Tag Archives: fleet

Aircraft market forecasts accuracy (update 2017)

About three years ago I wrote a post in which I analyzed the accuracy of commercial aircraft market forecasts. In particular, Boeing’s series of yearly Current Market Outlook (CMO). In that comparison, between the CMOs from 1999 and 2014, we could compare the predicted and the actual world fleets at 2013 year-end.

In this post, I just wanted to provide an update with the figures from the latest CMO (2017), released a couple of weeks ago, in comparison with 1997’s CMO. In that CMO from 1997, we find the following chart showing Boeing’s forecasted fleet size and distribution for 2001, 2006, 2011 and 2016 year-ends.

Fleet at year end - forecast 1997

1997 Boeing CMO year-end fleet forecasts for 2001, 2006, 2011 & 2016.

In 2017’s CMO, Boeing offered figures of 2016 year-end fleet.

Fleet at year end 2016 - Boeing 2017 CMO

Fleet at year-end 2016 – Boeing 2017 CMO.

Along these years, Boeing has simplified the segmentation with which it provides the fleet and aircraft demand. Single aisle segment is not divided in up to 4 sub-segments. Twin aisle aircraft have gone from two categories (747 and the rest) to three (small and intermediate widebody and large aircraft) and back to two (small widebody and larger), but slightly different. Freighters come with less sub-segments, too.

Despite of the difference in the presentation of the fleet we can try to make a comparison:

Comparison Fleet at year end 2016

Comparison of aircraft fleet at year-end 2016: 1997 forecast vs. actual (sources: Boeing CMO 1997 and 2017).

Some reflections:

  • The overall size of the fleet was quite well predicted, with a difference of 1%.
  • The forecasts for small aircraft was too conservative: both single aisle and regional fleets are today larger than forecasted.
  • The forecasts for larger aircraft was too optimistic: both widebody and freighter fleets are today smaller than forecasted.

This year’s Boeing’s CMO presentation includes a couple of slides on the accuracy of 1997 CMO in relation to what would be the demand for new airplanes vs. what it has turned out to be 20 years later.

CMO_1997_2017

More aircraft have been delivered in relation to what had been forecasted. Retirement of aircraft also increased its pace with increases of oil price in the 2000s. See the chart below from Avolon’s paper “Aircraft retirement and storage trends” [PDF, 2 MB].

Retirement_vs_oil_Avolon.png

Now, having seen all this information, I can update this other graphic which I shared 5 years ago in a blog post titled “World commercial aircraft fleet: forecast vs. actual“:

Fleet evolution - forecast vs actual - 2017 CMO

World commercial aircraft fleet: past forecast vs. actual, and future demand (data source: Boeing CMOs up to 2017). Fleet (blue and red lines) in the left axis; market forecast (grey columns) in the right axis.

As you can see, actual fleets, forecasted fleets and forcasted fleet demand have all been increasing year by year . The compounded annual growth rate (CAGR) for each one has been:

  • Actual fleet growth: 3.65% from 1995 to 2016 (3.04% from 2000 to 2016).
  • Forecasted (15-20 years before) fleet growth: 3.52% from 2000 to 2036 (3.55% from 2000 to 2016).
  • 20-year market forecast: 4.82% from 1992 to 2017 (3.56% from 2001 to 2017).

The 20-year market forecasts have grown at a higher rate (4.82%) than fleets (3.65%), it is mainly because the first sets of data that I could retrieve come from the economic crisis of the beginning of the 1990’s, when Boeing trimmed down its forecasts. From the 2000’s the figures for market forecast have grown at a similar rate (3.56%) than those of fleets (3.04%). And so will be the growth of forecasted fleet from 2016 to 2036: 3.52%.


Notes:

  • 1990 CMO long-term market forecast is made for 15 years, not 20.
  • Forecast of fleet for the periods 2000-2003, 2005-2008 and 2010-2013 does not come from CMOs published 20 years before, but from 5, 10 and 15-year fleet forecasts included in the CMOs of 1996, 1997, 1998 and 1999.
  • Boeing does not publish 5, 10 and 15-year fleet forecasts anymore.
  • It would be interesting to have a per-segment graphic, however there is not consistent data to produce it for the same time span. Boeing has made different changes to the way it reports fleet and market segments.
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Airbus vs. Boeing, comparison of market forecasts (2016)

Last week, on the first day of Farnborough air show, Airbus released the new figures of the 2016-35 Airbus’ Global Market Forecast (GMF, PDF 2.6 MB). This is good news, as it did so at the same time as Boeing released its Current Market Outlook (see a post here about it) and before it used to do so in September.

