"Over the past 20 years, global air traffic has doubled, while ticket prices have been cut in half. Today, you actually get more value for what you pay," Boeing VP marketing Randy Tinseth said.
The turnaround in the aviation industry is a result of the spread of low-cost airlines in all markets, leading to competition not only between airlines, but also among airplane manufacturers.
Tinseth said that 2015 was a peak year for Boeing's sales. The company expects substantial growth in Europe, Latin America, Asia, and the Middle East. Driven by the low-cost trend, demand will be strong for narrow-body and small and medium airplanes.
Boeing's revenue hit a peak of $96.1 billion in 2015, fueled by record deliveries: 762 airplanes to various airlines. The company projects 740 additional plane deliveries in 2016 lower than in 2015 as a result of devoting resources to the new models it is launching, including the 737 MAX, deliveries of which will commence next year to more than 60 airlines. Other models include the 787-10.
"The past five years have been good for the aviation industry, despite the global economic slowdown," says Tinseth, currently visiting Israel. "Airplane traffic grew 7% last year, thanks to lower prices, accompanied by the drop in global fuel prices, among other things. More people fly now."
Tinseth notes that airplane traffic has risen steeply in recent years. El Al Israel Airlines Ltd. (TASE: ELAL) alone has purchased 15 Boeing 787s, which it uses to offer passengers a better flying experience, among other things including a view of the horizon through much larger windows in the new models.
"Globes": Will we see pilotless planes in operation in the coming years?
Tinseth: "The technology for it is already available, but I don't see it being used it is still important for passengers to know that there are two pilots sitting in the cockpit responsible for them during the flight, which is still the safest mode of transportation in the world. We may be able to get away with one pilot in the future, but that will require organizational and technological adaptations."
On the other hand, Boeing Israel President David Ivry says that the need for pilots is growing. "All over the world, there are fewer and fewer ex-air force pilots. There is a need for training pilots in the private market," he explains.
How much have the low-cost airlines affected the new planes?
Tinseth: "We are already seeing changes brought about by the low-cost airlines. First of all, ticket prices are lower. Israel is a good example: growth in airplane traffic has grown by over 10%, and prices have fallen.
"When you boil it down, a low-cost flight is a consumer product aimed at bringing you from one place to another, not necessarily with maximum comfort. There are more seats in the plane and less passenger features. In the US, they have gotten the point - companies have streamlined, and have carved out their niche. It will take more time in Europe before the airlines channel the competition to their benefit.
"Low-cost airlines intensify competition and airplane traffic, which is good for both the passengers and the airlines. El Al has also realized that it had to go more in this direction. Passengers in the US have also realized that they pay for what they consume, and there are advantages in this: when I pay for a meal on an airplane, it's better than what I get for free.
"Profitable companies can invest in improving their products - and most of them are doing so. Air Canada, for example, was among the first to define what the passenger wants, and for what segment he pays. As in any industry, in aviation, too, the customer can pay for what is convenient for him and serves him."
Will high-speed Internet be an integral part of customer service on the new planes?
"In-flight Internet involves the regulation of the countries over which the flights pass, and that's complicated. We offer planes with the capability of offering web surfing, and our customers have to put it into operation. It works well, for example in flights over the US, but as soon as you pass into international waters, the entire game changes in terms of licenses, satellites, and so forth. In the future, I assume that we'll be there, and the situation today is already better than it was. Without a doubt, much can be done to improve this."
Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2016
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