The Boeing Current Market Outlook (CMO) is simply the next 20 year demand for air travel and airplanes. For as long as we can remember, marketing types have based many forecasts; In-Flight Entertainment and others, utilizing this informative tool. IFE has two commercial aircraft component markets (line-fit and retrofit) and the CMO and it’s Airbus cousin, Global Market Forecast, are usually the basis for most new aircraft installation market size estimates. We should note that the CMO has been a conservative voice in demand forecasting but GDP or economic-based predictions are tricky. On a bad day, the CMO has been as much as 10+ per cent off the mark; however, their predictions regarding aircraft markets (size – units) have been remarkably accurate. From Boeing’s own observations: “But the remarkable resilience of air travel is amply documented in more than 45 years of published editions of the Boeing Current Market Outlook.”

With respect to the forthcoming 20 years, Boeing further explains: “Commercial aviation has weathered many downturns in the past. Yet recovery has followed quickly as the industry reliably returned to its long-term growth rate of approximately 5 percent per year. We see that same resilience in the first half of 2010 as the industry rebounds from the recent severe downturn. Passenger traffic is projected to rise 6 percent for the year, with similar annual growth rates for 2011 through 2014.”

“Boeing notes that the commercial airplane market over the next 20 years will grow from 18,890 airplanes today to a whopping 36,390 in 2029. If you do the math, you get a net addition required of 19,410, but they note a requirement of new deliveries over the 20 years of 30,900 aircraft….huh? The difference is comprised of the 15,240 planes that are retired, the 1750 that are converted to freighters,…and so on.”

With this introduction, here is a synopsis, given you might not have enough time to check it out yourself.

Air Travel
World RPK growth has been outpacing World GDP growth, some 5 to 2 percent. Five trillion RPK’s…market growth has been approx 3% per year as a running average (think fuel) over the last 20 years?.After being in the toilet for the last couple years, pax traffic is expected to grow 5% in 2010, probably as a result of lowering fuel costs and quiet volcanos. Boeing is looking at near term pax growth to be in the 5% area. In fact, Boeing sees that number over the next 20 years.

On the other hand, airline yields (pax and cargo) have been declining for at least 10 years now. Operating costs, fuel, and lowering GDP have combined to squeeze airlines, yet capacity still outpaces utilization. This certainly explains reduced service offerings, load factor increase pushes, and increased fees. Bottom line: airlines are trying to regain profitability.

Airplane
As we noted, the CMO talks about air travel and airplanes. We note that Boeing see’s new aircraft delivery highlights based value in the following order: America (North and South), China, and UAE. We note that North and South American airlines must find the financing, China will try to get into the aircraft business, probably sing-aisle…and as for the UAE , it must be based on oil money and service driven quality, certainly not population. Over the next 20 years, Boeing see’s the breakdown of all new aircraft deliveries, from all aircraft manufacturers of planes over 30 seats as follows:

Single-Aisle
21,160 aircraft 30 – 199 seats
69% of units and 47%of dollars – Market Value – $1.7 Trillion

Twin-Aisle
7100 aircraft 200 – 399 seats
23% of units and45% of dollars – Market Value – $1.6 Trillion

Large
720 aircraft 400+ seats
2% of units and 6% of dollars – Market Value – $220 Billion

Total 30,900 – Market Value – $3.6 Trillion

You can look up your favorite segment or product category at the following links: Boeing and for Airbus. All Good stuff!