Leisure, business travel prompts expansion of fleets
China will become the first trillion-dollar aviation market in Boeing's forecast as the manufacturer projects demand for 6,810 new airplanes in the country over the next 20 years at a cost of $1.025 trillion, according to a Boeing report released on Tuesday.
That forecast is nearly twice the prediction made 10 years ago and shows the U.S.-based commercial airplane manufacturer has strong confidence in the Chinese market.
The report said 75 percent of the demand will be for single-aisle airplanes such as the 737 family, as low-cost carriers and full-service airlines have been adding airplanes and expanding new point-to-point services to meet the demand for both leisure and business travel.
As for wide-body aircraft, the fleet will triple in size, requiring 1,560 new airplanes such as the 787, 777 and 777X models, due to the demand from Chinese airlines that are busy exploring international routes.
"As China transitions to a more consumer-based economy, aviation will play a key role in its economic development," Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, said at a press conference.
He said the company expects to see passenger traffic grow 6.4 percent annually in China over the next 20 years.
Currently, the single-aisle fleet in China accounts for about 18 percent of global single-aisle aircraft, but China's wide-body fleet only represents about 5 percent of the global wide-body segment.
The continuing expansion of China's middle class, new visa policies and a wide range of wide-body airplanes with new technologies, capabilities and efficiencies gives Boeing confidence in the Chinese aviation market, Tinseth noted.
In May, Air China unveiled its first Boeing 787-9 Dreamliner.
China's four largest airlines - Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines - have all purchased 787s. In April, China Eastern signed a $4 billion deal with Boeing for 15 of the 787 aircraft.
Further, air cargo is expected to be a key driver for the growing market in China. From 2010 to 2015, the average annual growth rates for cargo were 55 percent in volume and 39 percent in revenue. The need could be for 180 new freighters and 410 converted freighters within the next 20 years.
According to Civil Aviation Data Analysis, carriers in the Chinese mainland introduced 38 aircraft in August this year, of which there were 14 Boeing 737-800s. Also, SF Express purchased two new 737 freighters.
Chinese airlines together comprise Boeing's largest customer, representing 25 percent of Boeing deliveries over the past three years.
Tinseth said the backlog from Chinese customers demonstrates that the new 737 MAX 8 and the current Next-Generation 737-800 are at the heart of the single-aisle market.
