Boeing’s annual Commercial Market Outlook (CMO) paints a rosy picture for air transport’s 20-year growth prospects, pandemic notwithstanding. In fact, Boeing predicts now that after 2024, airline traffic will return to the level the company had forecast for that year before pandemic struck.
“We’ve lost about two years of growth,” Vice President of Commercial Marketing Darren Hulst told reporters on Monday in advance of the CMO’s release. “There’s no getting around it.” But after that choppiness subsides and the industry regains equilibrium, the return to growth will be fast. Unlike in other airline industry crises, the fundamentals underpinning the industry remain strong. Global economic growth already has resumed and will continue to expand. “The recovery accelerates pretty quickly next year and into 2023,” Hulst said.
Instead, the constraints on air travel are regulatory. Travel restrictions remain in place around the world, hampering the return of air travel. The deployment of vaccines against Covid-19 is uneven worldwide, leading to a patchwork of regulations that further complicates air travel.
The domestic air travel recovery is well underway. Regional air travel — intra-Europe, and intra-Asia, for example — is starting to resume and will be the next area of growth. In line with previous forecasts, Boeing expects longhaul international travel to return last, and forecasts a return to 2019 levels by the end of 2023 or the beginning of 2024. Passenger traffic is expected to grow by 4 percent per year. “This is fundamentally a growth market,” Hulst said.
Another trend fueling this growth projection is demographic. Increasing urbanization in emerging economies will stimulate travel, as people are likely to fly to return to their home regions. Rising incomes also will allow for more discretionary spending, and people will want to “explore the world,” Hulst said.
The CMO forecasts a $9 trillion aerospace market over the next 20 years, broken down into $3.2 trillion in commercial aircraft, $2.6 trillion in defense and space programs, and $3.2 trillion in the services market. The world’s airlines will need more than 43,000 new aircraft to fuel expected growth over the next 20 years, resulting in a doubling of the global in-service fleet from 25,000 aircraft today to about 50,000, Hulst said.
The market for new aircraft will be split almost evenly around the world, with Europe, North America, China, and Asia excluding China accounting for about 20 percent each. The rest of the world accounts for the remaining 20 percent. “I’ve never seen a more balance market,” Hulst noted.
Boeing expects single-aisle aircraft to lead the market. Of the 43,000 aircraft the world will need, 33,000 will be single-aisle jets, just under 8,000 will be widebodies, 2,400 will be regional jets, and about 1,000 will be dedicated freighters. In terms of single-aisle jets, airlines will focus even more on fleet and network flexibility, which could mean more market share for larger single-aisle aircraft, like the Boeing 737-10 or the A321, which can complete longer missions. The widebody market, meanwhile, will coalesce around smaller, longer-range aircraft, like the 787 or A350 families, Hulst said.
In the short term, however, the used aircraft market could heat up. Airlines have parked more 4,000-5,000 aircraft in response to the pandemic. About 1,500 are expected to be fully retired. The balance are being recalled as demand warrants and could start changing hands as airlines rationalize their fleets. Others could be slated for freighter conversions.
Freight will be an area of considerable growth, but the market is expected to stabilize soon. Now, airlines are busy adding freighters or operating preighters, in the absence of belly-hold capacity. But as international routes begin to recover in 2024, the demand for conventional large freighters, with strengthened floors and cargo doors, will subside. Cargo demand, however, is expected to continue growing, fueled by explosive demand for e-commerce. This will result in more growth in the freighter-conversion market. “Express [e-commerce] markets don’t need the same type of densities as longhaul freight,” Hulst said. “Lower densities will require more and smaller aircraft.”
Hulst said Boeing expects the conventional jet — gas turbine — engines to be dominant over the next 20 years as new technologies likely will not be mature enough to replace jets on the in-service fleet. Boeing is optimizing its new aircraft to run on sustainable aviation fuels by the end of the decade. “Sustainable aviation fuels have become a critical part of our sustainability goals,” Hulst said.