Boeing and Airbus are the world’s leading aircraft manufacturers. Both companies manufacture all types of aircrafts including; cargo planes, passenger aircrafts, military, and other aerospace machinery. The companies have their global market forecasts for their products. Aircraft companies make market forecasts and compare with the current market outlook in order to cater for the air travel demand that exists in the industry. In addition, this helps them estimate the air transport market demand over the coming years. This article looks at the global market forecast of Airbus for the next 20 years and the current market outlook of the Boeing Company.
Airbus Global Market Forecast
Airbus’ Global Market Forecast for 2014-2033 provides a view of the air transport sector’s evolution, accounting for factors such as trade and tourism, oil prices, environmental issues, innovation, and competition. The methods used in the forecast involve analyzing the current market growth and making estimates for the next two decades (John, 2013). This gives the company an overview of what the current market will look like in the year 2033. On the contrary, the forecast takes into account the factors that influence growth of the aircraft industry. Through this analysis, the company can create an estimate of these factors and how they will influence the industry in the future. This forecast concentrates on the Middle East region.
Factors that Airbus employ to estimate the demand for air travel growth include; economic growth of certain regions, increasing urbanization, expanding middle class and the rise in migration, tourism, and international students. The economic growth of countries is essential for the growth of the aircraft market. Regions with the highest economic growth rates are termed as the potential markets. However, those with low rates of economic growth are not potential markets. The developed countries are the major aircraft buyers (Hill, 2012). This helps the manufacturer to estimate the types of aircraft to manufacture for the various regions depending on their buying ability. Increasing urbanization is also an essential factor for consideration. This helps the company to estimate the domestic aircrafts types that will be in demand in the market. If there is increased urbanization, then this means an increase in the number of airports, thus the need for aircrafts. By estimating the rate of urbanization in a certain region, then the demand and supply estimates can be made (Aswathappa, 2010).
The expanding middle class is also a factor for consideration. In the next 20 years, the forecast estimates that the middle class will represent 33% of the world’s population from the current 33%. The middle-class population is estimated to grow four times in Asia (John, 2013). This projection shows that more people will have the need for the air travel. This, therefore, shows that more aircrafts will be required by the year 2033. On the other hand, the international tourist arrivals are estimated to reach 1.1 billion in the year 2030. This factor influences the demand curve for the aircraft global market.
Boeing’s current market outlook
The current market outlook for the Boeing manufacturer looks beyond the short-term shocks in addressing the underlying trends in the aircraft industry. The methodology used in this forecast is the analysis of the factors that influence the growth of the market. These factors include; gross domestic product (GDP) development, population, and labor force composition, international trade, emerging technology, business model innovation, travel attractiveness, industry competitiveness and domestic airline regulations. These factors influence the demand curves of the market.
In the Pacific, Asia, the GDP growth was 4.8 in 2013. This was driven by the fast growth of the region, emerging economies and mature economies that had recovered from the global recession. Passenger traffic grew to 3.9% contrary to the yearly growth of 3.7%. Despite the hike in oil prices, the Asian airline realized a profit of 3.0 billion dollars and the forecast for the year 2014 were at $3.7 billion. Continued economic growth is expected in the region over the next 20 years. According to the forecast, the GDP growth is approximated at 4.4% annually. On the other hand, more than 100 million passengers are projected to enter the market every year (Malaval, 2013). To accommodate this growing demand, the region will need to acquire more airplanes.
The Boeing Company, therefore, focuses on increasing the production of aircrafts for this region. The forecast estimates that the fleet will be three times larger than the current one (Vasigh, 2012). Fast-growing LCCs and rapid traffic growth within the Asia Pacific region show the need for 9,540 single-aisle airplanes. This market is expected to grow by 15 percent as it is today to 24 percent in the year 2033. Network carriers, the mainstay of international long-haul air transportation, will assist in driving the demand for 3,570 wide-body airplanes. Air cargo also plays a significant role in transporting goods over the difficult terrain and large stretches of the ocean. Many of the world’s largest cargo operators are located in Asia. The region’s air cargo is projected to grow by 5.5% per year.
Airbus and Boeing industries formulate the 20-year forecast by carrying out a survey of the different regions of the world. Through a thorough analysis of the market, the survey can approximate the state of the different factors that influence the growth, demand and supply in the market. This data is then used to create a general estimate on how the current market would look like in the next 20 years. Thus, they can formulate strategies of aircraft manufacture to feed the future demands in the air travel industry.
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