crystal ball parking done here!lexvolo.com/wp-content/uploads/2013/07/gs1-peterson-aci... ·...

BOEING is a trademark of Boeing Management Company.

Copyright © 2008 Boeing. All rights reserved.

The statements contained herein are based on good faith assumptions and provided for general information purposes only.

These statements do not constitute an offer, promise, warranty or guarantee of performance Actual results may vary

depending on certain events or conditions. This document should not be used or relied upon for any purpose other than

that intended by Boeing.

Crystal Ball Parking Done Here! 2013 ACI-NA Economics & Finance, Human Capital & Business Information Technology Conference April 2013

Robert M. Peterson

Technical Fellow

Chief Analyst

COPYRIGHT © 2009 THE BOEING COMPANY

Agenda

The art and science of forecasting and planning

A look back

Current Market Outlook

A look forward


Forecasting – art or science?

or


Looking backwards through the crystal ball


Commercial Aviation in 1973

Airline regulation is the normal

Air travel is for business or luxury

Load factors are in the 50’s

Oil is less than $10/bbl

Twin-aisle aircraft (quads and tri-jets) represent the

future

US Security is focused on preventing hijackings to

Cuba

Enhanced safety is pre-eminent research topic

“Low cost carriers” is a gleam in Herb Kelleher’s eyes

US airlines dominate the world

NYC airports, ORD, DCA are congested


Commercial Aviation in 1993

Airline de-regulation is the normal

Air travel in US is mass market

Air travel is global


Oil is $20-$50/bbl

Twin engine aircraft (both single-aisle and twin-aisle)

represent the future

Security is un-focused

Enhanced safety is pre-eminent research topic

“Low cost carriers” are reality in the US and fantasy

in rest of world

US airline domination of the world is decaying rapidly

NYC airports, ORD, DCA are congested


US aviation since 2000 – Exogenous Factors

Dot com bust

9/11

SARS

Great Recession

Fuel Prices

Sequestration?

Boston Marathon?


US aviation since 2007 – Airlines

US airlines stabilizing after historic shocks

Capacity restraint is current behavior

Major airlines focusing on international over

domestic

Continued rationalization and concentration

of the airlines

New entrant airlines minimal


US aviation since 2007 – Airports

Airport capital sources morphing

Declining support from Aviation Trust Fund

Increased reliance on PFCs

Security issues driving change

Facilities

Human Resources

Increased sensitivity to economic efficiency


US Commercial Aviation in 2013

Airline de-regulation is the normal

Air travel in US is mass market

Growth has been meager over

last decade


Oil is $100/bbl with lots of volatility

Twin engine aircraft (both single-aisle and twin-aisle)

dominate the future

Security is challenging and highly focused

Safety Improvements become more challenging



“Low cost carriers” are reality

throughout the world

Alliances dominate the

international marketplace

NextGen is finally happening, albeit slowly

Air Travel is a global industry

NYC airports, LAX, ATL, DCA are congested

Climate Change is major issue

Industry is aligned in aspirational goals


Looking to the future

Current

Market

Outlook


20-year forecast: strong long-term growth

3.2% World

economy (GDP)

5.0% Airline traffic

(RPK)

5.2% Cargo traffic (RTK)

2011 to 2031

Number of airline

passengers 4.0%


Air travel growth has been met by increased frequencies and nonstops

0.5

1.0

1.5

2.0

2.5

Frequency Growth

Nonstop Markets

Average Airplane Size

Air Travel Growth

August OAG

World Index 1992=1.00

All routes


North American air travel growth varies by market

0 500 1,000 1,500

Within North America

Europe

China

Central America

South America

Northeast Asia

Middle East

Southeast Asia

Oceania

Southwest Asia

Africa

RPKs (billions)

2011 traffic Added traffic 2012 - 2031

Annual growth %

North America

Average Growth:

2.8%

North America

GDP Growth:

