Randy's Journal: Archives

13 October 2005

China and the next 20 years

I recently returned from almost two weeks in China. And as always when I travel, I got to talk with a lot of people about the aviation industry. While we were there, my colleague Randy Tinseth and I presented the 20 year airplane forecast for the China market.

Since our Chinese language capabilities are next to non-existent, our colleague from the Boeing Beijing office, Marianne Wu, translated for us at many of our events. We began in Beijing for the Aviation Expo China 2005, followed by a number of events in Shanghai, Guangzhou, and Shenzhen. Then we returned to Beijing to speak at the 2nd Annual China Aviation Conference.

One of the key points we made is that China's incredible economic growth will transform that region into the fastest growing air travel market in the world. Because of this, we're projecting that during the next 20 years China will remain the largest market for new commercial airplane deliveries outside of the United States.

As a matter of fact, we're forecasting that the commercial airplane fleet in China will nearly quadruple! China will need more than 2,600 new airplanes between now and 2024. As part of that growth, we think China's fleet mix will shift a bit over the next 20 years: regional jets and twin-aisle aircraft will increase their proportions, while 747-size and larger airplanes will decrease theirs.

The reason for this is simple. We've seen this trend elsewhere: increased frequencies and nonstops will be flown on smaller airplanes. And that trend will continue.

Both the domestic and international airlines of China will be expanding their networks. And more than 60% of the airplanes needed for international travel will be in the 200-400 seat twin-aisle category. Boeing has the perfect combination of airplanes to complement this in the 787 and 777.

These intermediate twin-aisle airplanes as well as single-aisles will be the fastest-growing market segments in China. On the other hand, the market for very large aircraft will be very small.

Let's break it down a bit. In Chinese domestic travel, almost 80% of the demand will be for single-aisle airplanes - a category in which the Next-Generation 737 is the most efficient, reliable, and lowest cost airplane. We see deliveries to Chinese airlines over the next 20 years of 293 regional jets (90 seats and below) and 1,678 other single-aisle airplanes. These airplanes will make up 47% of China's delivery dollars.

22% of China's deliveries will be intermediate-sized twin-aisles (568 airplanes). But those deliveries will amount to 44% of the delivery dollars over the next 20 years. 88% of China's delivery dollars will be from the single-aisle and twin-aisle segments combined.

Only 3% of deliveries (73 airplanes) will be of the 747-size and larger category. These airplanes make up the remaining 9% of the delivery dollars for China.

We covered a lot of facts and figures during the trip. But I know this won't be the last time we talk about (or visit) China. And by the way, the Chinese are doing their own airplanes forecasting now, and theirs closely aligns with what we've been saying.

As always, it was pleasure to visit. We saw a lot of enthusiasm in all of our sessions. In fact, I'm told we had one of the largest audiences of government officials ever in attendance at the CAAC (Civil Aviation Administration of China) presentation.

It's hard to believe, but my first trip to China was more than 20 years ago. It was back in 1984 during a 767 sales campaign. Like me, Boeing has a long history with China and its rapidly-growing aviation industry. We've been working together with China for 33 years in a mutually beneficial partnership. And I have a feeling that with the growing 787 program, it's sure to continue for many more years.