current market outlook 2016–2035 - Boeing

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CURRENT MARKET OUTLOOK 2016–2035

Copyright © 2016 Boeing. All rights reserved.

∙I

CURRENT MARKET OUTLOOK 2016–2035

OUTLOOK ON A PAGE

4 ∙ Outlook on a page

DELIVERIES BY AIRPLANE SIZE AND REGION Region

Asia

North America

Europe

Middle East

Latin America

C.I.S.

Africa

World

World Economy (GDP %)

4.1%

2.3%

1.8%

3.8%

2.9%

2.5%

3.7%

2.9%

Airline Traffic (RPK %)

6.0%

3.1%

3.7%

5.9%

5.8%

3.7%

6.1%

4.8%

Airplane Fleet (%)

5.0%

1.8%

2.7%

4.8%

4.4%

3.1%

3.8%

3.6%

15,130

8,330

7,570

3,310

2,960

1,170

1,150

39,620

2,350

1,030

1,120

770

350

140

170

5,930

160

120

150

230

120

120

150

150

Unit Share

38%

21%

19%

8%

7%

3%

3%

100%

Value Share

40%

17%

19%

13%

6%

2%

3%

100%

Market Size Deliveries Market Value ($B) Average Value ($M)

New Airplane Deliveries Large Widebody

130

20

30

320

-

30

-

530

Medium Widebody

1,490

420

570

850

30

50

60

3,470

Small Widebody

2,060

930

960

560

260

90

240

5,100

11,160

5,440

5,880

1,510

2,530

810

810

28,140

Single Aisle Regional Jets

290

1,520

130

70

140

190

40

2,380

15,130

8,330

7,570

3,310

2,960

1,170

1,150

39,620

50

10

10

140

-

10

-

220

Medium Widebody

520

160

200

320

10

20

20

1,250

Small Widebody

560

220

260

150

60

30

70

1,350

1,210

570

640

160

270

70

80

3,000

10

70

10

-

10

10

-

110

2,350

1,030

1,120

770

350

140

170

5,930

Large Widebody

270

100

170

140

-

50

10

740

Medium Widebody

540

320

360

320

20

20

60

1,640

Total

Market Value (2015 $B catalog prices) Large Widebody

Single Aisle Regional Jets Total

2015 Fleet

Small Widebody Single Aisle Regional Jets Total

860

750

440

250

140

140

80

2,660

4,540

4,010

3,370

590

1,280

650

430

14,870

140

1,730

270

70

110

170

110

2,600

6,350

6,910

4,610

1,370

1,550

1,030

690

22,510

70

60

100

320

-

50

-

700

2035 Fleet Large Wide-body Medium Wide-body

1,590

460

610

840

40

70

80

3,690

Small Wide-body

2,340

1,150

1,140

610

350

170

300

6,060

12,560

6,630

5,920

1,660

3,110

1,380

1,020

32,280

310

1,520

150

80

160

230

60

2,510

16,970

9,820

7,920

3,510

3,660

1,900

1,460

45,240

Single Aisle Regional Jets Total

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Outlook on a page ∙ 5

LONG-TERM MARKET OUTLOOK

6 ∙ Long-Term Market Outlook

LONG-TERM MARKET OUTLOOK

were delivered, and airlines ordered more than 2,400 new airplanes. These trends are expected to continue in 2016. MARKET FORCES Global economic expansion is expected to continue, and although

As Boeing celebrates the past with our centennial anniversary,

the overall picture is good, there will be regional challenges. North

we continue to look to the future with our Current Market

America is leading the global economic acceleration, and the

Outlook. This publication is The Boeing Company’s long-

Eurozone is finally starting to gain economic momentum. In the

term forecast of passenger and cargo traffic and the number

past, emerging markets have driven economic growth, but we are

of airplanes necessary to support that expectation. Our

now starting to see some regional divergence from this trend.

Current Market Outlook is one of the longest published and most accurate forecasts in the aviation industry.

EFFECTS OF MARKET FORCES Our long-term outlook incorporates the effects of market forces

These predictions are used to shape the company’s product

on the growth of the aviation industry. Based on what has

strategy and guide long-term business planning, as well as

happened historically and what is expected to occur, world GDP is

to share our view with the public, informing airlines, suppliers,

anticipated to grow at 2.9 percent annually over the next 20 years.

and the financial community of industry trends. We first

During the same period, passenger traffic is predicted to grow by

shared Current Market Outlook in the early 1960s at a Boeing-

4.8 percent and air cargo traffic by 4.2 percent.

supplier conference. Since then, we have updated our market outlook annually to freshly factor in the industry’s changing market forces. YEAR IN REVIEW

2016 market expectations Growing, efficient and profitable utilization of fleets and capacity

For the aviation industry, 2015 was an outstanding year. Key metrics increased across the board, and we expect to see this trend persist, with continued low oil prices anticipated to save the industry tens of billions of dollars in 2016 alone. According to the International Air

GDP GROWTH 2.4%

TRADE GROWTH 3-4%

OIL PRICES $40-50/bbl

PASSENGER TRAFFIC GROWTH 6.2%

CARGO TRAFFIC GROWTH 2-3%

AIRLINE PROFITS $39B

Transport Association, passenger traffic as measured by revenue passenger kilometers (RPK) was up approximately 7.4 percent, and capacity was up approximately 6.7 percent.

Demand by size

The result was record load factors of more than 80 percent worldwide.

Demand by size 2016 to 2035

Airplanes in service 2015 to 2035

Large widebody Medium widebody Small widebody

Because of lower oil prices and

Single aisle

various increased efficiencies, airlines

Regional jets

estimated net profits of $35 billion for

Total

New Airplanes

2015

2035

740

700

1,640

3,690

Medium widebody

2,660

6,060

Small widebody

14,870

32,280

2,600

2,510

22,510

45,240

Large widebody

Single aisle Regional jets Total

Value ($B)*

530

220

3,470

1,250

5,100

1,350

28,140

3,000

2,380

110

39,620

5,930

2015—which was also a good year for airplane manufacturers such as Boeing and Airbus. Over 1,400 jet airplanes

Copyright © 2016 Boeing. All rights reserved.

*$ values though out the CMO are catalog prices

Long-Term Market Outlook ∙ 7

SHAPE OF THE MARKET Over the next 20 years, Boeing is forecasting a need for over 39,600 airplanes valued at more than $5.9 trillion. Aviation is becoming more diverse, with approximately 38 percent of all new airplanes being delivered to airlines based in the Asia region. An additional 40 percent will be delivered to airlines in Europe and North America, with the remaining 22 percent to be delivered to the Middle East, Latin America, the Commonwealth of Independent States, and Africa. Single-aisle airplanes command the largest share of new deliveries, with airlines needing over 28,100. These new airplanes will continue to stimulate growth for low-cost carriers and will provide required replacements for older, less-efficient airplanes. In addition, 9,100 new widebody airplanes will be delivered, which will allow airlines to serve new markets more efficiently than in the past.

Demand by region Key indicators 2015 to 2035

Demand by region 2016 to 2035 New Airplanes

Value ($B)*

15,130

2,350

North America

8,330

1,030

4.0

Europe

7,570

1,120

Airline traffic RPK

4.8

Middle East

3,310

770

Cargo traffic RTK

4.2

Latin America

2,960

350

CIS

1,170

140

Africa

1,150

170

39,620

5,930

Region

Growth measures (%) World economy GDP

2.9

Asia Pacific

Airplane fleet

3.6

Number of passengers

Total

*$ values thoughout the CMO are catalog prices

8 ∙ Long-Term Market Outlook

Copyright © 2016 Boeing. All rights reserved.

Long-Term Market Outlook ∙ 9

BUILDING TOMORROW’S PLANES TODAY

10 ∙ Building Tomorrow's Planes Today

BUILDING TOMORROW’S PLANES TODAY

THE WORKHORSE OF THE FLEET The DC-3 has been called the greatest airplane of all time, undoubtedly a reference to its workhorse reputation as well as its innovation and longevity. The Douglas DC-3 made air travel

“BOEING HAS ALWAYS BUILT TOMORROW’S

popular and airline profits possible. Design work began in 1934

AIRPLANES TODAY!”

at the insistence of C.R. Smith, president of American Airlines.

That phrase is from a late-1930s advertisement for the Boeing

Smith wanted two new planes—a longer DC-2 to carry more

Model 314 Clipper, and it applies still today in 2016. Which

day passengers and another with railroad-type sleeping berths

proves two things: First, Boeing has always had some pretty

to carry overnight passengers. So, the DC-3 evolved from a

smart advertising people. But second—and more important—it

classic DC-2 version to become bigger and better, incorporating

reveals the fundamental truth about The Boeing Company’s

new technology. Innovation for the DC-3 airplane produced the

leadership throughout its first century of existence, beginning

Douglas Sleeper Transport—also called Skysleepers by airline

with the first B & W lifting off the waters of Lake Union in 1916.

customers—which was the height of luxury. Fourteen plush seats

Boeing has always been the leader in customer satisfaction,

(among the first herringbone, lie-flat seats in modern aviation)

technical thought, and innovation. Those qualities, sustained

in four main compartments could be folded in pairs to form

over a century, are unmatched by any other aviation company.

seven berths, while seven more folded down from the cabin

The following examples illustrate The Boeing Company’s

ceiling. In addition to the 455 DC-3 commercial transports that

unassailable position as aviation’s leader for the past 100 years.

were built for airlines, 10,174 were produced as C-47 military transports during World War II. Today, more than six decades

THE ROUTE OPENER

after the last one was delivered, hundreds of DC-3s are still

The Model 40A was used by airlines to carry mail for the US Post

flying and earning their keep carrying passengers or cargo.

Office in the 1920s, replacing converted military de Havillands

The workhorse legacy pioneered by the DC-3 continues

that had carried mail since 1918. Twenty-four of the Model 40A

today in the 737 family—with thousands of 737s in service

mail planes were ready to fly July 1, 1927, for their first day of

and thousands more to come. And starting in 2017, the

airmail service between San Francisco and Chicago—a trip that

737 MAX, with its efficiency, reliability, and passenger

took roughly 22 hours and involved five different airplanes.

appeal, will redefine “workhorse” for decades to come.

It should be enough to say that the new airplane’s tremendous

THE FLAGSHIP AIRPLANE

innovation of an air-cooled engine sufficiently reduced the weight of Thirty years before the iconic 747 first took to the skies as a the airplane to make it the top choice for mail delivery. Additionally,

flagship for airlines worldwide, Boeing built its first flagship—the

the Model 40A, under the umbrella of the Boeing Air Transport

Model 314 Clipper. It was an airplane that excelled in long-distance

Company, became one of the United State’s first passenger

flying as well as passenger comfort and style. As air travel became

airliners. In a small compartment alongside the mail bags, the

popular during the mid-1930s and passengers wanted to fly across

Model 40A could carry two passengers. The first passenger was

the ocean, Pan American Airlines asked for a long-range, four-

Jane Eads, a reporter for the Chicago Herald-Examiner, who

engine flying boat. In response, Boeing developed the Clipper,

wrote a note on a photo of the occasion: “Here’s to Boeing Air

named after the great ocean-going sailing ships. The Model 314

Transportation on my arrival at San Francisco, July 2, 1927, as

had a 3,500-mile range and made the first scheduled trans-Atlantic

the first passenger to travel on the transcontinental service.”

flight on June 28, 1939. By the year’s end, Clippers were routinely flying across the Pacific, navigating using sextants through a dome

Today, in the tradition of the route-opening Model 40A,

in the top of the fuselage. Clipper passengers looked down at the

the 787 Dreamliner serves more than 430 routes, with

sea from large windows and enjoyed the comforts of dressing

100 of those being new nonstop markets. Since the

rooms, a dining salon that could be turned into a lounge, and

787’s entry to service in 2011, more than 83 million

a bridal suite. The Clipper’s 74 seats converted into 40 berths

passengers have flown on the airplane, traveling to their

for overnight travelers. Four-star hotels catered gourmet meals

chosen destinations with unparalleled convenience.

that were served from the Clipper’s galley. Boeing built 12 Model

Copyright © 2016 Boeing. All rights reserved.

