In terms of new aircraft demand by region, Boyd predicts that from 2011 to 2020, North America will need 4,093 aircraft; Europe will need 3,973; and China will need 3,713.
Remarks Boyd, “There are about 18,000 airplanes in the fleet today globally; we think it’s going to grow to about 24,000 in the next ten years — 40 percent will be replacement of older airplanes and the remainder will be what we project to be growth. That’s 33 percent more airplanes in the sky [majority projected for China].”
With regard to aircraft type, Boyd says the 126-180 (basic narrow-body) seat category will see most of the growth. Another note to consider, comments Boyd, “In North America, we are going to see a decline in fleets during the next three years, because we will be seeing a lot of retirement of jets.
“Expansion of global alliances will allow pooling of equipment, ostensibly leading to better utilization of twin-aisle fleets, and less demand for new units.”
Also, adds Boyd, there is major uncertainty regarding the ultimate production of viable airliners in the 70-125 seat category. This could result in major up-shifts in unit capacity, and changes in airline operational strategies, he says.
In forecasting traffic for North America, Boyd predicts enplanements to be 1 to 1.5 percent up this year, and may be down in the coming year — mainly because capacity will drop a little bit. “What that means is higher fares; fuel prices will go up; labor will go up ... and the result of that is we will see traffic drop.
“The good news for U.S. carriers is, I think they can handle it. If we do go back into a major recession, virtually every U.S. carrier has capacity it can pull out.”
During the next five years, Boyd projects total passengers to increase by 9.2 percent (expansion will track at 2.4 to 2.7 percent through years 2012 to 2015), with most of the growth gravitating towards larger cities.
“It’s hubsite airports that are going to grow the most,” says Boyd. “We have stability, but we don’t see anything on the horizon that says we are going to see major growth.”
Michael Boyd says common wisdom on airlines is wrong