I think just about everyone was at least a little surprised at the announcement of the QANTAS flight between DFW and Brisbane, Australia.   It was a subject that would pop up on the radar now and then but generally dismissed with skepticism of it ever happening.  Particularly with the equipment that QANTAS had for making the flight, namely the 747-400ER.

Flights between the United States and Australia have been the domain of west coast cities such as Los Angeles and San Francisco and the primary equipment has been the 747-400.  The aircraft available to make such a flight has already changed and is due to change a bit more in the future.  The 747 got used more because of its range and ability to haul a passenger load with a strong load of cargo.  Generally, long flights like that work best if there is enough demand for a 747 because seat costs go down.

Now the 777-300 is plying trans-Atlantic routes between the US and Australia and soon will be on routes between the US and New Zealand.  It’s a good aircraft for the trip because of the 777’s ability to fly it non-stop, carry a load of cargo and a fairly large complement of passengers.  We’ll see these West Coast to Down Under flights fracture a bit more in the future when the 787-8/9 come online with airlines.

So why the 747 and DFW?  Well, it’s notable that SFO is losing its flight with QANTAS but that makes sense now.  San Francisco is the domain of United, not American Airlines and QANTAS is partners with AA via Oneworld.  Los Angeles remains and it should remain as a Western US departure point between for Oneworld. 

Until now, Oneworld has had to feed all its traffic from all over the United States to either Los Angeles or San Francisco and while LA is a Oneworld focus city, all other Oneworld focus cities are east of the Rocky Mountains.  They are Dallas/Fort Worth, Chicago, New York and Miami.   In that group, there was only one city that made sense with the aircraft available today:  DFW.

The other thing that has changed is the new anti-trust immune cooperative agreements that are forming in Oneworld.  First there is the trans-Atlantic Oneworld partnerships and second is the trans-Pacific(Japan) Oneworld partnership.  Next is logically AA/QANTAS. 

With DFW and Los Angeles as that “hub”, Oneworld can feed traffic to DFW from points east of the Rocky Mountains and from points in Mexico, Central America and South America all to DFW.  Yes, AA can feed that 747 nicely.  And if they do it well enough, you can bet on seeing an Airbus A380 being switched into that route. 

DFW gets a nice boost from all of this as well.  It’s already started to transition back into a more “international” airport than it has bee in some time.  British Airways is now using a 747 on one of its flights to DFW and AA is using more 777s for its flights to Europe.  It will continue to grow as a Oneworld “hub” both because of its good location (not nearly as affected by weather as other potential hubs) as well as the availability of room to grow. 

I would be completely unsurprised at the addition of another direct route to Tokyo and a direct flight to China in the near future.   Currently AA has 2 flights to Japan via 777s and I think we may see one more or, alternatively, we may see JAL start flying one of those flights with its own 777.  AA has wanted to fly direct to China from DFW (and it should) but has so far been blocked by its pilots over duty time rules that AA wanted a variance for from the union.  The flight they wanted to do ultimately went to Chicago instead.  Expect AA to make another run at such a route.

One thing I don’t think we’ll see is a lot of additional routes from Los Angeles to Oneworld destinations.  It’s a crowded airport with limited room to grow.  Delta/Sky Team has a strong base in Seattle and United/Star Alliance has got strength in San Francisco.   Dallas / Fort Worth offers the growth opportunities now with the ability to fly longer range flights using the 787 and 777 and I think we’ll see more and more long haul flights from DFW.

I have to say that I’m very pleased for DFW and I see this as a very good development for American Airlines as well.  It’s nice to see opportunities created like this within Oneworld and on AA’s part, too.

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It has been reported loudly that Delta is poised to issue an RFP (request for proposal) for as many as 200 jets and this is an order no manufacturer wants to lose.   The rumour comes just days after a record breaking Airbus order from IndiGo of India.

At this point, it’s still rumour but this one strikes me as pretty much dead on.   Delta has a huge fleet (720 aircraft with about 40 orders in place which include the deferred NWA order for the 787) and quite a few of those aircraft need to be replaced now or in the immediate future. 

Delta has the Northwest fleet comprised of the very old DC-9-5o, MD-88, MD-90, 757, 747 and some older Airbus equipment.  The Boeing fleet from Delta’s legacy side isn’t quite as old but there are some 757s and 767s in need of replacement as well.  Considering the widely varying fleet, it would come as no surprise that an replacement order is due.

Oil prices and future fuel prices will also drive the need for this order sooner than later if Delta’s goal of a consistent operating profit is to be realized. 

Pundits think this is Boeing’s to lose and I disagree.  Richard Anderson, CEO of Delta, has much more history with Northwest and he is no Airbus hater.  This will be an extremely heated competition and I will say that if Boeing were to lose this order or a significant portion of it, that will sting Boeing and its product line for years to come.

The prime driver for selection is going to be based on a number of items.  First and foremost, trip costs for aircraft to serve a particular grouping of routes.  We’ll see orders for single aisle aircraft to serve what I would call non-transcontinental routes.  In today’s world, that would be the Airbus A319 and Boeing 737-700.   Having trans-continental capability in the aircraft would be a plus but these aircraft are going to serve the focus cities of the airline with routes stretching out from the cities but not across the country.   The mission that the MD-88s, MD-90s, Airbus A319s and Boeing 737-700/800s are serving today.

The A319s are brand new and so are the Boeing 737-700s/800s.  This is going to be about replacing the McDonnell Douglas fleet.

Then there is a need for the larger trans-continental capable aircraft that remain single aisle serving longer trunk routes that won’t justify a widebody.  Currently, the Airbus A320 and Boeing 757 are serving those routes.  The A320’s arrived in early 1990’s and the 757s date from the early 1980s to the late 1980s.  The options for replacement here are the Airbus A320/321 and the Boeing 737-800 and 737-900ER.    Neither aircraft actually “replaces” a 757 which has great range and great payload.  I don’t think the A320s are going anywhere yet so this will probably involve a 757 replacement and they (Delta) may or may not want it to harmonize with their existing A320s.

Then there are the 767s.  Some are getting old and some are quite new still.  Delta needs an aircraft stretching between what a 757-300 offers and an A330-300 offers.  The 787 fits this and the fact that Delta has deferred its legacy NWA order for these makes me think that these aircraft won’t be candidates for replacement.

The 747s are pretty old and frankly I don’t think these we very well cared for either.  They need to be replaced and I do think we’ll see orders to do this on these aircraft.  None really serve routes that demand 4 engines so I think we’ll see a replacement oriented around 2 engines.

I think it’s anyone’s guess on the single aisle orders.  Airbus will fight like crazy to win this order with their A320NEO options and Boeing may well have to announce a 737 replacement at a great price to win it back.   Boeing should actually have great incentive to get going on the 737 replacement if Delta is truly interested.  With Delta, Southwest and, potentially, Ryanair all wanting a better 737, there is an exceptionally strong business case to get going on this.

If Boeing doesn’t offer a better 737 in this, I think the order goes to Airbus.

As for the 757/767 replacements . . . well, I’d give the edge to Boeing.  I think the 787 *is* a good answer for these aircraft.  They offer the right amount of extra capacity for growth, long haul capability, extremely high efficiency and flexibility.  I do think it possible that an order might be mixed between the A330 and 787 unless Boeing gets off its duff and gets that 787-9 into production.  The 787-9 is the A330 killer.

