On the one hand, Airbus COO John Leahy gets to make good on his prediction of 500+ committments to the A320NEO by the Paris Air Show. He even gets to land a traditional Boeing customer (Garuda International) but at the risk of sounding anti-Airbus and pro-Boeing, there is a bit more to this story in my opinion.
First, Garuda is hardly a critical Boeing network carrier. It stings a bit for Boeing but . . . when you have a competitive environment, customers change from time to time. That said, we aren’t hearing about Airbus customers switching to Boeing either.
Second, Airbus landed committments for 500+ aircraft. Not firm orders. Some of these committments are Memorandums of Understanding, some are Letters of Intent and some are orders. Boeing plays a bit more fair in this area in that it doesn’t “count” something as a committment until it is a firm order.
Third, when you look at who these committments come from, it isn’t game changing. They are almost all from existing Airbus customers and from customers in areas where Airbus and France have heavy influence. There is no radical shift in the landscape. If you’re an Airbus customer and you need a single aisle airliner, you’re pretty much going to order the NEO. That’s what has happened so far.
All of that said, Boeing is in danger of becoming a bit too secretive of its plans. It’s clear that major Boeing customers want to see something on the table. Moreover, I suspect that they would like to be let in on the discussions about what an airline *wants* in a new single aisle airliner / 737 replacement / 737 re-engine. If I were a Boeing customer, I would imagine that my attitude towards Boeing at this point would be quite similar to SWA’s CEO Gary Kelly’s. In a word: terse.
With the announcement made on the A350-1000 (which would appear to more or less bring that aircraft into competitive range of the 777-300ER but not exceed its capability), it’s time for Boeing to bet again. They have a firm handle on the 787-9 development and I think they’ll find it within themselves to repeat that on the 787-10. (Although one does wonder if they’re considering enough range / payload for the 787-10 given that airlines clearly enjoy the performance of late model 777-200ER/LR aircraft.
Boeing can’t afford to dither around much longer. It’s time for a decision and enough time has passed to make that decision. If they’re confident they can make a new airliner that is 20%+ better, make the bet and get going on it.
Airtran has had Skywest flying 6 routes for it out of Milwaukee and one of Southwest’s first moves is to dissolve that codeshare and start flying routes on its own. New routes will include flights to Des Moines, Akron-Canton and St. Louis.
As you can imagine, SWA pilots are thrilled. This goes to a central principle with Southwest, namely flying its own routes and flying routes that are profitable on their own.
I’ve found no information on what equipment will be used but my guess is that we’ll see 717s and 737-500s re-deployed as Southwest rationalizes services out of cities that both SWA and Airtran serve. The best candidate for those new routes are 717s as they have the right capacity and they’re all in reach with a 717.
The merger will allow SWA to find those new routes that many cities have been clamoring for. For the first time, Southwest has real depth when it comes to finding the route aircraft for the right route. Look for more routes developing both in the Rust Belt, Midwest and the South as time goes by. All three areas are places where SWA has had good luck and with the route overlap that exists in focus cities such as Milwaukee and Baltimore as well as in Florida, I think we’ll see a number of new routes and re-deployments of aircraft as time goes by.
Airbus has committed itself to the A320NEO series recently and Boeing continues to decide to not decide on what it will do with the 737. All the while hinting at a new aircraft development for a 737 replacement to enter into service around 2019/2020. Except that Boeing has also hinted from time to time that a re-engine might be in order while also saying that customers don’t want a re-engine.
In addition, Airbus will be releasing its configuration for the A350-1000 aka 777 killer in the next few weeks. Boeing doesn’t believe it quite meets the mark without a new wing and Airbus has said nothing about a new wing. Right now, on paper, the 777-300ER still beats the A350-1000. Unless Airbus releases a configuration that causes people to pause and gasp, Boeing will most likely not feel too threatened by Airbus for the time being.
And that’s why I say watch Airbus to see what Boeing does. Boeing knows it can probably win against Airbus with a 737 replacement in the time frame it is talking about while managing to keep customers interested in the current 737 through incremental improvements that should keep the two aircraft competitive. I’ve felt that Boeing wants to know what Airbus’ move is on the A350-1000 so it knows where to commit its resources. If the configuration and definition for the A350-1000 moves it into competitive territory with the 777, Boeing knows it needs to get to work on improving the 777 (an exceptional moneymaker for Boeing presently) in order to not lose those customers for the next 2 decades.
