BOEING COMMERCIAL AIRPLANES Marketing July …Overview 5 OUTLOOK CONTENT The Boeing Current Market...

B O E I N G C O M M E R C I A L A I R P L A N E S

Marketing July 2002

1

Overview 2 Current Market Outlook 2002

P U R P O S E

Every year, Boeing publishes its latest assessment of the demand for worldair travel. This assessment estimates the jet airplane capacity to meet theprojected growth in travel demand, plus the replacement market for olderin-service airplanes. This web site may be referenced as the Boeing worldoutlook for the future of commercial airplanes.

Boeing recently announced plans to focus product-development efforts on a new, high-speed airplane. As Current Market Outlook 2002 ispublished, the technical parameters of this offering are not yet fully defined,so an explicit forecast for this airplane is not included in this Outlook.

The underlying demandfor this airplane, however, isdocumented. That is, passengersrequire more frequent nonstopservice to more city pairs. They want to go, when theywant to go, directly to theirdestinations. This fundamentalremains unchanged.

The 2002 Current Market Outlook can also be found on the Internet at:http://www.boeing.com/commercial/cmo

For more information about the Outlook, contact:Tim Meskill, DirectorMarket AnalysisBoeing Commercial AirplanesP.O. Box 3707, MC 21-28Seattle, Washington 98124-2207 USATelephone: 206-766-2503

O V E R V I E W

Overview 3

E X E C U T I V E O V E R V I E W

The airline industry is in the midst of a dramatic short-term cycle. Even before the terrorism events of September 11, the largest worldeconomic slowdown in a decade was negatively impacting air travel and airline profitability.

In 2001, world airline traffic fell by 4%, and the first half of 2002remains at negative growth levels. World airline losses in 2001 far surpassedany of the losses during the Gulf War era of the early 1990s.

Airlines and passengers are experiencing increased security costsresulting from September 11, especially in the United States. Yet, basicairline industry dynamics have not changed.

The globalization of world economies and societies continues. Overthe 20-year Current Market Outlook period, increasing numbers of peoplewill travel to visit friends and relatives, to transact business, and to enjoyleisure and educational opportunities not available close to home.

AIRLINE TRENDS CONTINUE TO UNFOLD. The underlying trends mentioned inprevious Current Market Outlooks are still unfolding. Passengers want to travelas quickly as possible to theirfinal destination, and airlines,unfettered by regulation, areresponding. Governments aroundthe world are reducing theirregulatory roles in the airlineindustry.

When deregulationoccurs, competition increasesamong airlines to open newnonstop routes and to addfrequencies, thus attractingpassengers by giving them agreater choice of f lights. Therise of the “low-cost” carriers is not just because of their lowfares — in many cases they servesecondary airports withfrequent, nonstop service.

The continued pressure ofcompetition forces airlines to find new ways to lower costs. The rapidgrowth of Internet ticketing is enabling airlines to cut distribution costswhile giving passengers greater visibility of pricing and routing choices.Alliances allow airlines to expand their networks, provide economies ofscale in combined operations such as ticketing and maintenance, andultimately provide worldwide “seamless” travel to consumers.

Current Market Outlook 2002

20-Year Outlook—Airplanes

Major projections for the 20-year period 2002 to 2021 are as follows:

Worldwide economic growth will average 2.9% per year.

Passenger traffic growth will average 4.9% per year.

Cargo traffic growth will average 6.4% per year.

Worldwide demand for commercial airplanes, 2002–2021

Economic and traffic growth, 2002–2021

The world fleet will grow to 32,495 passenger and cargo jets in 2021.The composition of the world fleet in 2021 will be

17% smaller regional jets. 22% intermediate-size airplanes.

57% single-aisle airplanes. 4% 747-size or larger airplanes.

Total market potential is 23,930 new commercial airplanes worth $1.8 trillion in 2001 US dollars. Airlines will take delivery of

4,240 smaller regional jets. 4,980 intermediate-size airplanes.

13,765 single-aisle airplanes. 945 747-size or larger airplanes.

Overview 4

AIR TRAVEL WILL OUTPACE ECONOMIC GROWTH. During the next 20 years, air travel will grow about two percentage points faster than economies will grow.This additional growth will be stimulated by lower fares, growing world trade, and airline network improvements such as increased frequencies and more direct service.

World RPKs are expected to grow at 4.9%, with regional-flow forecastsvarying from 2% to 9% growth. Europe and North America are matureeconomies with lower growthrates, although they willcontinue to take the mostairplane deliveries. Asia-Pacifictraffic will grow above the worldaverage, and its market share ofworld RPKs will increase from14% to 19% over the next twodecades. Latin America willincrease its market share from2% to 4% because of a high 7.9%traffic growth rate.

WORLD FLEET WILL MORE THAN

DOUBLE. The world fleet willmore than double over the forecast period to 32,495 airplanes. The Boeingforecast is based on traffic growth continuing to be met with more point-to-pointflights and additional frequencies in existing city pair markets.

For airlines to accommodate growth, the share of 747 and largerairplanes will fall from 7% to 4%, whereas the percentage of intermediate-sizeairplanes will increase from 18% to 22%. Intermediate-size airplanes allowairlines to f ly the increased frequencies and additional city pairs requested bypassengers. For example, new nonstops announced in 2001 on Atlantic routessave between 14% and 19% of the travel time it would have taken on the bestavailable one-stop or connecting flight.

Almost three-quarters of the f leet in 2021 will be single-aisle jets. Theshare of smaller regional jets will increase from 10% to 17% of the world f leetduring the next 20 years. Throughout the world, airlines will use regional jetsfor hub feeding, taking traffic from hubs, hub bypass, point-to-point services,nonstop service on thin routes, turboprop replacement, and as a mainline jetcomplement, especially in off-peak hours.