Since I don’t think the A330s are going anywhere, I don’t see much opp0rtunity for Airbus’ A350 in this mix.  It’s deliveries are too far off and the A330s just don’t need to be replaced for a long time.

I think Delta’s large widebody strategy is likely going to be a mix of 777-200s and the 777-300ER to replace the 747s.  They already have a fleet of 777-200LR with GE engines so I think they’ll order 777-300ERs with GE engines to replace those 747s.  It will do everything the 747 will do only more efficiently.  I do *not* think the 747-8i will enter into this order.  Delta doesn’t need the capacity and the 777-300ER will serve all the routes the 747 is currently serving with no problem.  The A350-1000 is far too far off and its ability to perform is simply way too unknown for this to be serious contender at Delta.

I do not think that Bombardier or Embraer will enter into this order at all.  They just don’t have a product that meets the needs of an airline like Delta very well at all.

Don’t expect an order announcement for about a year.  Delta will let the manufacturers fight it out with best and final offers for quite some time and it will take time itself to do a detailed analysis.   But I can’t wait to hear their decision.

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QANTAS is adding a flight between DFW and Brisbane (with continuing service to Sydney) in May.  And I don’t mind saying that I didn’t see this coming.  Certainly not a QANTAS 747 flight.  This flight will come at the expensive of QANTAS serving SFO and I actually do think that is quite smart.

More on all of the details in another post after I’ve had time to do research on this development.

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United Airlines CEO Jeff Smisek says that there are too many seats chasing passengers on routes between the United States and Australia presently.  United has had a presence for over 25 years on those routes and its staying power comes from its corporate contracts and loyalty program but it is being challenged presently by lower fares from new entrants on those routes (Delta and V Australia) as well by the fact that its 747 aircraft have a less attractive IFE solution than others.

One of the great ironies for long haul routes such as these is that they have, for the last 40 years, been largely dominated by large widebody aircraft.  Most commonly, the 747.  Filling those aircraft day in and day out is a challenge and one reason why really only two airlines have traditionally succeeded on those routes.  New entrants or weak players usually leave the market because there really are too many seats chasing too few passengers, particularly in hard times.

Right now, QANTAS and United have 747s and A380s on that route.  Delta is using a 777-200LR and V Australia has 777-300s working the route.  Delta is probably right sized but they’ll have to remain committed to the market as a long term investment in order to succeed.  I understand why they want to cooperate with V Australia and I’m not sure that’s a bad thing for either airline but it appears that is going to take some time to work out.

United and QANTAS both are the dominant players but I wonder if they’ll remain so over the long term if Delta and V Australia hold their ground.  It’s anybody’s guess.  It does occur to me that we are about to see aircraft that would allow new entrants to make money on that route and, at the same time, be right sized for the route.  That would be the 787 and A350 aircraft. 

If those two aircraft permit the same profit margins that the larger aircraft offer, not only will those new entrants stick around but we might see more.  Delta isn’t going to have the 787 for 10 years or more.  United will have some and QANTAS should receive some too. 

Right now, the most practical approach is for airlines to depart the west coast of the United States using large widebody long haul aircraft.  What if United was able to start flying from the interior of the United States using 787s (which they are due to receive relatively soon)?  It’s doable and it might be practical. 

This is another great example of why larger and bigger isn’t always better.  The 787 and A350 are going to offer possibilities for long, thinner routes that will ultimately fracture those large capacity trunk routes flown by the 747 and A380 right now.

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With the QANTAS A380 fleet being grounded for several days, one thing was clear when it comes to this aircraft.

When one of these aircraft becomes unavailable, there can be a huge number of people needing to be cared for.   QANTAS’ A380 carries as much as 450 passengers and their typical equivalent 747 carries just 307 passengers.   For most routes that the A380 would fly, you would require generally 2 other long haul aircraft to deal with the extra burden.  By 2 extra, I mean you would need two 747-400s to get passengers cared for on a LA-Sydney route or two 777-300’s or at least two 777-200s.

But my larger point is that when you fly this aircraft, a cancellation can inconvenience from about 450 to 550 passengers with just one flight cancellation.  That’s a lot of people to take care of and airlines had best have a contingency plan to deal with such an eventuality because it is not like a single 737-800 cancelling.  It’s not even remotely like a 767 or 777 cancelling.  

It doesn’t appear that QANTAS has had much of a handle on dealing with their customers problems either.  To be fair, it’s not easy to ground those aircraft and then dispatch 747s to outlying destinations to take care of passengers.  The flight time alone between Sydney and LA is generally well in excess of 14 hours.  And it’s not easy to keep a spare A380 laying around either.  It’s not even easy to keep a used 747 lying around for backup. 

Then  again, it’s not like there will ever really be a huge fleet of A380s in the world either.  Unless Emirates defies all predictions and really does take delivery on all of their orders.

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The Seattle Times is reporting that Turkish Airlines has indicated its interest in both the Boeing 747-8i and Airbus A380.  CEO Hamdi Topçu apparently has said they’ll decide before the year end on this order. 

Such an order strikes me as hubris for this airline.  Yes, they’ve done pretty well for the past few years and they aren’t a tiny airline but they aren’t so big that their network could possibly justify such a large aircraft in its fleet.   Despite their entrance into the Star Alliance, they’re still a 2nd tier player at best.  Even additional 777-300ER aircraft would cause me to raise my eyebrows questioning this. 

Much of their success has been witnessed over the past 3 years and, on the outside, that would appear to make them attractive going forward.  The truth is, as competition with European and Middle East carriers heats up, I think this erodes their growth.  Furthermore, Turkey’s current political climate makes it somewhat less certain as a place to do business for the near future. 

Bottom line:  I don’t think they’ll actually order the aircraft and, if they do order such large aircraft, I don’t think they’ll actually take delivery.

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It’s become more and more clear that airlines are going to likely have 3 or 4 basic categories of aircraft.  First, the 100 to 135 seat category with a range that isn’t transcontinental but which allows a full load fly 3 to 3.5 hours maximum. 

Second, the 150 to 210 category with a range that will include trans-continental routes.  This was previously served by the 757 and 767 but has seen today’s 737 and Airbus 320 families take over. 

Third, the 220 to 280 seat arena which includes flights ranging from trans-continental to trans-oceanic including both the Pacific and Atlantic oceans.  We’ve seen the Airbus A330 and 767 and even the 777 in this area and that’ll continue for a bit longer too.  But it will be owned by the 787, 777 and A350 soon enough.

Finally, the very large aircraft on trunk routes that demand high capacity and high-ish frequency.  The 777-300ER, 747 (-400 and -8i) and A380 are the players here.  In the future, we’ll see more of the 777-300ER and A380 than the 747-8i and I think Boeing will have to come up with an aircraft that fits this area better both in economies as well as seat range. 

Nothing much has changed except that the models from Boeing and Airbus are getting freshened or replaced and their ceding the 100 to 135 seat market to Bombardier and Embraer.  The regional jet manufacturers are invading Boeing and Airbus territory and that’s brought along an interesting development. 

We can ignore the Comac efforts to date.  Their plans for a 150+ seat aircraft are just that, in my opinion, plans.  You don’t enter that arena without a lot of experience building something smaller and generally without experience being a partner on similar efforts for a while.  Those aircraft won’t fly, pun intended.

With a couple of exceptions, regional airlines are bringing those new 100 to 135 seat aircraft with them instead of that flying remaining with the majors.  Scope clauses continue to get revised to include larger aircraft and instead of major airlines adopting new equipment to serve those routes, they’re ceding that area largely to their regional airline partners.

