Boeing projects $4 trillion market for new aircraft and services

Boeing has expanded its annual market forecast to include the aviation services airlines need for efficient fleet operations. The total market - services plus future new aircraft deliveries - is estimated to be worth more than $4 trillion over the next 20 years

Boeing released its Current Market Outlook 2000 yesterday at the Farnborough Air Show.

The report's departure from its traditional format reflects the reality of a more competitive industry, and a growing and, to some extent, ageing worldwide aircraft fleet, a testimony to the long-term utility and value of today's jetliners.

"The shift from a regulated to liberalised market has increased competition among airlines and is forcing them to operate at much higher levels of efficiency to remain profitable," said Randy Baseler, Boeing Commercial Aircraft Group vice president - Marketing. "As a result, airlines are more interested in total lifecycle costs. They are redefining their business models and looking for ways to reduce their overall operating costs by either outsourcing non-core capabilities or diversifying to bring in revenue."

Baseler pointed out that suppliers that are able to provide comprehensive, customised product-and-service packages will be highly sought after by airline customers.

Boeing estimates that the commercial aviation support services market will be worth more than $2.6 trillion over the next 20 years, with annual revenues considerably more than that for the new aircraft market.

Airline operating expenses cover all activities to attract customers and deliver passengers and cargo to their destinations. These activities include a set of support services needed to operate airline fleets and eliminate surplus aircraft. In 1999 alone, airlines spent about $330 billion on operating expenses, with roughly $87 billion spent on support services.

Baseler said over the next two decades airlines were expected to spend the most in the heavy maintenance, airport route and infrastructure, aircraft servicing, and airframe component repair segments.

Boeing estimates the world fleet will be 31,755 jets by 2019 - more than double that of today - with two-thirds of the aircraft currently in service projected to be operating at the end of the forecast period. Additionally, the outlook estimates that 22,315 new aircraft will enter service to accommodate growth and replace aircraft that will be removed from service.

Of the $1.5 trillion that Boeing projects airlines will invest in new commercial aircraft over the next 20 years, about 55 percent will be for larger regional jets and single-aisle aircraft. Intermediate-size aircraft and small regional jets will receive nearly the same emphasis from fleet planners, while the market for jumbo and larger jets represents only 6 percent of the industry's total investment in new aircraft.

Baseler said the Current Market Outlook's projections for new aircraft are based on an annual worldwide travel growth of 4.8 percent over the next two decades, however, regional forecasts range from 2 to 8 percent.

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