Boeing, Airbus forecast huge demand in China

Carriers to expand fleets despite rising costs, economic slowdown

China will need 5,260 new commercial airliners valued at $670 billion over the next 20 years, and 77 percent of the planes will be for growth instead of replacement, according to the market outlook from US aircraft manufacturer Boeing Co.

Although Chinese airlines suffered from rising fuel cost and the economic slowdown this year, Boeing released forecasts on Wednesday that said China's commercial-airplane market will still have strong long-term growth.

"Sustained economic growth, growing trade activities and increasing personal wealth are some of the driving forces," said Randy Tinseth, vice-president of marketing of Boeing Commercial Airplanes.

But Boeing adjusted its forecasts of China's annual GDP increase in the next 20 years from last year's 7 percent to 6.5 percent this year, and the increase in annual average demand for air travel from 7.6 percent to 7 percent in this year's outlook.

Boeing also said that small and intermediate twin-aisle airliners are expected to be the most popular market segment, making up 48 percent of the market in value, with 1,190 new deliveries anticipated.

"We expect Chinese carriers to experience rapid international expansion over the next 20 years, with an annual increase rate of 8.9 percent on average," Tinseth said. "Chinese carriers now have the capability and resources to compete in the tough long-haul international market."

Boeing's market outlook last year showed that from 2011 to 2030, China would need 5,000 new commercial airplanes valued at $600 billion. Both numbers are less than the revised outlook, between 2012 and 2031.

Most of the additional new aircraft in the forecasts will be of the wide-body type to meet the demand of Chinese airlines working on the international market, Tinseth added.

The projections came a day after Boeing's main rival, Airbus SAS, predicted similar international expansion by Chinese airlines.

Chris Emerson, head of Airbus' product strategy and market forecast, said relations between China and the Middle East will also help drive demand.

However, both the manufacturers said the domestic market is still the main market for the Chinese airlines.

"Domestic flights from one city to another within China will be the largest single market in the world in 20 years," said John Leahy, Airbus' chief operating officer customers.

In the next 20 years, China's domestic passenger traffic will overtake US domestic traffic to become number one in the world, he said.

Airbus, which released its global market outlook from 2012 to 2013 on Tuesday, said the global market will need 28,200 new airplanes including passenger and freighter aircraft, worth nearly $4 trillion.

Asia-Pacific will account for 35 percent of all new aircraft deliveries, and in value terms, China is the single biggest market, Airbus said.

China will be the biggest contributor of Airbus' business value in the next two decades, the company said in London.

Business volume from China for Airbus aircraft will amount to $634 billion from 2012 to 2031, it said.

From 2011 to 2015, more than 2,500 aircraft will be delivered to China, including 1,000 for general aviation and 1,500 for commercial aviation, said Li Jiaxiang, head of the Civil Aviation Administration of China.

China has about 2,000 commercial airliners and 1,100 general aviation aircraft now.