Building Tomorrow's Planes Today ∙ 11

314s between 1938 and 1941. Production was interrupted by

company’s future on commercial-aviation jets. Innovation leading

World War II and, sadly, none of the 12 Clippers have survived.

to increased efficiency, greater range, and customer-satisfying

Although the Clipper’s tenure as the Boeing flagship was short-

features defined the Boeing package then, as it does now. The

lived, the company’s flagship tradition has persisted through

competition of the day, however, was not sitting idle. Leadership

time and technology, now moving gracefully from the 747 to

at Douglas saw the potential of the 707 and began work on its

another innovative Boeing success story—that of the 777.

own commercial jet—the DC-8. Douglas widened its fuselage to accommodate six-abreast seating, compared with the five-

THE INNOVATOR

abreast of the early 707 design. Boeing then made a decision to

The 707-320 Intercontinental was the visionary outcome of Boeing

widen the 707 fuselage by four inches, making it one-inch wider

President William Allen and his leadership team staking the

than the DC-8’s. Boeing’s next step was to introduce the 707-320

12 ∙ Building Tomorrow's Planes Today

Intercontinental, with its larger wing, longer fuselage, and increased WE’VE BEEN DOING THIS FOR 100 YEARS range. The changes were what the airline customers needed and

To be able to say, “We’ve been doing this for 100 years” is

wanted, and orders began pouring in for the 707. The 707-320

a profound advantage in the commercial aviation business.

was the bestselling variant of the 707, with a total of 580 sold.

Boeing’s century-long history offers a deep reservoir for technological leadership that delivers continuous innovation,

Today, when taking a look at the 777X family, The Boeing

helping our airline customers make their passenger customers

Company’s continuing vision and competitive pattern of winning is

happy. Reviewing Boeing’s history leads to the constant

undeniable. The 777X parallels the innovation story of the 707-320,

refrain, “How did they do that?” We expect that question will

but with a bigger wing, more-efficient engines, and increased

be asked many times throughout Boeing’s second century.

range—proof that 100 years of experience comes in handy.

Boeing will always build tomorrow’s airplanes today!

Copyright © 2016 Boeing. All rights reserved.

Building Tomorrow's Planes Today ∙ 13

BUSINESS & MARKET ENVIRONMENT

14 ∙ Business & Market Environment

activity. On the other hand, many emerging markets that are more

BUSINESS AND MARKET ENVIRONMENT

dependent on export revenue from natural resource extraction are seeing increased economic pressure. In many cases, declining export revenue goes hand in hand with slower GDP growth, increased capital outflow, and depreciated exchange rates. In

ECONOMIC ENVIRONMENT

several countries, political uncertainties exacerbate the fragile

While longer-term factors remain in place to support accelerating economic growth, the world economy in 2015 was

Global GDP growth

unable to break out of the recent pattern

Growth Rate in %

of steady but below long-term average

10.0

growth. Moreover, GDP performance was unevenly distributed across countries. In particular, low commodity prices, political uncertainties, and financial market volatilities made it difficult for some

8.0 6.0 4.0 2.0 0.0

countries to live up to their economic

-4.0

potential. Oil prices averaged around

-6.0

Forecast

World

-2.0

Emerging Markets Advanced Economies

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US$50 in 2015, roughly half the 2014

Source: IHS Economics

average value. Prices for many other commodities plummeted as well. Driven

Value against USD, index with Jan 2013 =100 110

economies driven by strong consumer

Source: IHS Economics

spending. But growth isn’t solely the result of low oil prices, as labor and housing

Oil volatility returns

markets have improved and monetary support remains strong—despite the US Federal Reserve raising interest rates for the first time since the Great Recession.

$/Barrel (Brent Crude Oil)

$/Gallon (US Gulf Coast Jet Fuel)

200

4.50

180

4.00

160

3.50

140

3.00

120

Among emerging markets there are many beneficiaries of lower commodity prices, as evidenced by China, where consumption remains strong and supportive of air travel growth amid a slowdown in aggregate economic

Copyright © 2016 Boeing. All rights reserved.

Mar 2016

Jan 2016

Nov 2015

Sep 2015

Jul 2015

cost of commodity imports and see their

May 2015

30 Mar 2015

European Union, benefit from the lower

Jan 2013

40

Jan 2015

50

those of the United States and the

Nov 2014

Most advanced economies, such as

CAD EUR JPY BRL RUB

60

Sep 2014

70

Jul 2014

a formidable challenge for others.

May 2014

80

Mar 2014

for some countries, they have created

Jan 2014

90

Nov 2013

100

lower prices have been a major benefit

Sep 2013

more nuanced perspective, while these

Jul 2013

for the global economy; yet, from a

May 2013

lower oil prices were likely a net positive

Exchange rates: US Dollar strength continues

Mar 2013

predominantly by supply-side factors,

2.50

100

2.00

80

1.50

60 40

1.00

20

0.5 0.0

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 Source: EIA

Business & Market Environment ∙ 15

economic situation and further reduce near-term growth prospects

accelerating significantly and sustainably for the remainder of

by lowering investment incentives. These developments highlight

the decade. This acceleration will be led by a growth uptick in

the need for many countries to diversify and reform economic

emerging markets and further sustained growth in large advanced

systems to enhance and fully realize their growth potential.

economies. The latter, in particular, will benefit from central bank support, reduced economic-policy frictions surrounding

Despite current challenges, IHS Economics sees global growth

European sovereign debt challenges, and the strengthening consumption effects of low energy prices in a global environment of plentiful but

Passenger traffic resilient due to multiple factors

underutilized production capacity. Annual growth RPKs (%)

FAST GROWING AND RESILIENT

10 8

PASSENGER MARKETS

Above Trend Growth

6

Passenger traffic continues to show impressive expansion and resilience on

4

a global scale. 2015 marked a continued

2016F

2015

2014

2013

year of above-trend growth, despite an

2012

0 2011

acceleration in growth and the sixth 2010

2

economic backdrop characterized by Source: ICAO, BCA

tepid GDP growth. Globally, load factors are around 80 percent and utilization remains at or near record levels. Demand

Airline Productivity Rising: Assets are being efficiently utilized

growth outpaced capacity in all major

Passenger Airplane Utilization Hours/Day

World Passenger Load Factors

world regions except for the Middle

9.5

82%

East, where double-digit traffic growth

80%

was surpassed by even higher-capacity

78%

additions. One likely reason for the strong

76%

market performance can be found in

9.0

8.5

the composition of GDP growth in many

8.0 74% 7.5

parts of the world. Large markets such

72%

7.0

as the United States, Europe, or China 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

70%

Sources: Utilization – BCA RMT; Load Factors – ICAO

Available Seat Kilometers (capacity)

related parts of the economy. Although a sharp slowdown in specific and less travel-intensive sectors are a drag on

Airline traffic growth exceeding airline capacity growth Year-over-year growth

all see relative strength in the consumer-

overall GDP numbers, most citizens enjoy Revenue Passenger Kilometers (traffic)

improved consumption opportunities

7%

and are willing to increase spending on

6%

services such as travel and tourism. This

5%

trend is reinforced by the removal of

4%

structural impediments to travel, such as

3%

visa restrictions, unlocking demand for

2%

travel warranted by rising income levels of

1%

an expanding global middle class. Another key factor is the increased efficiency of

0% Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15 Source: ICAO, BCA

16 ∙ Business & Market Environment

airline business models in bringing air travel to consumers around the world.

Low-cost carriers continue to expand

Air cargo market

into new markets while other airlines use their geographic location to increase ease of global travel or offer new routes, enabled by new-technology airplanes and more efficient operations. In addition, current low fuel prices allow airlines to manage capacity and fares to meet and stimulate demand more effectively.

Growth year-on-year

Air Cargo FTKs

Industrial Production

7% 6% 5% 4% 3% 2% 1% 0% -1%

TO RESUME GROWTH

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Q4 2013

Q3 2013

Q2 2013

AIR CARGO MARKETS LOOKING

Q1 2013

-2%

Sources: IATA Carrier Tracker (industry international scheduled freight) and A4A US domestic cargo traffic, Oxford Economics

Despite a strong start to the year when the US west coast seaport troubles boosted air cargo temporarily, 2015 was a year of many challenges for air cargo. Global trade stalled towards the middle of the year amid uncertainty emanating from Chinese manufacturing and globally weak industrial production. With fewer goods produced around the world, there was less trade. However, throughout the second half of the year, the global trade picture has been modestly improving. There are now signs that international trade is picking up speed throughout 2016 and major economic forecasters see growth averaging around 4 percent for the remainder of the decade. Globalization might not witness the extraordinary expansion of the early 2000s, but expansion isn’t over. Trade will allow productivity increases in global-production chains and expand availability and variety of products to consumers around the world. The many benefits of a global and open economy have motivated policy makers to advance free-trade initiatives of historic proportions. If rapidly implemented, the TransPacific Partnership and the Transatlantic Trade and Investment Partnership will stimulate global commerce and provide long-run growth potential for international trade and the air cargo industry.

Copyright © 2016 Boeing. All rights reserved.

Business & Market Environment ∙ 17

RECORD PROFITABILITY HIGHLIGHTS HEALTHY AIRLINE FINANCIALS With 2015 average fuel prices about 50 percent lower than in 2014, airline profitability has been elevated to record levels. Net profits reached around US $35 billion in 2015. With further fuelprice declines and the reduced impact of fuel-price hedging, this number is likely to be surpassed in 2016. Net margins improved globally as well, reaching 4.9 percent in 2015 and expected to top 5 percent in 2016—numbers not seen for almost a half century. With a strong local currency and a consolidated industry structure, US airlines are the most profitable on average, accounting for more than half the global industry’s profits. For airlines outside the United States, currency depreciation often moderated the gains from fuel prices, as did more intense competition. Airlines are using the improved financial position to undertake productivity-enhancing investments that will allow future healthy growth. These investments include interior upgrades, operational improvements, and acquisition of new, efficient airplanes.

Industry experiencing record profitability Net Profit (Loss) Billions

Percent of Revenue

$40

8%

$30

6%

$20

4%

$10

2%

$0

0%

2015

2016F

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

-8%

1986

-6%

($40)

1985

-4%

($30) 1984

-2%

($20)

1983

($10)

Source: ICAO (1983 – 2013) and IATA December 2015 (2014-15)

North America leading industry profitability Net Profit (Billions $)

2014

2015E

2016F

20

15

10

5

0 19.4

6.9

5.8

1.4

-.03

-.03

North America

Europe

Asia

Middle East

Latin America

Africa

-5

Source: IATA

18 ∙ Business & Market Environment

Copyright © 2016 Boeing. All rights reserved.

Business & Market Environment ∙ 19

TRAFFIC & MARKET OUTLOOK

20 ∙ Traffic & Market Outlook

the more common examples include:

TRAFFIC & MARKET OUTLOOK

··

More open air-services agreements between countries (e.g., the 2015 revised US-Mexico agreement).

··

Liberalized domestic-market regulation.

··

Emerging technology (e.g., new

METHODOLOGY

airplanes enabling new routes).

Current Market Outlook is a noncyclical forecast that looks

··

Business-model innovation (e.g., low-

beyond short-term market shocks to address underlying

cost airlines driving down fares).

trends in the aviation industry. Its travel-demand forecast

··

Airline-network improvements (e.g., new

covers 63 intra- and interregional traffic flows.

nonstop city pairs or greater frequency).

