Boeing (NYSE:BA) projects worldwide commercial airplane deliveries of 34,000 jets worth $4.5 trillion over the next 20 years.  The largest portion of this demand is forecast from Asia-Pacific region, including China and India with more than 12,000 deliveries. Sustained rapid economic growth, growing trade and a growing middle class with disposable income are the factors behind making the region the largest market for future airplane deliveries among major world markets. Thus, in terms of size Asia-Pacific will be the most important market for Boeing and Airbus over the coming years. Boeing, which is leading Airbus in the race for net airplane orders in 2012 has benefited in the current year from its strong focus on this market.
We currently have a stock-price estimate of $75 for Boeing, approximately in line with its current market price.
The product-mix of airplane demand from Asia-Pacific differs from other major world markets
The product-mix of demand from Asia-Pacific differs significantly from that in other major world markets. For instance, the North American market is characterized by growth of low-cost carriers which focus on domestic routes, and as narrow body planes constitute the largest portion of their airline fleets, the demand for new commercial airplanes in this market is heavily dominated by single-aisle airplanes, which include Boeing’s 737 series and Airbus’ A320 family.
The Middle-East market is characterized by increasing focus of its airlines on international routes, thus its demand for new airplanes comprises of a much larger share of twin-aisle airplanes, which include Boeing’s 787 Dreamliner and Airbus’s A380 that fly longer distances and mostly on international routes.
And, the Asia-Pacific market is characterized by increasing demand on domestic as well as international routes, thus the demand for new airplanes in this region is more evenly balanced between single and twin-aisle airplanes.
Within Asia-Pacific, Boeing forecasts China to be the largest market requiring 5,260 new commercial planes worth $670 billion over the next two decades.  It estimates that this demand will be driven not only by growing domestic travel in China but also by the expansion of Chinese airlines on international routes. Out of the $670 billion, roughly 48% is anticipated for the twin-aisle jets, which corresponds to 1,190 new deliveries.
India is forecast to be the second largest market within Asia-Pacific after China requiring 1,450 new planes worth $175 billion over the same period.  The company anticipates air-traffic in the country to grow at 8.4% per year for the next 20 years, one of the fastest in the world. At present, passenger traffic is growing at 7.2% in India, above the average growth rate of 5.9% in Asia-Pacific and the global average of 4.8%. Also, the demand for new airplanes in India and China is driven by addition of new routes and higher frequency of flights on existing routes, as opposed to North America and Europe where demand for new airplanes is driven by replacement for aging planes.
Recent orders from the Asia-Pacific region
The region has also been at the forefront of placing new airplane orders. Significant orders in the recent past include, Singapore Airlines’ order to purchase 54 Boeing planes worth $4.9 billion for its regional carrier, SilkAir, and Xiamen Air’s, which is a unit of China Southern Airlines, order to purchase 40 Boeing planes. Boeing’s rival Airbus too recently bagged a $7 billion order from Philippine Airline, and a $4.2 billion order for 10 A350-1000s from Hong Kong’s Cathay Pacific Airways.
Thus, as the Asia-Pacific region continues its rapid economic growth over the next two decades against relatively slower growth in most developed nations, the region will constitute the largest market for new commercial airplane deliveries and become the most important battleground for Boeing and Airbus. In terms of size, Asia-Pacific is followed by a distant second and third, Europe and North America at 7,760 and 7,290 expected airplane deliveries, respectively.Notes: