Boeing Co. predicts airlines will replace older and less-fuel-efficient planes at a faster rate in the next two decades to counter rising oil prices and cut operating costs.
During the next 20 years, carriers will replace more than half of the existing worldwide fleet–9,580 jets out of 17,330–with new planes, according to Boeing’s latest market forecasts issued Wednesday. The replacement demand increased by 1,400 planes from last year’s forecast because Boeing assumed higher long-term oil prices in its outlook.
With oil prices hovering above $70 a barrel, and airlines struggling to combat soaring fuel costs, Boeing tried to put a positive spin on the situation. While it certainly makes sense for airlines to retire their old aircraft with new, fuel-efficient airplanes, higher oil prices also could be detrimental for business.
Travelers have seen airlines boost fares multiple times this year. More increases could start cutting demand for air travel, which eventually would reduce the need for new planes. Boeing Vice President Randy Baseler conceded that higher oil prices are a “double-edged sword.”
But Chicago-based Boeing believes it has an answer to airline woes. Its new 787 Dreamliner, which will enter into service in 2008, is expected to burn 20 percent less fuel than similar long-haul planes that seat 200 to 300 passengers. Airlines have responded favorably, placing orders for more than 350 Dreamliners. The higher-than-expected demand has Boeing considering boosting monthly production of the plane.
In the first half of 2006, jet fuel averaged nearly $2 a gallon, up 29 percent from same period in 2005, according to the Air Transport Association. Fuel accounts for about 25 percent of operating costs at the largest U.S. carriers, such as American Airlines and Northwest Airlines Corp. The younger an airline fleet is, however, the lower fuel costs are as a percentage of total costs.
Boeing’s prediction about quicker replacements already is taking place. Last month American Airlines said it may buy new planes for the first time since 2001 to replace an aging fleet of MD-80s. American has 310 MD-80s that are 16 years old on average. Potential replacements are the Boeing 737 and the Airbus A320.
But American officials have said that until the airline is financially strong, they don’t want to commit to plane purchases. American lost $861 million last year.
Replacement planes will account for about one-third of the total demand for new jets in the next two decades, according to Boeing. Carriers will need more than 17,000 new planes to accommodate annual passenger growth of 4.9 percent.
The demand will push the worldwide fleet to about 36,000 planes in 2025, Boeing said. The greatest demand will come from North America and Asia.
Airbus will be updating its global market forecast later this year.
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asachdev@tribune.com