Different traffic flows have various driving influences and are modeled accordingly. For example, some flows may

Local markets as a factor in forecasting air-travel flow is not directly

emphasize development GDP per capita (economic

related to either macroeconomic trends or ease of travel, but its

activity) while other flows may be influenced by local-

impact on air-travel growth can be considerable. One notable

market factors, such as industry consolidation.

example is when from 2009 to 2015 the US domestic market

Generally, various influences on a region’s air-travel growth

experienced essentially no growth in airline capacity. Given

can be grouped into three categories: economic-activity, ease-

that load factors were already high, little headroom was left for

of-travel, and local-market factors. Some factors of market

traffic growth. As a result, traffic growth during this period was

demand, such as GDP, are easy to quantify; but others—for

anemic, although the economy as a whole grew by 13 percent.

example, liberalization—are more difficult to assess and may

Consolidation of the US airline industry during this time contributed

be causing an even greater effect on market performance. When such factors

What drives travel air growth?

are present, forecasting air-transport demand requires deeper analysis.

Ease of Travel

Economic activity is the most easily understood and quantified key ··

National and regional ctors rket Fa Local Ma

GDP development. ··

TRAFFIC

Economic Activity (GDP)

factor in traffic flow. It includes:

Per-capita income and population trends.

··

Labor-force composition.

··

International trade, economic, and investment links.

Resilient, growing market expected to continue RPKs (trillions)

However, there is a risk that economic

7.0

activity—the most readily understood

6.0

factor in traffic flow—can be overstated

5.0

as a driving force when there is a

4.0

traffic downturn. An important variable

3.0

to be considered is ease of travel.

2.0

ABOVE TREND SINCE 2011

TREND

1.0

in many ways. Some of

Copyright © 2016 Boeing. All rights reserved.

RPKs = Revenue Passenger Kilometers

2014

2015E

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

can experience improvements

0.0 1980

Ease of travel is a factor that

Source: : ICAO scheduled traffic

Traffic & Market Outlook ∙ 21

to this disconnect, as did the reluctance

Emerging markets are driving the economic growth

of US airlines to increase capacity in a time of high fuel prices. These

Annual GDP growth (%) 2015–2035

factors were not replicated in a similar combination anywhere else in the world.

Asia

4.1

Middle East

3.8 3.7

Africa World

SHORT-TERM EFFECTS ON AIR TRAVEL

Latin America

2.9 2.5

CIS

Although the air-transport industry is subject to occasional market shocks, the

2.9

2.3

North America Europe

industry’s demand is resilient; services are

1.8

often seen as essential, and spending on

Source: IHS Economics

discretionary trips for vacations or family events is frequently high priority. Over the past 30 years, the aviation industry has experienced recessions, oil-price

World traffic varies by market RPKs (billions)

shocks, near pandemics, wars, and

6.1

Within Asia*

security threats, yet traffic has continued

6.2

Within China

2.6

Within North America

to grow on average at 5 percent annually.

3.2

Within Europe

6.9

Middle East-Asia

4.7

Europe-Asia

Changes in the structure of an economy can also result in short-term

2.9

North Atlantic

4.5

Transpacific

4.1

Within/to CIS

4.8

Europe-Latin America

attracted much notice in the media,

4.7

Africa-Europe *excludes within China

World GDP growth: 2.9%

5.6

Within Latin America

slow-down in China’s GDP growth

World traffic growth: 4.8%

5.4

North America-Latin America

effects. For example, although the

air travel continued to perform well.

Annual Growth (%)

Added traffic 2016–2035

2015 traffic

0

500

1,000

1,500

2,000

2,500

3,000

3,500

The reason: Chinese consumer sectors, which drive travel behavior, remained strong,

availability of nonstop flights) tend to have a greater impact.

while heavy industrial production and fixed investments weighed on top-line growth, feeding the headlines.

Within a given region, propensity to travel as measured in trips or in revenue passenger kilometers (RPK) generally increases with

DEMAND FOR AIR TRAVEL IS EVOLVING

per-capita income. This increase varies considerably. Generally,

Demand dynamics shift according to different stages of

markets that are more open are more responsive to changes

a country’s economic development. Emerging markets

in per-capita income because airlines are freer to add routes,

throughout the world have shown that air travel is one of the

frequencies, and seats to capture demand. In a more regulated

first discretionary expenditures to be added as consumers join

environment, demand may increase with GDP per capita, but

the global middle class. As emerging market demand begins

lower service quality and higher pricing may restrain travel growth.

to develop, it may take the form of nonscheduled services to

Geography may also influence travel within a region, with islands

leisure destinations. Later, the same demand may migrate to

or poorly connected land masses necessitating more air travel.

scheduled services of low-cost carriers or to network airlines. KEY INDICATORS In developed markets, demand for essential travel has been met,

As discussed in the Methodology section, GDP is one of the

so growth comes from discretionary travel. GDP per capita matters key indicators within the aviation-market sector. IHS Economics less in these market contexts. Factors such as the availability

is estimating that the world GDP will grow approximately

of vacation days earned, the funds needed to travel, consumer

2.9 percent annually over the next 20 years. Based on the

confidence, service pricing, and service quality (for example, the

expected growth in GDP, as well as regional variations,

22 ∙ Traffic & Market Outlook

about 48 percent of travelers are flying

Air travel becoming more diverse geographically

on airlines based in North America and Europe. It is anticipated that 20 years from

Passenger traffic (RPKs) billions

now this number will shrink to 37 percent.

18,000 16,000 14,000 12,000

Other

We see that as regions around the world

Middle East

expand their aviation industry, their share

China

of the market continues to grow and

Asia (excl. China)

increases the strength in traffic flows.

10,000 8,000 6,000 Europe

4,000

37%

2,000 0

North America

48%

64% 1995

2015

2035

Over the next 20 years, it is predicted that China’s domestic traffic will overtake North America as the world’s largest airtraffic markets. The geographic location of the Middle East allows airlines in the

Delivery demand is diverse 3%

region to take advantage of connecting

3%

7% 38% 8%

39,620 New airplanes 2016 to 2035

19%

Region

New airplanes

Asia

15,130

North America

8,330

Europe

7,570

Middle East

3,310

Latin America

2,960

Africa

1,150

CIS

1,170

Total

39,620

almost any two points in the world with one connection, and this will help increase traffic in markets touching the Middle East. Growth within Central America and the Caribbean markets continues to be stimulated by ongoing liberalization. FLEET DEVELOPMENT In 2015, there were approximately 22,510 jet airplanes in service, a number that

21%

is expected to double over the next 20 years to an in-service fleet of 45,240 airplanes. To achieve that, 39,620 new

Delivery demand is diverse

airplanes will be needed, and 28,140 2016–2035

of them, or 71 percent of the total, will

30,000

be single-aisle airplanes. Additionally,

25,000

28,140 (71%)

9,100 new widebody airplanes will be

20,000

required. Regionally, the need for new

15,000

airplanes is well balanced: Asia will require approximately 40 percent; Europe

10,000

and North America combined will need

5,000 0

5,100 (13%)

2,380 (6%) Regional jets

Single aisle

Small widebody

3,470 (9%)

530 (1%)

Medium widebody

Large widebody

approximately 40 percent; and together, the Middle East, Latin America, Africa, and CIS will need the remaining 20 percent.

airline passenger traffic is expected to grow at an annual

Many factors can drive the demand for replacement. Age is the

rate of 4.8 percent and air cargo traffic at 4.2 percent.

primary one, but others include relative airplane economics, maintenance requirements, and the overall market environment.

As the aviation industry grows we continue to see diversification

In recent years, high fuel costs have played a larger role in

among world airlines. Twenty years ago, travelers were most

influencing decisions to remove airplanes from service, especially

likely flying on an airline based in North America or Europe. Today

in the single-aisle category. On the other hand, the lack of

Copyright © 2016 Boeing. All rights reserved.

Traffic & Market Outlook ∙ 23

availability of widebody airplanes has challenged airlines’ ability

NETWORK CARRIERS DRIVE THE DEMAND

to remove certain types from service as rapidly as desired.

IN SINGLE-AISLE GROWTH Several factors continue to drive the global demand for new

In the next 10 years, the number of single-aisle and widebody

single-aisle airplanes, including large replacement needs in

airplanes entering the replacement zone will double. The number of single-

Older, less efficient airplanes replaced with more efficient, newer generation airplanes

aisle airplanes reaching 25 years of age has traditionally averaged 250 to 275 annually, but that figure will double to more than 500 by the beginning of the

Units

40,000

next decade. Meanwhile, the annual

35,000

number of widebody airplanes reaching

30,000

25 years of age currently averages

25,000

100, but will increase to well over 200

20,000

annually by the beginning of the next

15,000

decade. These numbers are in addition

10,000

to the more than 1,400 single-aisle, widebody, and freighter airplanes still

45,240

45,000

22,730 57%

Growth

22,510

39,600

Replacement 16,890 43%

Retained

5,000

5,620

0 2015

2035

in service after more than 25 years. To continue growing globally at the expected annual rate of nearly 5 percent, the airline industry needs an approximate net annual increase in fleet size of 4 percent, and an approximate replacement

Significant growth in replacement requirement In-service aircraft reaching 25 years old Widebody

700

rate of 3 percent. Since fleet replacement

600

is largely less optional than fleet growth,

500

it provides a solid, stable base for longterm demand for new airplanes. The two largest fleet domiciles, Europe and North America, are expected to need well

Single-aisle

800

400 300 200 100 0 2016

over 61 percent of their new deliveries

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Flight Global Ascend Online Data

*770 Single Aisle and 322 Twin Aisle already ≥ 25 years old and still in service

to replace older, less-efficient airplanes, as are the mature Northeast Asia and Oceania regions, thereby balancing the growth across emerging and developing markets in Asia, Latin America, and Africa. Our long-term view of market demand is that airplane replacement will form

Regional variation in single aisle aircraft Single aisle fleet & demand outlook 2015

12,000 10,000 8,000

43 percent of demand during the next

6,000

20 years—a figure that has increased

4,000

nearly every year as more fleets in

2,000

emerging markets launch replacement cycles in the 20-year time frame.

24 ∙ Traffic & Market Outlook

2035

14,000

0 Asia

North America

Europe

Latin America

CIS

Middle East

Africa

Source: Ascend data and Boeing Market Analysis

the advanced economies, steady passenger-traffic growth

80 percent of all single-aisle demand. Listed below are trends

in the Asia-Pacific region, and the ongoing success and

highlighting the increased demand in each of these regions:

expansion of the low-cost business model around the globe.

··

Asia-Pacific passenger traffic is forecast to grow at an above-

A dominant 60 percent share of new-passenger airplane

average rate of 6.0 percent per year, and the majority of all

demand in the single-aisle category is driven by the network

anticipated single-aisle orders, which is expected to be 75

carriers, and represents 17,000 airplanes. Low-cost carriers

percent of overall orders, will serve the growth ambitions

and charter or inclusive-tour operators make up the balance

of the region’s airlines, for both domestic and international

for new single-aisle airplane demand, or 11,000 airplanes.

service. At least 70 percent of all new single-aisle orders is forecasted to be airplanes in the medium-sized category.

The rationale for new single-aisle airplanes varies by region.

··

Contrary to other regions, all airline business segments in

The long-term need for replacement of older-technology

Europe are expected to replace a majority of their single-

airplanes continues to outpace growth demand in the advanced

aisle airplanes over the next twenty years. At an aggregate

economies of Europe, Northeast Asia, North America, and

level, single-aisle airplane demand in Europe is primarily for

Oceania. New-airplane demand in Africa, China, India, Latin

replacement needs, representing 45 percent of all demand

America, and the Middle East is primarily for growth needs

in the region. Medium-sized airplanes are forecast to be

to meet the anticipated increase of passenger traffic.

the airplane of choice for many of the region’s operators. ··

Over the next 20 years, only the network carriers in North

Asia-Pacific, Europe, and North America are the three largest

America will require a greater number of single-aisle airplanes

market regions for new single-aisle airplanes, and they represent

for their fleet replacement needs, or 1,940 airplanes. The North American network carriers’ appetite for single-aisle airplanes is based primarily

Business model variation in single aisle aircraft

on the replacement of older, less-fuelTotal In-Service Fleet - Worldwide LCC

Charter/IT - Other

Broad Network

efficient jets with new-technology, fuel-

Other Networks

efficient, single-aisle airplanes, including 4%

from the Boeing 737 MAX family. The

4%

4%

next generation of these fuel-efficient

26% 30%

2015

44%

42%

2025

32%

42%

2035

Boeing 737 jets is scheduled for delivery in 2017, launching with Southwest Airlines. We estimate the majority of all

26%

25%

25%

new deliveries in this region will be in the medium-sized airplane category.