In previous years, I have published comparisons (1) of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 4.1 MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2016-2035.

Comparison of Airbus GMF and Boeing CMO 2016-2035.

Some comments about the comparison:

  • Boeing sees demand for 12% more passenger aircraft (excluding regional a/c) with a 10% more value (excluding freighters). The gap is higher than in 2015 (similar to 2013 and previous years).
  • In relation to last year studies, Airbus has increased demand by ~650 aircraft whereas Boeing has increased by 1,670.
  • Boeing continues to play down A380 niche potential (66% less a/c than Airbus’ GMF).
  • Both companies’ forecast for the twin aisle segment is nearly identical: ~7,600-7,700 aircraft (Airbus sees demand for about a 100 less aircraft than Boeing, mainly due to Boeing increased figures in relation to 2015). The mix between small and intermediate twins varies, ~300-400 units up and down. However, Boeing’s wide-bodies mix is not to be taken as engraved in stone, see the erratic trend in the last years here.
  • On the other hand, Boeing forecasts about 4,600 single-aisle more than Airbus (the gap has widened in 800 units this year). Boeing doesn’t provide the split between more or less than 175 pax capacity airplanes since its 2015 CMO, this year Airbus hasn’t included it either.
  • In relation to traffic, measured in terms of RPKs (“revenue passenger kilometer”), that is, the number of paying passenger by the distance they are transported, they see a similar future: Airbus forecasts for 2035 ~16.0 RPKs (in trillion, 4.5% annual growth from today) while Boeing forecasts 17.01 RPKs (4.8% annual growth).

The main changes from last year’s forecasts are:

  • Both manufacturers have increased their passenger aircraft forecast in between ~650-1,670 a/c.
  • Both manufacturers have increased the volume (trn$) of the market in these 20 years, by about 300-400 bn$.

Some lines to retain from this type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.5% per year (4.8% according to Boeing). This is, doubling every ~15 years.
  • Today there are about 18,019 passenger aircraft around the world (according to Airbus; 18,190 in Boeing’s CMO), this number is about 700 a/c more than the year before (4% increase) and will more than double over the next 20 years to 37,708 a/c in 2035 (39,750 as seen by Boeing, excluding regional jets).
  • Most deliveries will go to Asia-Pacific, 41% or 13,239 passenger aircraft (according to Airbus).
  • Domestic travel in China will be the largest traffic flow in 2035 with over 1,600 bn RPK (according to Airbus (x 3.7 times more than today’s traffic), or 1,897 bn RPK according to Boeing), or 11% of the World’s traffic.
  • About 12,830 aircraft will be retired to be replaced by more eco-efficient types.
Passenger traffic growth vs. global GPD growth.

Passenger traffic growth vs. global GPD growth.

As I do every year, I strongly recommend both documents (GMF and CMO) which provide a wealth of information of market dynamics. This year, Airbus included as well an excel file with its data, find it here [XLS, 0.3 MB]

(1) Find here the posts with similar comparisons I made with the forecasts of previous years: 2015, 2014, 2013, 2012, 2011, 2010.

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Airbus vs. Boeing, comparison of market forecasts (2015)

Few days ago, Airbus released the new figures of the 2015-34 Airbus’ Global Market Forecast (GMF, PDF 7.2MB).

In previous years, I have published comparisons of both Airbus’ and Boeing’s forecasts (Current Market Outlook, CMO, PDF 6.5MB). You can find below the update of such comparison with the latest released figures from both companies.

Comparison of Airbus GMF and Boeing CMO 2015-2034.

Comparison of Airbus GMF and Boeing CMO 2015-2034.

