Liberalization

Each time we update Boeing's Current Market Outlook, and really just about every time I deliver a presentation on the road, I talk about the concept of "liberalization."
And simply put, liberalization in this context refers to the phenomenon of commercial aviation around the world moving from being highly regulated to a more open and competitive marketplace.
Earlier this year an important study came out, taking a look at the economic impact of liberalization. And I've been meaning to share it with you and talk a bit about what it means for our business.
Over the past 25 years, three main forces have radically changed the airline industry: the regulatory environment, airplane/aerospace capabilities, and airline strategies/business models.
First, changes to government regulations have been critical in shaping the airline industry. Since the deregulation of the U.S. market in 1978, we've seen a dramatic shift in domestic and international markets. And we've also seen increased liberalization - even "open skies" - in international markets. This freer market access has had the effect of intensifying airline competition and causing airlines to focus more on what passengers want.
Second, airplane capability has reshaped airline networks. Today, airlines have a much greater selection of airplane types, with capacity and range combinations to meet competitive market demands.
And finally, this combination of changing regulation and improved airplane capabilities has shaped airline strategies and business models. The events of the recent down cycle accelerated the effects of these factors.
All of these forces will continue to drive our industry's evolution.
You can find out a lot more inside the study that I mentioned, The Economic Impact of Air Service Liberalization. It was conducted by a well-respected and credible third-party expert, InterVISTAS Consulting, and takes a look at the benefits of liberalization for the commercial aviation industry as well as for national economies.
Liberalizing air transportation directly affects economies by increasing flight frequencies and business and leisure traffic. And this increased travel demand drives GDP, jobs, travel, tourism, and exports.
Now, what about the effect of this growth on the environment? Well, as I've mentioned here in the blog before, it's important to understand that commercial aviation is one of the more efficient means of transportation. Enormous strides have been made by the aviation industry in reducing fuel consumption and the release of CO2 - about 70% since the jet age began. In fact, flying from point A to point B has less environmental impact than going by car or even high-speed train.
Boeing was one of the co-sponsors of the study. We took part because nobody had ever formally studied the issue in this manner. Before now, there was no hard data to support the conventional wisdom that liberalizing air travel had tangible economic benefits.
Although Airbus did not take part in the study, it's important to point out that both companies will benefit from liberalization since it so clearly leads to growth in air travel and the need for really good, efficient airplanes.
And I'm feeling more liberated just talking about how it helps both of us!


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