The why involves what it always involves:  labor costs.  They can have it flown cheaper by someone else and earn more money.  As that scope increases, however, I do wonder why you would continue to contract that out to an independent airline instead of owning it and its revenue stream.  Why wouldn’t you want to vertically integrate and own that lower cost structure as well as control the service product?

Instead, we see SuperLegacies prepared to sell off their regional airlines and pretty cheaply at that.  Even new-ish ones with pretty low labor costs. 

At some point, these regional airlines are going to see that they can operate their own networks and while they may choose to remain partnered with majors, they’ll also see they can take on more of the risk and much more of the profit available. 

Yes, it’s been tried already a couple of times and while those efforts sputtered at the 50 seat jet level, they won’t necessarily sputter using 90 to 110 seat jets that are coming on line.  Republic may be the first to do it successfully by buying brands and working to build an integrated network while continuing to service partnerships with major airlines, time will tell.  If they are successful, will they one day leave their partnerships with the majors and become a force to content with on their own?

And where does that leave the SuperLegacies in the future?  Will they continue to walk away from the bottom end of flying when it comes to capacity?  Will they continue to cede that work to partner airlines while working to build their long haul flying?  Can they afford to cede that much control on what, today, feeds their networks for that long haul flying?

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When I saw the 787 land at the Farnborough Airshow, I was very impressed at how fast and cleanly it stopped.  Even if it was relatively empty.  So I found a few videos of aircraft making impressive stops around the world.

 

The 787 at Farnborough and courtesy of FlightGlobal.

 

South African Airways 747SP – notice how narrow the landing runway was.

 

747SP landing at Lexington, KY

 

Evergreen Airways Boeing 747 Tanker

 

Continental Airlines 737 in Cozumel

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When Emirates announced its latest purchase of 30+ more A380 aircraft, a lot of carriers took notice, particularly in Europe.  The planned capacity increases that Emirates has put into place for the next 7 years is nothing short of baffling to most and it has made many airline CEOs wonder what they’re missing. 

Emirates operates on a model of being “hubbed” in the perfect place from traffic between Europe and India, Asia and Australia.  They compete with other international carriers on service and they compete with everyone with frequency and convenience.  Currently, many of those flights from Europe to those destinations require a fuel stop and Emirates uses Dubai for that fuel stop which allows them a big advantage on X things:  fuel is cheap, landing and taking off is cheap, Dubai is “on the way” to most of those destinations and isn’t much of a diversion for them, and they’re able to utilize their aircraft much more than some on a per day basis. 

That’s a powerful advantage.  Emirates has also kept many of the largest European governments (economies) from protesting much at all by being a huge customer of Airbus.  It’s very difficult for those governments to bite the hand that feeds their aerospace industry.  It’s notable that neither Canada nor the US have felt nearly as accomodating towards Emirates (and other UAE carriers) when it comes to access to their markets and in the case of the US, this is despite the fact that Emirates has also been a pretty good customer of Boeing’s. 

All of that scares the hell out of European international carriers.  Emirates also claims that these carriers are discovering that it takes an A380 to compete with an A380.   And then they went all in with their latest A380 order.   It’s very tough for those airlines to sit at the table and wonder if they can afford to go all in. 

I don’t think it takes an A380 to compete with an A380.  I think it takes an A380 to compete with an A380 on a few trunk routes and I think Emirates’ model crumbles with the 777LR, 787 and A350 for much of the destinations it serves.  

Right now, I think there is an attraction to the A380 on those routes for 2 reasons.  First, it’s the latest and greatest in long range aircraft.  Second, it has the freshest service product installed as a function of it being introduced by airlines for only the past 2 years.  Over time, the “newness” of the aircraft will go away (just as it did with other new aircraft introduced) and the service product will be matched by others on other aircraft. 

Right now, a lot of those legacy international carriers that are so worried are trying to compete with Emirates using 20 year old 747-400 aircraft with a service product that is, in many cases, a generation out of date.   If it isn’t a 747-400, it’s a 777-200/300 with a service product that was “copied” from the 747.  See where I’m going here?

Since we don’t have much visibility into the real financial picture of Emirates, a lot of analysis of them is speculative.  We don’t know where their financing comes from and at what terms.  We don’t know what their fuel prices are and we don’t know what their labor costs are either. 

That said, I don’t believe it is impossible to compete effectively with Emirates now and particularly in the future.   I believe those long, high capacity trunk routes that Emirates works so well are going to fracture with the next generation of jets. 

It’s already possible to use a 777LR to reach all of Asia from Europe and the 777-300ER will serve 90+% of Asia and do it point to point.  While Europe has traditionally been the transit point between Africa and the Americas, that’s already changing.  US airlines are now serving Africa more and more with smaller equipment that fits those long, thin routes pretty well.  South American airlines are initiating services to several parts of Africa with similar equipment.    and it only gets better as the 787 comes on line. 

So Emirates may capture some traffic for a while from the US but it is unlikely to dominate particularly in the future.  The magic routes to Singapore, Indonesia, Australia and New Zealand are likely to remain an Emirates strength but take note that those same international carriers in Europe who are freaked out right now are also now taking delivery of their own A380s.  Air France has them, Lufthansa just took delivery of its first and British Airways has them on order.   They will have the aircraft to compete with Emirates.

Frankly, I don’t understand why someone such as British Airways doesn’t explore setting up a Dubai base to compete directly with Emirates.  Or any of the others, for that matter. 

Regardless, this belief that huge trunk routes will remain is, in my opinion, false.  Those trunk routes will fracture into more and more “point to point” routes that are longer and thinner than ever before and the airlines serving those will be the preferred airlines for that travel.  People just don’t like connections when they can go non-stop.  If they can’t go non-stop, they still prefer the fewest connections.  It’s the time saver and saving time is why we fly.

Frankly, I can see Emirates becoming a bigger player in its region of the Middle East/India/Northern Africa/South East Asia but I see them contracting over the next 15 to 20 years on those trunk routes provided those other international carriers step up and get to work on their fleet and service planning.

There isn’t anything magical about Emirates  and despite their potential advantages from being Dubai owned and based, that doesn’t make them the carrier that can’t be beat.  It takes work, investment and planning but it can be done.

The last thing those airlines want is their own governments becoming more restrictive of access to markets.  It’s a world where that game is tit for tat and that works to no one’s advantage.  They can all survive and prosper with the right combination of leadership, management, planning and investment.

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Continental Airlines has announced the second 787 route that it will initiate with the arrival of the Boeing 787.  The first was from Houston to Auckland, NZ.  This time, it’s Houston to Lagos, Nigeria and I’m seeing a trend here. 

Continental is clearly intending to make Houston much more of a international gateway city and that makes some sense to me.  Houston Intercontinental Airport isn’t overcrowded, has excellent feed to it domestically and the new 787 makes a lot of long, thin routes not only possible but profitable. 

It doesn’t hurt that there is a fair bit of oil business in Nigeria too. 

This flight will be subject to a fair bit of regulatory approval and planning on the part of ContiUnited but it is both sensible and doable.  It’s clear that the 787 will be used to expand opportunities rather than simply replace existing aircraft, at least by ContiUnited anyways. 

It’s also further proof that very large aircraft flying hub to hub (hello A380 and B747) as a model for international travel is going to be reduced as these new, next generation widebody aircraft come online.

