Airbus and Boeing each released 20-year market forecasts at the Farnborough Air Show July 17, with the European manufacturer focusing largely on the commercial aircraft services market and the US manufacturer highlighting fleet projections.
Boeing’s updated 20-year market forecast predicts demand for 42,730 commercial jets with 90-plus seats by 2037, valued at $6.3 trillion. Airbus is predicting $4.6 trillion in cumulative value for the aircraft services market sector through 2037.
For the first time, Boeing added services to its annual long-term forecast, which has been renamed as the Commercial Market Outlook (CMO). Services revenues are expected to grow by 4.2% annually, creating an $8.8 trillion opportunity – exceeding the projected aircraft sales total.
“This is a bigger market in the long term than the aircraft market,” Boeing VP commercial marketing Randy Tinseth said at a media briefing at Farnborough. “We only have 7% [services] market share, so what a great opportunity as we grow to expand our share.”
Airbus said aircraft-focused lifecycle services—maintenance, spares pool access, tooling, technical training and system upgrades—will comprise the largest portion of business growth in the next 20 years, valued at $2.2 trillion, from $76 billion in 2018 to over $160 billion per year by 2037. Maintenance will be the dominant element, with increased outsourcing and paid-by-the-hour (PBH) contracts seen as a growing trend.
Flight operations services, including pilot training and flight-planning solutions, will generate $1.5 trillion in spending over the next two decades, Airbus said, noting that fleets are expected to more than double to 48,000 aircraft by 2037 and 540,000 new pilots will need to be trained by then.
Advancements in the passenger experience make up the remainder of the commercial aircraft services growth picture, with Airbus predicting an estimated $900 billion cumulative value in cabin upgrades, cabin crew training, IFE, connectivity and booking improvements over the coming 20 years. Business in this segment is expected to double in the next 20 years, Airbus said, rising from $27 billion annually at present to nearly $70 billion annually by 2037. “Seamless connectivity will undergo exponential growth,” Airbus said. “More and more passengers [will] manage their travel using a smart device, providing them all the information in real-time about the airport, connecting flight, bag collection [and more].”
Airbus said its ambition is to triple its services revenues from more than $3.2 billion in 2017 to reach $10 billion in commercial services revenue in the next decade. “To attain this goal, [we] will continue to develop full lifecycle integrated services for all Airbus aircraft operators,” the company said. “Airbus will also expand its current service portfolio to non-Airbus platforms, given that 62% of Airbus’ total fleet is operated by ‘multi-fleet’ operators.”
Boeing’s aircraft demand forecast is about 4.1% up on the figures released in 2017. “That shouldn’t be a surprise, because the market has grown by about 4%,” Tinseth said.
Within those figures, the outlook for regional jets is “down a bit,” while the numbers for single aisles, widebodies and freighters were all up, based on passenger traffic growth and aircraft retirements.
Boeing sees a need for 31,360 single aisles, valued at $3.5 trillion, up 6.1% over last year. This will be driven by continued low-cost carrier (LCC) growth and replacements in markets such as China and Southeast Asia. “Single aisles will continue to be the backbone of the fleet,” he said.
In the widebody segment, Boeing forecasts demand for 8,070 new aircraft worth nearly $2.5 trillion, triggered by a “large wave of replacements” from early next decade. “In the past, we segmented widebodies into different sizes, but that gets harder and harder, so we’ve just taken all that stuff out and tried to make it simpler,” Tinseth said.
Today’s global fleet includes more than 900 aircraft that are over 25 years old. By the mid-2020s Tinseth said more than 500 aircraft a year will reach 25 years old, double the current rate and fuelling the retirement wave. Around 44% (18,000) of the 42,730 new delivery total will be used for replacements.
The outlook for freighters has also increased, based on a “definite uptick” in the market, driven by a pick up in trade, economies and industrial production.
Over the next 20 years, Boeing sees a need for 980 production widebody freighters, up 60 on last year. These will be evenly split between large and medium sized aircraft. “This kind of demand will support production of two aircraft per month. Moving forward, freighters will be very important for production lines,” Tinseth said.
However, he added that new-build freighters are “only part of the story,” which includes a further 1,670 converted freighters. This means the total freighter fleet will grow from 1,870 today to almost 3,300 by 2027.
Overall, Boeing said the total global fleet will double to 48,540 by 2037, as passenger numbers swell from 4.3 billion to 10 billion. In terms of geographic split, the Asia Pacific region will continue to lead the way, accounting for 40% of deliveries and 38% of total services value. North America and Europe are the next strongest players, in terms of aircraft demand.
There is also a growing balance between emerging and advanced economies. In 2008, two thirds of all routes touched on an advanced economy; now that split is has slimmed to just 55%. Over the past year alone, more than 2,000 new city pairs have been launched.
“We are in a very, very strong market,” Tinseth said. “Our customers are in a good place. The market has greater breadth, depth and balance than ever before.”
Passenger growth is exceeding capacity, causing average load factor to rise five points in 10 years, and airlines are getting 13% better utilization from their aircraft. Average stage length has also risen by 12%.
“Forty percent of the growth we have seen in the market [since 2008] has been accommodated by an increase in [airline] productivity. Without this increased productivity, our customers would have had to bring 4,000 airplanes into the market to meet this growth,” Tinseth said.
However, he said airlines are getting to the “practical limit” on average load factor at 81%-82%. “If network carriers have the same load factor as low-cost carriers, they wouldn’t be providing the service that passengers expect,” Tinseth said, explaining that these passengers expect to be re-accommodated within a reasonable timeframe in the event of disruption.
He added that there are still opportunities to grow utilization and stage length – and the forecast has been adjusted down to reflect these efficiencies – but incremental gains are getting “tougher and tougher.”
Boeing has been releasing market forecasts since 1961, using them as a tool to shape its strategy, guide its long-term business plan and inform its airline customers. The latest figures are based average annual growth figures of 2.8% for GDP, 4.7% for passenger traffic, 4.2% for cargo and 3.5% fleet growth.
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