Source: Ascend data and Boeing Market Analysis

CAPABILITY, EFFICIENCY, AND FLEXABILITY STIMULATE GROWTH

Opening new markets

IN THE WIDEBODY FLEET Airlines make widebody-order decisions

More than 100 new nonstop markets now connected with the 787 Announced

In Operation

based on the airplanes’ versatility, asking questions such as does the airplane have the efficiency to open new routes, does it have the ability to go longer distances, and will it provide the right amount of seats for the market. As airlines continue to focus on versatility, we have seen a move from larger widebody airplane

As of April 29, 2016

Source: Ascend data and Boeing Market Analysis

Copyright © 2016 Boeing. All rights reserved.

types to smaller widebodies. In 1995, the large-size widebody airplane accounted

Traffic & Market Outlook ∙ 25

for 36 percent of the in-service fleet; today that number has

through 2014 and, with the aid of the US West Coast port

shrunk to 11 percent, and by the time we get to 2035, it will be

labor dispute that extended into the first quarter of 2015,

5 percent of the market share. The Boeing smaller-widebody

world air-cargo volume grew about 5 percent by year-end.

product family—the 787, 777, and 747-8i—goes above and beyond answering airlines’ requirements for this category. Over the next

In the second quarter of 2015, global trade and industrial

20 years airlines will need 8,170 new widebody airplanes for passenger service. The characteristics of a market and its airlines also influence the size and types of airplanes needed: ··

Asia, an emerging player in the long-

Airlines moving from large airplanes to small and medium widebodies In-Service Widebody Fleet Small

Medium

Large

100%

75%

haul international market as well as a burgeoning regional aviation market,

50%

will rely heavily on small and medium widebody airplanes. These size categories consist not only of smaller airplanes such as the 787-8 and

25%

0% 1995

2015

2035 Source: OAG, Innovata, Ascend and CMO 2016

787-9 that help take risk out of new routes, but they also include the 777 and 777X, which provide the size and

Future freighter deliveries will be led by demand for large widebodies

range required for serving long routes such as North American destinations. ··

Europe is ranked No. 2 for new deliveries of small widebody airplanes, a size which allows airlines to connect secondary markets to larger hubs as they explore ways to remain competitive.

··

The Middle East, because of the number of people transiting through the region, will take delivery of the

New Freighter Deliveries 930

Market Value $270 billion

600

500

200 550 59%

$190B 70%

150 400 380 41%

300

100 $80B 30%

200 50 100

$0B

0 0

Large 80+ tonnes

Medium 40–80 tonnes

0

Small <45 tonnes

Large 80+ tonnes

Medium 40–80 tonnes

Small <45 tonnes

greatest number of large widebody airplanes and the second greatest number of medium widebody

New freighter demand -- 930 new, 1,440 converted

airplanes. The location of the

Share of Fleet

Middle East makes it a hub for

100%

passengers to fly to almost any place

Delivery Units Standard-body conversions <45 tonnnes Medium widebody production 40–80 tonnes

550

80%

in the world with only one stop.

Widebody conversions 40–120 tonnes

60%

AIR CARGO GROWTH FORECAST TO RESUME After a period of stagnation that followed the global economic slowdown, aircargo traffic started to recover in late 2013. This recovery continued

26 ∙ Traffic & Market Outlook

400

40%

2,370 freighters 2016–2035

20% 380

0%

1,770 freighters 2015

3,010 freighters 2035

1,040

Large widebody production >80 tonnes

production slumped. As a result, air-cargo growth slowed with world air-cargo volume growing about 2 percent for the year. This is a temporary situation; the world economy and industrial production, which are primary leading indicators of air cargo traffic, are forecast to recover and return to long-term trend growth rates in 2017. In turn, air-cargo traffic will grow, and sustained growth should lead to improvements in capacity balance and yields. There is continued demand for the speed and reliability benefits that air freight offers. Industries that require transport of time-sensitive and high-value commodities such as perishables, consumer electronics, high-fashion apparel, pharmaceuticals, industrial machinery, and automobile components recognize the value of air freight, and this value will continue to play a significant role in their shipping decisions. The restructuring of logistics chains to serve the rapidly growing e-commerce industry also requires the unique capabilities that air cargo provides and offers a new area of growth. Passenger airplanes and dedicated freighters both carry air cargo. Lower-hold cargo capacity on passenger flights has been expanding as airlines deploy new jetliners with excellent cargo capability, such as the 777-300ER. However, dedicated freight services offer shippers a combination of reliability, predictability, and control over timing and routing that is often superior to that of passenger operators. As a result, freighters are expected to continue carrying more than half of global air cargo to satisfy the demanding requirements of that market. As global GDP and world-trade growth accelerate, air cargo traffic, as measured in revenue tonne-kilometers, is projected to grow an average 4.2 percent per year over the next 20 years. World air-cargo volume, in spite of exogenous shocks arising from economic and political events and natural disasters, grew an average of 5.2 percent per year over the last three decades. Replacement of aging airplanes, plus the industry’s growth requirements, will create a demand for 2,370 freighter deliveries over the next 20 years. Of these, 1,440 will be passengerairplane conversions. The remaining 930 airplanes, valued at $270 billion, will be new. The overall freighter fleet will increase by more than half—from 1,770 airplanes in 2015 to 3,010 by 2035.

Copyright © 2016 Boeing. All rights reserved.

Traffic & Market Outlook ∙ 27

WORLD REGIONS

28 ∙ World Regions

airplanes, even though growth is slower than in other parts

WORLD

of the world. In Asia, rising demand across the board will require a mix of single-aisle and widebody airplanes.

GLOBALIZED DEMAND

All regions will face similar challenges of fuel-price volatility,

As emerging markets continue to grow and new business

emission-control regimes, and ever-increasing airport and

models expand, the customer base for airplanes is becoming

airspace congestion as the growing world fleet tries to keep pace

increasingly diverse. In 1995, airlines in Europe or North

with burgeoning international and local demand for air travel.

America carried more than 64 percent of all traffic. By 2035, that share will shrink to 37 percent, with Asia Pacific and Middle East airlines becoming more prominent in global aviation. The low-cost business model is becoming a viable option in emerging markets, offering passengers access to a wider range of destinations and the opportunity to choose the speed and convenience of flying rather than traditional modes of transportation. In addition, new, efficient widebody airplanes are enabling smaller operators in developing economies to compete on longer routes traditionally dominated by foreign carriers. The range and economics of these airplanes are also enabling the emergence of the

World market value: $5.9 trillion

long-haul low-cost business model, which is dramatically expanding the

Share of fleet

number of long-haul nonstop city pairs

100%

offered. Rapidly evolving aviation product offerings and growth in emerging markets are broadening the geographical

Delivery units 1%

Single aisle 75%

9%

new jet airplanes, valued at $5.9 trillion.

6%

Small widebody Medium widebody

13%

50%

Large widebody

39,620 New airplanes 2016–2035

balance of airplane demand, spurring a worldwide requirement for over 39,620

Regional Jets

25%

71%

0%

22,510 Airplanes 2015

REGIONAL FOCUS

45,240 Airplanes 2035

Each region will respond to its unique situation and conditions with specialized airplane requirements. Middle East airlines

World key indicators and new airplanes

continue to favor widebody airplanes and premium passenger services to leverage

Growth Measures (%)

New airplanes

Share by size (%)

the area’s geographic advantages and

Economy (GDP)

2.9

Large widebody

530

1

Traffic (RPK)

4.8

Medium widebody

3,470

9

Airplane fleet

3.6

Small widebody

5,100

13

prominence in business travel. Airlines in Europe and North America are responding to growing competition from low-cost carriers by replacing older,

Market size

fuel-inefficient airplanes with new and

Deliveries

39,620

more economical single-aisle models.

Market value

$5,930B

Average value

$150M

The large installed airplane base in these regions generates a need for a

Single aisle

28,140

71

Regional jet

2,380

6

Total

39,620 2015 fleet

2035 fleet

Large widebody

740

700

Medium widebody

1,640

3,690

Small widebody

2,660

6,060

Single aisle

14,870

32,280

Regional jet

2,600

2,510

Total

22,510

45,240

considerable number of replacement

Copyright © 2016 Boeing. All rights reserved.

World Regions ∙ 29

enable the air-travel market in the region to expand beyond

ASIA

national boundaries and support airlines in implementing new low-cost carrier (LCC) business models, which is a viable and growing option for this emerging market. In addition to airlines being able to operate to new locations, easing of visa

China

Asia Aviation Trends Northeast Asia South Asia Southeast Asia Oceania

2011 FEBRUARY

2016 FEBRUARY

GROWING MARKET

Source: Innovata

The Asia region continues to demonstrate vigorous economic growth at a rate of 4.1 percent per year, outpacing the

Low Cost Carriers gaining traction in region

global average by 2.9 percent. Driven by LCC ASM shares in Asia

China and India as the main engines of growth, the region’s share of world GDP is projected to rise from 31 percent today

25%

20%

to 39 percent by 2035. The significant growth rate in this emerging market is expected to continue. As a result, airlines,

15%

10%

airport capacity, and passenger traffic are expected to experience a robust growth rate in the next 20 years. Demand in

5%

0% 2008

2006

commercial aviation is also coming from

2010

2012

2014

2016 Source: Innovata

the continuing expansion of the middle class in Asia, where a greater sector of the population is reaching income levels that make flying more affordable. Despite

Long-haul expansion is accelerating with 787s Weekly seats provided by Asian airlines (millions)

the presence of geopolitical conflict and

35

currency fluctuation, Asia’s airlines are

30

estimated to have earned a net profit of

25

$5.8 billion in 2015 and are projected to

20

earn a net profit of $6.1 billion in 2016.

15

Single Aisle

2.7% CAGR 2005–2010

9.1% CAGR 2005–2010

10

CHANGING INDUSTRY STRUCTURE Liberalization is responsible for significant expansion in Asia’s aviation industry. Changes, such as open skies,

30 ∙ World Regions

Twin Aisle

5 0 2000

2005

2010

2015 Sources: Historical OAG / 2015 Innovata

regulations is now allowing passengers to travel more broadly.

which was originally designed for short-haul leisure traffic flying single-aisle airplanes at the lowest possible fares. However,

To expand outside their home markets, many airlines have created

the trend is slowly shifting to also target corporate travel, where

international joint-venture subsidiaries, avoiding restrictions on

operating widebody airplanes with a premium cabin in medium-

foreign ownership. Subsidiaries often embrace the LCC model,

haul markets provides a viable alternative to network carriers for business travelers. LCC carriers support air-travel growth by making it

New widebody markets started by Asian Airlines

more affordable and accessible, thereby meeting the emerging travel demands of the region’s growing middle class. Widebody airplane shares

FUTURE DEMAND Asia is gaining prominence in global 787

aviation and is expected to become the

Others

world’s leading travel market. Total air

777

traffic for the region is forecast to grow at an average of 6.0 percent, and by 2035, passenger traffic throughout Asia Source: Innovata

will constitute 48.7 percent of global passenger traffic. Driven by the region’s strong economic development, highly

Asia market value: $2.3 trillion Share of fleet

effective industry structure, and increasing accessibility of air transport services,

Delivery units

100%

1% 3%

10%

75%

Regional Jets

more than 100 million new passengers are

Single aisle

projected to enter the market annually.