Filed under: Airline Fleets, Airline News, Airports by ajax
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Two days ago, Emirates announced an additional $11 Billion order for 32 more A380 aircraft.  If all of its orders are delivered, this means a fleet of 90 A380 aircraft by 2017 or just 7 years from now.  It’s an impressive order and no airline enthusiast can deny that such a fleet is kind of exciting.  But it doesn’t make sense. for either Emirates or Airbus.

This certainly allows Airbus to plunge ahead for a while longer manufacturing the A380 but it really doesn’t put them any further ahead on earning any real profit from the airliner when you consider the deferrals and (potential) cancellations from other airlines.  In addition, this adds risk to their orderbook rather than reduces it because this indicates a growing dependency on just one airline for this aircraft. 

Several airlines have the A380 and most indications are that while they can make money with it, it isn’t a game changer for the airlines.  As the world of airline routes continues to fracture due to aircraft like the A330, 777 and now the 787 and A350, more and more flying is becoming “point to point” in the international world.  There are a relatively few routes that can support the A380.

Even the largest 747 fleet operators such as British Airways and JAL have made moves to start replacing their largest aircraft with Boeing 777 aircraft on most routes.  Yes, British Airways has orders for the A380 but one has to question how many they can support even on their busiest routes such as London-NYC or London-Australia. 

If British Airways (at one time they had over 50 747 aircraft) can’t support a large fleet of 747s anymore, how can Emirates do so?  Emirates doesn’t have magic working for it.  They don’t know something that others don’t.  They do have some cost advantages on fuel and labor but as time goes by, even those advantages narrow considerably.   So how does Emirates justify a fleet of 90 A380 aircraft? 

They don’t.  A fleet of 90 A380s means ownership of that aircraft for the next 30 years at minimum.  30 years of operating such aircraft is a long time and let’s not lose sight of the fact that there isn’t exactly hot demand for used jumbos these days.  Even relatively new(ish) 747s are now being retired into a life as cargo aircraft as 777s replace them. 

Further, Airbus and Boeing aren’t a bunch of huckleberries when it comes to forecasting their markets.  In fact, their forecasts tend to agree in most areas except the concept of the super Jumbo.  Boeing doesn’t see that market growing and has chosen to focus on serving the fat middle section of the widebody market (220 to 350 seats) with their 787/777 family. 

Perhaps Emirates will prove me (and others) wrong.  But I’d bet large money against them at this point.

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For a light Sunday, here are some videos of rather dicey crosswind landings by various aircraft.

Boeing 747 at Hong Kong’s Kai Tak Airport

 

Airbus A320 at Hamburg Airport

 

Singapore Airlines 747-400 landing in Zurich

 

The Airbus A380 learns to land in crosswinds

 

The Boeing 777 learns to land in crosswinds. Bonus shot of a 747SP doing the same.

The Concorde attempts a crosswind landing and decides to abort it on re-heat.

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Continental Airlines announced their first route to use their soon to arrive 787 aircraft.  It will be from Houston to Auckland, NZ and if nothing else, this is just fun to think about.   Tentatively scheduled for November of 2011, it’s a long way off still and I would regard it as being subject to a lot of things going right such as the aircraft arriving in time. 

This is exactly why I believe aircraft such as the A380 and 747-8 have a very limited role in the future of air travel.  We now have aircraft that, in the broad scale, are medium sized but very long range capable.  The 777-200LR was the first but even that aircraft is a touch big for some routes.  Not so for the 787-8.  The 787-8 is a 767/A330 sized aircraft capable of handling longer, thinner routes that, frankly, really don’t get flown today. 

Houston to Auckland may strike many as a little weird but it really isn’t.  It puts Auckland within range of the middle of the United States with a full load and margin for safety.  Suddenly there are a whole lot of cities on the East Coast and in the Midwest that can enjoy 1 stop service to New Zealand.  Previously those people had to fly to the West Coast and, in many cases, had to make 2 stops before arriving in LA.  Even if they had to make one stop, this flight will mean less travel time “door to door” than ever experienced before. 

Houston might seem an odd gateway to Auckland but it isn’t.  Consider the hub cities the new ContiUnited will have.  You can feed traffic from NYC, Philadelphia, Washington DC, Cleveland, Chicago and Houston to that flight.  That’s probably not enough to fill a 747-800 but it’s plenty to fill a 787-8 aircraft and I suspect a lot of that traffic will tend towards a more premium customer. 

The United part of the airline will continue to handle West Coast to Australia trips.  Air New Zealand will probably keep their routes from New Zealand to the US but ContiUnited will now be the first to open up the eastern half of the US to Down Under.  That’s huge and a bit of a blow to both Delta (SkyTeam) and American Airlines (Oneworld).  This could potentially see Delta and/or AA opening up routes using the 787 to similar destinations Down Under. 

Will it happen?  I think so but it does have a certain fairy tale quality to it.  I remember Aviation.Net members discussing such fantasy routes as far back as 2005 I think and when such things get fantasized on Aviation.Net, I tend to believe they’re too good to be true.  However, I believe this has a better than 50% chance of happening because it fits well within how Continental is run, the Star Alliance network and its what a SuperLegacy network airline should be flying when it comes to long haul destinations.

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The Dallas Morning News Aviation Blog has THIS story about Delta possibly deferring or cancelling its (inherited from Northwest) 787 orders for 18 aircraft (and 50 additional options.)  And this kind of makes sense to me. 

 

Northwest probably did need those 787 aircraft for its trans-pacific routes.  Its 747 fleet was adequate for some routes but others just couldn’t stand a 747 and Northwest doesn’t have any 777 aircraft.  The combined fleet of Delta and Northwest is a different matter, however. 

 

If anything, I think Delta might have one long haul aircraft type too many.  That said, they have 767 (Delta) and A330 (Northwest) aircraft for medium haul routes and configured so that each is nearly ideal for passenger density.  They have the 777 (Delta) and the 747 (Northwest) for long haul, high density routes as well.  Frankly, I think Delta might be better off adding the 777-300 to its fleet and retiring the 747 but that isn’t their plan.  They are refurbishing the 747 aircraft and extending leases on them.  Clearly Delta sees a profitable use for them at this time. 

 

The 787 isn’t going to be a trans-Atlantic aircraft.  Certainly not on the first routes for any airline.  A new(ish) build 767-300 or A330-300 can do those routes just as economically.  The 787 is better suited to routes like NYC to Tokyo or LA to Sydney or Atlanta to Rio de Janeiro or even the US to India.  Delta has the right sized aircraft for those routes.  

 

Delta can probably sell those orders profitably at this point.  There are a number of airlines who don’t have new(ish) 767s or A330s and there are several more who need to downsize from a 747 or 777 on long haul routes.  Airlines such as Continental and AA come to mind.  

 

Mind you, the enthusiast in me wishes all US airlines flew the latest and great aircraft.  The practical side of me says we’ll probably only see Continental take up its orders on schedule and even AA will likely take its time adding the 787.

Filed under: Airline Fees by ajax
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FlightGlobal has THIS story about Boeing considering a wing extension to improve the aerodynamic efficiency of the Boeing 777 and improve load and range.  How the 777 will sell against the Airbus A350 in development is a question everyone is asking these days even though the A350’s specifications and real performance definitions are, at best, still a bit murky. 

 

Although the A350 is definitely a competitor to the 777, engine thrust is really what reveals may be happening here.   So far, Airbus has been unable to grow its engine range into thrust ranges that approach what the 777 has with the GE90 engines.  Airbus remains at about 93Klbs of thrust from Rolls Royce and its two larger aircraft versions, the -900 and -1000 are, for the moment, have Rolls Royce as a sole source for engines.