Boeing likely believes it can cover the 777-200ER territory with a 787-10 (and perhaps an incremental improvement to the -10 as an ER model later). This leaves it free to preserve the 777-300 in its current configuration or find improvements to the existing design or even design a new aircraft family to fit above 787-10 and finish alongside the 747-8i.
But what Boeing doesn’t want to do is commit to launching 2 new airplane programs simultaneously. Boeing already knows what will likely happen if it does that.
With all of that into consideration, I think that once we know the firm definition for the A350-1000, Boeing will know how to sequence its next airplane programs. It will be either a 737RS first with a 777 replacement kicked off 3 to 4 years later or a 777 replacement first with a 737 re-engine done simulataneously and a 737 replacement coming 10 to 12 years after the re-engine.
I strongly believe that Boeing wants to do the former sequence (737 replacement / 777 replacement) because it puts Airbus into a corner. With this strategy, Boeing probably has an all new line of aircraft using the latest technology spanning from 150 seats to 450 seats while Airbus has the A320NEO and A350 series but with a gap between the A320NEO and A350 being filled by what will be quite the aging aircraft: the A330. In fact, there already is a gap, although minor, between the A320 series and the A330 series. And make no mistake: The A330 will begin to die in another 2 years or so as a result of the A350 and 787 developments.
My prediction? I think Airbus will announce nothing that threatens Boeing’s competitiveness in the 777 models. Sometime late in the fall or early in the winter while riding on an uptick with the deliveries of the 787 and 747-8i to customers, Boeing will announce a 737 replacement program with a big airline order. Sometime around 2017 or 2018, we’ll see Boeing announce a replacement for the 777 sized above the 787-10 and right up alongside the 747-8i.
Jon Ostrower has written about a conversation he had with Southwest Airlines VP Operations Coordination Jeff Martin. Mr. Martin says they need an efficient replacement aircraft for their 200+ 737 Classic aircraft and they need it sooner than 2019/2020 and, no, a re-engined 737 Next Gen does not meet the criteria they have for such a replacement.
Actually, Southwest has two subfleets to think about. The 737-300/500 fleet and the 717 fleet. The former because it is just aging and aging quickly and the latter because it isn’t sustainable as a fleet over time since it isn’t being made anymore and obtaining additional aircraft would be difficult at best.
Would Southwest consider another aircraft maker? Absolutely. This idea that Southwest wants one fleet type is somewhat silly. This is an airline with over 500 aircraft and one aircraft type doesn’t fit all situations as well as 2 or 3 fleet types.
I’ll also point out that since Gary Kelly has taken over as CEO, Southwest has embraced a lot of change and they’ve succeeded despite predictions to the contrary.
In addition, I recall Southwest getting a bit lathered up over what they saw regarding the Frontier Q400 fleet when doing their due diligence almost two years ago. If there is one thing Southwest likes to do, it’s save money.
I think Bombardier products will get a strong look. I think the CSeries and the Q400 might get looked at quite closely. Dispatch reliability is going to be a key point, however. But there are at least 2 cities that SWA operates from in which a fleet of Q400 aircraft could make very profitable bases: Chicago and Dallas.
In addition, I think Embraer will have a shot at pitching their aircraft (current and future) and I think Airbus will get its feet in the door as well over the A320NEO. Thing is, the very fact that it is the A320NEO that Airbus has to offer is what, in my opinion, makes them an unlikely player at SWA. Southwest doesn’t want a warmed over design to tide them over. They want revolution over evolution when it comes to efficiency.
Revolution is potentially the CSeries with both enough capacity and range to fill almost all of Southwest’s requirements. They also have enough seating range to make it an effective aircraft in both the 110 and 130 seat range. That is going to be a sweet spot for Southwest for some time to come. Yes, they need an aircraft that will seat 145 to 170 as well (and that aircraft will also need continental range as well) but they’ve got that in a fairly new fleet of 737-700/800 aircraft. The nice advantage to the CSeries / Boeing approach is being able to have a range of sub-types across a two type fleet. You get effective 4 needs met with two basic types and doesn’t that approach sound frugal?
Boeing needs to wake up just a bit and get a little more aggressive. To believe that SWA is a Boeing customer now and for the future ignores a great deal of change when it comes to SWA and its needs.
