Boeing on Tuesday raised its forecast for aircraft demand in China for the next 20 years, showing the manufacturer's confidence in the Chinese market in spite of the country's slowing economy.
Despite the current volatility in China's financial markets, we see strong growth in the country's aviation sector over the long term, Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, said at a media briefing in Beijing. Tinseth also said China is expected to be the largest aviation market in 2030.
The U.S. plane producer expects China to purchase 6,330 aircraft over the next 20 years, estimating the total value of those new airplanes at $950 billion. The fleet number is 5 percent higher than Boeing's 2014 forecast.
The company estimates China's commercial airplane fleet will triple over the next 20 years from 2,570 aircraft in 2014 to 7,210 aircraft in 2,034, with more than 70 percent of new deliveries accommodating growth.
In detail, Boeing is forecasting demand for 4,630 single-aisle airplanes through 2034. The demand will be driven by growth in new carriers and low-cost airlines in both developing and emerging markets, as well as the continuous expansion of established airlines.
Growth of new routes in second-tier cities reached 20.3 percent from 2010 till now, compared with growth of 7.6 percent in the large seaside cities, the report said.
Boeing forecast the percentage of low-budget carriers could jump to 25 percent to 30 percent by 2034 from current 8 percent in terms of the single-aisle market.
In terms of the long-haul routes, Chinese carriers have opened 30 routes longer than 5,000 kilometers over the past two years, a big jump in terms of market share, Boeing said.
The producer said the wide-body segment will require 1,510 new airplanes, led by small and medium wide-body airplanes such as the 777-300ER (Extended Range), 777X and the 787 Dreamliner.
Tinseth stressed that Chinese airlines have more than doubled their long-haul international capacity over the past three years, in large part following the delivery of 747-8 Intercontinental airplanes to Air China and 777-300ERs and 787s to several leading Chinese carriers.
Chinese airlines' market share of the long-haul routes from China has risen to about 45 percent, up from 36 percent in 2009, Darren Hulst, marketing director for Northeast Asia of Boeing commercial airplanes said in July. The increase means the annual growth rate of long-haul routes was 20 percent over the past six years.
However, the airlines are also under pressure from the weakening yuan, which may hurt their revenue in the second half of this year.
Tinseth said falling oil prices hurt more than the weakening exchange rate as the growth of the aviation market is faster than the growth of the economy.
Currently, Airbus and Aviation Industry Corp of China (AVIC) have not released market forecasts this year, but, Airbus predicted in 2014 that China will need 5,300 airplanes - worth of $820 billion - over the subsequent two decades. AVIC predicted in 2014 that China will require 5,483 aircraft over the period.