 

Already airlines who are operating the 777 and who have ordered the A350 have said that the 777 will still have a significant payload advantage over the A350.  Payload advantages can translate into carrying more passengers, more cargo or more range.   In other words, the 777, on first glance, remains a very viable aircraft and with performance improvements, looks to remain so.

 

But what happens if Airbus is able to convince an engine maker to grow its thrust range into the 105K to 115K thrust range of the GE90?  That would probably mean a commitment to some kind of new engine from Rolls-Royce or a stunning reversal of position from GE on supply a version of the GE90 to Airbus.   Nonetheless, it’s a hard to ignore how such a development would change the viability of the 777 overnight. 

 

Incremental performance improvements are common on airliners and Boeing knows it can grow the distance between the two aircraft with these improvements but only if Airbus is denied a 100K+ thrust engine.  Since Rolls Royce has had quite some time to recoup investment on its large Trent engines and time to spend on research and development, I would not discount the possibility that they’ll commit to such an engine in the future but probably only if they retain some sort of exclusivity. 

 

I think the extended wing, engine performance improvements and other tweaks will keep the 777 in the sales game for the next 4 to 6 years but if Boeing wants to retain supremacy, it’s time to start asking what the follow on successor to the 777 might look like. 

 

Boeing has the 787 back on the right track and while they’ve got some work to do in getting the 787-9 and the speculated 787-10 into production, that has become straightforward engineering now.   The 747-8 has come into its own test program and since that is an incremental re-development of the 747, there isn’t much there that isn’t straightforward engineering as well. 

 

The 737 successor is by all accounts something to be deferred for development until late in this decade.  Instead, it will receive a new engine almost certainly which will require some changes to the existing design but nothing that would warrant calling it a new aircraft.  Instead, such an aircraft will be much like a 747-8 development. 

 

That means there is potentially a 5 to 6 year gap there in which a new development program can take place before the 737 development must start in earnest.  I rather think that’s the moment of opportunity for Boeing to go forward with that new large wide body replacement aircraft.  It will push the company, certainly, but that development, particularly with what they’ve learned in developing the 787, would almost certainly dominate the markets for 20 or more years if they were to make the commitment.

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There have been a few attempts to create long haul, low cost carriers over the past several decades.  Laker Airways and People Express were two examples of that from years past.  Neither succeeded in the long run due to competition but also because long haul flights are a different creature.

 

Now I’m beginning to think someone could do it.  It would require a few very special adjustments to make it successful and those adjustments would be a real challenge to accomodate but, yes, I think someone could do it.

 

Michael O’Leary of Ryanair has talked of doing this but his concept, at least how he has laid it out, is fraught with peril since it is based on a Ryanair strategy. 

 

Long haul flights really only work between two large population centers because they do depend a lot on airport infrastructure and originating traffic in those areas.   They are international and that requires airports that can accomodate customs and immigration facilities and airports that have runways that are long enough for long haul aircraft. 

 

They also can’t depart and arrive at just any time.  Not to be attractive anyway.  So schedules are much more important and frequency isn’t necessarily the key as much as finding routes that offer high aircraft utilization. 

 

Until recently, they also required really large aircraft such as the 747 or DC-10/MD-11 to lower the costs per available seat.   Filling those aircraft day in and day out is difficult on a point to point basis if you don’t have really large population centers to feed those aircraft.

 

Things have kind of changed though.  For one, there are aircraft that might be suited to such operations which offer very low CASM (cost available seat mile) but which aren’t so big that they become difficult to fill.  I’m thinking of the Boeing 787 and 777 and the Airbus A330 and A350. 

 

These aircraft are capable of long haul flight, offer enough capacity and the kind of operating costs that might just make such a venture possible.   In particular, the 787-8 and A330 make this look real attractive. 

 

The one twist that I think you would need is partnerships to feed these flights at major cities that would serve as the departure points for such flights.  In the past, I would be skeptical of this being possible.  Now, not so much.  Southwest Airlines is forging partnerships with LCC carriers in Canada and Mexico (WestJet and Volaris) and its just the kind of partnership that a long haul LCC venture could use.

 

Imagine an LCC carrier using the A330 or 787-8 flying routes such as DFW-London or Chicago-London or NYC-London.  Or even Portland, OR to Amsterdam or Denver to Germany.   Maybe even Salt Lake City to Japan. 

 

The best aircraft would be the 787-8.  It would accomodate medium to long haul flights perfectly with low enough CASMs for virtually any city pair.  Its expected to be more low maintenance than any other aircraft of its kind.  It could become the 737 of long haul quite easily. 

 

If you had partnerships with LCC carriers on both sides to feed connecting traffic (something else that Southwest has done a time or two with its relationships with ATA and Icelandair (which was actually an interline agreement), you might be able to do it. 

 

Imagine Southwest Airlines feeding such an LCC in places such as Denver, Baltimore, Pittsburgh,  Portland or Seattle and Ryanair feeding such a venture at airports such as Dublin, London-Standsted or Frankfurt-Hahn.  Or, perhaps, Airtran feeding such an airline from Atlanta to Rio de Janeiro with Azul providing the feed in Brazil. 

 

This new LCC would have to be the “codeshare” on the domestic/regional flights and its own entity on the long haul international portion.  Domestic/regional partners would benefit from the additional regional traffic but really should not be selling tickets from Kansas City to Rio de Janeiro via Atlanta.  It goes against their models.  These partnerships should be about each sticking to their models but providing some interlining between the two. 

 

Oddly enough, I see airlines in two parts of the world being able to do this.  The United States would be ideal because a US based long haul LCC carrier can reach around the world from the US borders.  The other area would be one based in the Middle East such as Dubai which could also reach around the world. 

 

With Open Skies agreements falling into place left and right, the right aircraft being available now and LCC IT infrastructures becoming flexible enough to enter into this kind of partnership, it might just be possible in the near future.

Filed under: Airline Service by ajax
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Let’s talk alliances before anything else.

 

There is a huge battle taking place over who gets to have Japan Air Lines (JAL) business.  The financially struggling airline has suddenly become a hot property and American Airlines (OneWorld) and Delta Airlines (SkyTeam) are fighting over JAL like it’s a supermodel.   Both airlines are offering hugely attractive financial packages to JAL and I suspect the poor airline has no idea of who to nod their head towards. 

 

Ultimately, I think JAL will stay in Oneworld.  There is more at stake here than what is offered as a financial rescue package.  Japan is still a very nationalistic country and keeping the identify of what is, for most purposes, its flag carrier will be important.  It has a solid relationship with Oneworld and American Airlines and compared to the risk of joining with SkyTeam and the possibility of being a second tier player in that relationship, JAL has a safer bet with Oneworld. 

 

In addition, I don’t think JAL can afford to wait for anti-trust immunity to act with airline partners and it won’t have to by staying with Oneworld. 

 

The Middle East:

 

I continue to think that the major international airlines (Emirates, Qatar, Etihad) of the Middle East are more at risk than they claim.  Yes, they’ve experienced phenomal growth and, yes, they continue to purchase aircraft like a 5 year old buys candy but what’s next for them and their route systems? 

 

The Middle East doesn’t offer a good connecting point for North or South America.   Airlines in North America can reach their markets non-stop with existing aircraft and why would a passenger choose to connect via an airport in the UAE (United Arab Emirates) when they can fly non-stop at a competitive price.  Better service product won’t attract these customers.  

