BOEING COMMERCIAL AIRPLANES Marketing July 2002 1
B O E I N G C O M M E R C I A L A I R P L A N E S
Marketing July 2002
1
Overview 2 Current Market Outlook 2002
P U R P O S E
Every year, Boeing publishes its latest assessment of the demand for worldair travel. This assessment estimates the jet airplane capacity to meet theprojected growth in travel demand, plus the replacement market for olderin-service airplanes. This web site may be referenced as the Boeing worldoutlook for the future of commercial airplanes.
Boeing recently announced plans to focus product-development efforts on a new, high-speed airplane. As Current Market Outlook 2002 ispublished, the technical parameters of this offering are not yet fully defined,so an explicit forecast for this airplane is not included in this Outlook.
The underlying demandfor this airplane, however, isdocumented. That is, passengersrequire more frequent nonstopservice to more city pairs. They want to go, when theywant to go, directly to theirdestinations. This fundamentalremains unchanged.
The 2002 Current Market Outlook can also be found on the Internet at:http://www.boeing.com/commercial/cmo
For more information about the Outlook, contact:Tim Meskill, DirectorMarket AnalysisBoeing Commercial AirplanesP.O. Box 3707, MC 21-28Seattle, Washington 98124-2207 USATelephone: 206-766-2503
O V E R V I E W
Overview 3
E X E C U T I V E O V E R V I E W
The airline industry is in the midst of a dramatic short-term cycle. Even before the terrorism events of September 11, the largest worldeconomic slowdown in a decade was negatively impacting air travel and airline profitability.
In 2001, world airline traffic fell by 4%, and the first half of 2002remains at negative growth levels. World airline losses in 2001 far surpassedany of the losses during the Gulf War era of the early 1990s.
Airlines and passengers are experiencing increased security costsresulting from September 11, especially in the United States. Yet, basicairline industry dynamics have not changed.
The globalization of world economies and societies continues. Overthe 20-year Current Market Outlook period, increasing numbers of peoplewill travel to visit friends and relatives, to transact business, and to enjoyleisure and educational opportunities not available close to home.
AIRLINE TRENDS CONTINUE TO UNFOLD. The underlying trends mentioned inprevious Current Market Outlooks are still unfolding. Passengers want to travelas quickly as possible to theirfinal destination, and airlines,unfettered by regulation, areresponding. Governments aroundthe world are reducing theirregulatory roles in the airlineindustry.
When deregulationoccurs, competition increasesamong airlines to open newnonstop routes and to addfrequencies, thus attractingpassengers by giving them agreater choice of f lights. Therise of the “low-cost” carriers is not just because of their lowfares — in many cases they servesecondary airports withfrequent, nonstop service.
The continued pressure ofcompetition forces airlines to find new ways to lower costs. The rapidgrowth of Internet ticketing is enabling airlines to cut distribution costswhile giving passengers greater visibility of pricing and routing choices.Alliances allow airlines to expand their networks, provide economies ofscale in combined operations such as ticketing and maintenance, andultimately provide worldwide “seamless” travel to consumers.
Current Market Outlook 2002
20-Year Outlook—Airplanes
Major projections for the 20-year period 2002 to 2021 are as follows:
Worldwide economic growth will average 2.9% per year.
Passenger traffic growth will average 4.9% per year.
Cargo traffic growth will average 6.4% per year.
Worldwide demand for commercial airplanes, 2002–2021
Economic and traffic growth, 2002–2021
The world fleet will grow to 32,495 passenger and cargo jets in 2021.The composition of the world fleet in 2021 will be
17% smaller regional jets. 22% intermediate-size airplanes.
57% single-aisle airplanes. 4% 747-size or larger airplanes.
Total market potential is 23,930 new commercial airplanes worth $1.8 trillion in 2001 US dollars. Airlines will take delivery of
4,240 smaller regional jets. 4,980 intermediate-size airplanes.
13,765 single-aisle airplanes. 945 747-size or larger airplanes.
Overview 4
AIR TRAVEL WILL OUTPACE ECONOMIC GROWTH. During the next 20 years, air travel will grow about two percentage points faster than economies will grow.This additional growth will be stimulated by lower fares, growing world trade, and airline network improvements such as increased frequencies and more direct service.
World RPKs are expected to grow at 4.9%, with regional-flow forecastsvarying from 2% to 9% growth. Europe and North America are matureeconomies with lower growthrates, although they willcontinue to take the mostairplane deliveries. Asia-Pacifictraffic will grow above the worldaverage, and its market share ofworld RPKs will increase from14% to 19% over the next twodecades. Latin America willincrease its market share from2% to 4% because of a high 7.9%traffic growth rate.
WORLD FLEET WILL MORE THAN
DOUBLE. The world fleet willmore than double over the forecast period to 32,495 airplanes. The Boeingforecast is based on traffic growth continuing to be met with more point-to-pointflights and additional frequencies in existing city pair markets.
For airlines to accommodate growth, the share of 747 and largerairplanes will fall from 7% to 4%, whereas the percentage of intermediate-sizeairplanes will increase from 18% to 22%. Intermediate-size airplanes allowairlines to f ly the increased frequencies and additional city pairs requested bypassengers. For example, new nonstops announced in 2001 on Atlantic routessave between 14% and 19% of the travel time it would have taken on the bestavailable one-stop or connecting flight.
Almost three-quarters of the f leet in 2021 will be single-aisle jets. Theshare of smaller regional jets will increase from 10% to 17% of the world f leetduring the next 20 years. Throughout the world, airlines will use regional jetsfor hub feeding, taking traffic from hubs, hub bypass, point-to-point services,nonstop service on thin routes, turboprop replacement, and as a mainline jetcomplement, especially in off-peak hours.
Current Market Outlook 2002
Overview 5
O U T L O O K C O N T E N T
The Boeing Current Market Outlook is organized in four major sections:State of the Industry, Traffic and Economics, Demand for CommercialAirplanes, and data Appendices.
STATE OF THE INDUSTRY discusses the current short-term business cycle,which has been one of the most volatile in air travel history. The sectionconsiders the difference between short-term cycles and long-term trends.
TRAFFIC AND ECONOMICS presents the Boeing 20-year outlook for the demandfor air travel. This demand is influenced by economic factors including GDPgrowth, international trade, and airline fares. Also important are the serviceimprovements offered by airlinesas they increase flight frequencieson existing city pairs and add new,often nonstop, destinations.
DEMAND FOR COMMERCIAL
AIRPLANES details the Boeing 20-year outlook for commercialairplanes. Airlines purchaseairplanes to serve increasedpassenger demand for air travel, to replace retired airplanes, and to rationalize their fleets insupport of network developmentand cost-containment goals.
APPENDICES provide detailed data on the traffic and airplane demandforecasts, including deliveries, retirements, fleet mix, and air travel by region.
Current Market Outlook 2002
State of the Industry 6 Current Market Outlook 2002
A I R L I N E P R O F I TA B I L I T Y
Following six years of profitability, the airline industry experienced majorfinancial losses in 2001. Although airlines anticipated modestly slowingtraffic growth in 2001, offset somewhat by easing fuel prices, they hopedrestrained capacity expansion would lead to satisfactory yields.
That forecast began tounravel even before 2000 endedas the information-technologysector plunged, and its high-yield business travelers becamescarce.
By 2001, Japan was in arecession, and Europe and theUnited States were weakening.By May 2001, for example,system traffic of US airlines andinternational traffic of majorEuropean and Asian carriers allshowed negative growthcompared to May 2000.
On average, year-to-datetraffic for the world throughAugust 2001 was only up 1.3%from the prior year.
Total airline industry lossin 2001 was almost $12 billion,far surpassing any of the lossesduring the early 1990s Gulf Warand recession period.
World Air Traffic Plummeted in 2001Major airline traffic growth, monthly percentage of change over prior year
Source: ROM Associates
–25
–20
–15
–10
–5
0
5
10
15
2002200120001999JDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ
S TAT E O F T H E I N D U S T RY
–12
–8
–4
0
4
8
12
–12
–8
–4
0
4
8
12
2001199519891983
World Airline Profitability DeclinedNet profit in billions US$
Percentage of revenueNet result
Source: International Civil Aviation Organization
Percentage of revenue
State of the Industry 7
D E C L I N E I N T R A F F I C
Cycles are a regular part of the industry. However, annual negative trafficgrowth has been experienced only twice in all of modern aviation history — in 2001 and in 1991. Annual traffic for 2001 fell 4% from annual 2000.
Although 1991 showed negative growth, the Gulf War started at thebeginning of the year, whereas the events of 2001 were near the end — thusmasking the magnitude of the 2001 events when calendar years are considered.
The exogenous shock of the terrorist attacks resulted in the shutdown of US airspace and a decline in world airline traffic that was unprecedented.The lowest month for US system traffic following the Gulf War was –9.8%,versus –32.5% for September2001.
ECONOMY AND EVENTS OF
SEPTEMBER 11 IMPACT THE
WORLD. All regions of the worldfelt the impact of economicslowdown and the events ofSeptember 11. The Japaneseeconomy was in recession,Europe was weak, South Americaexperienced problems, and theUnited States entered recessionby the end of the year.
Even before September 11,excess capacity on the NorthAtlantic had contributed tofalling traffic and loads. Thetraffic f lows with double-digitdeclines included domesticUnited States, North Atlantic,Pacific, and to a lesser degreeUnited States–Latin America.
Current Market Outlook 2002
Traffic Growth Is CyclicalWorld RPKs, percentage of change from previous year
Percentage of change Pre-Sept 11 Post-Sept 11
–12
–8
–4
0
4
8
12
2001199619911986
Traffic Growth Slowed WorldwideBy carrier domicile, RPK index (1995 = 100)
100
120
140
160 AsiaEuropeUS
2001200019991998199719961995
State of the Industry 8
C A PA C I T Y R E D U C T I O N
Before September 11, airlines were managing capacity in the good times of 2000 and even as the world economic slowdown unfolded in 2001.
After the initial shock of September 11, RPKs fell faster than ASKs,and load factor fell. However, by spring 2002, airlines werekeeping capacity constrained,allowing load factor to rise.
Historically, airlines willkeep capacity in check untilloads recover and then begin to raise fares — a strategy justbeginning to play out in thisdownturn.
Current Market Outlook 2002
First Traffic Fell; Then Airlines Reined in CapacityMajor world markets, monthly percentage of change over prior year
2000 2001 2002–25
–20
–15
–10
–5
0
5
10
15 ASKRPK
MFJDNOSAJJMAMFJDNOSAJJMAMFJ
Load Factor Fell in 2001By carrier domicile, percentage
65
67
69
71
73
75 AsiaEuropeUS
2001200019991998199719961995
State of the Industry 9
C Y C L E A N D F O R E C A S T
The major driver of long-term air travel growth is economic growth.International trade, airline service improvements, and declining faresexplain additional portions of traffic expansion.
In the short-term, consumer confidence and business profits can bestrong influences on air travel demand. Air travel shares commonalities withdurable goods such as computers or cars. Visits to friends and relatives,vacations, and even business trips can be put off when income is short orinsecure.
EXTRA COST OF SECURITY AFFECTS AIR TRAVEL. After September 11, fearand “hassle” factors such as lines at security checkpoints distorted the morenormal relationship between economic variables and air travel.
Although terrorism does not permanently depress travel becausesecurity responses make future incidents increasingly difficult and unlikely,higher security costs cause a onetime, permanent reduction in the demandfor air travel.
Some time in 2003, travel should resume the growth path it leftduring the year 2001 economic slowdown. The hiatus in travel due to fear and the recession should beover. However, travel will notrecover to the long-term averagegrowth trend. It will recover tosome parallel trend, displaceddownward by the extra cost ofsecurity in time and money.
Short-haul travel will bear a larger share of the burdenbecause security costs are based on boardings and are alarger share of total costs forshorter trips.
In general, the impact onworld traffic of the added cost of security is about one-tenth of 1 percentannualized over the 20-year forecast period. This equates to 2 percent fewerworld RPKs in 2021 that there would have been without the events ofSeptember 11.
Important as the short-term cycle is in the present, in the long-termforecast the effect of short-term cycles is smoothed. The next sections of thisOutlook present the Boeing long-run assessment of the demand forcommercial airplanes.
Current Market Outlook 2002
Demand for Air Travel 10 Current Market Outlook 2002
E C O N O M I C S A N D T R A F F I C
World GDP is forecast to grow by 2.9% over the next 20 years. In mature economies, GDP growth will average between 2% and 3% peryear. By contrast, GDP growth in developing regions may average over 4%.
Mature economies rely on productivity gains, service industries, andconsumer markets for much of their gains, whereas emerging economies are characterized by expanding labor forces, increased manufacturing, and entry into global capital and trade markets.
China is forecast to havethe fastest growing GDP at5.9%, as it continues itssuccessful melding of a centrallyplanned economy with the worldmarket economy.
WORLD AIR TRAFFIC WILL
CONTINUE TO GROW. World airtraffic measured in RPKs willgrow 4.9% annually over the next20 years, or two percentagepoints more than GDP.
The majority of air trafficgrowth is explained by economicgrowth. International trade,airline service improvements,and declining fares explain additional portions of traffic expansion.
Northeast Asia, South America, and Europe have the largest growth of air traffic in excess of GDP. Europe will experience the continuingpositive effects of liberalization. South America will recover from presenteconomic slowdowns and will increase air traffic through liberalization,international trade, and tourist development. Japan and Korea currentlygenerate less air travel than their wealth would indicate and in the long termshould show more robust air travel rates.
Southwest Asia and Africa GDP and traffic have historically lagged the world. Both regions are forecast to grow above the world average overthe next 20 years, as their economies and airline industries modernize.
GDP and RPK Growth Varies by DomicileAnnual growth, 2002–2021
0 2 4 6 8
RPKGDP
China
Southwest Asia
Central America
Southeast Asia
Middle East
CIS Region
Africa
South America
North America
Oceania
Europe
Northeast Asia
WORLD
Percentage
D E M A N D F O R A I R T R A V E L
Demand for Air Travel 11
I M PA C T O F B A S E Y E A R O N T H E F O R E C A S T
To be consistent with the Boeing and industry standard of a 20-year forecastperiod, this Outlook will use 2001 as the base year. However, the negativetraffic growth during 2001 creates a paradox for the long-term trafficforecast.
Using 2001 as the baseyear, the annualized 20-yeargrowth rate for the world for2002 to 2021 is 4.9%. If 2000 isused as a base, the annualized 21-year growth rate through2021 is 4.5%. These ratescompare to a 4.7% 20-yeargrowth rate published in CMO2001 for the period 2001 to 2020 with 2000 as a base.
When 2000 is used as a base, the long-term outlook has fallen by two-tenths of a percentage point.
New, permanent security costs resulting from September 11 are passedon to the air traveler early in the forecast period as higher fares, resulting inlower travel throughout the 20-year period. Also, recalibrationof the model for long-term GDPhas resulted in a slight decreasein the 20-year growth rate.
Flows involving NorthAmerica and the Middle Eastare most impacted bySeptember 11. Hard hit were theAtlantic and Pacific, especiallyflights from Japan.
Current Market Outlook 2002
Annual Traffic Growth Rate
Outlook 2001Base Year Outlook 2002
4.7%2000 4.5%
2001 4.9%
The Base Year Makes a DifferenceAnnual growth in RPKs, 2002–2021 and 2001–2021
0 2 4 6 8
20 year
21 year
China
Southwest Asia
Central America
Southeast Asia
Middle East
CIS Region
Africa
South America
North America
Oceania
Europe
Northeast Asia
WORLD
Percentage
Demand for Air Travel 12
T R A F F I C G R O W T H B Y R E G I O N
Two effects determine total air travel growth for a country. The first andmore significant effect is economic growth. The second is the value createdas airlines reduce prices and increase service offerings and as internationaltrade grows.
Over time, this second effect causes the share of GDP that a countrydevotes to air travel to increase. The share of GDP spent on air travel bycountries with high initial travel shares has tended to grow more slowly than the world average. These countries have maturing air travel markets.
In contrast, GDP share spent on air travel by countries with lowhistorical travel shares has tended to rise faster than the world average. The RPK forecast, thus, shows considerable variation among regional f lows.
Because of its maturity, the North America market share of world trafficwill decline from 25% to 19%, as less-developed markets grow faster. Forexample, the market share of the combined segments of the Asia-Pacific region(China, Northeast Asia, and other Asia-Pacific) will increase from 14% to 19%.
The North Atlantic market will fall from 12% market share to 10%,and the South Atlantic (Europe–Latin America) will remain constant at 4%share. Europe will maintain a 13% market share.
Latin America, a smallregion with only 2% worldmarket share, will increaseshare to 4% because of a high7.9% traffic growth rate fueledby liberalization and increasedworld trade of South America.
Current Market Outlook 2002
Air Travel Growth Varies by RegionAdded traffic, 2002–2021
RPKs, billions
2001 traffic2002–2021
growth
3.5%
4.7
4.9
4.3
5.4
5.5
9.0
7.9
5.0
4.9
6.4
4.8
Annualgrowth, %
0 500 1,000 1,500 2,000
Africa–Europe
Northeast Asia
Europe–Latin America
North America–Latin America
Latin America
China
Transpacific
Europe–Asia
Other Asia-Pacific
North Atlantic
Europe
North America
T R A F F I C A N D F L E E T
Airlines purchase airplanes to f ly specific routes in response to trafficdemand. Route characteristics vary by region. Airlines need large numbersof single-aisle airplanes to f ly the many domestic short-haul routes withinNorth America and Europe.
Within Asia-Pacific, a far-flung region that stretches from NortheastAsia to New Zealand and across to India, a mix of single-aisle and twin-aisleairplanes is required. In the long-haul transoceanic markets, twin-aisleairplanes dominate the f leet.
SHORT-HAUL MARKETS DOMINATE DEPARTURES. Worldwide, more than 4,200 small and intermediate regional jets will be delivered by 2021.
Short-haul markets dominate the world’s departures, representing a dramatic 96% of the total.Domestic flying in Europe andNorth America alone willconstitute almost 40% of theworld’s added ASKs and willabsorb over two-thirds of thedeliveries of single-aisleairplanes.
ASIA-PACIFIC REQUIRES MAJOR
SHARE OF CAPACITY. A majorshare of capacity to be addedduring the 20-year forecastperiod involves travel within, to, and from the Asia-Pacific region.