Overview 5

O U T L O O K C O N T E N T

The Boeing Current Market Outlook is organized in four major sections:State of the Industry, Traffic and Economics, Demand for CommercialAirplanes, and data Appendices.

STATE OF THE INDUSTRY discusses the current short-term business cycle,which has been one of the most volatile in air travel history. The sectionconsiders the difference between short-term cycles and long-term trends.

TRAFFIC AND ECONOMICS presents the Boeing 20-year outlook for the demandfor air travel. This demand is influenced by economic factors including GDPgrowth, international trade, and airline fares. Also important are the serviceimprovements offered by airlinesas they increase flight frequencieson existing city pairs and add new,often nonstop, destinations.

DEMAND FOR COMMERCIAL

AIRPLANES details the Boeing 20-year outlook for commercialairplanes. Airlines purchaseairplanes to serve increasedpassenger demand for air travel, to replace retired airplanes, and to rationalize their fleets insupport of network developmentand cost-containment goals.

APPENDICES provide detailed data on the traffic and airplane demandforecasts, including deliveries, retirements, fleet mix, and air travel by region.


State of the Industry 6 Current Market Outlook 2002

A I R L I N E P R O F I TA B I L I T Y

Following six years of profitability, the airline industry experienced majorfinancial losses in 2001. Although airlines anticipated modestly slowingtraffic growth in 2001, offset somewhat by easing fuel prices, they hopedrestrained capacity expansion would lead to satisfactory yields.

That forecast began tounravel even before 2000 endedas the information-technologysector plunged, and its high-yield business travelers becamescarce.

By 2001, Japan was in arecession, and Europe and theUnited States were weakening.By May 2001, for example,system traffic of US airlines andinternational traffic of majorEuropean and Asian carriers allshowed negative growthcompared to May 2000.

On average, year-to-datetraffic for the world throughAugust 2001 was only up 1.3%from the prior year.

Total airline industry lossin 2001 was almost $12 billion,far surpassing any of the lossesduring the early 1990s Gulf Warand recession period.

World Air Traffic Plummeted in 2001Major airline traffic growth, monthly percentage of change over prior year

Source: ROM Associates

–25

–20

–15

–10

–5

0

5

10

15

2002200120001999JDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ

S TAT E O F T H E I N D U S T RY

–12

–8

–4

0

4

8

12

–12

–8

–4

0

4

8

12

2001199519891983

World Airline Profitability DeclinedNet profit in billions US$

Percentage of revenueNet result

Source: International Civil Aviation Organization

Percentage of revenue

State of the Industry 7

D E C L I N E I N T R A F F I C

Cycles are a regular part of the industry. However, annual negative trafficgrowth has been experienced only twice in all of modern aviation history — in 2001 and in 1991. Annual traffic for 2001 fell 4% from annual 2000.

Although 1991 showed negative growth, the Gulf War started at thebeginning of the year, whereas the events of 2001 were near the end — thusmasking the magnitude of the 2001 events when calendar years are considered.

The exogenous shock of the terrorist attacks resulted in the shutdown of US airspace and a decline in world airline traffic that was unprecedented.The lowest month for US system traffic following the Gulf War was –9.8%,versus –32.5% for September2001.

ECONOMY AND EVENTS OF

SEPTEMBER 11 IMPACT THE

WORLD. All regions of the worldfelt the impact of economicslowdown and the events ofSeptember 11. The Japaneseeconomy was in recession,Europe was weak, South Americaexperienced problems, and theUnited States entered recessionby the end of the year.

Even before September 11,excess capacity on the NorthAtlantic had contributed tofalling traffic and loads. Thetraffic f lows with double-digitdeclines included domesticUnited States, North Atlantic,Pacific, and to a lesser degreeUnited States–Latin America.


Traffic Growth Is CyclicalWorld RPKs, percentage of change from previous year

Percentage of change Pre-Sept 11 Post-Sept 11

–12

–8

–4

0

4

8

12

2001199619911986

Traffic Growth Slowed WorldwideBy carrier domicile, RPK index (1995 = 100)

100

120

140

160 AsiaEuropeUS

2001200019991998199719961995


C A PA C I T Y R E D U C T I O N

Before September 11, airlines were managing capacity in the good times of 2000 and even as the world economic slowdown unfolded in 2001.

After the initial shock of September 11, RPKs fell faster than ASKs,and load factor fell. However, by spring 2002, airlines werekeeping capacity constrained,allowing load factor to rise.

Historically, airlines willkeep capacity in check untilloads recover and then begin to raise fares — a strategy justbeginning to play out in thisdownturn.


First Traffic Fell; Then Airlines Reined in CapacityMajor world markets, monthly percentage of change over prior year

2000 2001 2002–25

–20

–15

–10

–5

0

5

10

15 ASKRPK

MFJDNOSAJJMAMFJDNOSAJJMAMFJ

Load Factor Fell in 2001By carrier domicile, percentage

65

67

69

71

73

75 AsiaEuropeUS

2001200019991998199719961995


C Y C L E A N D F O R E C A S T

The major driver of long-term air travel growth is economic growth.International trade, airline service improvements, and declining faresexplain additional portions of traffic expansion.

In the short-term, consumer confidence and business profits can bestrong influences on air travel demand. Air travel shares commonalities withdurable goods such as computers or cars. Visits to friends and relatives,vacations, and even business trips can be put off when income is short orinsecure.

EXTRA COST OF SECURITY AFFECTS AIR TRAVEL. After September 11, fearand “hassle” factors such as lines at security checkpoints distorted the morenormal relationship between economic variables and air travel.

Although terrorism does not permanently depress travel becausesecurity responses make future incidents increasingly difficult and unlikely,higher security costs cause a onetime, permanent reduction in the demandfor air travel.

