Air China announced yesterday (Wednesday) that it will buy 45 The Boeing
Company (BA) jets to help cover increased domestic demand at a time when
many Western airlines are struggling to overcome high fuel prices and declining
traffic.
Air China will buy 15 Boeing 777s and 30 Boeing 737s at a cost of $6.3
billion, the company said on its website. The purchase will increase Air China’s
fleet by 35%, as the company competes with other Chinese carries for a dominant
share of a market that is expected to grow 9% annually over the next several
years, The Associated Press
reported.
Whereas commercial airlines in developed markets have been struggling, with
some even collapsing under the weight of high fuel costs and sluggish demand,
airplane manufacturers have been buoyed by strong demand in emerging markets
such as the Middle East and China.
In fact, a report released earlier this month predicted $3.2
trillion in aircraft sales over the next 20 years, as air travel picks up
despite current price pressures.
Boeing’s annual Current Market Outlook estimates that passenger travel will grow
at a 5% rate, and cargo will grow at a 5.8% rate over the next several years.
Despite record fuel costs, air travel and shipping have become an integral part
of daily life for many consumers and businesses. Boeing says that demand will
only grow.
"During 40 years of producing the Current Market Outlook, we have learned
that the resilience of air transport growth comes from its intrinsic importance
to the livelihood of people around the world," the report read.
Over one-third of the projected $3.2 trillion market is set to come from the
Asia-Pacific region, which is expected to have $1.19 trillion in future airplane
deliveries, according to Boeing data. North America and Europe are both
projected to have $740 billion, while the Middle East region clocks in at $260
billion. Latin American demand is forecast at $140 billion.
In order to meet the upsurge in demand, Boeing estimates that planemakers
will deliver 29,400 planes during the period, up from the 28,600 predicted last
year.
Boeing Profits Soar on Emerging Market Growth
The news of Air China’s purchase came one day after Boeing announced Sheik Ahmed bin Saeed Al-Maktoum of Dubai would pay
$3.78 billion for 54 Boeing 737-800 series jets. The sheik announced he
plans to use the planes to start his own low-fare airline, FlyDubai, itself an
indication of demand for air travel in emerging markets.