By 2021, more than 70% of large airplanes will be serving Asianmarkets. Asian markets also comprise the bulk of intermediate twin-aisleflying, although the North Atlantic will be the largest discrete traffic f lowfor the midsize twin aisles.
0
500
1,000
1,500
2,000
2,500
Growth in Regional Traffic Shapes Fleet RequirementsASKs in billions
747 and larger
Twin-aisle
Single-aisle
Smaller regional jets
202120012021200120212001202120012021200120212001Asia–Europe Transpacific North Atlantic Europe Asia-Pacific North America
Demand for Commercial Airplanes 13 Current Market Outlook 2002
D E M A N D F O R C O M M E R C I A L A I R P L A N E S
Demand for Commercial Airplanes 14
N E T W O R K D E V E L O P M E N T S T R AT E G I E S
Airlines’ network development strategies influence their airplaneacquisition decisions. Airlines take into account government regulations,airplane capabilities and economics, passenger requirements, competitionfrom other airlines, alliances, and the maturity of an airline’s existingnetwork.
Over time, network development strategies have increasingly focusedon adding new nonstop services; boosting frequencies on existing routes;competing with other carriers on their routes; and building complementaryprimary, secondary, alliance, domestic, and gateway hub networks.
PASSENGERS WANT TO QUICKLY REACH THEIR DESTINATIONS. Passengers willavoid itineraries that require several hub connections and numerous segmentsto complete a journey. Wherepossible, airlines will providepassengers point-to-point serviceon busy routes. When this is noteconomically feasible, passengerswill prefer carriers who movethem over a single hub with one-stop connecting service to theirfinal destination.
These network strategiesgenerally demand that airlinesmaintain or reduce airplane sizeto provide frequent, nonstopservice. High-fare customers in particular are sensitive to convenientdeparture and arrival times. The value they perceive in more flight-timechoices outweighs the cost to airlines of offering the added flights.
AIRLINES COMPETE BY OFFERING FREQUENCIES. A second reason to offermore frequencies is their role as a primary form of nonprice competition.Whether fares are fixed by regulation, or are forced to similar competitivelevels under deregulation, in the long run they rarely provide a vehicle forairlines to differentiate themselves in the marketplace.
In the battle for market share and long-term profitability, competitorsalmost always match fare reductions. With prices matched, the battle formarket share takes place in the service arena, with frequency of servicebeing a deciding competitive factor.
Current Market Outlook 2002
Airlines Provide Passengers With More Frequencies and Airport PairsIndex (1980 = 100)
75
120
165
210
255
300
Airplane size in seats
Airport pairs
RPKs
Frequencygrowth
20001995199019851980
Demand for Commercial Airplanes 15
F L E E T G R O W T H
The world f leet is expected to more than double by 2021, with total f leetsize growing to 32,495 airplanes.
Over the 20-year forecast period, 6,705 airplanes will be retired from active commercial service and will be replaced. An additional 17,224airplanes will be needed to fill capacity demand.
NEW AIRPLANES CONTRIBUTE TO GROWTH AND REPLACEMENT. The tally of airplanes added and removed is a straightforward exercise. Defining thenumber of airplanes attributable to growth and those attributable toreplacement is not. The reason is that airplanes are not replaced jet-for-jet, but rather seat-for-seat.
The 6,705 airplanesremoved from the system will bereplaced by some airplanes ofequal size, but also by bothsmaller and larger airplanes.For example, an airline might“replace” its hushkitted 727-200s (156 seats) with 757-200s(201 seats). Only a portion ofeach 757-200 actually serves asreplacement; the restcontributes to growth.
Based upon an estimate ofthe amount of capacity removedfrom the world f leet, approximately one-fourth of the market for newcommercial jets can be thought of as replacement for older in-serviceairplanes, and the remaining three-quarters for accommodation of bothpassenger and cargo traffic growth.
About 56% of the f leet operating today is projected to still be inoperation 20 years from now.
Current Market Outlook 2002
The World Fleet Will More Than Double Over the Next 20 Years
Smaller regional jetsSingle-aisleTwin-aisle747 and larger
2021
2001
15,271airplanes
32,495airplanes
18%
22%7%
4%
17%
10%
65% 57%
Demand for Commercial Airplanes 16
A I R P L A N E R E P L A C E M E N T
Historically, new capacity is added as older airplanes pass through a series of replacement stages.
The first stage is lower utilization in response to increasingmaintenance downtime or increasing operating costs.
The second stage is often the sale of an airplane to another operatorwho has different utilization requirements. For example, a new owner maymodify the airplane for cargo use, or another airline may have a need for anolder airplane type to be compatible with the rest of their f leet. Governmentnoise regulations also influence airplane retirements.
AIRLINES ACCELERATED RETIREMENT OF OLDER AIRPLANES. The events ofSeptember 11 have introduced a distortion to the historical model. In responseto double-digit traffic declines,airlines accelerated retirementsof older airplanes and parkedsome newer ones.
Many of the newer parkedairplanes will return tocommercial service, but olderairplanes are being permanentlyremoved from commercialservice earlier than they wouldhave been pre-September 11.
Current Market Outlook 2002
Additions and Removals Impact the World FleetUnits
5,000
15,000
25,000
35,000
17,224 growth airplanes
6,705 replacements
8,566 retained fleet
15,271 retained fleet
20212001
Demand for Commercial Airplanes 17
N O I S E S TA N D A R D S
The International Civil Aviation Organization (ICAO) has put in place a new noise certification standard. This standard, known as Chapter 4, was formulated over several years with input from aircraft and enginemanufacturers, airlines, airports, and community groups.
The Chapter 4 standard, which enters into force January 1, 2006,requires that new transport airplane types be certified to noise levels thatare cumulatively 10 EPNdB (effective perceived noise, in decibels) below theold Chapter 3 standard, based on the three noise certification measuringpoints.
It is possible that some of the airplanes now certified to the Chapter 3 noise standard may face future operating restrictions in Europe.
The European Union has issued a directive that will allow operatingrestrictions to be placed on airplanes that do not have a 5 EPNdB cumulativemargin below the Chapter 3 standards. The directive also establishes rulesand procedures that must befollowed before an airport caninstitute restrictions.
The effect of the directiveremains unclear at this writing, as the number of airports that willinvoke restrictions is not known.