Some time in 2003, travel should resume the growth path it leftduring the year 2001 economic slowdown. The hiatus in travel due to fear and the recession should beover. However, travel will notrecover to the long-term averagegrowth trend. It will recover tosome parallel trend, displaceddownward by the extra cost ofsecurity in time and money.

Short-haul travel will bear a larger share of the burdenbecause security costs are based on boardings and are alarger share of total costs forshorter trips.

In general, the impact onworld traffic of the added cost of security is about one-tenth of 1 percentannualized over the 20-year forecast period. This equates to 2 percent fewerworld RPKs in 2021 that there would have been without the events ofSeptember 11.

Important as the short-term cycle is in the present, in the long-termforecast the effect of short-term cycles is smoothed. The next sections of thisOutlook present the Boeing long-run assessment of the demand forcommercial airplanes.


Demand for Air Travel 10 Current Market Outlook 2002

E C O N O M I C S A N D T R A F F I C

World GDP is forecast to grow by 2.9% over the next 20 years. In mature economies, GDP growth will average between 2% and 3% peryear. By contrast, GDP growth in developing regions may average over 4%.

Mature economies rely on productivity gains, service industries, andconsumer markets for much of their gains, whereas emerging economies are characterized by expanding labor forces, increased manufacturing, and entry into global capital and trade markets.

China is forecast to havethe fastest growing GDP at5.9%, as it continues itssuccessful melding of a centrallyplanned economy with the worldmarket economy.

WORLD AIR TRAFFIC WILL

CONTINUE TO GROW. World airtraffic measured in RPKs willgrow 4.9% annually over the next20 years, or two percentagepoints more than GDP.

The majority of air trafficgrowth is explained by economicgrowth. International trade,airline service improvements,and declining fares explain additional portions of traffic expansion.

Northeast Asia, South America, and Europe have the largest growth of air traffic in excess of GDP. Europe will experience the continuingpositive effects of liberalization. South America will recover from presenteconomic slowdowns and will increase air traffic through liberalization,international trade, and tourist development. Japan and Korea currentlygenerate less air travel than their wealth would indicate and in the long termshould show more robust air travel rates.

Southwest Asia and Africa GDP and traffic have historically lagged the world. Both regions are forecast to grow above the world average overthe next 20 years, as their economies and airline industries modernize.

GDP and RPK Growth Varies by DomicileAnnual growth, 2002–2021

0 2 4 6 8

RPKGDP

China

Southwest Asia

Central America

Southeast Asia

Middle East

CIS Region

Africa

South America

North America

Oceania

Europe

Northeast Asia

WORLD

Percentage

D E M A N D F O R A I R T R A V E L

Demand for Air Travel 11

I M PA C T O F B A S E Y E A R O N T H E F O R E C A S T

To be consistent with the Boeing and industry standard of a 20-year forecastperiod, this Outlook will use 2001 as the base year. However, the negativetraffic growth during 2001 creates a paradox for the long-term trafficforecast.

Using 2001 as the baseyear, the annualized 20-yeargrowth rate for the world for2002 to 2021 is 4.9%. If 2000 isused as a base, the annualized 21-year growth rate through2021 is 4.5%. These ratescompare to a 4.7% 20-yeargrowth rate published in CMO2001 for the period 2001 to 2020 with 2000 as a base.

When 2000 is used as a base, the long-term outlook has fallen by two-tenths of a percentage point.

New, permanent security costs resulting from September 11 are passedon to the air traveler early in the forecast period as higher fares, resulting inlower travel throughout the 20-year period. Also, recalibrationof the model for long-term GDPhas resulted in a slight decreasein the 20-year growth rate.

Flows involving NorthAmerica and the Middle Eastare most impacted bySeptember 11. Hard hit were theAtlantic and Pacific, especiallyflights from Japan.


Annual Traffic Growth Rate

Outlook 2001Base Year Outlook 2002

4.7%2000 4.5%

2001 4.9%

The Base Year Makes a DifferenceAnnual growth in RPKs, 2002–2021 and 2001–2021

0 2 4 6 8

20 year

21 year

China

Southwest Asia

Central America

Southeast Asia

Middle East

CIS Region

Africa

South America

North America

Oceania

Europe

Northeast Asia

WORLD

Percentage

Demand for Air Travel 12

T R A F F I C G R O W T H B Y R E G I O N

Two effects determine total air travel growth for a country. The first andmore significant effect is economic growth. The second is the value createdas airlines reduce prices and increase service offerings and as internationaltrade grows.

Over time, this second effect causes the share of GDP that a countrydevotes to air travel to increase. The share of GDP spent on air travel bycountries with high initial travel shares has tended to grow more slowly than the world average. These countries have maturing air travel markets.

In contrast, GDP share spent on air travel by countries with lowhistorical travel shares has tended to rise faster than the world average. The RPK forecast, thus, shows considerable variation among regional f lows.

Because of its maturity, the North America market share of world trafficwill decline from 25% to 19%, as less-developed markets grow faster. Forexample, the market share of the combined segments of the Asia-Pacific region(China, Northeast Asia, and other Asia-Pacific) will increase from 14% to 19%.

The North Atlantic market will fall from 12% market share to 10%,and the South Atlantic (Europe–Latin America) will remain constant at 4%share. Europe will maintain a 13% market share.

Latin America, a smallregion with only 2% worldmarket share, will increaseshare to 4% because of a high7.9% traffic growth rate fueledby liberalization and increasedworld trade of South America.


Air Travel Growth Varies by RegionAdded traffic, 2002–2021

RPKs, billions

2001 traffic2002–2021

growth

3.5%

4.7

4.9

4.3

5.4

5.5

9.0

7.9

5.0

4.9

6.4

4.8

Annualgrowth, %

0 500 1,000 1,500 2,000

Africa–Europe

Northeast Asia

Europe–Latin America

North America–Latin America

Latin America

China

Transpacific

Europe–Asia

Other Asia-Pacific

North Atlantic

Europe

North America

T R A F F I C A N D F L E E T

Airlines purchase airplanes to f ly specific routes in response to trafficdemand. Route characteristics vary by region. Airlines need large numbersof single-aisle airplanes to f ly the many domestic short-haul routes withinNorth America and Europe.

Within Asia-Pacific, a far-flung region that stretches from NortheastAsia to New Zealand and across to India, a mix of single-aisle and twin-aisleairplanes is required. In the long-haul transoceanic markets, twin-aisleairplanes dominate the f leet.

SHORT-HAUL MARKETS DOMINATE DEPARTURES. Worldwide, more than 4,200 small and intermediate regional jets will be delivered by 2021.

Short-haul markets dominate the world’s departures, representing a dramatic 96% of the total.Domestic flying in Europe andNorth America alone willconstitute almost 40% of theworld’s added ASKs and willabsorb over two-thirds of thedeliveries of single-aisleairplanes.

ASIA-PACIFIC REQUIRES MAJOR

SHARE OF CAPACITY. A majorshare of capacity to be addedduring the 20-year forecastperiod involves travel within, to, and from the Asia-Pacific region.

By 2021, more than 70% of large airplanes will be serving Asianmarkets. Asian markets also comprise the bulk of intermediate twin-aisleflying, although the North Atlantic will be the largest discrete traffic f lowfor the midsize twin aisles.

0

500

1,000

1,500

2,000

2,500

Growth in Regional Traffic Shapes Fleet RequirementsASKs in billions

747 and larger

Twin-aisle

Single-aisle

Smaller regional jets

202120012021200120212001202120012021200120212001Asia–Europe Transpacific North Atlantic Europe Asia-Pacific North America

Demand for Commercial Airplanes 13 Current Market Outlook 2002

D E M A N D F O R C O M M E R C I A L A I R P L A N E S

Demand for Commercial Airplanes 14

N E T W O R K D E V E L O P M E N T S T R AT E G I E S

Airlines’ network development strategies influence their airplaneacquisition decisions. Airlines take into account government regulations,airplane capabilities and economics, passenger requirements, competitionfrom other airlines, alliances, and the maturity of an airline’s existingnetwork.

Over time, network development strategies have increasingly focusedon adding new nonstop services; boosting frequencies on existing routes;competing with other carriers on their routes; and building complementaryprimary, secondary, alliance, domestic, and gateway hub networks.

PASSENGERS WANT TO QUICKLY REACH THEIR DESTINATIONS. Passengers willavoid itineraries that require several hub connections and numerous segmentsto complete a journey. Wherepossible, airlines will providepassengers point-to-point serviceon busy routes. When this is noteconomically feasible, passengerswill prefer carriers who movethem over a single hub with one-stop connecting service to theirfinal destination.

These network strategiesgenerally demand that airlinesmaintain or reduce airplane sizeto provide frequent, nonstopservice. High-fare customers in particular are sensitive to convenientdeparture and arrival times. The value they perceive in more flight-timechoices outweighs the cost to airlines of offering the added flights.

AIRLINES COMPETE BY OFFERING FREQUENCIES. A second reason to offermore frequencies is their role as a primary form of nonprice competition.Whether fares are fixed by regulation, or are forced to similar competitivelevels under deregulation, in the long run they rarely provide a vehicle forairlines to differentiate themselves in the marketplace.

In the battle for market share and long-term profitability, competitorsalmost always match fare reductions. With prices matched, the battle formarket share takes place in the service arena, with frequency of servicebeing a deciding competitive factor.


Airlines Provide Passengers With More Frequencies and Airport PairsIndex (1980 = 100)

75

120

165

210

255

300

Airplane size in seats

Airport pairs

RPKs

Frequencygrowth

20001995199019851980


F L E E T G R O W T H

The world f leet is expected to more than double by 2021, with total f leetsize growing to 32,495 airplanes.

Over the 20-year forecast period, 6,705 airplanes will be retired from active commercial service and will be replaced. An additional 17,224airplanes will be needed to fill capacity demand.

NEW AIRPLANES CONTRIBUTE TO GROWTH AND REPLACEMENT. The tally of airplanes added and removed is a straightforward exercise. Defining thenumber of airplanes attributable to growth and those attributable toreplacement is not. The reason is that airplanes are not replaced jet-for-jet, but rather seat-for-seat.

The 6,705 airplanesremoved from the system will bereplaced by some airplanes ofequal size, but also by bothsmaller and larger airplanes.For example, an airline might“replace” its hushkitted 727-200s (156 seats) with 757-200s(201 seats). Only a portion ofeach 757-200 actually serves asreplacement; the restcontributes to growth.

Based upon an estimate ofthe amount of capacity removedfrom the world f leet, approximately one-fourth of the market for newcommercial jets can be thought of as replacement for older in-serviceairplanes, and the remaining three-quarters for accommodation of bothpassenger and cargo traffic growth.

About 56% of the f leet operating today is projected to still be inoperation 20 years from now.


The World Fleet Will More Than Double Over the Next 20 Years

Smaller regional jetsSingle-aisleTwin-aisle747 and larger

2021

2001

15,271airplanes

32,495airplanes

18%

22%7%

4%

17%

10%

65% 57%


A I R P L A N E R E P L A C E M E N T

Historically, new capacity is added as older airplanes pass through a series of replacement stages.

The first stage is lower utilization in response to increasingmaintenance downtime or increasing operating costs.

