates into the need for 30,900 new commercial passenger and freighter airplanes. That ﬁgure is up 1,900 units over last year’s report, as world economies rebound and market demand increases amid a still unstable environment for the industry. “Looking at 2010, we see a world economy that continues to recover,” said Randy Tinseth, Boeing Commercial Airplanes marketing V.P. and principle CMO spokesman. “We expect the world economy to grow above the long-term trend this year. As a result, both passenger and cargo travel will grow this year. Airline revenue and yields are up, but fuel prices remain volatile.” Tinseth said that the manufacturer was too conservative in its market projections last year. That resulted in this year’s up-ticking of near-term unit demand, particularly based on the strength and resilience of the single-aisle market. “One of the reasons we do the forecast every year is that we want to focus on the market’s long-term potential and incorporate our latest thinking and the latest trends. Each year we rip it up and take a new, fresh look,” Tinseth said.

airlines did OK, and in fact, many of our customers who are low-cost carriers made money and are growing. This year, we are seeing the recovery and how resilient the market has been, and that’s reﬂected in the forecast and our business decisions,” Warner said. While the forecast reﬂects current trends, Warner said what really powers it are the long-term indicators for air travel industry health. “Economic growth, liberalization, the strength of emerging markets driving much of the demand, the faster growing business models like the low-cost carriers replacement of older, less-efﬁcient airplanes, these are the real engines behind the CMO.” (See Chart 2, page 13).

Growth, Demand Continue Upward
The new forecast predicts that worldwide passenger trafﬁc is expected to grow annually at a 5.3 percent rate over the long-term, driven by economic growth from regions with diverse airplane needs. The single-aisle market segment will continue to dominate global growth thanks to the proliferation of low-cost carriers; emerging markets such as India, China and Southeast Asia; and continuing instability in the price of fuel. The single-aisle segment has outpaced long-haul markets over the last decade and will continue to trend upward as older ﬂeets are retired. “It has been extraordinarily resilient over this last cycle,” Tinseth said in referring to the single-aisle marketplace. “One reason is that as a company, and as an industry as a whole, we managed demand in that segment pretty well. We probably could have built a few more airplanes, but I think supply and demand, in general, were in line, so we didn’t overproduce. Second, there is really strong, underlying demand for these airplanes from those

The Difference a Year Makes
This year’s CMO reﬂects a fairly signiﬁcant increase in forecast industry deliveries. (See Chart 1, page 13). “Last year we were in a very different position,” said Head Forecaster Michael Warner (pictured). “We were in the middle of the recession, and we didn’t know that there would be a recovery as strong as we’ve seen. But our industry didn’t cut back on production rates. A number of 12 The ofﬁcial publication of the International Society of Transport Aircraft Trading

Jetrader - September/October 2010

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