 

There is very little business between South America and Africa, India, The Middle East or Southeast Asia and, so, South America isn’t a place that could serve as a growth area for those airlines. 

 

Emirates, Qatar and Etihad have succeeded by offering a hub between Europe and the Middle East, India, Southeast Asia and (to some extent) Australia/New Zealand.  However, even European airlines are adding longer range aircraft and are able to reach each of those destinations non-stop  more and more with the exception of Australia and New Zealand. 

 

In addition, each of those airlines is bankrolled to some extent with oil profits and the uncertainty of those profits and the uncertainty of other investments in the Middle East has to raise the risk for that continued bankrolling.   I don’t see any of these airlines failing in the next year but I do see them perhaps deferring orders and re-organising their fleets. 

 

India: 

 

What a catastrophe!  No airline in India will do well for now and there has to be some consolidation in this market in the near future.   Kingfisher and Jet Airways are both excellent candidates for takeovers and, perhaps, they are excellent candidates for each other.  Kingfisher bet on Airbus by ordering A330 and A340 aircraft first.  Their A330 fleet doesn’t quite have the range it really needs to expand outside of its current markets and the A340 was a terrible choice for long range flights.  So much so, it got rid of the aircraft on order. 

 

Now, Kingfisher has a few A350 and a few A380 aircraft on order for deliveries starting in 2014.  While it could desperately stand to have the A350 now, I don’t see how it can wait until 2014 for the aircraft.  I also seriously doubt it will ever take up the A380 both because of cost and an inability to fill the aircraft enough for regular flights. 

 

Jet Airways also has a great service product but bought too big of an aircraft for the routes it needed to compete on.  Jet Airways purchased the 777-300ER when it really needed the 777-200ER/LR for the international routes it proposed to serve.  Now 4 of the aircraft are leased to Turkish Airlines and 3 are going to Royal Brunei leaving just 3 for Jet Airways. 

 

Both Kingfisher and Jet Airways have a great service product and good networks across India and neighboring countries.  They would be better served by merging and using one brand for their national service and another for their international services.  Kingfisher for India and Jet Airways for international service. 

 

The Far East:

 

China has a lot of problems coming to roost with the inevitable decline in their economy which is heavily dependent on North America and Europe.    Look for some consolidation in this market.  I do think that Chinese airlines face potential issues from government mandates to purchase indignenous aircraft being developed now.  There is little chance that the aircraft being built will be competitive internally or externally.  At least for this first round of development.

 

While JAL is suffering and ANA (All Nippon Airlines) isn’t performing that great at present, I see no major changes in the Japanese markets.  This is an area that will bounce back but only after a long fight.    The same is true for Korea. 

 

Oceania: 

 

Australia will be interesting to watch.  I’m tempted to guess that the status quo will remain in most cases.  The competition between the US and Australia only continues to grow more fierce and something has to give.  I still think that United Airlines may well be the airline to withdraw from this market and only because of the rather unique market relationship formed between Delta and V Australia (and Virgin Blue). 

 

 QANTAS will continue to own a large piece of all air travel from its home nation and they could be helped along with some deliveries of the 787.  At some point, QANTAS must grow and growth means a lot of long and thin routes to be added. 

 

South America: 

 

I don’t think there will be any major news from this continent over the next year.  LAN will continue to succeed by operating smart and honest.   Brazilian airlines will continue to fight things out but there is enough international business for each of them and their real threat comes from Azul on a domestic basis. 

 

Look for Azul to consider adding a larger aircraft to its fleet and don’t count Boeing out on that deal.   It would be easier for David Neeleman to add the Boeing 737 to his fleet in Brazil because he could outsource maintenance more easily. 

 

Aerolineas Argentinas:  Well, what can I say?   This disaster is much like the country itself.  It won’t go away but it won’t perform either.  No outside airline will consider taking it over after what happened with Grupo Marsans’ ownership.   They lack an appropriate fleet for their flying, a strategic plan for stabilizing their revenues and no clear plan for future growth.  But the Argentinian government also won’t let them go away.  It is a matter of national pride.

 

LAN Argentina is growing in Argentina but somehow I remain skeptical that it will be allowed to succeed too well.  Why?  For one reason, the government of Argentina owns Aerolineas Argentinas and it has a vested interest in that airline earning money.  For another reason, LAN Argentina is owned by the LAN Group of Chile.  Look up how Chileans and Argentinians feel about each other.

 

Colombia and Venezuela: 

 

Avianca Airlines has joined hands with Grupo Taca and I suspect that will be a good thing for both airlines.  Avianca could benefit by the exellent managment of Grupo Taca and Grupo Taca could benefit from greater access to South American markets.   Its almost certain that the two will harmonize their fleets and service products for greater economies while maintaing the two identies for greater acceptance throughout Central and South America.

 

Venezuela:  All airlines erode further due to the increasing interference of the Venezuelan government and, more specifically, Hugo Chavez.  I lost hope for Venezuela’s airline industry when they forced Conviasa (in partnerhsip with Iran Air and originally using an Iran Air 747-SP) into a route between Caracas and Tehran with an intermediate stop in Damascus.  This is the ultimate in “this route makes no sense.”  If the government can do that, then they’ll do other things to damage the industry.

 

Europe:

 

The European continent’s airlines are hunkered down just as much as the US based airlines.   There isn’t much to be expected in Europe for the next 12 months but let’s look at it anyway.

 

British Airways is kind of the American Airlines of the UK.  They’ll always somehow manage to survive and generally pretty well.  They have their own labour troubles but, again, they seem to be capable winning these for now.  British Airways needs to cut costs a bit more so I wouldn’t be surprised at some order deferrals and/or hastening the exit of the 747-400. 

 

The one airline I continue to wonder about in Europe is Lufthansa.  While they have a good service product and an excellent reputation, they also seem to have some weaknesses.  Lufthansa continues to purchase weaker sisters in Europe such as SWISS, Brussels Airlines, Austrian Airlines, Lauda Air and, now, BMI.  

 

20 years ago, this would seem reasonable in that European countries were pretty nationalistic.  Now, not so much.  Yes, there are some pockets of nationalism that exist but I wonder at maintaining so many different brands, fleets and networks now.  It would seem that the brands could be pared down to 2 or 3 mainline airlines and 3 to 5 regional airlines.   BMI wasn’t an airline that was succeeding in any great way and what does Lufthansa get for their purchase?  I see little of value.   I don’t know that BMI gets Lufthansa an entry into the UK that is of any more value than the Lufthansa brand itself.

 

I also wonder about their fleet.  They have a large fleet of A340 aircraft serving medium to long haul routes and that cannot be very efficient or profit enhancing.  Yet, Lufthansa has made no real move to correct this problem.   Their one major aircraft order in the past several years was for the four engined 747-8i.  They have no orders for the 787 (although Boeing would no doubt happily accomodate them with early delivery positions) nor the A350 (and I’m certain Airbus ould love to add them to the order book as well.) 

 

This puts Lufthansa into competition with British Airways who has moved towards operating more twin engine, long haul aircraft (777 and 787) as well as KLM/Air France (777).   Yes, they do own some A330 aircraft but their true long haul equipment is the A340 and 747.

 

KLM / Air France:  Not much here.  I don’t see an order for aircraft coming from them unless Airbus magically announces a GE engine for the A350-1000.  Otherwise, I seem them holding their cards close to their vest and waiting to see what happens in Europe.

