Increasing demand from low-cost airlines and booming airline travel in Asia – China in particular – drove Boeing to raise its forecast for new airplanes.
"It's a market that's exceeded our expectations," said Randy Tinseth, vice president of Marketing,Boeing Commercial Airplanes. "With new and more efficient airplanes entering service, the growth in air travel is being driven by customers who want to fly where they want, when they want."
Boeing's 20-year industry forecast calls for 36,770 new airplanes over the next 20 years. That's an increase of 4.2 percent compared to last year's forecast.
"We believe we're well positioned for future growth," said Tinseth.
Boeing's forecast comes just days before the Farnborough Air Show where the airplane maker and its European competitor, Airbus, are expected to announce a slew of new orders.
The outlook also comes on the heels of Boeing securing an order from Emirates Airlines for at least 150 Boeing 777X planes with a book value of at least $56 billion.
Narrow body boom
The biggest growth in new airplanes is expected to come in the narrow body market.
Boeing believes the industry will need 25,680 single-aisle planes over the next 20 years.
"The single-aisle market is the backbone of the airline system," said Tinseth. Boeing's narrow body 737 has long been the most popular plane sold by the company.
By late 2017 Boeing will start delivering the 737 MAX, a newer, more fuel-efficient version of the 737 which has already has a backlog of more than two thousand orders.
Boeing's competitor, Airbus, will start delivering its new narrow body plane, the A320neo late next year.
Both planes will be in demand by low-cost airlines adding service on new routes over the next 20 years.
China, Asia booming
Another reason single-aisle planes are in demand is the rapidly growing airline markets in Asia, especially China.
In fact, Boeing expects the Asia Pacific region to require 13,460 new planes by 2033, with majority being single-aisle planes.
China Eastern Airlines this month announced plans to start a low-cost carrier. The airline, which is run by the government, gave no indication when it will start its budget airline but, like other discount carriers, it will likely rely almost exclusively on single-aisle planes.
"Based on the overwhelming amount of orders and deliveries, we see the heart of the single-aisle market in the 160-seat range," said Tinseth. "There's no question the market is converging to this size, where network flexibility and cost efficiency meet."
Through the first half of this year, Boeing has delivered 342 new planes while the total for Airbus was 303.
—By CNBC's Phil LeBeau.