Developing markets buoy Boeing's confidence

Boeing projects airlines in emerging markets, such as the Middle East, will drive demand. Photo: Flydubai 737-800. Courtesy, Boeing.

Boeing, encouraged by the strength of developing markets, is sticking with its bullish aircraft demand forecast despite the uncertain nature of the economic recovery, Commercial Airplanes Marketing Director Drew Magill said Wednesday.

Speaking to the Gabelli Annual Aircraft Supplier Conference in New York, available via webcast, Magill said Boeing is contending with a situation in which "we're seeing different growth rates in different regions." The developed economies of the US, EU and Japan "are struggling" and won't return to 2008 levels of GDP growth until "the end of 2011 or 2012," he said.

But emerging markets are experiencing strong air traffic growth and rising consumer spending, giving Boeing confidence that its July forecast of demand for 30,900 new commercial aircraft valued at $3.6 trillion over the next two decades is solid (ATW Daily News, July 16). "This is a slower recovery than we've seen before, but outside the US, EU and Japan, it's actually expansionary," Magill explained.

He noted that airlines with which Boeing speaks are expressing an interest in fuel efficient aircraft and standardized fleets. "Airlines want to keep things simple," he said. They also are "placing a premium on flexibility"—desiring aircraft that can be easily moved between long-haul and shorter-haul operations.

Magill projected that RPKs globally should return to 2008 levels by the end of this year. By 2014, air traffic will resume its "original growth trend" of around 5.3% average annual expansion, he predicted. Regarding airfreight traffic, he said, "It's probably going to be late 2011 or 2012 before air cargo is back to its [2007] peak."