Small widebody Medium widebody

13%

50%

Large widebody

15,130 new airplanes 2016–2035

25%

demand and modernize their fleets, over the next 20 years Asia will need 15,130 74%

0%

6,350 airplanes 2015

To accommodate this significantly growing

airplanes, valued at $2.35 trillion. The

16,970 airplanes 2035

number of airplanes in the Asia fleet will nearly triple, from 6,350 airplanes in 2015 to 16,970 airplanes in 2035. Fastgrowing LCCs within the region will

Asia key indicators and new airplanes

help drive a need for 11,160 single aisle

Growth Measures (%)

New airplanes

Share by size (%)

Economy (GDP)

4.1

Large widebody

130

1

Traffic (RPK)

6.0

Medium widebody

1,490

10

Airplane fleet

5.0

Small widebody

2,060

13

Single aisle

11,160

74

Regional jet

290

2

Total

15,130 2015 fleet

2035 fleet

Large widebody

270

170

Medium widebody

540

1,590

Market size Deliveries

15,130

Market value

$2,350B

Average value

$160M

Copyright © 2016 Boeing. All rights reserved.

Small widebody

860

2,340

Single aisle

4,540

12,560

Regional jet

140

310

Total

6,350

16,970

airplanes. Airplanes like the 787 and 777 have enabled airlines in the region to open new markets. These market dynamics will lead to regional need for 3,680 new widebody airplanes by 2035. Air cargo also plays a crucial role in Asia. The region transports vast amounts of goods over difficult terrain and vast stretches of ocean. Many of the world’s largest and most efficient cargo operators are located in the

World Regions ∙ 31

region. Carriers in the region are expected to need 320 new-

expanded air-services agreement in December 2015, replacing the

production freighters and 580 converted freighters by 2035.

previous bilateral agreement that dated back to 1960. The current agreement restricts air service to a maximum of 30 transborder routes, with two or three airlines from each country permitted to

NORTH AMERICA

serve. Under the new liberalized bilateral agreement, all air-service restrictions between the two countries will be lifted, a move that is

BIENVENIDO CUBA! NEW AIRSERVICE AGREEMENTS TO BOOST

U.S. airlines proposed jet flights to Cuba

TRAVEL TO CENTRAL AMERICA (INCLUDING THE CARIBBEAN) Despite economic and political uncertainty

Minneapolis/St.Paul

in various regions of the globe, the North

New York/Newark Philidelphia Washington, DC

San Francisco

American airline industry is on a trajectory

Charlotte

Los Angeles

of continued growth in passenger traffic

Boston

Chicago

Denver

Dallas/Ft. Worth

Atlanta

Houston

and capacity. Domestic service in the

Tampa

Orlando Miami/Ft. Lauderdale

United States recorded the highest growth

Same plane, thru service Seasonal service only

rates from all airline business segments.

Varadero Santa Clara Camaguey Holguin Santiago De Cuba

Havana Cienfuegos

The Big 3 network carriers filled on

Source: Airline press releases (2016)

average 86 percent of their domestic (mainline) seats as demand outpaced supply, with a year-over-year 3.5 percent

North America market value: $1.0 trillion

increase of traffic and an increase of only 3 percent year-over-year in capacity.

Share of fleet

Delivery units

100%

As passenger traffic to Europe and South

0%

Single aisle 5%

75%

America face short-term headwinds, other regions are experiencing growth in travel to North America, notably Central

Small widebody 18%

11%

Medium widebody Large widebody

50%

8,330 new airplanes 2016–2035

25%

America and the Caribbean. For the first time in more than a half century, there is

Regional Jets

0%

6,910 airplanes 2015

a new air-services agreement between the United States and Cuba, signed

9,820 airplanes 2035

66%

between the respective governments in 2015. Several US airlines have applied for the initial flight frequencies to Cuba:

North America key indicators and new airplanes

20 daily round-trip flights to the capital,

Growth Measures (%)

New airplanes

Share by size (%)

Havana, and ten round-trips to nine other

Economy (GDP)

2.3

Large widebody

20

--

Cuban international airports. The United

Traffic (RPK)

3.1

Medium widebody

420

5

Airplane fleet

1.8

Small widebody

930

11

States Department of Transportation will award the initial frequencies to Cuba in

Single aisle

5,440

66

Regional jet

1,520

18

Total

8,330

the summer of 2016. Currently, the only 2015 fleet

scheduled air service from North America

Market size Deliveries

8,330

to Cuba is from Canadian gateways.

Market value

$1,030B

Average value

$120M

In addition to the Cuba agreement, the United States and Mexico also signed an

32 ∙ World Regions

2035 fleet

Large widebody

100

60

Medium widebody

320

460

Small widebody

750

1,150

Single aisle

4,010

6,630

Regional jet

1,730

1,520

Total

6,910

9,820

viewed as the next step toward a future full open skies agreement.

per annum predicted over the next 20 years. As previously mentioned, with six years of sustained growth within North

Due to these new, expanded air-service agreements with Cuba

America the traffic forecast has also been increased to 2.6 percent

and Mexico, the traffic forecast between North America and

per year, up slightly by 0.2 percentage points. The expectation for

Central America increased 1.1 percentage points to 5.3 percent

a liberalized air-services agreement between the United States and China is also anticipated in the near future, which will further boost travel

LCC share within Europe approaching 50%

and trade between the two countries.

LCC Share of Intra-Europe Service

Over the next 20 years, we are forecasting

50% 45%

a need for 8,330 new airplanes. Single-

40% 35%

aisle airplanes are the largest forecast

30%

category, with an estimated 5,440 units

25%

representing 65 percent of demand. Due

20%

to a large installed fleet that is nearing

15%

economic retirement and the offering of

10% 5%

new fuel-efficient airplanes, 65% of all

0% 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Innovata/OAG

Europe market value: $1.1 trillion Share of fleet

0% 2%

Regional Jets

7%

75%

Single aisle

STRONG GROWTH DESPITE

Small widebody

UNCERTAINTY

Medium widebody

13%

Large widebody

50%

7,570 new airplanes 2016–2035

25%

needs, slightly more than 5,400 airplanes.

EUROPE

Delivery units

100%

new airplanes will be for replacement

Europe’s aviation market remained strong in 2015 despite significant economic uncertainties. Europe’s GDP grew by 1.9 percent in 2015 and is forecast to grow by

0%

78%

4,610 airplanes 2015

1.8 percent annually through 2035. The

7,920 airplanes 2035

Association of European Airlines reports that member airlines carried approximately 307 million passengers, 4.3 percent more passenger traffic in 2015 than in 2014.

Europe key indicators and new airplanes

Members of the European Low Fares

Growth Measures (%)

New airplanes

Share by size (%) --

Airline Association reported an increase

Economy (GDP)

1.8

Large widebody

30

Traffic (RPK)

3.7

Medium widebody

570

7

Airplane fleet

2.7

Small widebody

960

13

over 2014. European airlines acquired

Single aisle

5,880

78

Regional jet

130

2

more than 240 new airplanes in 2015,

Total

7,570

7,570

Market value

$1,120B

Average value

$150M

Copyright © 2016 Boeing. All rights reserved.

of which 67 percent were single aisle.

2015 fleet

2035 fleet

Large widebody

170

100

The European aviation market is expected

Medium widebody

360

610

Small widebody

440

1,140

to grow during the next 20 years, with

Single aisle

3,370

5,920

Regional jet

270

150

Total

4,610

7,920

Market size Deliveries

in passengers of about 12.3 percent

airlines forecast to acquire more than 7,500 new airplanes valued at over $1.1 trillion. Single-aisle airplanes will comprise

World Regions ∙ 33

the majority of deliveries, representing a 78 percent share of

where their capacity has grown over 20 percent since 2010.

total deliveries. Although European aviation growth is slower than aviation growth in emerging economies, the region’s large installed base of more than 4.600 airplanes supports substantial

MIDDLE EAST

demand for replacement airplanes. Replacement demand will account for 56 percent of Europe’s total new airplane market.

SUPPORT FOR AVIATION GROWTH Located at the crossroads of Asia, Africa, and Europe, airlines

CONTINUED STRATEGIC EVOLUTION

in the Middle East are well positioned to compete for traffic

Airline operations in Europe continue to evolve with the launch

connecting these continents. About 80 percent of the world’s

of new ventures, routes, and business models. Norwegian Air

population lives within an eight-hour flight of the Persian

Shuttle continues to expand their long-haul low-cost carrier

Gulf, allowing carriers in the Middle East to aggregate traffic

(LCC) operations, while Lufthansa has launched a long-

at their hubs and offer one-stop service between many city

haul LCC subsidiary to compete for leisure passengers.

pairs that would not otherwise enjoy such direct itineraries.

The introduction of the 787 has allowed operators to

Partnerships of various kinds also feed Middle East hubs.

economically serve long-haul, nonstop markets that have

However, no single strategic approach has yet emerged as

not been served before. European operators have been

dominant from the organic growth in selective code sharing,

on the forefront of this trend, with 96 long-haul routes

equity stakes in out-of-region carriers, or membership in traditional

introduced since 2012—the most of any region.

alliances. Each of these strategies creates opportunities to

LCCs continue to grow short-haul

Middle East: Aviation growth factors

markets, providing over 47 percent of intra-Europe capacity in 2015. Network airlines are shifting short-haul flying to

North - South

Alliances

their LCC subsidiaries, and are focused on flowing long-haul passengers through

$

their hubs with connecting itineraries. Smaller flag carriers and charter

Equity & Code Shares

East - West

Organic Growth

airlines must carve out a profitable POWERFUL HUB AGGREGATION

niche to be able to compete in an environment where LCCs dominate

DIVERSE BUSINESS STRATEGIES

REGIONAL CROSSROADS

short-haul, point-to-point service and large network carriers and their alliance partners exploit the cost advantages of mega-hubs for long-haul traffic.

Middle East market value: $770 billion Share of fleet

Large Middle East airlines have captured significant long-haul share from Europe’s network carriers by providing one-stop service from Europe to destinations such

Delivery units 2%

100%

Single aisle 75%

East carriers is greatest. In response, Europe’s network carriers have shifted long-haul capacity to more profitable markets—notably the North Atlantic,

34 ∙ World Regions

Small widebody

10%

Medium widebody Large widebody

50%

as India, Australia, and Southeast Asia, where the geographic advantage of Middle

Regional Jets

26% 25%

3,310 new airplanes 2016–2035

0%

1,370 airplanes 2015

3,510 airplanes 2035

17%

45%

Middle East key indicators and new airplanes

Further complicating the problem, lower

Growth Measures (%)

New airplanes

Share by size (%)

Economy (GDP)

3.8

Large widebody

320

10

Traffic (RPK)

5.9

Medium widebody

850

26

Airplane fleet

4.8

Small widebody

560

17

Single aisle

1,510

45

Regional jet

70

2

Total

3,310 2015 fleet

2035 fleet

Large widebody

140

320

$770B

Medium widebody

320

840

$230M

Small widebody

250

610

Single aisle

590

1,660

Regional jet

70

80

Total

1,370

3,510

Market size Deliveries

3,310

Market value Average value

oil prices also lead to reduced foreign investment and economic activity within the region’s oil-exporting countries.