Advertising Age had a brief interview with Herb Kelleher of Southwest Airlines recently and one thing about it struck me quickly. It’s a lesson many businesses could stand to learn.
When things got tough for Southwest, they spent more, not less, on advertising and marketing.
It’s a lesson I learned myself more than 10 years ago when I was partners in a construction firm and new construction jobs dried up. You don’t fold up, you go hunt the business even harder.
It seems like an obvious thing but it really isn’t. Just take a look around you and at what has happened with a great many businesses over the past 3 years. The first reaction to bad times is to stop spending money . . . period. People retrench and hunch down to try to withstand the storm about to hit.
And a few others go and innovate. With Southwest, it’s advertising but it is much more as well. They innovate. They look for smart savings. They embrace change and they empower people to use good judgement in executing that change. In the 1990’s, when fuel prices spiked as a result of the first Gulf War, Southwest pilots suddenly started requesting higher altitudes on their flights to the surprise of other airlines and air controllers. In fact, they got downright aggressive about getting optimal altitudes for their flights. Why? Because it saved money.
Now, among US airlines, Southwest is virtually the only one embracing the need to invest in GPS technology to be prepared for NextGen air traffic control. Other airlines are making statements to the press about its expense and how the US government should pay for it. Southwest has it, is implementing it and benefitting from it. It saves them money now and it will save them more money in the future.
When Boeing was designing the cockpit for the Next Generation 737 aircraft, Southwest (Boeing’s biggest customer for the 737) asked that the new flat panel cockpits be designed to emulate the “steam” gauges being used in their 737-200/300 fleet so that there would be no transition between the aircraft for its pilots. Why? Well, training was one reason but there was a better one underlying that: Pilots would be able to seemely switch from aircraft to aircraft during their flight day without having to slow down and re-think what they were doing each time they took over a new aircraft. That made turning flights quickly still doable.
What do you do when it gets tough? Innovate and advertise. That’s what Southwest does.
At first glance, integrating Airtran’s fleet into Southwest’s operations would appear to be easy and straight forward. In fact, it isn’t. Airtran operates a different floor plan and a two class cabin. All of this affects things like weight and balance of the aircraft as well as using the floor plan on Southwest flights.
So Southwest will begin slowly converting Airtran fleet over to the Southwest model one by one. Southwest will add these aircraft and, over time, take over Airtran routes. Airtran will slowly reduce in size by fleet and route at the same time until both are on the same single operating certificate and the aircraft are homogenized into the fleet.
Expect this to take longer than a year. Even converting the 737-700s is fairly straight forward but now Southwest has to decide upon how it will configure the Airtran 717 aircraft for all coach seating before it begins that integration. Since Southwest generally executes these kind of changes when aircraft already require service and maintenance, the two airline operations could co-exist for a longer than usual period of time until this work is complete.
Aeromexico, Mexico’s flagship airline these days, says its IPO (Initial Public Offering) was oversubscribed by two times. The airline managed to bring in about $330 million ($3.9 billion pesos) from the IPO on Friday.
These funds will be used to finance the purchase of 10 Embraer 190 jets and 10 Boeing 737s. The airline already operates 40 737s and has so far added 8 Embraer 190 jets.
The IPO represents 15% of the company’s equity presently. Aeromexico was acquired by Mexican investors in 2009 and instead of representing a cash out by investors, this signals new investment in the airline which couldn’t come too soon.
Aeromexico owns a mixed fleet that is both old and new. It expects to receive new 787s to replace its aging 767s soon and it still operates almost 40 ERJ-145 aircraft. While fuel is somewhat cheap in Mexico, it still is a prime driver of costs for airlines there.
One has to hand it to the Airbus PR machine and COO John Leahy. Those guys could spin a strike as an innovative development for their aircraft line.
One of the latest claims from these fine folks is that the A320NEO is already the best selling commercial aircraft ever. Not so fast. While the NEO has racked up some good orders, much of what Airbus is counting as orders are actually just memorandums of understanding. They are not firm orders in the sense of what Boeing would count as an order. But it does have some good momentum and that’s great for that product. It’s getting the kind of updates it really needs and that’s good for anyone operating the A320 series aircraft.
Yes, there is rampant speculation that the NEO could have 600 orders by this summer’s airshow in Paris but let’s see if that develops first before we proclaim world domination.
Mr. Leahy also puts forth the idea that because the NEO has the potential to last until 2030, Boeing will ultimately have to decide to do a 737 re-engine itself. He also has decided that technology won’t be advanced enough for a new aircraft (Boeing or Airbus) until far past 2020, the date Boeing says it could come up with something to replace the 737.
Coming up with a better, more efficient airliner is a matter of engineering, not developing unknown technologies. If there is a business case that funds the new aircraft development, then the aircraft can be built. If anything, Airbus’ decision to do the NEO actually advances Boeing’s business case for doing a new development. Why? Because Airbus’ adoption of the CFM LEAP 56 and Pratt & Whitney GTF engines will encourage those companies to mature their products faster, not slower. The faster those engines mature, the more ready they are for a newly developed 737 replacement.
Mr. Leahy thinks Boeing will re-engine. I think Boeing will do a new development. In fact, I think as the case for a new development gets stronger, Boeing may well pull in its date that it could be done by to as early as 2018 or just 7 years from now. I think John Leahy desperately wants Boeing to keep the 737 because it allows the Airbus to remain competitive. Most independent observers feel the Airbus A320NEO only manages to deliver trip costs that are equal to Boeing’s current 737, not exceed them. If Boeing can deliver a 20%+ improvement on trip costs with a new family of aircraft in a timely manner, it clobbers Airbus’ product line right out of the door and Boeing won’t promise what it can’t deliver.
There is one thing about Airbus that really annoys me and, in my opinion, causes trouble in the aviation world and that is its bombastic claims. I get rather tired of tossing cold water at a company that is actually producing a great, competitive product simply because they cannot be content to be a world player in the aviation world and desire to continually proclaim themselves the World’s Greatest Ever.
Since the Southwest decompression incident last Friday, there have been a number of parties suddenly using the event to promote an agenda. The DoT and FAA have both acted more politically than anyone would necessarily like to see. In fact, I believe a number of people have failed to see what went right in this incident such as a successful emergency descent and safe landing. A recovery that was so smooth, all but one passenger continued on their flight when a replacement aircraft was sent.
Now the TWU (Transport Workers Union) is calling for the FAA to clamp down on maintenance being down out of the United States. What they would really like is for it to be forbidden altogether. Sadly, this is much more about jobs than it is about safety. The reality is that if maintenance done outside the United States was the hazard that the TWU would have you believe, we would have catastrophes happening left and right. The fact is that air travel in the United States over the past 10 years is vastly more safe (by inicidents and type of incidents) than it has ever been before.
We don’t have lax safety procedures. We really don’t. An unpredicted and unpredictable event happened and the good news is that everything that was supposed to happen if the unforeseen happened did actually happen. the hole in the fuselage was contained, the aircraft performed an emergency descent with no further issues and the aircraft was landed safetly with no substantive injuries. And for every event remotely similar to this over the past 10 years, the outcome was the same.
Making political hay out of this or any other event is irresponsible and unsafe. When you begin to allow political motiviations control the ultimate outcome of these situations, you lose the transparency that actually makes this industry safe. Who wants to self report unsafe events and incidents if they know they’ll be crucified for it politically?
This is my criticism of how France approaches such things. By opening criminal investigations into air disasters, they encourage people to not cooperate, not self report and, worst of all, not engage in self examination with a goal of avoiding or eliminating the problem in the future.
The most responsible thing that could be done in this event would be to let the NTSB do its job, make its recommendations and then follow those recommendations. Allowing anyone to “score” politically as a result of this incidents puts us all more at risk.
Southwest Airlines CEO, Gary Kelly, continues to speak loudly at his doubts about Boeing providing a replacement that is 10 or more years down the line in lieu of a re-engine. At the J.P. Morgan Aviation, Transportation and Defense Conference, Kelly spoke of this dilemma for Southwest and just how unsatisfying it is.
Southwest wants more fuel effiency sooner than what Boeing is publicly talking about. Kelly believes that Southwest needs to advance its talks with Boeing on this subject. Kelly also believes they can manage more than one type of aircraft in their fleet and believes the Boeing 717 will offer many possibilities for Southwest going forward. Finally, he also believes they can source their next mainline aircraft from several manufacturers, not just Boeing and he includes Airbus and Bombardier (CS Series) in that statement.