Current Market Outlook 2002
Demand for Commercial Airplanes 18
D E L I V E R I E S
The largest share of airplane deliveries are single aisle. The current world f leetof 11,500 single-aisle airplanes plus regional jets is expected to grow to 23,850airplanes by the year 2021. Airlines will use these smaller airplanes to offer more frequencies in domestic service and short-haul international f lights.
NEED FOR REGIONAL JETS WILL
INCREASE. The regional jet sharewill increase substantially. USregional airlines are operatingsmaller jets on new nonstopflights.
Regional jets extend thegeographic reach of Majorairline hubs, augment larger jetoperations in off-peak hours,replace Major airline larger jetson thin routes, and substitutefor prop flights. Europeancarriers also will operate largenumbers of regional jets, especially in hub bypass and point-to-point markets.
Although not at the high absolute numbers experienced in Europe andNorth America, other regions of the world also will be expanding their use ofregional jets over the next 20 years. For example, the share of Oceania’s f leetcomprising smaller regional jets will increase from 7% to 16%. In China, theshare will increase from 6% to 12%.
INTERMEDIATE-SIZE AIRPLANE MARKET WILL GROW THE FASTEST. Airlines willcontinue to augment their fleets of twin-aisle airplanes as well. Over half thedelivery dollars are intermediate twin-aisle and larger jets. These airplanes willserve fragmenting long-haul markets such as the Atlantic and Pacific, as well ashigher density shorter routes, such as those within Asia.
THE LARGE-AIRPLANE MARKET IS SMALL. The market for very large airplanes is small. Summing the projected requirements for 747-and-larger airplanes in allmajor travel markets reveals a total need for 944 airplanes over the next 20 years.
Within this size category, about 40% of the requirement — orapproximately 393 jets — is for passenger airplanes of the size of the 747-400.About one-quarter of the requirement is for freighters.
The market for airplanes larger than today’s 747-400 becomes significantonly during the second decade of this forecast. By the end of the forecast period,most intercontinental routes will have at least daily service, and traffic volumeswill support an airplane larger than the current 747.
The projected requirement for airplanes of 500 seats or greater, however, is estimated at only 334 passenger jets over the study period.
Current Market Outlook 2002
Single-Aisle Airplanes Dominate Future Deliveries2002–2021
Smaller regional jetsSingle-aisleTwin-aisle747 and larger
23,929airplanes
1.79 trilliondelivery dollars*
21%
12%4% 5%
41%
18%
57%
* In year 2001 dollars
42%
Demand for Commercial Airplanes 19
D E M A N D F O R F R E I G H T E R A I R P L A N E S
The freighter f leet will increase over the next 20 years from 1,775 to 3,078airplanes. Freighters as a share of the total airplane fleet will fall from 12%to 10% due to an increase in the size of the average freighter. Taking 1,228retirements into account, 2,531 airplanes will be added to the freighter f leetby 2021.
Widebody freighters, currently 39% of the f leet, will supply nearly60% of these additions and will end the period comprising 60% of the f leet.The shift toward widebodyfreighters will result in afleetwide increase in averagefreighter airplane payload. Themedium widebody fleet willmore than triple over the next20 years — the greatest change of any category.
MAJORITY OF FREIGHTER
ADDITIONS WILL BE MODIFIED
AIRPLANES. By 2021, it isanticipated that freighters of allsizes will provide as much as 44%of the world’s total air cargocapacity, a slight increase from today.
More than 70% of the more than 2,531 freighter f leet additions duringthe next 20 years, satisfying both market growth and replacement needs,will come from modified passenger and combi airplanes. Nearly half of theseconversions will be widebody conversions.
By 2021, 681 new production freighters will enter the f leet. Althoughnew aircraft will comprise a minority of the world freighter f leet by 2021,many airlines prefer the technical advantages, reliability, and fuel efficiencyof new aircraft.
Half of new freighter deliveries will be in the large category. The value of all the new freighters totals $116 billion in current US dollars.
Current Market Outlook 2002
Widebody Freighters Dominate the Future Fleet
Small (<30 tons)Medium standard-body (30–50 tons)Medium widebody (40–65 tons)Large (>65 tons)
2021
2001
1,775 freighters
3,078freighters
17%
26%
22%
29%
11%
39%
22% 34%
R E G I O N A L D E L I V E R I E S
The mix of airplane models and number of deliveries varies widely byregion. On the passenger side, North America, with its large number ofexperienced travelers and its need to replace an aging fleet, will require the most airplanes over the next 20 years.
Compared with other regions, a larger number of North Americandeliveries will be regional jets. In Europe, over 80% of deliveries will besingle-aisle airplanes and regional jets. Asia-Pacific will take deliveries of the most 747-and-largerairplanes.
The world’s airlines willadd 2,531 new and convertedfreighters by 2021. As describedin the Boeing World Air CargoForecast, factors such as airlinestrategies, retirement rates, and varying growth rates ofmajor trade flows and marketsegments will impact the sizesof new and converted freightersadded to each region.
For example, large US-based air express systems willadd many medium and largewidebody freighters for bothgrowth and replacementpurposes. Asia-Pacific andEuropean airlines will add many large long-haul freighters, especially new and converted 747s.
Demand for Commercial Airplanes 20 Current Market Outlook 2002
Passenger Airplane Deliveries Vary by RegionNumber of new airplanes, 2002–2021
747 and larger
Twin-aisle
Single-aisle
Smaller regional jets
0
2,000
4,000
6,000
8,000
Africa andMiddle East
LatinAmerica
Asia-Pacific* Europe North America
Freighter Deliveries Vary by RegionNumber of new and converted airplanes, 2002–2021
0
300
600
900
1,200
1,500 Large
Medium widebody
Medium standard-body
Small
Africa andMiddle East
LatinAmerica
Asia-Pacific*Europe North America
* Includes Southwest Asia
Appendices 21 Current Market Outlook 2002
A P P E N D I C E S
M A R K E T O U T L O O K R E G I O N S
Market Outlook regions have been formed to best illustrate major world traffic f lows. They do not always exactly match political or geographic regions.
