Bullish Boeing Predicts $6.3 Trillion in Plane Sales, Says A380 and 747 Are Dead

Boeing is bullish on airline passenger growth and demand for airplanes, increasing its 2018 forecast for aircraft by 4.1% over 2017. At the Farnborough Air Show on Tuesday, the plane maker released its 2018 Commercial Market Outlook, an outlook on demand for aircraft and passenger travel growth over the next 20 years that's considered a benchmark for the commercial aviation industry.

Boeing predicts worldwide demand for 42,700 aircraft valued at $6.3 trillion from 2018 to 2038. The company says that 44% of those aircraft will be replacements for current airplanes, with the remaining 56% accounting for new entrants and passenger travel growth.

Most of these planes will be single-aisle aircraft, purchased for emerging markets such as Asia-Pacific and India. Boeing now predicts demand for 31,360 single-aisle planes, an increase of 6.1% over the 2017 forecast.

Randy Tinseth, the head of marketing for Boeing's commercial airplanes division, said that airline association IATA predicts 4.3 billion passengers traveling in 2018, but sees that number approaching 10 billion passengers in 2038. Load factors — the percentage of seats filled — are also at record levels. Low-cost carriers approach the practical limits (96% in the case of Ryanair) with the industry average at 82%. This is up from 76% only five years ago, according to Boeing. Aircraft utilization, or the hours per day planes spend flying, is up 13% in 2017, a sign of increased productivity growth.

Death of the Big Jets

There are currently 22,000 city pairs worldwide; Boeing predicts some 2,000 added in 2018 alone. That 10% growth is a reflection of the dominance of point-to-point traffic with single-aisle aircraft. Indeed, Tinseth minced no words about the demand for very large aircraft over the next 20 years, such as the Boeing 747 or Airbus A380: "60 aircraft," he said, deadpan. If he is right, then the two giants of the skies aren't just an endangered species — they are really on the verge of extinction.

This compares to a predicted demand for 8,070 wide-body aircraft such as the Boeing 787 or A350, primarily used for point-to-point long-haul traffic.

"Airbus has historically overestimated demand for widebody aircraft and underestimated demand for single-aisle aircraft," Tinseth said. "That changed this year. They took out 1,000 wide-body aircraft from their report and added 3,500 single-aisle. I can't say if that's a white flag."

As for regional jets, the smaller end of the market at around 100 seats, those are predicted to see lower demand than thought in 2017.

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The Long View

Tinseth has been at Boeing since 1981, and has seen the company weather war, recessions, and now, protectionism.

"The industry is incredibly resilient," he said. "Things return to normal in six to 12 months."

As for the accuracy of these predictions, Tinseth said that Boeing has been creating these reports since the 1960s.

"Our team looks at these reports every year, from 20 years ago to see how we're doing," he said on the sidelines of the biggest aviatrion trade show. "I think we're conservative."