Boeing raised its 20-year forecast for aircraft demand in China as economic growth and an expanding middle class spur travel in the world’s most-populous nation.
China will need 7,240 new planes valued at almost $1.1 trillion in the two decades through 2036, Boeing said Wednesday. That compares with its projections last September for 6,810 aircraft through 2035.
The upward revision for China comes despite rising trade tensions between the Asian nation and the U.S. and a volatile geopolitical environment in the Korean peninsula. China is “a critical market,” where long-term economic growth, a recovering air-cargo market and the expansion of Chinese airlines support a more optimistic forecast this year, according to Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.
“We believe the Chinese carriers will carry more and more passengers to and from China so that they will grow their market share and as a result their fleet will expand,” Tinseth said.
China has become the world’s biggest source of outbound travelers, prompting authorities to ramp up efforts to build new airports and expand existing ones, not only in top-tier cities like Beijing, but also regional economic centers such as Chengdu and Xi’an. China accounts for almost 11 percent of Boeing’s revenue, according to data compiled by Bloomberg.
Narrowbody airplanes will make up 5,420, or three-quarters of the total plane deliveries to China during the period, as full-service and discount carriers expand routes for both leisure and business travel, Boeing said.
In June, Boeing raised its global forecast by about 4 percent to 41,030 planes worth $6.1 trillion.
Boeing is in the race with Airbus to sell passenger jets to Chinese carriers, which are hitting the prime of their expansion. State-owned carrier China Southern Airlines Co. is seeking to grow its fleet to more than 1,000 by the end of this decade, from about 700 planes now, while HNA-backed Hainan Airlines Holding Co. is bringing in Boeing’s Dreamliner to help it launch non-stop flights from smaller Chinese cities to global destinations.
China itself is likely to join the race in the next 20 years to supply passenger jets, with Commercial Aircraft Corp. of China having conducted the maiden test flight for its C919 narrowbody jet in May. The company says it has racked up more than 600 orders from Chinese carriers and lessors.
The country will need 180 new cargo freighters, worth $60 billion, in the next 20 years because of a boom in e-commerce, with another 440 passenger jets converted to freighters in this period, according to Boeing’s estimates.
Tinseth refrained from forecasting Boeing’s share of the Chinese market in the next 20 years, but said it is big enough even for a third player besides Airbus and Boeing, especially for narrowbody aircraft.