Some comments about the comparison:

  • Boeing sees demand for 9% more passenger aircraft (excluding regional a/c) with a 10% more value (excluding freighters). The gap is the same as in 2014 (in previous years Boeing forecasted up to 14% more aircraft).
  • In relation to last year studies, Airbus has increased demand by ~1,200 aircraft about the same increase seen at Boeing’s.
  • Boeing continues to play down A380 niche potential (67% less a/c than Airbus’ GMF). This year, Airbus has increased in about 50 units its forecasted demand for the VLA segment.
  • Both companies’ forecast for the twin aisle segment is nearly identical: ~7,500 aircraft (Airbus sees demand for about a 100 more than Boeing). The mix between small and intermediate twins varies, 700 units up and down. However, Boeing’s wide-bodies mix is not to be taken as engraved in stone, see the erratic trend in the last years here.
  • On the other hand, Boeing forecasts about 3,800 single-aisle more than Airbus (the gap has widened in 200 units this year, lower than in 2013 forecasts though). Boeing doesn’t provide in 2015 CMO the split between more or less than 175 pax capacity airplanes.
  • In terms of RPKs (“revenue passenger kilometer”), that is, the number of paying passenger by the distance they are transported, they see a similar future: Airbus forecasts for 2034 ~15.2 RPKs (in trillion, 4.6% annual growth from today) while Boeing forecasts 16.15 RPKs (4.9% annual growth).

The main changes from last year’s forecasts are:

  • Both manufacturers have increased their passenger aircraft forecast in ~1,200 a/c.
  • Both manufacturers have increased the volume (trn$) of the market in these 20 years, by about 300bn$ or 6.5%(excluding regional jets and freighters).

Some lines to retain from this type of forecasts:

  • Passenger world traffic (RPK) will continue to grow about 4.6% per year (4.9% according to Boeing). This is, doubling every ~15 years.
  • Today there are about 17,354 passenger aircraft around the world (according to Airbus; 17,350 in Boeing’s CMO), this number is about 500 a/c more than the year before (3% increase) and will more than double over the next 20 years to above 35,749 a/c in 2034 (over 37,990 as seen by Boeing, excluding regional jets).
  • Most deliveries will go to Asia-Pacific, 40% or 12,596 passenger aircraft (according to Airbus).
  • Domestic travel in China will be the largest traffic flow in 2034 with over 1,600bn RPK (according to Airbus (x 3.8 times more than today’s traffic), or 1,704bn RPK according to Boeing), or 11% of the World’s traffic.
  • About 13,400 aircraft will be retired to be replaced by more eco-efficient types.
GDP and traffic growth (source: Airbus 2015 GMF).

GDP and traffic growth (source: Airbus 2015 GMF).

As I do every year, I strongly recommend both documents (GMF and CMO) which provide a wealth of information of market dynamics.

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Daily cost of Boeing 787 fleet grounding? (number play)

I am following relatively closely the news related to the grounding of Boeing 787 world fleet due to the recent issues that 2 of the operating aircraft had in service. I was wondering how much could Boeing be penalised by this situation.

Then, a couple of days ago I started seeing estimates (up to 5bn$?!), so enjoying playing with numbers as I do, I wanted to make up my figures before reading the explanation I am looking for somewhere else. Let me share the number play with you.

I have read news pointing at a solution based on new batteries, which certification could extend until 2014! Well, hopefully it doesn’t take that long, but since we don’t know for how long the fleet is going to be grounded and we also don’t know what the final fix is going to be, what I am interested at this moment is in trying to guess the cost per day of the grounding of the fleet.

Let me explain the assumptions I am going to take and where do they come from:

  • aircraft grounded: 50 (Boeing deliveries).
  • average seating: 210-250 seats for -8 (a/c delivered) and 250-290 for -9 (seating numbers from Boeing; deliveries from Wikipedia).
  • revenue per passenger: here, instead of doing an extensive research, I based the calculation on a previous research made by Air Insight for a report about Air India potential claim for 787 delays (the article is from one year ago).
    • $234 per flight hour for first class (using a 75% load factor),
    • $136 per flight hour for business class (80%),
    • $67 per flight hour for economy class (85%).
  • seating per class: using the information from United as reported by SeatGuru for the
  • 787-8: 36 + 72 + 111 (1) (for a total of 219 pax).
  • flight hours per day: Air India was flying between 11 and 11.78 FH/day according to Air Insight. Ethiopian was said to be flying about 14 FH/day. I’ll take an average of 12 flight hours per day.