 

The BA/Iberia merger:  I never saw the attraction myself.  It’s a low rent copy of the KLM/Air France union and I suspect there are many issues to resolve before the two really combine.   Personally, I think the odds of this merger actually taking place is, at best, 50/50. 

 

 Their alliance with AA over the Atlantic will continue to be a strong issue for the US Justice Department.   The BA/AA strength on the US/UK routes and the the IB/AA strenght on the US/Spain routes is really a bit too much.   I think the DoT/FAA is willing to let this alliance go forward but I think the DoJ is going to speak loudly and force a request for concessions.   Concessions that I think, this time, BA and AA may meet with some negotiation.

Filed under: Airline Service by ajax
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The Boeing 787 and Airbus A350xwb are commonly compared to each other over the past few years but are they really similar aircraft?

 

In one sense, yes, they are.  Both aircraft make substantial use of CFRP for instance.  Boeing makes the fuselage of the 787 as a full “barrel” and Airbus plans to use CFRP panels using an more conventional structure underneath.  Both will also use similar engine and engine technologies although Boeing is using a system that eliminates “bleed air” from its systems for the first time while Airbus retains it. 

 

They are both aimed at the medium to long range market although Boeing’s 787-3 (if it ever comes to fruition) is aimed at domestic markets primarily in Japan with a planned range of about 3000 nautical miles maximum.  When the introduction of this aircraft was delayed in favor of the 787-8 and 787-9, Japan Air Lines transferred its orders to the 787-8 and All Nippon Airlines reduced its order and transferred the remaining to the 787-8.  Ultimately, I suspect this aircraft may be developed to offer trans-Atlantic, US transcontinental and Japanese domestic capability.   That would mean a range increase of probably as much as 1000 nautical miles which would still be 1500 or more nautical miles less than other 787 models.

 

Both were initially introduced as 3 models.  Boeing has firmly offered the 787-3/8/9 and Airbus has firmly offered the A350-800/900/1000.   However, the variants of each manufacturer do not match up one for one.

 

The 787-3 and 787-8 will be a bit smaller than the first A350-800 model.  Instead, Airbus targeted its A350-800 model to match up against the 787-9.  The A350-900 and 1000 more accurately match up against the Boeing 777-200/300 aircraft. 

 

What drove the development of each of these aircraft is more important and shows the difference.  Boeing needed a replacement for both the 767 and the 757.  Those models were more than 20 years old and had issues with continuing to be capable aircraft for airlines.  The 767 was unable to carry cargo competitively with the A330 and A300 Airbus models and its engines were becoming fuel inefficient for many routes.  The 757 had morphed to a medium haul / trans-Atlantic model but didn’t quite have the legs to reach Europe except from extreme East Coast destinations. 

 

Boeing already had the 777-200 which filled a gap between its 747-200/400 models and it didn’t need to replace it since the 777/200ER was quite young and it had the 777-200LR coming online shortly.  It needed an aircraft that was capable of carrying a passenger load from 230 to nearly 300 with a full cargo load on at least medium range routes of 5000 nautical miles or more. 

 

In addition, airline trunk routes were fracturing so it needed its next aircraft to be capable of flying much longer routes so the new aircraft had to be capable of flying routes from 5000nm to 8000nm efficiently.  Something that the 767 wasn’t capable of and the 777 wasn’t very suited to capacity wise for the shorter ranges.   So Boeing defined the 787 to fill that gap.

 

Airbus was faced with a different problem.  The A330 was and is still a strong seller and an excellent competitor for the 777-200 on medium range routes.  It had the A380 coming online as a competitor to the 747 which left a large gap between the A380 and A330 because airlines had never really bought into the A340 model line.  The A340 was an inefficient competitor to the 777-200/300 line of aircraft because it used 4 engines (as opposed to 2 engines) and possessed a fuselage that was slightly too narrow to be stretched for more capacity without other problems cropping up. 

 

What Airbus didn’t have was a real 777 competitor and that’s what it needed.  After going through several definitions of the new aircraft, it arrived at the A350xwb.  The A350xwb-900/1000 compete directly with the 777-200/300 models in capacity and range.   However, where customers are already seeing a deficiency is in cargo capacity. 

 

Although the A350 is not yet completely defined, it appears that while it may have lower costs per available seat mile, the 777 will continue to be able to lift and carry several tons more cargo in addition to its passengers.  In real world operations, the two may be very even competitors unless and until Airbus is able to offer higher thrust engines (100K pounds of thrust or better), this deficiency will remain.  Currently, Rolls-Royce has shown some willingness to build to that thrust capability (borrowing on their engine technology for the 777) but GE has shown no interest in developing a new engine using GEnx technology to meet the specifications of Airbus’ A350-1000 model leaving a large gap.  GE sees such an engine cutting into its current customer base on the 777.  Current 777-200LR and 777-300ER models have GE engines capable of 110K and 115K thrust respectively.

 

Both models promise to be excellent, successful aircraft because they fill needs for each manufacturer’s customers.  Both brands needed those models to fill very important places in their lineups.   Even airlines see these aircraft as more complimentary than competitors as evidenced by many large airlines ordering both models. 

 

The Boeing 787 promises to be successful with US, European, Japanese and, possibly, Australian airlines.  South American airlines will likely follow in 5 to 10 years.   This aircraft will serve airlines whose routes are either long and thin or those that have high frequency. 

 

The Airbus A350 will serve routes that are fat and long primarily and will likely be used by airlines based in the Middle East, South East Asia, India, Australia and by some in Europe.   This aircraft is more a trunk route airliner that will serve routes with lots of density, low to medium frequency and of 5500nm distance (at the least).

 

It is notable that Airbus faces an issue that Boeing doesn’t have with the 787 and that is customer base.  Nominally, both companies have a healthy order book for each respective aircraft.  The 787 has well over 800 orders and the A350 has well in excess of 500 orders.   Both have an average of 15 orders per customer even.  However, the customer base for the A350 is really quite a bit more narrow than Boeing’s.

 

Airbus has roughly 505 orders for its A350 aircraft line up and of that, the only truly significant large quantity orders come from a few airlines based in the Middle East or South East Asia.  More than half of those orders (284) are attributed to just 13 customers from Africa, the Middle East and South East Asia.  Of those 13 customers, 7 customers should be considered as somewhat dubious in light of the present world wide economic climate in the airline industry.  Of the remaining 6 customers, 3 airlines and one leasing company (Emirates, Etihad, Qatar and DAE Capital) account for 205 of those orders.  The A350 will need to find a wider customer base for all its models to reduce the risk the order book currently has.   Those three main airlines are each based in the UAE (United Arab Emirates) and while successful today, have dubious opportunities for their continued growth over time. 

 

Boeing’s order book is stretched more evenly across airlines of the world and on most continents.  While Boeing does have some dubious order holders, they are fewer overall and comprise a vastly smaller portion of the order book both percentage-wise and in total orders.   Boeing has much less risk in its order book.

 

Boeing should begin deliveries to customers in the 4th quarter of 2010 or about 10 months from now.  With a second production line expected to come online in 2 to 3 years, Boeing is well placed to fill its orders and have enough production slack to fill new orders from major airlines.   Within the next 2 years, expect to see the 787-10 defined and design work begun.  The 787-10 will likely be a 777-200 competitor in some respects but it also allows Boeing to define a new 777 or replacement model that reaches further upwards in capacity in the future.

