I’m just back from the Airfinance Conference in New York, and my last official business trip as V.P., Marketing. Before I head off into the sunset, there’s a topic that’s very hot right now - and something we talked about at the conference - and I’d like to share some views on it.

It has to do with the current “cycle” for the aviation industry. Of course, when you hear people in our business talk about cycles, they’re not talking about motorcycles or one-wheel clown vehicles! In our case, we’re talking about the ups and downs or the patterns of airplane orders over time. But lately it’s become clear that the “cycles” story is about much more than that.

While in New York, I made an appearance on the television business news channel CNBC, talking about cycles, and about the tremendous success of the 787 Dreamliner, which enjoyed a surge in order announcements this week.

The traditional interpretation of “cycles” might leave you with the impression that as soon as orders slow, that will spell a slack time for the industry. But in our business, a cycle is more than orders. It’s also the delivery of airplanes. After all, that is where we make our money.

There are a number of factors that we observe in our own analysis of the upcycle. And when you look at it from the analytical perspective, it appears that this cycle will be different – mainly more drawn out, or elongated – than some of the famous previous cycles of the 1980s and 1990s.

Today we have:

• Sound industry fundamentals
• Sustained economic growth
• Increased aviation liberalization
• U.S. and European airplane orders yet to come
• Strong replacement demand

Couple these with a more balanced geographic demand for aircraft, more balance in terms of different airline business models, and the current requirement for aircraft replacement, and it does seem to add up to a different kind of cycle.

For example, in 2005, about 28% of the Boeing backlog was from North American carriers. Compare that with 1985 when the North American backlog was 66% of the total. Today we’re much less reliant on one or two regions of the world. And as you know, the current spurt in orders has happened largely without major contribution from U.S. legacy carriers. They’ll need to start replacing their fleets over the next several years, and that will help extend the cycle.

The shift in business models is also helping the cycle, as we see more deliveries going to short-haul and low-cost carriers.

And an aging fleet will require renewal - further extending the cycle. This is particularly true in the U.S. By 2011, the U.S. network carriers alone will have over 250 aircraft which are over 25 years old. This number will expand to over 540 by 2013 – only 6 years from today.

So, it’s likely that this order cycle will continue longer than in the past. Yes we’ve had a couple of huge orders years but as a percentage of the current airline fleets, we are still a ways off from the peaks of some past cycles.

During my New York trip this week, I enjoyed a lively discussion about the airplanes market with correspondent Bob Jamieson (on the left) and members of the ABC News business unit.

Also, there are around 17,000 airplanes out there, over half of which will need to be replaced with new, more efficient airplanes over the next twenty years.

Another thing that is different this time around is that, as I mentioned, both Boeing and Airbus have significant backlogs – and a lot of the airplanes on order don’t even start delivering until much further out in time, somewhat due to airplanes that are still in development.

We’re seeing indications that this positive cycle is more “oblong.” In other words, it looks to have more length or longevity. That doesn’t mean we’re going to see record orders once again, but we think there will still continue to be strong orders industry-wide.

So with this kind of positive cycle, it’s more important to look at backlog, rather than the traditional “book to bill” thinking. If you have four or five years of backlog - as both of the major manufactures now have - that’s a key thing to keep in mind when considering the longevity of a positive delivery cycle. When the book of unfilled orders becomes large enough to sustain a company through a business cycle, book-to-bill becomes less important than the ability to execute the business plan.

The unprecedented backlog also means that on deliveries, we’re just starting this positive cycle, so the delivery up-cycle this time around is also prolonged. It’s not going to just sharply drop off. As I mentioned, you’ve got new airplane development going on, and some major airlines entering the market late. And these are factors which will tend to cause the delivery cycle to be elongated.

So our current thinking is that this cycle will remain positive longer than in the past. And that brings me back to my cycle at Boeing, which, on the other hand, is winding down.

After next Monday, I should have more time to do some cycling of my own!