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Archive for August, 2015 – Boeing predicts nearly $1 Trillion airplane orders from China in 20 years

Boeing, China’s leading provider of commercial airplanes, projected a demand in the country for 6,330 new airplanes over the next 20 years. Boeing released its annual China Current Market Outlook (CMO) in Beijing, estimating the total value of those new airplanes at $950 billion.

“Despite the current volatility in China’s financial market, we see strong growth in the country’s aviation sector over the long term,” said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes. “Over the next 20 years, China’s commercial airplane fleet will nearly triple: from 2,570 airplanes in 2014 to 7,210 airplanes in 2034, with more than 70 percent of these deliveries accommodating growth.”

“China’s aviation market is incredibly dynamic, from its leading airlines to its startups and low-cost carriers,” said Ihssane Mounir, vice president of Sales and Marketing for Northeast Asia, Boeing Commercial Airplanes. “Boeing is committed to serve customers in the world’s largest airplane market by providing the most fuel-efficient airplanes and services to support their growth and profitability.”

As China becomes the world’s largest domestic air travel market, Boeing is forecasting demand for 4,630 single-aisle airplanes through 2034. This sector is driven by growth in new carriers and low-cost airlines in developing and emerging markets, as well as continuous expansion in established airlines. In fact, the efficiency and flexibility of single-aisle aircraft like the 737 helps Chinese carriers connect and stimulate growth along the Economic Belt as part of the One Belt, One Road Strategy. Tinseth said the Next-Generation 737-800 and new 737 MAX 8 – Boeing products at the heart of the single-aisle market – offer airlines the best fuel efficiency, reliability and capability.

China’s low-cost carriers are currently responsible for about 8 percent of single-aisle market demand, rising to 25-30 percent of demand by 2034, Tinseth noted. “The 737 MAX 200 will have the lowest fuel costs – 20 percent per seat – versus today’s most efficient single-aisle airplanes,” Tinseth said. “737 MAX fuel efficiency and the 737’s position as the industry’s most reliable airplane offer Chinese low-cost carriers competitive advantages as they grow new business.”

Boeing forecasts that the widebody segment will require 1,510 new airplanes, led by small and medium widebody 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.

“Enabled by China’s growing middle-class population, new visa policies and the underlying strength of its economic growth, this expansion is expected to continue, and in fact accelerate,” Tinseth said. “The 777, 787 and 747-8 are perfectly positioned to support Chinese airlines’ continued globalization.”

New Airplane Deliveries to China: 2015-2034
Airplane type Seats Total deliveries Dollar value
Regional jets 90 and below 190 $10B
Single-aisle 90-230 4,630 $490B
Small wide-body 200-300 810 $210B
Medium wide-body 300-400 650 $220B
Large wide-body 400 and above 50 $20B
Total ———– 6,330(16.6% of world total) $950(17% of world total) – Global economic fall may prove beneficial for some

There are many who will be benefitting from the sudden drop in the market globally. Taxi rides are more expensive than the Uber X. People who look to save money, their overall ride volume will go down. But the already ailing cab companies will have a tough time competing with their cheaper and more efficient services such as Uber. People who book in AirBnb and are looking at saving money on vacations will gain by not booking in expensive hotels.

The markets in The US claim that they are stronger economically so there are less chances of a meltdown. The US banking system is stronger and consumers are less in debt they feel since the last decade. The hotel and restaurant industries are busy and scrambling for workers as tourists and local families treat themselves, pouring new earnings into the region.

Jobs are booming, with companies adding 48,200 workers through July, a pace unseen since 1998. San Diego gets the bulk of its tourism business from inside the U.S., but a sharp reduction in travel from China could zap a real growth area.

“The crash of rupee against dollar will not have much impact on overseas travel for Indians during the upcoming vacation season. The festive season starts during Navaratri and goes up-to Diwali, wherein most Indians prefer short haul vacations around Southeast Asia or Middle East, thus it is least likely to impact travel. Given the fact that there are still 5-6 weeks before the onset of the festive season, we can hope for the Rupee to recover in the meantime,” feels Manmeet Ahluwalia, Marketing Head, Expedia India

“Our recent Expedia Holiday Activity Report showed that if the dollar got expensive, Indian travelers wouldn’t cancel their bookings completely. Instead they would adopt different measures to keep within their holiday budget like- 63% would cut down on shopping, 38% would look at shifting to a more affordable destination, 32% would avoid places of interest that are ticketed, 32% would downgrade hotel star category while 25% would reduce vacation days.”

However, though there is a speck of optimism reflected by some with the market value dwindling, the global slump will form gaping cracks in the global economy. If a small country like Greece could threaten the European economy then it goes without saying what the fall of the world number two currency could have on the global economic scene.