Wednesday, August 26, 2015

China/Asian Market 6,339 Airplanes By 2034

So Boeing says from its computer modeling programs. The next few question starts a twenty year long series of questions, only revealed with a month to month progression until 2034. Therefore, Winging It, proposes more questions, and a series of educated guesses for answers that may or may not happen, but will enlighten contemplation on the matter for the next 20 years. Five Questions and five long answers is the exercise.

1. Is 6,330 a realistic Boeing number?

Yes and no: However, Boeing had to seek a number dead center for its highest probability of outcome when contemplating twenty years of demand during a projection. It would be safe to assume natural global growth and demand will push the world's largest population base into needing air transportation in all forms. Boeing took into account market growth, fleet renewal requirements, and an over-all smoothing of economic conditions for its acquisition of multi-billion dollar fleets. The over-all demand for all its Boeing types happens to be a safe planning number and market constraint that the Boeing sales team will go after in the form of setting a goal of greater than 50% share of the market. Over-all it would like sales projecting 3,500 to 4,000 of its total number of 6,330 or about 55%-60% market share as a realistic goal during the next twenty years. The "no" answer to the above question is stemmed on fuel prices, economic conditions of world and regional economy with the absence of war.

2. What other influences are applied to the Boeing Asia Number?

Strangely enough all regions in the world are affected by airline competition and Boeing had to take into consideration those external factors in its Asian model. Note that the Middle East and China itself has made inroads into Australia affecting the Australian growth model. The appearance of the the 787, and now the A-350 change the dynamics of any region. BA recently announced a London to San Jose route invading American transcontinental, and then Atlantic ocean hooping routes. The two edge sward (You come here and I go back you) of region of hooping jets should be factored in with any region. 

A second factor is not singled out for Asia's aircraft demand for new aircraft. The used market is a fungible and flowing condition. China will need an instant infusion of used single aisle aircraft at times. The used market can supply the single aisle as the Max and NEO are delivered world wide, thus releasing used stock for use within the Asia region until it can place orders and receive new single aisle aircraft. Boeing has predicted 4,630 single aisle aircraft during the next twenty years. Many will be used purchases as immediate growth is realized and some will be new purchases. Asia region will trigger a robust used NG repurchasing flow within that 4,630 projection for single aisle aircraft. All things considered, 4 630 single aisle should rise in number as the 20 year mark approaches in real time. The MAX  NEO choice will be settled by the 3,000th purchase for the region.  

3. What new aircraft could influence the Boeing 20 year projection?

Engine technology, new materials, and innovation may alter the projection forward. If airplane makers master the materials used in single aisle aircraft, then that becomes the game changer. Boeing has studied the effects of going to a single aisle plastic body aircraft. It is not cost effective for the gains made on over-all single aisle aircraft performance. Boeing is looking towards an ultimate range of 5,000 miles for single aisle aircraft for replacing a 757 concept. However engine technology has not caught up with that bench mark nor has the cost of applying plastic body to a single aisle makes sense for what it would cost an airline customer when buying its aircraft seating under two hundred passengers.  

The combining of refinement of composite applications and engine performance will take the single aisle forward with its next leap. By midterm in 2025 these issues may has resolved, while projecting the single aisle forward, as the next game changer. By 2030 the single aisle will take on a load of orders matching global growth with inconceivable numbers and enjoying new iteration of single aisle types.

4. Could the Boeing Twenty Year Projection Have missed Something It Now Knows?

The answer succinctly is, YES! Boeing did not disclose its own plans within the projected number. Hinted at in question 3, Boeing is continuously and judiciously moving forward in a constant state. There is no reason, Boeing can stop from out gaining the competition on the development floor. There is also no reason Airbus will stop either. However, Boeing cannot project ideas and the affect of those ideas into its model. Improvement and innovation will skew the 20 year market, as it is currently missing from the model, and cannot be safely measured as a factor for its projections. Winging It will only assume the innovation in the next twenty years will have a measurable impact on the Asian market. Comac and Airbus cannot keep up with the vast Boeing engineering conglomerate at this time. It can only react as it has done in the last ten years. The A-350 was a Boeing 787 reaction which fell short of the Boeing "Moon Shot" concerning the 787 family.

5. What will Boeing's market share in Asia look like in 2034? 

A difficult answer as so many things are evolving during this period in aviation's history. However, an attempt at this answer would suggest Boeing made a strategic pivot in its goals centered on two key areas. One is the production floor. Two is the 787 implementation. Productivity had to at least match, but must eventually exceed its competitors. The why in all this is about the customer, and the cash flow for supporting the second part.

Customers much have a finite five year window for receiving aircraft into its fleets, according to the usual corporate planning window. When Boeing falls outside that delivery window, it is no longer in sync with its customers, and cannot not mount its most effective market campaigns. The customer has a need for competing with timely aircraft deliveries matching its own financial resources.

Boeing has a need for cash flows supporting its advances over its competitors from the delivery of aircraft. The 787 is funded by timely delivery, which has opened more opportunity for its own aircraft development from cash flows. Production is the key to maintaining its lead over competitors while supplying customers with aircraft quickly so they may sustain a lead over its own competitors.

Production flow is key to most everything happening on the market front. The 787 is part two of the vision for implementation of a "Moon Shot". Airbus cannot overcome the shot with half measures as it has taken with its A-350. It will be fifty years before it can mount any real response to the 787 happening. It will have to exceed any Boeing attempt of new aircraft by a twofold margin over Boeing, in order to duplicate what Boeing did. Boeing made commonality its theme from its old standalone typing of aircraft from the 1990's. No longer are aircraft from Boeing individual. They all have similar attributes which makes maintenance, flying and operational features alike. Something Airbus did in the 1990's which Boeing missed, but has now caught up. 

The market share for Boeing in Asia is substantial, as it has positioned itself with many achievements on its own accord matching the Asian market emergence well. Airbus has a hodgepodge WB family of aircraft with an awkward membership in the A-350-900 and the yet to be Built A-350-1000, while the A-380 has started to languish on the order book. Boeing could conceivably achieve a 60% market share across the types by 2025 in the Asia Region.