With all these assumptions, the daily cost of B787 grounded fleet is: ~12.3 millon dollars / day.

Partial results of the calculation are:

  • average revenue per flight hour, ~20,500$;
  • average daily revenue of a 787, ~245k$.

Taking into account that the fleet has been grounded for already 2 weeks, the cost so far is in excess of 170m$, not much compared to Boeing earnings (to be released today). But if the solution and certification process takes really until 2014, this cost would be in the order of 4.5bn$ (close to the 5bn$ figure pointed by Jefferies & Co. analyst).

Final remarks. Remember that this number play just tries to guess what is the revenue loss from not flying 787s. It doesn’t take into account the cost of fixing the problem, or whether the same routes are flown by other aircraft models and to what extent Boeing might or might not be penalised (in relation to revenue loss? profit loss?). This number play also does not take into account potential financial impact on further deliveries being postponed.

***

(1) Taking estimate of revenues and load factors from Air India and seating numbers from United already introduces some error.

Note: After completing this post, I saw the following similar estimate in Reuters published 2 weeks ago: 1.1m$ per day for a fleet of 17 a/c, the case of ANA.

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World commercial aircraft fleet: forecast vs. actual

Some weeks ago I made a comparison about Airbus and Boeing aircraft market forecasts. Last week I published a couple of posts about the evolution in the forecasted aircraft average size and on the accuracy of these market forecasts. For this, I looked for old issues of Boeing Current Market Outlook from as back as 1990.

The next step then it was obvious, I compiled the following graphic showing with the data available information over a 40-year span on:

  • The evolution of world commercial aircraft fleet year by year (blue line) from 1995 to 2011,
  • The forecasted world aircraft fleets by Boeing CMO (red line) from 2000 to 2031 (with some gap years). For 2015 to 2031 the forecast was made 20 years ahead; for 2010-13 it was made 15 years ahead; for 2005-2008, 10 years ahead and for 2000-2003, 5 years ahead.
  • The published 20-year aircraft market forecast year by year.

World commercial aircraft fleet: forecast vs. actual (data source: Boeing CMO).

As you can fleets, forecasted fleets and market fleets have all been increasing year by year. The compounded annual growth rate (CAGR) for each one has been:

  • Actual fleet growth: 3.73% from 1995 to 2011 (2.88% from 2000 to 2011).
  • Forecasted fleet growth: 3.55% from 2000 to 2031 (3.69% from 2000 to 2011).
  • 20-year market forecast: 5.07% from 1992 to 2012 (3.43% from 2001 to 2012).

It is interesting to see that in those years when there is both figures for actuals and forecasted fleets the figures are close (-3.3% average deviation) and so is the trend, though forecasted fleet was lower at the beginning of that period (-7.2% in 2000) and grew at a higher rate until almost matching the numbers in 2011 (+1.2%).

Even though, the 20-year market forecasts have grown at a higher rate than fleets, it is mainly because the first data that I could retrieve come from the economic crisis of the beginning of the 1990’s, when Boeing trimmed down its forecasts. From the 2000’s the figures for market forecast have grown at a similar rate than those of fleets. And so will be the growth of forecasted fleet from 2011 to 2031: 3.5%.

****

Notes:

  • 1990 CMO long-term market forecast is made for 15 years, not 20.
  • Forecast of fleet for the periods 2000-2003, 2005-2008 and 2010-2013 does not come from CMOs published 20 years before, but from 5, 10 and 15-year fleet forecasts included in the CMOs of 1996, 1997, 1998 and 1999.
  • Boeing does not publish 5, 10 and 15-year fleet forecasts anymore.
  • It would be interesting to have a per-segment graphic, however there is not consistent data to produce it for the same time span. Boeing changed singe-aisle cut-off seat size from 1999-2000, in 1996-1997 and 2008 didn’t report the split within twin-aisle, in 2008 it also didn’t report the split within single-aisle.

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