LATIN AMERICA NEAR-TERM CHALLENGES; LONG-TERM PROSPECTS Several countries in the Latin America region are working through near-term economic challenges. The Brazilian

coordinate schedules across international boundaries, which

and Venezuelan economies are contracting, and Argentina is

further enhance the appeal of services connecting the Middle East.

on the edge, although the new government is taking positive action for improvement. Conversely, the economies of many

The 2016 Iran nuclear deal represents an impressive opportunity

other nations, including Mexico, Panama, Peru, and Colombia,

for the region. Iran has a large population spread across a number

are performing well and are positioned for continued expansion.

of significant urban centers. The country was cut off from the

Chile is still growing, although affected by the commodities

world for many years by economic sanctions, but this new agreement

Latin America fleet evolution

regarding the nation’s nuclear program opens up channels for the removal of those sanctions and the reintegration of Iran into the world economy. Foreign

Periods of expansion and stability: single aisle jets dominate 1800 1600 1400

investment and trade will see strong

1200

growth in Iran, while the new openness

1000

should allow airlines both inside and outside of the country to add new services. Airlines within the country now also have the opportunity to renovate

800 600 400 200 0 1975

their fleets¬—an opportunity that

1980

RJs

1985

Single aisle

1990

Small widebody

1995

2000

Medium widebody

Large

2005

2010

2015

Source: Flight Global Ascend Online Data

they have been quick to act upon. Lower oil prices challenged many

Latin America market value: $350 billion

Middle East economies in 2015 and

Share of fleet

2016. Although not every country in the

100%

region has oil, many of its governments often use oil revenues in place of VATs, income taxes, or taxes on corporate profits to finance their operations. When oil prices fall below the expectations of these governments (which was typically $80 to $100 per barrel before the fourth quarter of 2014), deficits emerge, and

Delivery units 1% 0%

Regional Jets Single aisle

9%

75%

5%

Small widebody Medium widebody Large widebody

50%

2,960 new airplanes 2016–2035

25%

0%

1,550 airplanes 2015

3,660 airplanes 2035

85%

they are prompted to cut expenditures.

Copyright © 2016 Boeing. All rights reserved.

World Regions ∙ 35

and better connectivity. As more cities

Latin America key indicators and new airplanes

are connected with better air service, Growth Measures (%)

New airplanes

Share by size (%)

Economy (GDP)

2.9

Large widebody

--

--

Traffic (RPK)

5.8

Medium widebody

30

1

Airplane fleet

4.4

Small widebody

260

9

Single aisle

2,530

85

Regional jet

140

5

Total

2,960

Market size

in turn further stimulate economic growth. TRAFFIC AND FLEET FORECAST Passenger traffic growth for Latin America

2015 fleet

2035 fleet

--

--

Large widebody

business and leisure travel increase, which

Deliveries

2,960

Market value

$350B

Medium widebody

20

40

Average value

$120M

Small widebody

140

350

Single aisle

1,280

3,110

Regional jet

110

160

Total

1,550

3,660

and the Caribbean is forecast to average 5.8 percent per year for the next 20 years. The fastest growth is expected within intraregional flows, as economic conditions improve. Traffic within South America is forecast to average

slump, and Cuba is gradually opening its borders. The Latin

6.0 percent per year through 2035.

American region has a history of cyclical ups and downs, but the fundamental drivers for future expansion remain in place:

The cyclical pattern of growth followed by stabilization in

the middle class is growing, income levels are expected to

Latin America is apparent in the historical development of

rise, and the commodities and resources that have enabled

the fleet for the region. Most of the growth has taken place

growth during previous periods still remain. Overall, while

within the single-aisle fleet segment, which is consistent with

the near-term economic outlook is challenging, long-term

the forecast for demand for new airplanes. During the most

prospects for the region as a whole are promising.

recent expansion period from 2004 through 2015, the Latin American fleet grew at an average rate of 5.2 percent per year.

OUTLOOK FOR AVIATION Air traffic increased during 2015, even in the midst of these

The region’s commercial fleet is projected to double between

challenges. Passengers carried, traffic (revenue passenger

now and 2035, from nearly 1,550 airplanes today to more

kilometers—RPKs), capacity (available seat kilometers—ASKs),

than 3,600. Latin America will need 2,960 new deliveries

and passenger-load factors all grew during 2015, according to the

over the next 20 years to meet the combined demands of

Latin American and Caribbean Air Transport Association, again

growth and replacement. The majority of these deliveries are

demonstrating the resilience of air travel. Airlines are adjusting

expected to be in the single-class segment, reflecting the

capacity and rationalizing their fleets as needed to deal with

continued growth of low-cost carriers and further expansion

the current situations and to position themselves for growth.

of networks within Latin America and the Caribbean.

Challenges provide incentive for change. Brazil is proposing

AFRICA

to raise the maximum-permitted level of foreign ownership of Brazilian airlines to 49 percent, and airlines and airline-related entities are calling for reforms on taxes, policies, and regulations

SHORT-TERM ECONOMIC HEADWINDS

that constrain growth. Mexico and the United States reached a

A combination of external and domestic factors caused Africa’s

liberalized air-services agreement in late 2015 that is on track for

economic activity to slow from 3.4 percent in 2014 to 3.0 percent

approval, and ratification of the US-Brazil open-skies agreement

in 2015. The region has benefitted from a much-improved business

appears to be imminent. These developments produce new

and macroeconomic environment, high commodity prices, and

opportunities for cooperation through partnerships and alliances.

highly accommodative global financial conditions. However, 2015 saw a shift in external conditions with lower commodity

Economic development is a key driver in the demand for air travel,

prices, a slowdown in major trading partners, changes in foreign

and airlines and aviation infrastructure will evolve to meet this

exchange rates and tightening borrowing conditions. Domestic

demand. Low-cost airlines and network carriers will continue to

factors, such as electricity shortages and political instability and

expand intra-regionally and internationally, providing more flights

conflict, contributed to unfavorable conditions in some middle-

36 ∙ World Regions

income countries. The recent downturn in commodity pricing

economic environment. Despite the headwinds, the decline is

has hurt the African economy though GDP decline is projected

projected to be short term, with a rebound commencing in 2017.

to slow in 2016, as prices stabilize and supply constraints ease. Pricing volatility can reduce long-term growth prospects but

LESS DEPENDENCY ON COMMODITY PRICING

many policymakers have adopted better fiscal policies that

Africa is much better positioned to manage some difficult

have allowed them to minimize the effects of downturns in the

economic conditions because their dependency on commodity pricing has decreased. The region has

Africa: Commodity prices stabilized and are increasing US$ indexes, 2010=100

an immensely improved business and Energy

Metals

macroeconomic environment, supporting

Agriculture

higher investment through improved

$200

policies. According to the Doing Business

$180 $160

report by World Bank Group, Sub-

FORECAST

$140

Saharan Africa made more regulatory

$120 $100 $80

improvements from 2013 to 2014 than any

$60

other region. Solid private-consumption

$40

growth with ongoing infrastructure

$20

investment is continuing in most of the 2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

$0

region’s low-income countries and many

Source: World Bank Commodity Price Data (The Pink Sheet), April 2016

in the region are resisting a weakening trend and continue to post robust growth. While some countries are being negatively

Africa market value: $170 billion

affected by the sharp decline in the Share of fleet

Delivery units

prices of their main commodity exports,

0%

100%

Regional Jets

75%

particularly the region’s oil exporters, it

Single aisle

5% 4%

Small widebody

21% 50%

importers seeing economic gain from

Large widebody

more favorable pricing. Growth in services

1,150 new airplanes 2016–2035

25%

has been a boon for others that are net

Medium widebody

has expanded quickly, manufacturing output has grown, and tourism has rapidly

0%

accelerated as the number of foreign

70%

690 airplanes 2015

1,460 airplanes 2035

visitors doubled and receipts tripled between 2000 and 2012. Even in a period where commodity production slips, other parts of the economy have improved to

Africa key indicators and new airplanes

reduce the impact. Of the 38 countries

Growth Measures (%)

New airplanes

Share by size (%)

--

--

Economy (GDP)

3.7

Large widebody

Traffic (RPK)

6.1

Medium widebody

60

5

Airplane fleet

3.8

Small widebody

240

21

Single aisle

810

70

Regional jet

40

4

Total

1,150 2015 fleet

2035 fleet

Large widebody

10

--

$170B

Medium widebody

60

80

$150M

Small widebody

80

300

Single aisle

430

1,020

Regional jet

110

60

Total

690

1,460

Market size Deliveries

1,150

Market value Average value

Copyright © 2016 Boeing. All rights reserved.

where data was available, 28 had more than 60 percent of their merchandise exports from commodities. Further reduction on this dependence will dampen the booms and busts of economic activity throughout the region. The World Bank projects that commodity prices will generally level out in 2016, with a recovery in 2017 projected from stronger demand, and potentially supply disruptions.

World Regions ∙ 37

LONG-TERM GROWTH INDICATES

OPPORTUNITIES FOR NEW MARKETS

INCREASED DEMAND FOR AIRPLANES

The economic turmoil has resulted in a retrenchment for many

Air traffic to, from, and within Africa is expected to grow by

CIS airlines. In the near term, the net result is overcapacity,

about 6.1 percent annually over the next 20 years as airplane

particularly for long-haul airplanes used for international travel.

technology continues to increase fuel efficiency, opening new

However, the development of low-cost carriers (LCCs) in the

international routes that were previously unattainable. Flights

marketplace is creating new opportunities for more efficient

between Africa and Europe continue to account for the largest

use of airplanes, both domestically and in markets immediately

share of the region’s air travel, although the market share is

adjacent to CIS countries. There has been a slightly increased

decreasing and is projected to continue the decline during the

liberalization of Russia’s regulatory policy that had prevented

forecast period. Adding in the traffic between Africa and the

the development of LCCs. The emergence of low-cost carriers

Middle East and within Africa, a virtual tie for the second largest

in the marketplace should create demand for new single-aisle

traffic flows, the top three constitute more than 86 percent of

airplanes, which is estimated to be 810 over the next 20 years.

the total capacity, with intra-Africa being the fastest growing by net capacity. This growth, combined with the need to replace

LONG-TERM OUTLOOK

the region’s aging fleet, will result in a demand for 1,150 new

As the political and economic situation improves, international

airplanes. While the majority of the demand will be for 810

travel will rebound along with a requirement in the region for

single-aisle airplanes, the need for new widebody airplanes

more twin-aisle airplanes. International traffic is expected to

will also increase as air travel continues to grow among the

grow at an annual rate of 4.8 percent over the next 20 years.

expanding African middle class and long-distance visitors.

Concurrently, the development of low-cost carriers within the CIS market space will spur demand for single-aisle airplanes. CIS

C.I.S.

airlines will need 810 single-aisle and 170 widebody airplanes to handle the increased traffic. Additionally there is now pent-up demand for replacing an increasingly aging fleet of Russian-

CURRENT ECONOMIC HEADWINDS DELAY

built airplanes. Together with older, western-built airplanes, 47

LONG-TERM FUTURE GROWTH

percent of deliveries will be used to replace existing stock.

2016 will prove to be another trying year for Russia and the Commonwealth of Independent States (CIS). With a projected 2.3

It is estimated that 190 regional jets, both western and

percent decline in the Russian GDP, only modest improvements

Russian built, will be required over the next twenty

in energy pricing, and continuing economic sanctions, the

years; this demand is being driven by the growth that

region will continue to struggle toward growth gains. However,

the intra-CIS region has been experiencing.

countries less dependent on energy exports do offset the aggregate GDP decline to 0.9 percent, offering a glimpse of slow recovery back to growth territory within the next three years. As a consequence of the economic and political challenges within the region and internationally, aviation demand within the CIS is projected to grow at a modest 3.1 percent through 2020. In 2015, a 23 percent reduction in the value of an already weakened ruble served to constrain international travel. But owing to the unique geographic demands of the CIS-member countries, which span twelve time zones, domestic traffic over 1000 kilometers has seen an impressive 13.9 percent increase in passengers carried in 2015 compared to the previous year. While the ruble remains weak against the US dollar and the euro, Russians and other CIS citizens will spend more of their discretionary income in domestic markets.

38 ∙ World Regions

Domestic travel growing as airlines look for opportunities to expand Seat Miles (Millions) 2500

2000

1500

1000

Domestic International

500

0 2007

2005

2009

2011

2013

2015 Innovata/OAG

C.I.S. market value: $140 billion Share of fleet

Delivery units

100%

Regional Jets

3%

Single aisle 4%

75%

Small widebody

16%

8%

Medium widebody Large widebody

50%

1,170 new airplanes 2016–2035

25%

0%

1,030 airplanes 2015

1,900 airplanes 2035

69%

C.I.S. Key indicators and new airplanes New airplanes

Share by size (%)

Economy (GDP)

2.5

Large widebody

30

3

Traffic (RPK)

3.7

Medium widebody

50

4

Airplane fleet

3.1

Small widebody

90

8

Single aisle

810

69

Regional jet

190

16

Total

1,170

Growth Measures (%)

Market size Deliveries

1,170

Market value

$140B

Average value

$120M

Copyright © 2016 Boeing. All rights reserved.

