London: Boeing has forecast a $3.2 trillion market for new commercial airplanes over the coming 20 years, one that shall be driven by an increasing demand for airplanes to replace older, less efficient aircraft.

In its 2008 Current Market Outlook report released in London, The Boeing Company 's 2008 outlook calls for a market of 29,400 new commercial airplanes, both passenger and freighter, by 2027, with a balanced demand in aircraft by region. The forecast takes into account the industry's near-term challenges, including a slowing worldwide economy, surging fuel prices, slowing traffic growth in some markets, and concerted action by airlines to balance costs and revenues.

"We're facing a very dynamic situation today in the commercial aviation industry," said Boeing Commercial Airplanes Vice President, Marketing Randy Tinseth, in a statement. "This year's forecast is rooted in today's realities, but also recognises the nature of a long-term outlook."

The influence of current market conditions is well reflected in the 2008 outlook, with replacement airplanes taking a greater share of demand of 43 per cent, as compared to the previously forecast 36 percent due to the loss of economic viability of older aircraft in light of higher fuel costs.

Additionally, Boeing is forecasting a slightly smaller fleet size at the end of the 20-year period (35,800) rather than that predicted in the previous outlook (36,400). The company says that compared with today's world fleet of 19,000 units, this represents an annual increase of 3.2 per cent annually, the same as the estimated economic growth rate.

What is more enlightening is that given the strong orders over the past three years, over 30 per cent of the forecast is already in backlog. "Over the more than 40 years that Boeing has been forecasting the commercial aviation market, we've experienced other challenges with their own dynamics and their own impact on global air travel. What we've learned is that our industry, which is based on the need to transport passengers and freight via our global aviation system, is extremely resilient," Tinseth said.

"We're seeing an increasing share of airplane deliveries to the Asia-Pacific region, as well as the Middle East, Latin America, and the Commonwealth of Independent States (CIS)," Tinseth said. "The result is a much more geographically balanced and more stable long-term market, which is less vulnerable to swings in regional economies or other variations in demand."

With that perspective, the forecast overlays the current market environment with a long-term view that portrays how air transport would be transformed over the next 20 years, bringing forth an outlook that indicates continued strong fundamentals underlying the need for new airplanes, including economic growth, world trade, aviation market liberalization, and new aircraft capabilities.

These new airplanes will accommodate a forecasted 5 per cent annual increase in global air travel, and a 5.8 per cent annual increase in air cargo traffic. Over the next 20 years, passenger and cargo airlines will take delivery of:

- Regional Jets: 2,510 units ($80 billion) -- Declining segment as airlines "up-gauge" to single-aisles due to capacity, economic, environmental constraints

- Single-Aisles: 19,160 units ($1,360B) -- Largest segment by units

- Twin-Aisles: 6,750 units ($1,470B) -- Largest segment by investment

- 747 and larger: 980 units ($290B) -- Small but significant market

Orders from Asian airlines will make up 31 per cent of the deliveries, while North American carriers will account for 29 per cent of the demand. Tinseth said that 27 per cent of the demand would come from Europe and Russia, and Latin American carriers will book 6 per cent of the total, with the Middle Eastern airlines making up 5 per cent. Boeing says that single-aisle airplanes will make up the bulk of deliveries during the next 20 years. Strong domestic and intra-regional air travel growth in emerging Asia-Pacific markets, along with continued growth of low-cost carriers worldwide is driving demand in this segment.

Boeing's 20-year outlook report has been published annually for over 40 years.