Appendices 22 Current Market Outlook 2002
W O R L D T R A F F I C B Y R E G I O N A L F L O W, 1 9 8 5 – 1 9 9 6 APPENDIX A
RPKs in billionsAfrica–AfricaAfrica–EuropeAfrica–Middle EastAfrica–North AmericaCentral America–Central AmericaCentral America–EuropeCentral America–North AmericaCentral America–South AmericaChina–ChinaChina–EuropeChina–North AmericaChina–Northeast AsiaChina–OceaniaChina–Southeast AsiaCIS Region–CIS RegionCIS Region–InternationalEurope–EuropeEurope–Middle EastEurope–North AmericaEurope–Northeast AsiaEurope–South AmericaEurope–Southeast AsiaEurope–Southwest AsiaMiddle East–Middle EastMiddle East–North AmericaMiddle East–Southeast AsiaMiddle East–Southwest AsiaNorth America–North AmericaNorth America–Northeast AsiaNorth America–OceaniaNorth America–South AmericaNorth America–Southeast AsiaNortheast Asia–Northeast AsiaNortheast Asia–OceaniaNortheast Asia–Southeast AsiaOceania–OceaniaOceania–South AmericaOceania–Southeast AsiaSouth America–South AmericaSoutheast Asia–Southeast AsiaSoutheast Asia–Southwest AsiaSouthwest Asia–Southwest AsiaRest of the WorldWorld total
198513.54043.0375.1561.220
12.82017.86843.3393.2878.4369.5777.8076.7543.0028.081
175.81415.863
170.04843.436
158.59917.02512.25026.60011.85917.6855.012
15.13614.505
470.63346.88011.00814.4608.013
32.2736.055
15.99818.6140.115
12.23329.47717.6655.658
10.4715.848
1573.158
199014.68947.7327.3941.298
14.30627.64763.7143.499
18.25416.92713.43410.9165.810
14.489224.24024.098
258.34641.512
230.68829.34722.30946.38617.47019.4626.560
10.98016.583
589.05595.16218.97219.61515.32450.01612.87932.51226.2410.688
24.28633.84129.8815.804
11.6027.534
2181.501
199514.77557.1786.4792.640
18.26744.19371.0974.271
56.62426.61121.63015.9989.234
23.03263.39533.918
306.83644.920
278.89546.55032.93065.88420.66620.71310.30920.58423.194
670.470121.51224.13535.88525.88667.40431.82344.33542.6710.641
33.06539.67053.8118.104
15.20511.776
2567.213
199615.33566.8976.9733.126
17.85847.50774.5804.595
61.15629.35224.14317.34310.67427.20050.76439.483
324.37447.897
296.43454.56137.21172.03223.35321.78911.25820.44223.762
721.958129.11124.82038.33925.98171.70835.32247.83244.5470.757
36.76942.24858.2238.873
16.11715.046
2747.755
Appendices 23 Current Market Outlook 2002
W O R L D T R A F F I C B Y R E G I O N A L F L O W, 1 9 9 7 – 2 0 0 0 APPENDIX A
RPKs in billionsAfrica–AfricaAfrica–EuropeAfrica–Middle EastAfrica–North AmericaCentral America–Central AmericaCentral America–EuropeCentral America–North AmericaCentral America–South AmericaChina–ChinaChina–EuropeChina–North AmericaChina–Northeast AsiaChina–OceaniaChina–Southeast AsiaCIS Region–CIS RegionCIS Region–InternationalEurope–EuropeEurope–Middle EastEurope–North AmericaEurope–Northeast AsiaEurope–South AmericaEurope–Southeast AsiaEurope–Southwest AsiaMiddle East–Middle EastMiddle East–North AmericaMiddle East–Southeast AsiaMiddle East–Southwest AsiaNorth America–North AmericaNorth America–Northeast AsiaNorth America–OceaniaNorth America–South AmericaNorth America–Southeast AsiaNortheast Asia–Northeast AsiaNortheast Asia–OceaniaNortheast Asia–Southeast AsiaOceania–OceaniaOceania–South AmericaOceania–Southeast AsiaSouth America–South AmericaSoutheast Asia–Southeast AsiaSoutheast Asia–Southwest AsiaSouthwest Asia–Southwest AsiaRest of the WorldWorld total
199716.57875.2597.4904.599
18.40951.72076.5395.269
61.67932.40727.09418.03711.10228.53244.48942.595
347.57851.861
324.06158.38140.26281.48322.69722.37310.58120.83224.261
758.000139.99424.99643.01530.70575.38236.38350.70345.8080.756
38.93646.60061.1369.540
16.13015.449
2919.698
199817.34079.2488.1874.201
19.44056.73780.8356.608
62.46834.15729.67016.73811.43526.76438.70444.511
378.05554.869
351.57859.66546.26082.86824.35423.87112.45420.06125.934
781.491129.99325.06746.21728.54074.35325.32245.73446.5111.020
36.98951.95948.9099.588
15.77514.726
2999.208
199918.03488.3628.7604.407
21.38461.16286.4936.046
64.03037.47030.85717.50811.26327.20839.36342.063
406.06359.643
380.05560.55951.11889.91224.71925.30314.33321.58627.490
823.969137.40226.86145.43131.42277.10422.28446.64947.4411.275
41.61352.21850.37610.35515.69614.715
3170.003
200019.42299.4079.8114.416
23.95066.36193.9317.256
73.63440.09333.17119.43412.13029.33041.72543.325
440.57865.011
419.96163.58753.16295.75626.22727.83416.05323.96029.414
866.929140.15029.95047.24832.05079.03224.06648.51549.2441.282
46.19053.52353.65010.93516.01016.054
3393.770
Appendices 24 Current Market Outlook 2002
W O R L D T R A F F I C B Y R E G I O N A L F L O W, 2 0 0 1 – 2 0 2 1 APPENDIX A
RPKs in billionsAfrica–AfricaAfrica–EuropeAfrica–Middle EastAfrica–North AmericaCentral America–Central AmericaCentral America–EuropeCentral America–North AmericaCentral America–South AmericaChina–ChinaChina–EuropeChina–North AmericaChina–Northeast AsiaChina–OceaniaChina–Southeast AsiaCIS Region–CIS RegionCIS Region–InternationalEurope–EuropeEurope–Middle EastEurope–North AmericaEurope–Northeast AsiaEurope–South AmericaEurope–Southeast AsiaEurope–Southwest AsiaMiddle East–Middle EastMiddle East–North AmericaMiddle East–Southeast AsiaMiddle East–Southwest AsiaNorth America–North AmericaNorth America–Northeast AsiaNorth America–OceaniaNorth America–South AmericaNorth America–Southeast AsiaNortheast Asia–Northeast AsiaNortheast Asia–OceaniaNortheast Asia–Southeast AsiaOceania–OceaniaOceania–South AmericaOceania–Southeast AsiaSouth America–South AmericaSoutheast Asia–Southeast AsiaSoutheast Asia–Southwest AsiaSouthwest Asia–Southwest AsiaRest of the WorldWorld total
200119.94796.22610.5964.615
23.01672.99793.4627.169
80.33540.17333.33718.42312.43431.67746.73243.542
446.30655.324
377.54555.82950.50495.94827.48627.13812.04022.85829.855
807.978114.22327.55444.79129.32680.21722.50247.78750.7211.185
47.57650.79355.95711.59116.61817.676
3262.009
201132.289
159.55115.2467.010
50.754103.221140.71012.497
214.67170.68757.76239.27117.32646.98075.15988.632
723.681103.808607.323118.67399.541
151.92849.63643.34823.49333.88450.401
1131.619221.27538.99589.79155.179
142.95640.70089.68964.5562.066
63.582135.623103.78319.26619.26627.073
5404.549
202151.224
245.34522.36510.05293.676
154.203215.64121.641
446.618114.729108.12172.26124.31075.486
117.822145.116
1117.759153.843876.474200.140166.542229.85486.94566.59433.96848.64280.836
1620.643347.40356.083
148.72389.517
279.12364.399
157.51083.9023.239
92.033257.774180.82334.58888.12542.439
8526.535
2002–2021 %/year
4.84.83.84.07.33.84.35.79.05.46.17.13.44.44.76.24.75.24.36.66.14.55.94.65.33.85.13.55.73.66.25.76.45.46.12.55.23.48.56.05.68.74.54.9
Appendices 25 Current Market Outlook 2002
Year-end2001
Removedfrom
serviceYear-end
2021
Seat category*
Freighter
2002–2021new
deliveriesConverted
to freighter
Year-end2001
Removedfrom
serviceYear-end
2021
2002–2021new
deliveries
Single-aisleSmall and intermediateregional jets
90–120 and largeregional jets
121–170
171–240
1,505 4,238 384 5,359
2,380 3,018 1,960 3,438
5,441 7,883 2,856 10,468
1,092 2,764 502 3,354
Twin-aisleSmall 1,261 2,194 603 2,852Intermediate 1,042 2,424 484 2,982Large 775 727 538 964
Total passengerairplanes 13,496 23,248 7,327 29,417
Small 698 72 602 723 891Medium 688 260 388 817 1,377Large 389 349 238 310 810
Total freighterairplanes 1,775 681 1,228 1,850 3,078
Total 15,271 23,929 8,555 32,495
* Categories based on 36-/32-inch mixed-class configuration (includes freighter and combi airplanes in appropriate passenger category; the twin-aisle and large categories also show typical three-class configurations).
PA S S E N G E R A N D F R E I G H T E R F L E E T D E V E L O P M E N T APPENDIX B
2001 year-end 2021 year-end Seat category* Models Units Percent Units PercentSingle-aisle
Small andintermediateregional jets
F 28F 70Bac 1-11RJ70/RJ85;BAe 146-100/-200Regional jets fromBombardier,Embraer, and Fairchild
1,518 9.9 5,359 16.5
90–120 and large regional jets
727-100737-100/-200/-500/-600717-200DC-9MD-87F 100RJ100/BAe 146-300CaravelleConcordeA318Regional jets fromBombardier,Embraer, and Fairchild
2,760 18.1 3,500 10.8
121–170 737-300/-400/-700/-800727-200720A319/A320Trident-3MercureMD-81/-82/-83/-88/-90DC-8-10/-20
5,746 37.6 11,295 34.7
(Continued on next page)
W O R L D A I R L I N E F L E E T D I S T R I B U T I O N APPENDIX B
Appendices 26 Current Market Outlook 2002
Appendices 27 Current Market Outlook 2002
W O R L D A I R L I N E F L E E T D I S T R I B U T I O N ( C O N T I N U E D ) APPENDIX B
171–240 737-900757707-300B/CA321DC-8-30/-40/-50/-60/-70
1,475 9.7 3,700 11.4
Twin-aisle230–310(181–249)
767A300A310A330-200
1,494 9.8 3,845 11.8
311–399(250–368)
777-200/-300A330-300A340L-1011DC-10MD-11
1,253 8.2 3,370 10.4
Large 747A380
1,025 6.7 1,426 4.4747 and larger(>400)
Total 15,271 100.0 32,495 100.0
* Categories based on 36-/32-inch mixed-class configuration (includes freighter and combi airplanes in appropriate passenger category; the twin-aisle and large categories also show typical three-class configurations).
2001 year-end 2021 year-end Seat category* Models Units Percent Units Percent
Appendices 28 Current Market Outlook 2002
D E L I V E RY D I S T R I B U T I O N , H I S T O RY 1 9 5 2 – 2 0 0 1 APPENDIX B
Models Percent Units Percent
Small and intermediateregional jets
F 28F 70Bac 1-11RJ70/RJ85;BAe 146-100/-200Regional jets fromBombardier,Embraer, and Fairchild
47.0 3.7 1,968 9.7
90–120 and largeregional jets
727-100737-100/-200/-500/ -600717-200DC-9MD-87F 100RJ100/Bae 146-300CaravelleConcorde
128.8 10.3 4,268 21.1
121–170 737-300/-400/-700/ -800727-200707-120/-220720A319/A320Trident-3MercureMD-81/-82/-83/-88/-90DC-8-10/-20
322.3 25.7 6,961 34.4
171–240 757707-300B/CA321DC-8-30/-40/-50/-60
155.1 12.4 2,439 12.0
2001 dollarsbillionsSeat category*
Single-aisle
(Continued on next page)
Appendices 29 Current Market Outlook 2002
D E L I V E RY D I S T R I B U T I O N , H I S T O RY 1 9 5 2 – 2 0 0 1 APPENDIX B
( C O N T I N U E D )
Twin-aisle 230–310 (181–249)
767A300A310A330-200
179.0 14.3 1,715 8.5
311–399(250–368)
777-200/-300A330-300A340L-1011DC-10MD-11
213.9 17.0 1,598 7.9
Large747 and larger (>400) 747 208.5 16.6 1,292 6.4
Total 1,254.6 100.0 20,241 100.0
* Categories based on 36-/32-inch mixed-class configuration (includes freighter and combi airplanes in appropriate passenger category; the twin-aisle and large categories also show typical three-class configurations).