2015 fleet

2035 fleet

Large widebody

50

50

Medium widebody

20

70

Small widebody

140

170 1,380

Single aisle

650

Regional jet

170

230

Total

1,030

1,900

World Regions ∙ 39

PILOT & TECHNICIAN OUTLOOK

40 ∙ Pilot and Technician Outlook

DEMAND FOR LOCALLY SOURCED AND QUALIFIED PILOTS

PILOT & TECHNICIAN OUTLOOK

Regional markets that have relied heavily on recruiting pilots from outside their home locations are increasingly seeking to recruit, train, and develop locally sourced pilots. New market opportunities are creating an increased

EXTRAORDINARY DEMAND FOR PILOTS,

demand for qualified, skilled, and experienced pilots.

TECHNICIANS, AND CABIN CREW As global economies expand and airlines take delivery of tens of

Over the next 20 years, the Asia Pacific region will

thousands of new commercial jetliners over the next 20 years,

lead the worldwide growth in demand for pilots, with a

there is extraordinary demand for people to fly and maintain these

requirement for 248,000 new pilots. North America will

airplanes. To meet this tremendous growth, the 2016 Boeing Pilot

require 112,000, Europe 104,000, the Middle East 58,000,

and Technician Outlook forecasts that between now and 2035,

Latin America 51,000, the Commonwealth of Independent

the aviation industry will need to supply more than two million new

States (CIS) / Russia 22,000, and Africa 22,000.

aviation personnel—617,000 commercial airline pilots, 679,000 maintenance

New Pilots by Region: 2016–2035

technicians, and 814,000 cabin crew. 4%

4%

8%

Meeting this demand will require innovative solutions – focused on educational outreach and career pipeline programs

40% 9%

– to inspire the next generation of

617,000

pilots, technicians, and cabin crew. New technologies, devices, and training

17%

diversity of aviation personnel will also

248,000

Europe

112,000

North America

104,000

Middle East

58,000

Latin America

51,000

CIS

22,000

Africa

methods will be needed to meet a wide range of learning styles. The growing

Asia Pacific

22,000

World Total

617,000

18%

require instructors to have cross-cultural and cross-generational skills to engage tomorrow’s workforce. ECONOMIC EXPANSION FUELING AVIATION GROWTH Airlines across the globe are expanding their fleets and flight schedules to satisfy demand generated by global economic expansion. The aviation industry continues to address these challenges by creating balanced, sustainable solutions to fill future pilot pipelines. Although Asia Pacific remains the region with the highest overall demand, there has been a significant increase in the expected number of skilled resources required in other parts of the world. New market opportunities, such as the opening of Cuba for the North American market and increased intra-Europe travel for the European market, have strengthened demand.

Copyright © 2016 Boeing. All rights reserved.

Pilot and Technician Outlook ∙ 41

AIRPLANE RELIABILITY AFFECTING MAINTENANCE As newer generation airplanes become more prevalent in worldwide fleets over the next 20 years, airplane reliability will improve, and maintenance check intervals will lengthen. Although this trend will moderate demand for maintenance personnel somewhat, the global need for technicians will remain strong. Global fleet growth, along with the increasing trend for operators to outsource maintenance, repair, and overhaul activities to third-party providers, will drive an increased need for qualified technicians. The need for vmaintenance personnel is largest in the Asia Pacific region, which will require 268,000 new technical personnel. Airlines in North America will require 127,000, Europe 118,000, the Middle East 66,000, Latin America 50,000, CIS / Russia 26,000, and Africa 24,000.

New Technicians by Region: 2016–2035 4%

4%

7%

39%

10%

679,000

17%

Asia Pacific

268,000

Europe

127,000

North America

118,000

Middle East

66,000

Latin America

50,000

CIS

26,000

Africa World Total 19%

42 ∙ Pilot and Technician Outlook

24,000 679,000

OPERATIONAL IMPROVEMENTS EXPAND CABIN CREW DEMAND As airlines continue to expand flight routes, grow their fleet, and transition to airplanes with higher seat capacity, an increasing number of cabin crew personnel will be needed to ensure the safety and comfort of passengers. With a focus on operational improvements, many regional markets have also updated regulations to require a greater number of cabin crew per aircraft. Over the next 20 years, the largest projected growth in cabin crew demand is in the Asia Pacific region, with a requirement for 298,000 new cabin crew. Europe will require 169,000, North America 151,000, Middle East 92,000, Latin America 51,000, Africa 27,00, and CIS / Russia 26,000.

New Cabin Crew by Region: 2016–2035 3% 3% 6%

11%

37%

814,000

21%

Asia Pacific

298,000

Europe

151,000

North America

169,000

Middle East

92,000

Latin America

51,000

CIS

26,000

Africa World Total

27,000 814,000

19%

Copyright © 2016 Boeing. All rights reserved.

Pilot and Technician Outlook ∙ 43

DATA

44 ∙ Data

PASSENGER TRAFFIC AIRLINE PASSENGER TRAFFIC, GROWTH BY REGIONAL FLOW RPKS in billions

2008

2009

2010

2011

2012

2013

2014

2015

2035

Africa -Africa

41.6

43.9

48.7

51.1

54.5

53.7

56.6

59.2

223.3

6.9%

125.6

128.2

135.5

134.1

140.4

140.4

146.5

153.2

387.5

4.7%

Africa - Middle East

24.9

32.9

36.4

39.4

48.6

50.8

53.7

59.5

235.9

7.1%

Africa - North America

6.3

8.8

11.3

11.4

12.6

12.2

12.5

12.7

41.7

6.1%

Africa - Southeast Asia

5.4

4.1

5.6

5.9

4.6

4.2

3.7

3.7

13.0

6.5%

Central America - Central America

32.3

29.8

31.3

32.2

33.8

36.5

38.7

42.5

99.3

4.3%

Central America - Europe

83.3

77.1

73.8

73.7

78.3

82.1

87.4

95.3

213.8

4.1%

Central America - North America

115.8

104.7

112.7

114.5

132.0

138.3

153.0

170.1

478.1

5.3%

13.1

14.0

18.3

19.2

23.2

28.5

30.8

34.2

98.5

5.4%

China - China

236.5

287.4

335.4

380.1

411.3

460.8

509.2

564.7

1897.4

6.2%

China - Europe

82.5

77.3

82.1

94.2

96.7

96.9

105.2

121.1

356.7

5.5% 6.7%

Africa - Europe

Central America - South America

2015 - 2035

China - North America

62.7

60.9

71.4

85.4

87.1

89.5

98.1

107.5

394.6

China - Northeast Asia

48.4

43.2

51.8

51.5

60.9

60.7

66.2

73.0

180.7

4.6%

China - Oceania

21.4

22.8

27.4

31.4

34.1

35.0

37.7

44.3

131.1

5.6%

China - Southeast Asia

50.6

45.3

54.7

63.0

73.8

82.5

89.4

109.9

422.1

7.0%

CIS Region - CIS Region

88.9

76.9

87.6

103.1

107.1

118.3

125.3

138.1

256.8

3.2%

CIS Region - International

77.7

83.6

101.6

124.1

139.4

157.9

164.9

151.9

389.1

4.8%

660.5

624.9

640.2

659.5

676.6

714.0

760.3

796.8

1482.1

3.2%

Europe - Europe Europe - Middle East

115.2

131.2

143.8

153.3

178.0

196.8

210.9

242.5

690.2

5.4%

Europe - North America

432.4

405.4

418.6

430.2

432.9

441.8

462.7

475.0

840.2

2.9%

Europe - Northeast Asia

69.0

59.4

64.3

63.8

75.9

74.3

77.8

81.3

139.9

2.7%

Europe - South America

75.2

79.3

82.9

89.8

99.6

102.4

102.1

104.4

293.1

5.3%

Europe - South Asia

55.5

51.3

53.8

54.1

53.9

56.4

57.2

57.5

176.7

5.8%

Europe - Southeast Asia

101.5

95.9

97.1

100.4

106.6

105.3

108.0

111.3

254.1

4.2%

Middle East - Middle East

63.4

68.6

77.9

82.4

76.5

86.3

91.7

102.2

253.6

4.6%

Middle East - North America

29.5

41.6

45.7

50.3

57.1

63.2

73.7

88.3

259.0

5.5%

Middle East - South Asia

49.5

64.8

75.1

83.0

87.3

95.1

100.5

114.4

485.8

7.5%

Middle East - Southeast Asia

45.4

46.7

56.3

61.3

66.4

79.0

89.4

97.6

281.0

5.4%

North America - North America

974.1

915.1

946.3

976.3

984.7

998.4

1029.9

1077.7

1808.7

2.6%

North America - Northeast Asia

139.4

120.2

128.4

135.4

149.0

150.4

154.0

160.5

231.1

1.8%

North America - Oceania

32.3

34.8

34.9

38.3

40.3

43.1

43.3

48.3

105.5

4.0%

North America - South America

52.7

56.9

60.9

66.7

72.0

79.2

82.7

86.9

263.9

5.7%

9.3

10.3

10.3

11.3

10.7

9.8

9.6

10.8

38.8

6.6%

Northeast Asia - Northeast Asia

North America - Southeast Asia

84.9

81.9

84.6

81.9

92.6

103.9

107.6

112.5

155.9

1.6%

Northeast Asia - Oceania

20.8

15.1

18.1

16.6

17.1

15.9

15.9

17.2

34.4

3.5%

Northeast Asia - Southeast Asia

87.7

74.3

79.6

92.3

104.9

113.3

124.2

134.6

283.0

3.8%

Oceania - Oceania

72.0

73.3

78.4

83.8

92.0

99.0

100.0

102.8

257.4

4.7%

Oceania - Southeast Asia

57.4

54.7

61.1

66.9

71.5

77.8

83.2

80.0

219.7

5.2%

South America - South America

81.6

86.9

115.8

134.4

141.9

147.4

155.7

159.1

509.7

6.0%

South Asia - South Asia

40.1

43.8

49.5

58.6

63.8

68.1

71.4

79.2

487.6

9.5%

Southeast Asia - South Asia

24.3

21.9

28.5

29.2

34.0

36.2

38.4

40.4

222.7

8.9%

Southeast Asia - Southeast Asia

93.2

96.0

113.1

130.7

145.1

166.6

176.9

194.0

848.1

7.7%

Rest of World

55.5

69.3

87.9

97.4

116.0

126.1

140.0

148.2

651.7

7.7%

Grand Total

4,639.2

4,564.2

4,938.7

5,262.2

5,585.0

5,898.0

6,246.0

6,664.5

17,093.0

4.82%

Copyright © 2016 Boeing. All rights reserved.

Data ∙ 45

AIRPLANES REQUIRED PASSENGER AND FREIGHTER AIRPLANES Market value and demand by region DEMAND AND VALUE BY REGION Region

$B

Airplanes

Asia

$2,350

15,130

Europe

$1,120

7,570

North America

$1,030

8,330

Latin America

$350

2,960

Middle East

$770

3,310

C.I.S.

$140

1,170

Africa

$170

1,150

$5,930

39,620

World DELIVERIES BY AIRPLANE SIZE AND REGION Regional jets

Single aisle

Small widebody

Medium widebody

Large widebody

Total deliveries

290

11,160

2,060

1,490

130

15,130

1,520

5,440

930

420

20

8,330

130

5,880

960

570

30

7,570

70

1,510

560

850

320

3,310

Latin America

140

2,530

260

30

0

2,960

C.I.S.