 

Boeing’s next moves are likely to be, in order, the 787-9, the 787-10 and then either a refresh of the 777 model as a next generation enhancement with extensive use of composite materials, new engine technology and likely following a systems approach similar to the 787.  If it isn’t a refresh of the 777, it will be a new model to replace the 777 with capacities just above the present 777-200 and finishing with capacities a bit past the current 777-300.   A 737 replacement should follow once that 777 issue is nearing production.

 

Airbus currently has the A330 and plans to continue production for several more years.  However, Airbus is due to be left with two serious gaps.  First, the gap between the A321 and the A330 which nominally should be filled with a 787 competitor.   This is likely where Airbus goes next but not before 2015 or later.  Then, Airbus also has a bit of a gap between the A350-1000 and the A380.  This gap really isn’t so important for the next 10 years but its one they’ll have to watch since Boeing will be positioned to offer a right-sized aircraft in that market in the form of a 777-refresh, 777 replacement and their about to be introduced 747-8i.  After filling the A321/A330 gap, Airbus will likely go to work on their A320 series replacement which, I suspect, will be sized at slightly larger capacities than the current A318/319/320/321 lineup.

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The Associated Press is reporting that United has decided to order (25) Boeing 787-8 and (25) A350-900 aircraft with deliveries starting in 2016.   Options for 50 additional aircraft (of each type) are also included. 

 

The order isn’t a surprise in that it has been commonly known that United was considering a purchase.  Even the split between types doesn’t really come as a surprise.  United Airlines is already an Airbus customer and United Airlines is *not* a party to the gentleman’s agreement to buy only Boeing aircraft.  American Airlines, Delta Airlines and Continental Airlines are parties to that agreement which gives them access to early positions on the production line(s) and preferential pricing.   That is how AA managed to land early delivery slots when they made their order for the 787 earlier this year.

 

Some will be surprised that United didn’t buy more 777 aircraft but I’m not sure that would have made sense for them.  They don’t necessarily need the cargo lift that a 777 offers and, frankly, this order wasn’t for 777 replacement aircraft.   These aircraft will replace 747s (with more frequency) and 767s (one for one) as United retires those two types from its fleet. 

 

 I suspect United decided to not keep all their eggs in one basket and chose the A350 because it would be newer and more efficient for the type of routes United serves.  Nothing more, nothing less. 

 

Lack of a firm offering for the 787-10 is starting to become visible.   This is the dawn of that omission and it will be a glaring one in another 12 to 18 months.   Airlines would like to have some confidence that they can purchase a fleet that spans the three basic types for various missions and which doesn’t require a different pilot rating for each type.   Confirming the 787-10 and preparing an offer to airlines wouldn’t be an unwise thing on Boeing’s part.

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That isn’t a big surprise to most readers of this blog and one very good reason why I’ve said little about the event.  Despite the long program delays and disappointing news of certain developments about this aircraft, I remain extremely excited about this aircraft.   Perhaps for different reasons than most, though.

 

Mainstream press continues to speak about the 787’s increased comfort potential for the passenger and sometimes mentions the efficiency the aircraft will offer airlines.  All that is true but it excites me for different and more specific reasons. 

 

First and foremost, it is the first truly new aircraft to come from Boeing since the 777 made it’s first flight in 1994.   Since then, there have been improved variants of the 737, 767 and 777 introduced but this is the first “from scratch” aircraft to show up in 15 years from Boeing.  That is exciting to me.

 

One of the most disappointing results from the Boeing / McDonnell Douglas merger is that, in many respects, Boeing was taken over by McDonnell Douglas managers rather than the other way around despite the fact that, for all intents and purposes, it was really a Boeing takeover of McDonnell Douglas.   Since that merger, Boeing has been much more intently focused on developing its defense businesses almost at the expense of investing in Boeing Commercial Aircraft.   That has been disappointing and a bit perplexing to me given Boeing’s ability to build fantastic aircraft for the commercial world.

 

So I hope that this aircraft, the 787, represents a return to innovation and development for Boeing Commercial Aircraft.   I hope that a new, younger group of managers is being born from this program that will lead Boeing’s development of new aircraft such as a 737 replacement, a 757/767 replacement and, yes, a new 777/747 replacement too.   But I remain concerned if for no other reason than Boeing seems to be ignoring new competition from Bombardier and EMBRAER who are now challenging the 100 to 130 seat domestic segment in the US and elsewhere.   If Bombardier can build its new C-Series aircraft with union labor in Canada, Boeing should be more than capable of developing a new family of aircraft to compete against those two companies.

 

While the first flight is truly on track to happen in the next two weeks, the burning anticipation of that first flight has, if anything, died down in many respects.  Those who have followed it tortuous path to first flight recognize that it isn’t the first flight that means anything now.  The aircraft is so mature in its development that we know it will not only fly but fly very successfully.  We know that the major teething problems are almost certainly over now.   There isn’t any need to speculate on its performance on a first flight and really nothing to wonder about for its testing over the next 12 months.

 

The real anticipation comes from seeing it perform with an airline.  We want to see it enter an airline’s fleet and see how it performs during real world use.   We want to see if airline CEOs proclaim it the game changer we all ferverently hope it is.  We even just want to see what the airlines’ liveries will really look like on it.  The real next “moment of truth” for the 787 is when it enters a fleet in its new livery.  The launch customer is All Nippon Airways (ANA) and we should see ANA put the 787 into service sometime in late 2010.

 

The 787 should see service with a US airline in late 2010 or early 2011 and it will be Delta Airlines who has the honor by virtue of inheriting Northwest Airlines’ orders.   I suspect we’ll see Delta order more shortly after the 787 begins operating in its fleet.  Continental Airlines will put the 787 into service a short while later.

 

This is the most anticipated large volume aircraft to be designed and built since the 1960’s.  That’s exciting. 

 

What’s also exciting is what this aircraft means to Boeing and its future development projects.   Will these same technologies be used on a 737/757 replacement?   Is it conceivable that they’ll be used for a Very Large Aircraft to replace the 777?  Both are possibilities.   Detractors say there isn’t as much “gain” to be had in using carbon fibre based fuselages for a 737 replacement with respect to efficiency and that is probably true.

 

However, these new techologies may mean that Boeing can produce the 737 replacement even faster.  The composite carbon fibre fuselages may mean less maintenance and longer maintenance intervals for airlines like Southwest and Ryanair.   The new engines coming into development will demand some changes too.  Larger by-pass ratio engines or, if developed, open rotor engines means more clearance will be needed between the wing and the ground.   The next aircraft will  have to stand taller and that might mean a little more time spent on ground handling.  

 

The next generation engines and Boeing decision to produce an “electric” airliner may see those approaches used in the 737 replacement.  Have we reached a point in reliability that we can expect these new systems to survive the punishing schedules of a domestic airline?  I think so but the 787 is the aircraft that must support that supposition. 

 

The 787 won’t be exciting because of what it potentially offers the customer in comforts.   Yes, no matter what we’ll have larger windows and a little bit more fresh air and pressurization in the cabin but if you think you’ll be getting more spacious seat pitch, you’ll be disappointed.   This new aircraft will be as packed as any in service now.   Overhead bins will still be crowded. 

 

My birthday is December 12th.  There is speculation that the 787 may fly as early as December 14th.  That’s close enough that I find myself kind of hoping that Boeing might pull a fast one and send it up into the sky 2 days early.  It would be exciting to have an airliner born on my birthdate.

Filed under: Aircraft Development, Airline Fleets by ajax
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