The second stage is often the sale of an airplane to another operatorwho has different utilization requirements. For example, a new owner maymodify the airplane for cargo use, or another airline may have a need for anolder airplane type to be compatible with the rest of their f leet. Governmentnoise regulations also influence airplane retirements.

AIRLINES ACCELERATED RETIREMENT OF OLDER AIRPLANES. The events ofSeptember 11 have introduced a distortion to the historical model. In responseto double-digit traffic declines,airlines accelerated retirementsof older airplanes and parkedsome newer ones.

Many of the newer parkedairplanes will return tocommercial service, but olderairplanes are being permanentlyremoved from commercialservice earlier than they wouldhave been pre-September 11.


Additions and Removals Impact the World FleetUnits

5,000

15,000

25,000

35,000

17,224 growth airplanes

6,705 replacements

8,566 retained fleet

15,271 retained fleet

20212001


N O I S E S TA N D A R D S

The International Civil Aviation Organization (ICAO) has put in place a new noise certification standard. This standard, known as Chapter 4, was formulated over several years with input from aircraft and enginemanufacturers, airlines, airports, and community groups.

The Chapter 4 standard, which enters into force January 1, 2006,requires that new transport airplane types be certified to noise levels thatare cumulatively 10 EPNdB (effective perceived noise, in decibels) below theold Chapter 3 standard, based on the three noise certification measuringpoints.

It is possible that some of the airplanes now certified to the Chapter 3 noise standard may face future operating restrictions in Europe.

The European Union has issued a directive that will allow operatingrestrictions to be placed on airplanes that do not have a 5 EPNdB cumulativemargin below the Chapter 3 standards. The directive also establishes rulesand procedures that must befollowed before an airport caninstitute restrictions.

The effect of the directiveremains unclear at this writing, as the number of airports that willinvoke restrictions is not known.



D E L I V E R I E S

The largest share of airplane deliveries are single aisle. The current world f leetof 11,500 single-aisle airplanes plus regional jets is expected to grow to 23,850airplanes by the year 2021. Airlines will use these smaller airplanes to offer more frequencies in domestic service and short-haul international f lights.

NEED FOR REGIONAL JETS WILL

INCREASE. The regional jet sharewill increase substantially. USregional airlines are operatingsmaller jets on new nonstopflights.

Regional jets extend thegeographic reach of Majorairline hubs, augment larger jetoperations in off-peak hours,replace Major airline larger jetson thin routes, and substitutefor prop flights. Europeancarriers also will operate largenumbers of regional jets, especially in hub bypass and point-to-point markets.

Although not at the high absolute numbers experienced in Europe andNorth America, other regions of the world also will be expanding their use ofregional jets over the next 20 years. For example, the share of Oceania’s f leetcomprising smaller regional jets will increase from 7% to 16%. In China, theshare will increase from 6% to 12%.

INTERMEDIATE-SIZE AIRPLANE MARKET WILL GROW THE FASTEST. Airlines willcontinue to augment their fleets of twin-aisle airplanes as well. Over half thedelivery dollars are intermediate twin-aisle and larger jets. These airplanes willserve fragmenting long-haul markets such as the Atlantic and Pacific, as well ashigher density shorter routes, such as those within Asia.

THE LARGE-AIRPLANE MARKET IS SMALL. The market for very large airplanes is small. Summing the projected requirements for 747-and-larger airplanes in allmajor travel markets reveals a total need for 944 airplanes over the next 20 years.

Within this size category, about 40% of the requirement — orapproximately 393 jets — is for passenger airplanes of the size of the 747-400.About one-quarter of the requirement is for freighters.

The market for airplanes larger than today’s 747-400 becomes significantonly during the second decade of this forecast. By the end of the forecast period,most intercontinental routes will have at least daily service, and traffic volumeswill support an airplane larger than the current 747.

The projected requirement for airplanes of 500 seats or greater, however, is estimated at only 334 passenger jets over the study period.


Single-Aisle Airplanes Dominate Future Deliveries2002–2021

Smaller regional jetsSingle-aisleTwin-aisle747 and larger

23,929airplanes

1.79 trilliondelivery dollars*

21%

12%4% 5%

41%

18%

57%

* In year 2001 dollars

42%


D E M A N D F O R F R E I G H T E R A I R P L A N E S

The freighter f leet will increase over the next 20 years from 1,775 to 3,078airplanes. Freighters as a share of the total airplane fleet will fall from 12%to 10% due to an increase in the size of the average freighter. Taking 1,228retirements into account, 2,531 airplanes will be added to the freighter f leetby 2021.

Widebody freighters, currently 39% of the f leet, will supply nearly60% of these additions and will end the period comprising 60% of the f leet.The shift toward widebodyfreighters will result in afleetwide increase in averagefreighter airplane payload. Themedium widebody fleet willmore than triple over the next20 years — the greatest change of any category.

MAJORITY OF FREIGHTER

ADDITIONS WILL BE MODIFIED

AIRPLANES. By 2021, it isanticipated that freighters of allsizes will provide as much as 44%of the world’s total air cargocapacity, a slight increase from today.

More than 70% of the more than 2,531 freighter f leet additions duringthe next 20 years, satisfying both market growth and replacement needs,will come from modified passenger and combi airplanes. Nearly half of theseconversions will be widebody conversions.

By 2021, 681 new production freighters will enter the f leet. Althoughnew aircraft will comprise a minority of the world freighter f leet by 2021,many airlines prefer the technical advantages, reliability, and fuel efficiencyof new aircraft.

Half of new freighter deliveries will be in the large category. The value of all the new freighters totals $116 billion in current US dollars.