2.6%

2.2%

3.8%

6.4%

4.4%

6.0%

2.2%

6.4%

5.8%

4.3%

7.9%

6.0%


North America airlines will need 7,530 new airplanes valued at $760 billion

Airplane deliveries: 7,290 2012 - 2031

Market value: $820 billion 2012 - 2031

890 regional jets

12%

5,040 single-aisle

69%

1,320 twin-aisle

18%

40 large 1%

0

1,000

2,000

3,000

4,000

5,000

6,000

0

100

200

300

400

500

$30B regional jets

4%

$440B single-aisle

54%

$340B twin-aisle

41%

$10B large 1%


70 percent of North America deliveries will be replacements

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Units

6,650

8,830

2011

1,540

Retained fleet

5,110

Replacement

70%

7,290

2031

2,180

Growth

30%


North America’s changing market share, 1990–2011


North American airlines business model shifts

Source: Boeing CMOs

LCC Charter/IT Broad Network Other Networks

ASMs 2001 2011

2031

73%

19%

62% 17% 61% 17%

22% 21% 6%

2%


0

400

800

1,200

1,600

2,000

0

1,000

2,000

3,000

4,000

5,000

6,000

North America forecast vs. backlog

7,290 New Airplane Deliveries 2012 to 2031

2,253 Airplane Backlog Includes unplaced lease content

2012

890 Regional Jets

12%

5,040 Single Aisle

69%

1,320 Twin Aisle

18%

40 Large

1%

Sources: Forecast – CMO 2012

Backlog – Ascend 6/12

61 Regional Jets

3%

1,811 Single Aisle

80%

374 Twin Aisle

17%

7 Large

<1%


What do I see in my crystal ball?


The near future (2013-2018)?

Energy costs

Are we supply constrained, or refining/

distribution system constrained?

Infrastructure

Capital source challenges

NextGen

It will happen SLOWLY

Climate Change/environment

Sustainability must be integrated into

everything we do

Geopolitics

Economy

US

Global

Fat tails or Black Swan events


What’s next - Airlines?

Airline alliances are not the end state

Cross border ownership rules are likely to relax

The RJ love affair is over

More rational assignment of aircraft to markets

LCC and legacy airline business models less distinct

Is there a new airline business model coming?


Commercial Aviation is experiencing a metamorphosis

1918-1935 Infancy

1935-1957 Adolescence

1957-1981 Jet Age – Maturity

1981-201x Deregulation

201x-20xx ????


What’s next-Airports?

Airports become true multi-modal nodes in the network

Air service must be economically justified

Hub concentration will remain

Local O-D traffic supports non stop service in only a few markets

Economic efficiency is imperative

Environmental sustainability is equal imperative


Advice to airports (provided with humility)

Know your market

Adapt

The future is less

certain than it has been

Diversify

Destinations

Clients/partners

Workforce



NextGen is still being implemented

Satellite Based Navigation is

standard

Oil is $200/bbl with lots of volatility

Aviation biofuels make up a significant

fraction of the supply

“Open Skies” are the worldwide normal

NYC Airports, DCA, LAX still congested


US Commercial Aviation in 2033 - continued

Environmental Issues are “front

and center”

Aviation leads in global

standards

Financiers will be excited by a new

and different airline business model

But, LCCs and Network carriers

will still be prevalent



Airplanes will still look the same

But will be more efficient than

today

Non-stop to anywhere capability

Hubs will still represent foundation of air travel

High Speed Rail is not a replacement for air travel



There will be a “surprise” for all

of us

Yet, many of the issues-du-jour

will be similar to today

Uncertainty and volatility will still

be challenges to forecasters and

planners

Those of us still working will

have plenty to do!

Cracks and blemishes in my

crystal ball


Clouds in our crystal ball

Energy

Climate

Change

Governance

Geopolitics Resources

Human

Capital


Final comments

Is Commercial Aviation in the U.S. a mature industry?

Or is the industry undergoing another metamorphosis?

What are the surprises in the next two decades?

BOEING is a trademark of Boeing Management Company.

Copyright © 2008 Boeing. All rights reserved.

The statements contained herein are based on good faith assumptions and provided for general information purposes only.

These statements do not constitute an offer, promise, warranty or guarantee of performance Actual results may vary

depending on certain events or conditions. This document should not be used or relied upon for any purpose other than

that intended by Boeing.

“A forecaster is like a

cross-eyed javelin thrower:

they don’t win many

accuracy contests, but they

keep the crowd’s attention." ~Anonymous


The next Current Market Outlook

The 2013 version of the CMO will

be published on our website on or

about July 5, 2013

http://www.boeing.com/commercial/cmo/index.html

crystal ball parking done here!lexvolo.com/wp-content/uploads/2013/07/gs1-peterson-aci... ·...

Documents