China’s broader economy may be slowing, but its aviation market is booming and is set to become the world’s largest in just a few years as a rising consumer class spends more on travel.
The International Air Transport Association forecast in October that the country will overtake the United States as the world’s biggest market in terms of traffic to, from and within the country in the middle of the next decade.
“The rebalancing of China’s economy towards consumption will support strong passenger demand over the long term,” it said.
IATA sees China adding one billion new passengers during the period 2017-2037, for a total of 1.6 billion. Rob Koepp, who follows China for the Economist Corporate Network in Hong Kong, said that both Boeing and rival Airbus are in a “sweet spot” in China given their market dominance for aircraft spurred by the increasing aspirations of the country’s consumers.
“They’re wanting a better lifestyle that includes the opportunity to travel,” Koepp told CNBC on Thursday.
As a sign of that rising demand, airport construction has boomed. The city of Beijing is set to open a second international airport later this year. In its commercial market outlook published in September, Boeing cited China’s increasing urbanization and growing middle class as factors boosting travel demand.
“China needs the airplanes for growth to fuel their economy and to meet their passenger growth and cargo growth needs,” Muilenburg said.
Peter Harbison, executive chairman of CAPA Centre for Aviation, a Sydney, Australia-based research organization, said growth in China’s aviation market reflects increasing demand for travel as the country grows richer.
“That’s at the heart of it, economic development,” Harbison told CNBC on Thursday.
According to the CAPA Fleet Database, Boeing and Airbus dominate the market in China, accounting for a combined 92.5 percent of aircraft in service. Boeing stands at 47.2 percent and Airbus at 45.3 percent, the latest figures show.