Widebody Freighters Dominate the Future Fleet

Small (<30 tons)Medium standard-body (30–50 tons)Medium widebody (40–65 tons)Large (>65 tons)

2021

2001

1,775 freighters

3,078freighters

17%

26%

22%

29%

11%

39%

22% 34%

R E G I O N A L D E L I V E R I E S

The mix of airplane models and number of deliveries varies widely byregion. On the passenger side, North America, with its large number ofexperienced travelers and its need to replace an aging fleet, will require the most airplanes over the next 20 years.

Compared with other regions, a larger number of North Americandeliveries will be regional jets. In Europe, over 80% of deliveries will besingle-aisle airplanes and regional jets. Asia-Pacific will take deliveries of the most 747-and-largerairplanes.

The world’s airlines willadd 2,531 new and convertedfreighters by 2021. As describedin the Boeing World Air CargoForecast, factors such as airlinestrategies, retirement rates, and varying growth rates ofmajor trade flows and marketsegments will impact the sizesof new and converted freightersadded to each region.

For example, large US-based air express systems willadd many medium and largewidebody freighters for bothgrowth and replacementpurposes. Asia-Pacific andEuropean airlines will add many large long-haul freighters, especially new and converted 747s.

Demand for Commercial Airplanes 20 Current Market Outlook 2002

Passenger Airplane Deliveries Vary by RegionNumber of new airplanes, 2002–2021

747 and larger

Twin-aisle

Single-aisle

Smaller regional jets

0

2,000

4,000

6,000

8,000

Africa andMiddle East

LatinAmerica

Asia-Pacific* Europe North America

Freighter Deliveries Vary by RegionNumber of new and converted airplanes, 2002–2021

0

300

600

900

1,200

1,500 Large

Medium widebody

Medium standard-body

Small

Africa andMiddle East

LatinAmerica

Asia-Pacific*Europe North America

* Includes Southwest Asia

Appendices 21 Current Market Outlook 2002

A P P E N D I C E S

M A R K E T O U T L O O K R E G I O N S

Market Outlook regions have been formed to best illustrate major world traffic f lows. They do not always exactly match political or geographic regions.


W O R L D T R A F F I C B Y R E G I O N A L F L O W, 1 9 8 5 – 1 9 9 6 APPENDIX A

RPKs in billionsAfrica–AfricaAfrica–EuropeAfrica–Middle EastAfrica–North AmericaCentral America–Central AmericaCentral America–EuropeCentral America–North AmericaCentral America–South AmericaChina–ChinaChina–EuropeChina–North AmericaChina–Northeast AsiaChina–OceaniaChina–Southeast AsiaCIS Region–CIS RegionCIS Region–InternationalEurope–EuropeEurope–Middle EastEurope–North AmericaEurope–Northeast AsiaEurope–South AmericaEurope–Southeast AsiaEurope–Southwest AsiaMiddle East–Middle EastMiddle East–North AmericaMiddle East–Southeast AsiaMiddle East–Southwest AsiaNorth America–North AmericaNorth America–Northeast AsiaNorth America–OceaniaNorth America–South AmericaNorth America–Southeast AsiaNortheast Asia–Northeast AsiaNortheast Asia–OceaniaNortheast Asia–Southeast AsiaOceania–OceaniaOceania–South AmericaOceania–Southeast AsiaSouth America–South AmericaSoutheast Asia–Southeast AsiaSoutheast Asia–Southwest AsiaSouthwest Asia–Southwest AsiaRest of the WorldWorld total

