Last Thursday, Boeing released its Commercial Market Outlook – a 20 year forecast that attempts to peer into the crystal ball as to how many airliners the world will need over the next two decades. Presented to the aviation media and transport correspondents in London by Randy Tinseth (you can check out his blog here) it is available in full here. (the last 2009 CMO got downloaded some 259,971 times). Boeing has a full-time staff of six people preparing this annual report and uses it to drive its strategy as well as sharing it with customers.
The big takeway from the 2010 CMO is that the world is going to need some 30,900 airliners worth some $3.6trillion between now and 2029. This is up on the 29,000 aircraft forecast in the 2009 report. So while growth is coming back in the world air transport market, (with passenger air traffic at 5.3% and cargo at 5.9% )but it will not be until 2013 until it recovers to the previous upward pre-recession growth trend line of a steady4.9%.
However, there are some interesting asides from the Q&A session. Firstly in perhaps the first time since McDonnell Douglas, in the next decade the Airbus/Boeing duopoly may be over. Now while both Airbus and Boeing are aware of Bombardier and Embraer upsizing their established regional products to attack the A320/737 single-aisle market, there are two direct rivals now waiting in the wings, the Russian UAC/Irkut MS-21 and the Chinese COMAC C919.
Here’s where it gets interesting. While the Russian market is important, the really big prize for both Airbus and Boeing is China – expected in the next 20 years to outstrip the US in the size of the market. It is estimated that it will require three times the number airliners currently operating over Chinese skies.
Boeing’s own analysts in preparing its market outlook, then look very carefully at China. They even factor in China’s plans for high-speed rail links between cities into its CMO. But for both Airbus and Boeing, perhaps the elephant in the room is the C919 airliner and whether the Chinese government, keen to promote its own hi-tech domestic aerospace industry will allow Chinese airlines a truly free choice in selecting what single-aisle aircraft they buy. Tinseth maintains that the CMO only looks at what opportunities for sales there are, based on growth and retirement of old aircraft, but it may be that for China, they may be up against a strong domestic rival with government backing.
Second – by the end of this year Boeing will have decided what to do about the popular, but aging 737. This iconic single-aisle airliner is still going strong, but two things are now hastening Boeing to review its future. The first is the market, where increased demand (up 9%) for single aisle airliners was a surprise. Says Tinseth “we underestimated the demand for single-aisle”. The second is the threat from any Airbus A320NEO (New Engine Option) – which might significantly boost the appeal of that single-aisle. By September Airbus will know if it has enough engineering resources to launch this project.
Tinseth says that for the 737 there are three options. 1) Re-engine with a more fuel efficient powerplant like P&W’s GTF PW1000G (geared turbofan) as used on the Bombardier CSeries and Mitsubishi MRJ. However he warns that after the development costs are factored in, the final cash operating cost savings to airlines might only be as much as 2-3%. Is that worth it?2) The second option might be a true clean sheet design – something like the ‘Muppet’ concepts that Boeing studied in 2006 or even something like the Royal Aeronautical Society’s RS-002 concept. 3) Finally there might be the option of ‘do nothing’ or more accurately continue with incremental improvements. If the airliner is still selling well, and the game-changing technology (in the form of open-rotor engines) is still some way off then it could be that both Airbus and Boeing decide to wait for the engine makers to deliver the goods.
Third – Tinseth also used the briefing to draw attention to the A380s (relative) lack of commercial success compared to Airbus’s forecasts back in 2000 – the year it was launched. He noted that while it had notched up big orders in the Middle East with Emirates (also the biggest 777 customer) Airbus’s market predictions of 10 years ago (1,200 airframes over 20 years) was looking extremely unlikely to occur. He argued that to make the forecasts, Airbus would need to sell 1,000 in the next decade or 100 a year. In short – Tinseth says that the past decade has vindicated Boeing’s vision of point-to-point, whereas Airbus had let their optimistic projections of the very large airliner sector drive their market strategy and this ‘paradigm shift’ in the marketplace hadn’t happened. (As an aside, in a pre Farnborough media briefing Airbus noted that 2010 is the year in which there are now more people living in cities than in rural areas – is this urbanisation the ‘paradigm shift’ the A380 needs?)
So who will be the new entrant to break the Airbus/Boeing duopoly? What will Boeing decide to do with the 737? And can Airbus really make the that 2000 market prediction for the A380 come true? The next decade should be even more interesting than this one.