Models Percent Units Percent2001 dollars
billionsSeat category*
Appendices 30 Current Market Outlook 2002
D E L I V E RY D I S T R I B U T I O N , F U T U R E 2 0 0 2 – 2 0 2 1 APPENDIX B
2001 dollarsbillionsSeat category* Models Percent Units Percent
Single-aisleSmall and intermediateregional jets
90.7 5.1 4,238 17.7RJ70/RJ85Regional jets fromBombardier,Embraer, andFairchild
90–120 and largeregional jets
107.0 6.0 3,018 12.6737-600717-200A318RJ100Regional jets fromBombardier,Embraer, andFairchild
121–170 737-700/-800A319A320
432.4 24.2 7,955 33.2
171–240 737-900757A321
194.1 10.8 2,794 11.7
Twin-aisle230–310(181–249)
767A300A310A330-200
301.5 16.9 2,424 10.1
311–399(250–368)
777-200/-300A330-300A340
446.2 25.0 2,556 10.7
Large747A380
213.5 12.0 944 4.0747 and larger (>400)
Total 1,785.4 100.0 23,929 100.0
* Categories based on 36-/32-inch mixed-class configuration (includes freighter and combi airplanes in appropriate passenger category; the twin-aisle and large categories also show typical three-class configurations).
Appendices 31 Current Market Outlook 2002
R E S U LT S B Y R E G I O N O F T H E W O R L D APPENDIX C
Africa2002–2021
Asia-Pacific2002–2021
Europe2002–2021
Traffic Growth to/from: %/year %/year %/year
4.83.84.83.88.14.0
3.86.25.44.65.25.5
4.85.44.75.24.94.3
Airplane Deliveries Number of airplanes
Single-aisle and regional jetsTwin-aisle747 and largerTotal
3985912
469
2,8732,066
5615,500
6,0321,153
1947,379
Delivery dollars, billions (2001)
Single-aisle and regional jetsTwin-aisle747 and larger
17.09.12.8
131.2322.5126.2
272.9168.444.0
Total 28.9 579.9 485.3
AfricaAsia-PacificEuropeMiddle EastLatin AmericaNorth America
Single-aisle and regional jetsTwin-aisle747 and largerTotal
34526528
638
1,946161
2,107
6,4111,276
1497,836
Delivery dollars, billions (2001)
Single-aisle and regional jetsTwin-aisle747 and larger
17.838.86.3
83.223.7
302.1185.234.2
Total 62.9 106.9 521.5
LatinAmerica
2002–2021
NorthAmerica
2002–2021
AfricaAsia-PacificEuropeMiddle EastLatin AmericaNorth America
3.84.65.24.6
5.3
8.15.24.9
7.95.0
4.05.54.35.35.03.5
Airplane Deliveries Number of airplanes
Middle East 2002–2021
Traffic Growth to/from: %/year %/year %/year
Appendices 32 Current Market Outlook 2002
R E S U LT S B Y E C O N O M Y, 2 0 0 2 – 2 0 2 1 APPENDIX D
Investment*2001 dollars, billionsCategory
Airplanedeliveries*
United StatesChinaJapanUnited KingdomGermanyFrance
481165135969163
7,2011,912
9901,3381,243
837
Brazil, Canada, Singapore, South Korea 40–60 250–800Australia, Italy, Netherlands, Spain, Taiwan 25–40 250–660India, Ireland, Malaysia, Mexico, SaudiArabia, Thailand 15–25 120–450Argentina, Belgium, Indonesia,Pakistan, South Africa, Switzerland,United Arab Emirates
10–15 70–220
Austria, Bahrain, Chile, Denmark,Egypt, Finland, Greece, Israel, New Zealand, Norway, Philippines, Poland, Sweden, Turkey 5–10 40–230
Algeria, Bangladesh, Brunei, Colombia, Costa Rica, Cuba, Cyprus, Czech Republic, El Salvador, Ethiopia,Hungary, Iceland, Iran, Jamaica, Jordan, Kenya, Kuwait, Lebanon, Luxembourg, Malta, Mauritius,Morocco, Panama, Peru, Portugal,Qatar, Romania, Slovenia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Venezuela, Vietnam, Yemen 1–5 10–80
*Totals shown are per economy in each category.
World Airplane Demand 33
The sources used in the preparation of the Boeing Current Market Outlookinclude:
AirclaimsAir Transport Association (ATA)Association of Asia Pacific Airlines (AAPA) Association of European Airlines (AEA)Boeing primary research DRI•WEFA, Inc.International Air Transport Association (IATA)International Civil Aviation Organization (ICAO) Jet Information ServicesOfficial Airline Guide (OAG)ROM Associates US Department of Transportation Form 41
Historical data are estimates based on Boeing analyses. Data for 2001 are preliminary.
Current Market Outlook 2002
A B O U T T H E D ATA
World Airplane Demand 34
ASK: Available seat-kilometers — the number of seats an airline providesmultiplied by the number of kilometers they are f lown; a measure of airline capacity.
CIS: Commonwealth of Independent States — states of the former Soviet Union.
GDP: Gross domestic product — the total output of goods and servicesproduced within a country; the broadest measure of economic output with the exception of GNP (gross national product), which includes a country’s nationals who work in other countries.
LOAD FACTOR: Revenue passenger-kilometers divided by available seat-kilometers.
RPK: Revenue passenger-kilometers — the number of passengers multipliedby the number of kilometers they f ly.
SCOPE CLAUSE: Provisions in US Major airlines’ pilot contracts that imposelimits on the operation of jet airplanes used by regional “partner” airlines.Limits on seat count (generally 70 seats or less), weight, cruise speed, orratio of regional jets to standard jets are the most common provisions.
TRAVEL SHARE: A ratio measuring the portion of GDP that a country devotes to air travel.
YIELD: Revenues divided by revenue passenger-kilometers; it represents an aggregate of all the airfare and airline charges and is measured on a per-kilometer basis.
Current Market Outlook 2002
G L O S S A RY