198513.54043.0375.1561.220

12.82017.86843.3393.2878.4369.5777.8076.7543.0028.081

175.81415.863

170.04843.436

158.59917.02512.25026.60011.85917.6855.012

15.13614.505

470.63346.88011.00814.4608.013

32.2736.055

15.99818.6140.115

12.23329.47717.6655.658

10.4715.848

1573.158

199014.68947.7327.3941.298

14.30627.64763.7143.499

18.25416.92713.43410.9165.810

14.489224.24024.098

258.34641.512

230.68829.34722.30946.38617.47019.4626.560

10.98016.583

589.05595.16218.97219.61515.32450.01612.87932.51226.2410.688

24.28633.84129.8815.804

11.6027.534

2181.501

199514.77557.1786.4792.640

18.26744.19371.0974.271

56.62426.61121.63015.9989.234

23.03263.39533.918

306.83644.920

278.89546.55032.93065.88420.66620.71310.30920.58423.194

670.470121.51224.13535.88525.88667.40431.82344.33542.6710.641

33.06539.67053.8118.104

15.20511.776

2567.213

199615.33566.8976.9733.126

17.85847.50774.5804.595

61.15629.35224.14317.34310.67427.20050.76439.483

324.37447.897

296.43454.56137.21172.03223.35321.78911.25820.44223.762

721.958129.11124.82038.33925.98171.70835.32247.83244.5470.757

36.76942.24858.2238.873

16.11715.046

2747.755




199716.57875.2597.4904.599

18.40951.72076.5395.269

61.67932.40727.09418.03711.10228.53244.48942.595

347.57851.861

324.06158.38140.26281.48322.69722.37310.58120.83224.261

758.000139.99424.99643.01530.70575.38236.38350.70345.8080.756

38.93646.60061.1369.540

16.13015.449

2919.698

199817.34079.2488.1874.201

19.44056.73780.8356.608

62.46834.15729.67016.73811.43526.76438.70444.511

378.05554.869

351.57859.66546.26082.86824.35423.87112.45420.06125.934

781.491129.99325.06746.21728.54074.35325.32245.73446.5111.020

36.98951.95948.9099.588

15.77514.726

2999.208

199918.03488.3628.7604.407

21.38461.16286.4936.046

64.03037.47030.85717.50811.26327.20839.36342.063

406.06359.643

380.05560.55951.11889.91224.71925.30314.33321.58627.490

823.969137.40226.86145.43131.42277.10422.28446.64947.4411.275

41.61352.21850.37610.35515.69614.715

3170.003

200019.42299.4079.8114.416

23.95066.36193.9317.256

73.63440.09333.17119.43412.13029.33041.72543.325

440.57865.011

419.96163.58753.16295.75626.22727.83416.05323.96029.414

866.929140.15029.95047.24832.05079.03224.06648.51549.2441.282

46.19053.52353.65010.93516.01016.054

3393.770




200119.94796.22610.5964.615

23.01672.99793.4627.169

80.33540.17333.33718.42312.43431.67746.73243.542

446.30655.324

377.54555.82950.50495.94827.48627.13812.04022.85829.855

807.978114.22327.55444.79129.32680.21722.50247.78750.7211.185

47.57650.79355.95711.59116.61817.676

3262.009

201132.289

159.55115.2467.010

50.754103.221140.71012.497

214.67170.68757.76239.27117.32646.98075.15988.632

723.681103.808607.323118.67399.541

151.92849.63643.34823.49333.88450.401

1131.619221.27538.99589.79155.179

142.95640.70089.68964.5562.066

63.582135.623103.78319.26619.26627.073

5404.549

202151.224

245.34522.36510.05293.676

154.203215.64121.641

446.618114.729108.12172.26124.31075.486

117.822145.116

1117.759153.843876.474200.140166.542229.85486.94566.59433.96848.64280.836

1620.643347.40356.083

148.72389.517

279.12364.399

157.51083.9023.239

92.033257.774180.82334.58888.12542.439

8526.535

2002–2021 %/year

4.84.83.84.07.33.84.35.79.05.46.17.13.44.44.76.24.75.24.36.66.14.55.94.65.33.85.13.55.73.66.25.76.45.46.12.55.23.48.56.05.68.74.54.9


Year-end2001

Removedfrom

serviceYear-end

2021

Seat category*

Freighter

2002–2021new

deliveriesConverted

to freighter

Year-end2001

Removedfrom

serviceYear-end

2021

2002–2021new

deliveries

Single-aisleSmall and intermediateregional jets

90–120 and largeregional jets

121–170

171–240

1,505 4,238 384 5,359

2,380 3,018 1,960 3,438

5,441 7,883 2,856 10,468

1,092 2,764 502 3,354

Twin-aisleSmall 1,261 2,194 603 2,852Intermediate 1,042 2,424 484 2,982Large 775 727 538 964

Total passengerairplanes 13,496 23,248 7,327 29,417

Small 698 72 602 723 891Medium 688 260 388 817 1,377Large 389 349 238 310 810

Total freighterairplanes 1,775 681 1,228 1,850 3,078

Total 15,271 23,929 8,555 32,495

* Categories based on 36-/32-inch mixed-class configuration (includes freighter and combi airplanes in appropriate passenger category; the twin-aisle and large categories also show typical three-class configurations).

PA S S E N G E R A N D F R E I G H T E R F L E E T D E V E L O P M E N T APPENDIX B

2001 year-end 2021 year-end Seat category* Models Units Percent Units PercentSingle-aisle

Small andintermediateregional jets

F 28F 70Bac 1-11RJ70/RJ85;BAe 146-100/-200Regional jets fromBombardier,Embraer, and Fairchild

1,518 9.9 5,359 16.5

90–120 and large regional jets

727-100737-100/-200/-500/-600717-200DC-9MD-87F 100RJ100/BAe 146-300CaravelleConcordeA318Regional jets fromBombardier,Embraer, and Fairchild

2,760 18.1 3,500 10.8

121–170 737-300/-400/-700/-800727-200720A319/A320Trident-3MercureMD-81/-82/-83/-88/-90DC-8-10/-20

5,746 37.6 11,295 34.7

(Continued on next page)

W O R L D A I R L I N E F L E E T D I S T R I B U T I O N APPENDIX B



W O R L D A I R L I N E F L E E T D I S T R I B U T I O N ( C O N T I N U E D ) APPENDIX B

171–240 737-900757707-300B/CA321DC-8-30/-40/-50/-60/-70

1,475 9.7 3,700 11.4

Twin-aisle230–310(181–249)

767A300A310A330-200

1,494 9.8 3,845 11.8

311–399(250–368)

777-200/-300A330-300A340L-1011DC-10MD-11

1,253 8.2 3,370 10.4

Large 747A380

1,025 6.7 1,426 4.4747 and larger(>400)

Total 15,271 100.0 32,495 100.0


2001 year-end 2021 year-end Seat category* Models Units Percent Units Percent


D E L I V E RY D I S T R I B U T I O N , H I S T O RY 1 9 5 2 – 2 0 0 1 APPENDIX B

Models Percent Units Percent

Small and intermediateregional jets

F 28F 70Bac 1-11RJ70/RJ85;BAe 146-100/-200Regional jets fromBombardier,Embraer, and Fairchild

47.0 3.7 1,968 9.7


727-100737-100/-200/-500/ -600717-200DC-9MD-87F 100RJ100/Bae 146-300CaravelleConcorde

128.8 10.3 4,268 21.1

121–170 737-300/-400/-700/ -800727-200707-120/-220720A319/A320Trident-3MercureMD-81/-82/-83/-88/-90DC-8-10/-20

322.3 25.7 6,961 34.4

171–240 757707-300B/CA321DC-8-30/-40/-50/-60

155.1 12.4 2,439 12.0

2001 dollarsbillionsSeat category*

Single-aisle

(Continued on next page)


D E L I V E RY D I S T R I B U T I O N , H I S T O RY 1 9 5 2 – 2 0 0 1 APPENDIX B

( C O N T I N U E D )

Twin-aisle 230–310 (181–249)

767A300A310A330-200

179.0 14.3 1,715 8.5

311–399(250–368)

