Flight demand from emerging markets will be enough to sustain growth forecasts from the world’s leading aerospace company (and United States’ biggest manufacturing exporter)—even with recent disappointing U.S. manufacturing data and uncertainty over the longer-term economic implications of the U.S./China trade war.
So said Boeing CEO Dennis Muilenburg, who doubled down on his upbeat growth forecast for the global aerospace industry in a talk before the Economic Club of New York on Tuesday.
Asked whether he was optimistic about the outcome of trade talks between the U.S. and China, Muilenburg said diplomatically that both countries have a “mutual interest” in maintaining a healthy aerospace ecosystem.
Muilenburg’s coolly positive account of his industry’s prospects in the new trade war landscape comes weeks after the CEO said that ongoing trade tensions could threaten revenue projections for the 787 Dreamliner aircraft in China, which is already the single largest non-U.S. aerospace market in the world. Currently 1 of every 4 aircraft coming off the Boeing assembly line—90% of the workforce of which is U.S.-based—is shipped to China, where Boeing just within the past year opened its first-ever 737 completion plant.
Asked whether he perceived China’s state-owned aerospace manufacturer COMAC as an emergent threat in the newly amplified trade-war atmosphere, Muilenburg said that COMAC is already part of Boeing’s supply chain, and that Boeing regards COMAC as a “future competitor,” rather than a current one.
Emerging markets: The friendlier skies
Sticking by forecasts that global air travel demand will require 44,000 new planes over the next 20 years—roughly double the size of the current fleet—Muilenburg qualified the estimate by adding that 80% of this next-generation product line is to be located outside of the U.S. and Europe.
Muilenburg pointed to aerospace exports as the biggest trade-surplus generator in the U.S. economy, and an industry valued globally at a projected $8.7 trillion over the next 10 years. He said this growth will be driven less by GDP, as has been the case in the era of U.S./European flight dominance, but newly enabled by the growth of the emerging market middle class.
He noted that only 6-10% of the world’s population currently flies annually, and that less than 20% have ever taken a flight. In tandem with the growth in emerging markets flight demand, Boeing is anticipating that 1.5 million new pilots and flight technicians will be needed over the next 20 years to serve this new passenger market. Due to the comparative lack of accumulated flight hours by newer pilots in these emerging markets, the need for more sophisticated, technology-enabled flight-deck interfaces will be acute.
What’s in the pipeline
Finally, Muilenburg spoke about the imperative for innovation if the U.S aerospace industry expects to maintain its competitive edge. Pioneering technologies in the space are already being developed through Boeing’s HorizonX venture accelerator, which invests capital typically in the single-to-low-double digit millions in mid-stage aerospace disruptor companies (as of this summer, HorizonX had a portfolio of 18 such ventures, primarily focused on drones, battery power for aircraft, and autonomous flight technology). Asked for his estimation of the timeline for these futuristic technologies, Muilenburg said he expects revenue-bearing activities in early commercial applications such as urban flight taxis will be a reality within the next five years.
Boeing’s own emerging technology pipeline is currently skewed to defense applications, such as the MQ-25 stingray aerial refueling drone developed for the U.S. Navy.
Boeing is also readying its own launch into space travel, which Muilenburg regards as a near-term precursor to fully fledged space-based manufacturing. Its CST-100 Starliner aircraft, designed as a commercial aircraft for low-earth orbit, is scheduled for a first launch later this year. The company is also working with NASA to develop a Mars rocket as part of the Artemis Mission, culminating in a test flight next year.