This week, we published our 10-year and 20-year commercial aircraft forecasts. It showed some interesting times ahead.

“Another aircraft forecast?” you ask. Yes, but why?

This forecast is different.

Our first forecast failed. You’ll never see it because we threw it away. It just didn’t work. Why didn’t it work? We pulled out our pre-pandemic model for forecasting aircraft demand. It starts with traffic (RPKs) and correlates to economic growth (GDP) and a propensity to travel. Sound familiar?

In the pre-pandemic world of 0% interest rates, flowing supply chains, and humming production lines, it was enough just to count the number of people flying and assume aircraft production would adjust to match supply with demand.

Of course, today, things are different. Most notably, we can’t start with traffic to estimate passenger demand. Why? Because fares are high.

Why are fares high? Because we don’t have enough seats to accommodate the demand.

So what really is demand, then? A combination of people flying and the fares they paid. In other words, revenue.

Why should we assume supply will match this demand? We shouldn’t.

Wait a minute, is this the same way you forecast the narrowbody shortage three years ago? Shh. Secret sauce… but yes.

So we started from scratch. This forecast is different from what you’re used to. Here’s how:

Separation of supply and demand

It’s actually two forecasts. A supply forecast and a demand forecast. Gone are the days of assuming manufacturers will only build just enough aircraft to satisfy market demand. And why should they? If airlines are offering money for airplanes, they should build them. It is not the job of the OEMs to tell the airlines they don’t actually need airplanes.

Remember this chart? The focus has been on the shark-tooth dip that is the narrowbody shortage. This was what we saw in 2021. Now, our forecast asks, what happens after the lines touch in 2026?

Revenue-based forecast

We’re breaking all sorts of forecasting norms and have attracted the ire of the “that’s not how we’ve done it for years”-ists. Instead of relying on secondary metrics that used to correlate with industry growth, we went straight to the primary. By splitting supply, we allow the forecast to model true demand - the combination of who is willing to buy at what prices. In other words, revenue.

Region breakdowns

The global market is no monolith. We split the supply and demand forecasts into nine distinct regions, all with their own dynamics (Nine, and Russia, anyway. Takes a big part of the map, but Russia is… well… Russia). Each region's demand is calculated independently of the other regions, effectively producing nine unique demand forecasts.

Aircraft type breakdowns

Nine regions times four aircraft segments equals 36 micro-forecasts.

Production forecasts

Imagine being a supplier today. Imagine being asked to ramp production at great expense when some Yahoo with a newsletter and a proclivity for pretty charts tells you production plans may be unsustainable in the long term.

Then imagine that Yahoo shows you the detailed numbers and even provides the detailed Excel file. Which reminds me; we’re also providing the…

Detailed Excel file

Remember The Airline Monitor? You should, because Ed Greenslet is a legend. A treasured piece of advice Ed gave me years ago was to show your work and share it. If it’s right, it only adds credibility. If it’s wrong, you’ll find out real fast and can fix it. But if it’s truly novel, nobody can steal it because the value isn’t the model, itself, it’s the deep understanding that comes from building it and playing the “what-if” game.

33-page report with 38 visualizations

We’ve completed a detailed write-up of the forecast, including the methodology, results, study conclusions, and what it means for airlines, lessors, OEMs, and suppliers. The report also details the events that could change the trajectory of the forecast. It’s a forecast, not a prediction. This is designed to set your team up to understand the trajectory of the market and to identify when it diverges and what that means. That’s the true secret sauce.

How to purchase the forecast - Visual Approach Research

The detailed forecast and Excel model is available for $3,000. For those corporate subscribers of Visual Approach Research, it is included in the annual team subscription of - wait for it - $3,000.

A Visual Approach Research subscription also gives your team access to our Aircraft Intelligence Monthly reports, as well as detailed analysis of the aviation market. Additionally, the new products we are adding are all made available to our corporate subscribers.

If your team is interested in learning more about the forecast, you can subscribe directly.

If you would like to learn more about our approach, let us know. We will send you the outline of the forecast. We are also happy to walk you through the methodology, how it’s different, and how our approach to identifying market edge is different.

You should do a chart on…

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