190

810

90

50

30

1,170

Region Asia North America Europe Middle East

Africa

40

810

240

60

0

1,150

2,380

28,140

5,100

3,470

530

39,620

Regional jets

Single aisle

Small widebody

Medium widebody

Large widebody

Total deliveries

Asia

$10

$1,210

$560

$520

$50

$2,350

North America

$70

$570

$220

$160

$10

$1,030

Europe

$10

$640

$260

$200

$10

$1,120

World

MARKET VALUE BY AIRPLANE SIZE AND REGION* Region

MIddle East

$0

$160

$150

$320

$140

$770

$10

$270

$60

$10

$0

$350

Africa

$0

$80

$70

$20

$0

$170

C.I.S.

$10

$70

$30

$20

$10

$140

World

$110

$3,000

$1,350

$1,250

$220

$5,930

Latin America

* 2015 $B catalog prices. Values above 10 have been rounded to nearest 10.

46 ∙ Data

PASSENGER AND FREIGHTER AIRPLANES In service and future fleet

TOTAL AIRPLANES IN SERVICE

AIRPLANE DEMAND

Size

2015

2035

Size

Regional jet

2,600

2,510

Single aisle

$B

Airplanes

Regional jet

$110

2,380

14,870

32,280

Single aisle

$3,000

28,140

Small widebody

2,660

6,060

Small widebody

$1,350

5,100

Medium widebody

1,640

3,690

Medium widebody

$1,250

3,470

$220

530

$5,930

39,620

$B

Airplanes

Large widebody Total

740

700

22,510

45,240

Grand total

PASSENGER AIRPLANE DEMAND

PASSENGER AIRPLANES IN SERVICE Size

Large widebody

2015

2035

Size

Regional jet

2,550

2,480

Regional jet

$110

2,380

Single aisle

14,280

31,050

Single aisle

$3,000

28,140

Small widebody

2,080

5,140

Small widebody

$1,270

4,720

Medium widebody

1,390

3,090

Medium widebody

$1,100

3,020

$180

430

$5,660

38,690

$B

Airplanes

$190

550

$80

380

$270

930

Large widebody Total

440

470

20,740

42,230

FREIGHTER AIRPLANES IN SERVICE

Large widebody Grand total

FREIGHTER AIRPLANE DEMAND

Size

2015

2035

Size

Widebody

1,130

1,750

Large*

640

1,260

Medium widebody

1,770

3,010

Grand total

Standard Total

* Large passenger and large freighter categories differ

Copyright © 2016 Boeing. All rights reserved.

Data ∙ 47

FLEET DEVELOPMENT PASSENGER AND FREIGHTER AIRPLANES Market value and fleet development MARKET BY AIRPLANE SIZE Market value 2015, $B

Market share value

New airplane deliveries

Market share units

$220

4%

530

1%

Medium

$1,250

22%

3,470

9%

Small

$1,350

23%

5,100

13%

Total widebody

$2,820

48%

9,100

24%

Total single aisle

$3,000

51%

28,140

71%

$110

2%

2,380

6%

$5,930

100%

39,620

100%

End of year 2015

Removed from service

Converted to freighter

New deliveries 2016 - 2035

End of year 2035

440

400

430

470

Medium

1,390

1,320

3,020

3,090

Small

2,080

1,660

4,720

5,140

Total widebody

3,910

3,380

8,170

8,700

Total single aisle

14,280

11,370

28,140

31,050

Total regional jets

2,550

2,450

2,380

2,480

20,740

17,200

1,440

38,690

42,230

End of year 2015

Removed from service

Converted to freighter

New deliveries 2016 - 2035

End of year 2035

1,130

710

930

1,750

640

420

0

1,260

1,770

1,130

1,440

930

3,010

End of year 2015

Removed from service

Converted to freighter

New deliveries 2016 - 2035

End of year 2035

20,740

17,200

1,440

38,690

42,230

Size Large*

Total regional jets Total fleet

PASSENGER FLEET DEVELOPMENT Size Large*

Total fleet

FREIGHTER FLEET DEVELOPMENT Size Widebody Standard body Total freighter fleet

TOTAL FLEET Size Passenger fleet Freighter fleet Total fleet * Large passenger and larger freighter categories differ

48 ∙ Data

1,770

1,130

1,440

930

3,010

22,510

18,330

1,440

39,620

45,240

FLEET BY REGION FLEET GROWTH by size and region FLEET BY AIRPLANE SIZE Size Large

Airplanes in service 2015

Fleet share 2015

Airplanes in service 2035

Fleet share 2035

740

3%

700

2%

Medium

1,640

7%

3,690

8%

Small

2,660

12%

6,060

13%

Total widebody

5,040

22%

10,450

23%

Total single aisle

14,870

66%

32,280

71%

Total regional jets

2,600

12%

2,510

6%

22,510

100%

45,240

100%

Large widebody

Total fleet

Total fleet

FLEET BY REGION IN 2015 Region

Regional jets

Single aisle

Small widebody

Medium widebody

Asia

140

4,540

860

540

270

6,350

1,730

4,010

750

320

100

6,910

Europe

270

3,370

440

360

170

4,610

Latin America

110

1,280

140

20

0

1,550

70

590

250

320

140

1,370

170

650

140

20

50

1,030

North America

Middle East C.I.S. Africa

110

430

80

60

10

690

2,600

14,870

2,660

1,640

740

22,510

Regional jets

Single aisle

Small widebody

Medium widebody

Large widebody

Total fleet

World

FLEET BY REGION IN 2035 Region Asia

310

12,560

2,340

1,590

170

16,970

1,520

6,630

1,150

460

60

9,820

Europe

150

5,920

1,140

610

100

7,920

Latin America

160

3,110

350

40

0

3,660

North America

Middle East

80

1,660

610

840

320

3,510

C.I.S.

230

1,380

170

70

50

1,900

Africa

60

1,020

300

80

0

1,460

2,510

32,280

6,060

3,690

700

45,240

World

Copyright © 2016 Boeing. All rights reserved.

Data ∙ 49

MAJOR TRAFFIC FLOWS AIRLINE TRAFFIC FLOWS by region TRAFFIC IN 2015 RPKs

Asia

North America

Europe

Middle East

Latin America

Africa

Asia North America

60%

15%

16%

13%

48%

21%

37%

1%

7%

11%

37%

4%

Europe

14%

21%

34%

30%

28%

49%

Middle East

11%

4%

10%

13%

-

19%

Latin America Africa

0%

11%

9%

-

34%

1%

1%

1%

7%

7%

0%

19%

100%

100%

100%

100%

100%

100%

RPKs

Asia

North America

Europe

Middle East

Latin America

Africa

Asia

63%

18%

19%

43%

1%

9%

North America

10%

40%

17%

10%

37%

4%

Europe

11%

19%

30%

26%

25%

39%

Middle East

14%

6%

14%

10%

-

24%

Latin America

0%

16%

10%

-

35%

2%

Africa

1%

1%

8%

9%

1%

22%

100%

100%

100%

100%

100%

100%

Total traffic to and from region

TRAFFIC IN 2035

Total traffic to and from region

Bold: Share within region. Sum data down the table only. Excludes other small flows that are not included in the summary table (less than 1% of each region).

How to read the tables: Read down the selected column; for example: In 2015, traffic within North America accounted for 48% of all the total traffic to, from and within North America. In 2035, traffic within North America will account for 40% of all the total traffic to, from and within North America.

50 ∙ Data

MAJOR TRAFFIC FLOWS AIRLINE TRAFFIC FLOWS by region AIRLINE PASSENGER GROWTH RATES 2015–2035 RPKs Asia

Africa

Latin America

Middle East

Europe

North America

Asia

7.2%

6.4%

6.9%

4.7%

4.5%

6.2%

2.6%

North America

6.1%

5.4%

5.5%

2.9%

Europe

4.7%

4.8%

5.4%

3.2%

Middle East

7.1%

-

4.6%

Latin America

9.1%

5.6%

Africa

6.9%

AIRLINE PASSENGER TRAFFIC IN 2015 RPKs in billions Asia North America Europe Middle East Latin America Africa

Africa

Latin America

Middle East

Europe

North America

Asia

21.2

4.0

298.2

371.3

338.0

1573.5

1077.7

12.7

257.0

88.3

475.0

153.2

199.7

242.5

796.8

59.5

-

102.2

4.0

235.9

59.2

AIRLINE PASSENGER TRAFFIC IN 2035 RPKs in billions Asia North America

Africa

Latin America

Middle East

Europe

North America

Asia

85.0

13.7

1141.4

927.4

819.4

5225.9

1808.7

41.7

742.0

259.0

840.2

Europe

387.5

506.9

690.2

1482.1

Middle East

235.9

-

253.6

13.7

707.5

Latin America Africa

Copyright © 2016 Boeing. All rights reserved.

223.3

Data ∙ 51

AIRPLANE MARKET SECTOR DEFINITIONS Bold: Airplanes in production or launched. SINGLE AISLE PASSENGER AIRPLANES Single Aisle

Regional Jets

Boeing 707, 757

AVIC ARJ-900

Antonov An-148, -158

Boeing 717, 727

BAe 146-300, Avro RJ100

AVIC ARJ-700

Boeing 737-100 through -500

Bombardier CRJ-1000

Avro RJ70, RJ85

Boeing 737-600, -700, -800, -900ER

Bombardier CS100, CS300

BAe 146-100, -200

Boeing 737-MAX7, MAX8, MAX9

Embraer 190, 195

Bombardier CRJ

Airbus A318, A319, A320, A321

Comac C919

Dornier 328JET

Airbus A319neo, A320neo, A321neo

Fokker 100

Embraer 170, 175

Boeing/MDC DC-9, MD-80, -90

UAC MS 21-200/300

Embraer ERJ-135/140/145

Illyushin IL-62

Fokker 70, F28

Tupolev TU-154, TU-204, TU-214

Mitsubishi MRJ

Yakovlev Yak-42

Sukhoi Superjet 100

LARGE Three class: more than 400 seats

MEDIUM Two class: 340 to 450 seats Three class: 300 to 400 seats

SMALL Two class: 230 to 340 seats Three class: 200 to 300 seats

Boeing 747-8

Boeing 777, 777X

Boeing 767, 787-8, -9

WIDEBODY PASSENGER AIRPLANES

Boeing 747-100 through -400

Boeing 787-10

Boeing/MDC DC-10

Airbus A380

Boeing/MDC MD-11

Airbus A300, A310

Airbus A340

Airbus A330-200, -300, -800, -900

Airbus A350-1000

Airbus A350-800, -900

Illyushin IL-86

Lockheed L-1011 Illyushin IL-96

FREIGHTER AIRPLANES LARGE FREIGHTER More than 80 tonnes

MEDIUM FREIGHTER 40 to 80 tonnes

SMALL FREIGHTER Less than 45 tonnes

Boeing/ MDC MD-11

Boeing 767

BAe 146

Boeing 747-100 through -400

Lockheed L-1011SF

Boeing/MDC DC-8/9

Boeing 777

Boeing /MDC DC-10

Boeing 737

Airbus A350

Boeing 787

Boeing 727

Illyushin IL-96T

Airbus A300

Tupolev Tu-204

Antonov An-124

Airbus A330

Boeing 707

747-8F

Illyushin IL-76TD

Boeing/MDC MD-80 Boeing 757-200

Production and conversion (SF) models assumed for each type unless otherwise specified

52 ∙ Data

Airbus A320, A321

Copyright © 2016 Boeing. All rights reserved.

Data ∙ 53

WEBSITE www.boeing.com/cmo E-MAIL [email protected] ADDRESS Boeing Commercial Airplanes Market Analysis P.O. Box 3707, MC 21-28 Seattle, WA 98124-2207 Cover photo: Ted Huetter/The Museum of Flight, Seattle

07/22/16 | CMO-Print-2016-Final-V7

54 ∙ Data

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current market outlook 2016–2035 - Boeing

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