Airlines responding and adapting
Boeing factors a wide variety of market forces and influences into the long-term forecast that the company produces each year. At the broadest level, global economic growth is expected to average 3.2 percent over the next 20 years, fostering 5.0 percent annual growth in passenger traffic and 5.2 percent annual growth in cargo traffic.
In response to market pressures, airlines are deploying capacity more strategically to help boost yields and cover higher fuel expenses. Airlines are optimizing airplane utilization more closely to seasonal demand fluctuations, and passenger load factors remain near historic highs. The number of new-generation airplanes in the parked fleet remains low, indicating that airlines are shifting utilization to their most efficient assets. These activities are projected to help the global airline industry achieve a profitable year, despite below-average economic growth and oil prices that are likely to average in the triple digits for the full year-a scenario that would have seemed unbelievable just a decade ago.
The industry continuously adapts to varied market forces, including fuel price, economic growth and development, environmental regulation, infrastructure, market liberalization, airplane capabilities, other modes of transport, business models, and emerging markets. Each of these forces can have both positive and negative impacts on the industry. For example, on the negative side, rising fuel prices have become a major component of airline costs. On the positive side, the rise in fuel prices has prompted manufacturers to produce more fuel-efficient airplanes, such as the 787 and 737 MAX. High fuel costs have also encouraged airlines to explore cost-cutting opportunities and new sources of revenue to help offset the effects of fuel prices. Impacts such as these inform our analysis of aviation market developments.