Commercial aviation services will be worth $3.2 trillion over the next 20 years, Boeing has predicted, with more than two-thirds of this accounted for by MRO and parts support.
In its Commercial Market Outlook 2023-2042, the OEM forecast that the services market would grow at 3.9% annually—ahead of its prediction for 3.5% annual fleet growth.
Digital services will be one driver of this growth, and will account for 26% of the total services market over the next 20 years, which compares with 30% for MRO.
For services as a whole, the fastest growth will be in South Asia (mainly India) and Southeast Asia, at 7.5% and 7.1%, respectively.
In contrast, the mature markets of North America and Eurasia will only see services grow at 2.3% and 3.9%, respectively, although they will remain the biggest and most important, worth $855 billion and $945 billion. The third-biggest market will be China, at $675 billion.
Boeing said it had “another very strong quarter” for its own services business in the first quarter of 2023, adding that it had “fully returned to pre-pandemic levels.”
At the end of Q1 2023, Boeing Global Services (BGS) had a backlog of $19 billion. Q1 revenue was $4.7 billion, up 9% year on year, primarily driven by its commercial parts and distribution business.
Investors noted that BGS was also extremely profitable, with a 17.9% operating margin.
“We love the service business, right?” responded Boeing’s chief financial officer, Brian West. “It's a franchise; it goes on for years and years … I think it's going to accrue to our benefit over the next several years.”
Boeing CEO David Calhoun also noted that BGS was benefiting from supply chain constraints in the aftermarket.
“Of course, we now have a supply constrained market around that. So I'm not surprised these margins have expanded and I'm not expecting them to go down," said Calhoun.