777-200/-300A330-300A340L-1011DC-10MD-11

213.9 17.0 1,598 7.9

Large747 and larger (>400) 747 208.5 16.6 1,292 6.4

Total 1,254.6 100.0 20,241 100.0


Models Percent Units Percent2001 dollars

billionsSeat category*


D E L I V E RY D I S T R I B U T I O N , F U T U R E 2 0 0 2 – 2 0 2 1 APPENDIX B

2001 dollarsbillionsSeat category* Models Percent Units Percent

Single-aisleSmall and intermediateregional jets

90.7 5.1 4,238 17.7RJ70/RJ85Regional jets fromBombardier,Embraer, andFairchild


107.0 6.0 3,018 12.6737-600717-200A318RJ100Regional jets fromBombardier,Embraer, andFairchild

121–170 737-700/-800A319A320

432.4 24.2 7,955 33.2

171–240 737-900757A321

194.1 10.8 2,794 11.7

Twin-aisle230–310(181–249)

767A300A310A330-200

301.5 16.9 2,424 10.1

311–399(250–368)

777-200/-300A330-300A340

446.2 25.0 2,556 10.7

Large747A380

213.5 12.0 944 4.0747 and larger (>400)

Total 1,785.4 100.0 23,929 100.0



R E S U LT S B Y R E G I O N O F T H E W O R L D APPENDIX C

Africa2002–2021

Asia-Pacific2002–2021

Europe2002–2021

Traffic Growth to/from: %/year %/year %/year

4.83.84.83.88.14.0

3.86.25.44.65.25.5

4.85.44.75.24.94.3

Airplane Deliveries Number of airplanes

Single-aisle and regional jetsTwin-aisle747 and largerTotal

3985912

469

2,8732,066

5615,500

6,0321,153

1947,379

Delivery dollars, billions (2001)

Single-aisle and regional jetsTwin-aisle747 and larger

17.09.12.8

131.2322.5126.2

272.9168.444.0

Total 28.9 579.9 485.3

AfricaAsia-PacificEuropeMiddle EastLatin AmericaNorth America

Single-aisle and regional jetsTwin-aisle747 and largerTotal

34526528

638

1,946161

2,107

6,4111,276

1497,836

Delivery dollars, billions (2001)

Single-aisle and regional jetsTwin-aisle747 and larger

17.838.86.3

83.223.7

302.1185.234.2

Total 62.9 106.9 521.5

LatinAmerica

2002–2021

NorthAmerica

2002–2021

AfricaAsia-PacificEuropeMiddle EastLatin AmericaNorth America

3.84.65.24.6

5.3

8.15.24.9

7.95.0

4.05.54.35.35.03.5

Airplane Deliveries Number of airplanes

Middle East 2002–2021

Traffic Growth to/from: %/year %/year %/year


R E S U LT S B Y E C O N O M Y, 2 0 0 2 – 2 0 2 1 APPENDIX D

Investment*2001 dollars, billionsCategory

Airplanedeliveries*

United StatesChinaJapanUnited KingdomGermanyFrance

481165135969163

7,2011,912

9901,3381,243

837

Brazil, Canada, Singapore, South Korea 40–60 250–800Australia, Italy, Netherlands, Spain, Taiwan 25–40 250–660India, Ireland, Malaysia, Mexico, SaudiArabia, Thailand 15–25 120–450Argentina, Belgium, Indonesia,Pakistan, South Africa, Switzerland,United Arab Emirates

10–15 70–220

Austria, Bahrain, Chile, Denmark,Egypt, Finland, Greece, Israel, New Zealand, Norway, Philippines, Poland, Sweden, Turkey 5–10 40–230

Algeria, Bangladesh, Brunei, Colombia, Costa Rica, Cuba, Cyprus, Czech Republic, El Salvador, Ethiopia,Hungary, Iceland, Iran, Jamaica, Jordan, Kenya, Kuwait, Lebanon, Luxembourg, Malta, Mauritius,Morocco, Panama, Peru, Portugal,Qatar, Romania, Slovenia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Venezuela, Vietnam, Yemen 1–5 10–80

*Totals shown are per economy in each category.

World Airplane Demand 33

The sources used in the preparation of the Boeing Current Market Outlookinclude:

AirclaimsAir Transport Association (ATA)Association of Asia Pacific Airlines (AAPA) Association of European Airlines (AEA)Boeing primary research DRI•WEFA, Inc.International Air Transport Association (IATA)International Civil Aviation Organization (ICAO) Jet Information ServicesOfficial Airline Guide (OAG)ROM Associates US Department of Transportation Form 41

Historical data are estimates based on Boeing analyses. Data for 2001 are preliminary.


A B O U T T H E D ATA

World Airplane Demand 34

ASK: Available seat-kilometers — the number of seats an airline providesmultiplied by the number of kilometers they are f lown; a measure of airline capacity.

CIS: Commonwealth of Independent States — states of the former Soviet Union.

GDP: Gross domestic product — the total output of goods and servicesproduced within a country; the broadest measure of economic output with the exception of GNP (gross national product), which includes a country’s nationals who work in other countries.

LOAD FACTOR: Revenue passenger-kilometers divided by available seat-kilometers.

RPK: Revenue passenger-kilometers — the number of passengers multipliedby the number of kilometers they f ly.

SCOPE CLAUSE: Provisions in US Major airlines’ pilot contracts that imposelimits on the operation of jet airplanes used by regional “partner” airlines.Limits on seat count (generally 70 seats or less), weight, cruise speed, orratio of regional jets to standard jets are the most common provisions.

TRAVEL SHARE: A ratio measuring the portion of GDP that a country devotes to air travel.

YIELD: Revenues divided by revenue passenger-kilometers; it represents an aggregate of all the airfare and airline charges and is measured on a per-kilometer basis.


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