Boeing sees rapid growth in aircraft market

By T. S. Shankar

FARNBOROUGH (LONDON), JULY 30. The U.S.- based aircraft manufacturing giant, Boeing, has envisaged more than double its estimate for commercial aircraft market following the inclusion in its forecast of aviation services that airlines need for efficient fleet operations.

The total market services and future aeroplane deliveries are estimated to be worth over $4 trillions over the next two decades, outlined Boeing's ``Current Market Outlook-2000'' report, which was released at the just concluded Farnborough International Air Show on Sunday.

Being published for over 30 years now, Boeing current market outlook has been widely acknowledged as the leading industry forecast on worldwide air travel growth and new demand for planes.

Boeing, it is pointed out, for the first time, included commercial aviation support services in its forecast. Last year, this market was worth $87 billions.

Based on that, we believe that it will be a $2.6 trillion business turnover by the next 20 years, Mr. Randy Baseler, Vice- President (Marketing) of the Boeing Commercial Airplanes Group, said. ``This, we feel, represented a great growth opportunity for the Boeing. We have all the engineering data on 80 per cent of the aircraft in the world, which puts us in a good advantageous position,'' he said in an informal talk with this correspondent at the air show.

In a change from its traditional format, the report reflected the reality of a more competitive industry and a growing and ageing plane fleet worldwide, a testimony to the long-term utility and value of today's jetliners.

He noted that the ``shift from a regulated to a liberalised market has increased competition among airlines and it is forcing them to operate at much higher levels of efficiency to remain profitable. As a result, airlines are more interested in total life cycle costs. They are redefining their business models and looking for ways and means to reduce their overall operating costs by either out sourcing non-core capabilities or diversifying to bring in revenue.''

Pointing out that over the next two decades, airlines were expected to spend the most in maintenance, airport route and infrastructure, aeroplane servicing and airframe component repair segments, Mr. Baseler said Boeing estimated the world fleet to be 31,755 jets by 2019, more than double that of today, with two- thirds of the planes currently in service projected to be operating at the end of the period of forecast.

In addition, the report outlines that 22,315 new planes would enter service to accommodate growth and replace flying machines that would be removed from service.

Of the $1.5 trillion that Boeing projects airlines would invest in new commercial planes over the next 20 years, about 55 per cent will be for larger regional jets and single-aisle planes. While intermediate-size planes and small regional jets would receive nearly the same emphasis from fleet planners, the market for 747-size segment and larger jets represented only 6 per cent of the industry's total investment in new planes.

``We see a market fragmentation continuing within the regions and in inter-continental markets, which means airlines will rely more and more on smaller airplanes to meet passenger demand for direct flights and links between more cities,'' he said.

North America was poised to lead this trend with regional and single-aisle planes - 717s, 737s, and 757s and the like - while Asia- Pacific region would receive the largest number of twin- aisle planes such as 767s and 777s.

``The world is changing at Internet speed, causing the airlines to look at their business strategies and business models in a different way.

We are now seeing this happen in Europe the way it happened in the U.S. along with Southwest Airlines. Carriers such as Easy jet, Go, Ryanair and Virgin Express are causing the major European airlines to re-think their strategies,'' he added.

The current market outlook projections for new planes were based on an annual worldwide travel growth of 4.8 per cent over the next two decades. However, regional forecasts ranged from 2 to 8 per cent.

Asian economies, recovering from the financial crisis, would experience above-average traffic growth and deliveries to the airlines in this region would increase.

Latin America, also recovering from an economic crisis, would see some of the world's fastest traffic growth, the report said adding that Boeing was encouraged by the growth it saw globally and the opportunities it represented for the complete Boeing product line, especially in the long-range market.

``Our new long-range 777s and the 747X family are the perfect solutions for fragmenting, long-range markets around the world, especially in the North Pacific, the Europe and the Asia markets,'' he said pointing out that the ``777 family of airplanes would continue to reshape the air travel industry on the whole.''

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