There isn’t anything new being said here. However, its the fact that Kelly has taken to saying it in virtually every public forum that is significant. Southwest wants Boeing to pay attention and the fact that Kelly continues to speak indicates that Boeing isn’t doing a very good job of listening so far. Is it hubris, dysfunctionality or a short wait before they hope to wow Southwest?
I actually lean towards hubris in this case. I believe Boeing thinks that Southwest will wait. I believe that Southwest is not the same Southwest Airlines that existed in the mid 1990’s and if Boeing expects to keep them as a mainline customer, it’s time for some transparent talks on what these airlines need.
A local friend made a comment to me about Delta Airlines and their mish-mash of a fleet vs Southwest Airlines and their one aircraft type fleet. His comment was aimed at the success difference between the two.
Well, not so fast. When you consider airlines 30 years ago and airlines of today, there is one thing that stands out. Fleet size. Today’s airlines such as Airtran and JetBlue would be behemoths in the market place in 1980 with 138 and 163 aircraft respectively.
Let’s take a look at what truly large airlines have in fleet size. Southwest Airlines, the 800lbs gorilla of LCC carriers, has 547 aircraft of which all are 737s, yes, but which is actually comprised of the 122 passenger -500 and the 137 passenger -300/-700.
United Airlines and Delta Airlines both have over 700 aircraft and American Airlines presently has about 620 aircraft. Each of those three carriers have a broad range of aircraft types, seating capacities and range capabilities.
A one type fleet works well for the smaller airlines because, yes, it does allow them to save money on maintenance and it keeps things simple when negotiating with unions about how much one is paid to fly what type for what distance.
But as you grow larger, it really is better to have some flexibility. Even Southwest acknowledges that the Boeing 717 aircraft they’ll gain from Airtran (number over 80) should help quite a bit in matching the right aircraft to the right route. They’ve gone farther than that, though, by ordering the 737-800, a larger aircraft than they’ve ever operated before.
If Southwest expects to continue to grow, they’ll have to move into both larger and smaller markets than they have customarily entered in the first 40 years of their life. The fleet types aren’t what will make their lives complex when it comes to the cost(s) of maintaining them. What they will have to contend with is the idea that a pilot of a smaller aircraft should earn less than the pilot of a larger aircraft. They’ll have to deal with scheduling flight attendant crews of two different sizes and that’s something they’ve never had to do before. Fortunately, the range in size between the 717 and the 737-800 is not so great that they can’t argue that all their pilots should be paid the same (and I would agree.) The truth is, while their fleet may be different, the missions aren’t that different in terms of distance, turnaround, etc.
Delta is succeeding with a broad range of aircraft in ways not seen before. Yes, they have added complexity but an airline big enough to operate more than 700 aircraft should be complex. Could they simplify? Certainly. Should they? I’m not so sure. There can be disadvantages to dealing with one aircraft manufacturer instead of two in terms of the bulk of a fleet.
Neither Boeing nor Airbus can really supply enough aircraft to Delta on a timeline that would make sense to replace, for instance, Delta’s 563 single aisle aircraft. It would take 40 aircraft a year to replace that fleet over nearly 15 years. Those manufacturers have to supply a number of other airlines as well.
Boeing and Airbus can deliver about 32 to 38 aircraft a year in their 737/A320 families. A Delta replacement order would conceivably consume more than one month’s production capacity in a calendar year and there are a whole lot more airlines out there of size than just Delta.
By using both manufacturers, Delta would get more flexibility in deliveries and more reliability as well. This is true for any airline of size. In addition, by making each manufacturer compete for those orders, the airline is liable to receive a better price on each aircraft and when you are talking about 500+ aircraft, that could well mean savings reaching into the hundreds of millions of dollars.
The days of ordering “just Boeing” or “just Airbus” may well be over for any airline of significant size. This may be true even for Southwest in the distant future. Boeing and Airbus are unlikely to remain in the 100 to 130 seat category and will probably cede that to the next generation manufacturers such as Embraer and Bombardier. That doesn’t mean an airline, even an LCC doesn’t need those aircraft, it does.
It’s notable that JetBlue already has a two fleet strategy as well as Airtran and Frontier. Southwest effectively has a two fleet strategy and probably needs 3 different sizes to work with going forward.
Flexibility is the key. Routes change over time. Some routes yield more and more passengers while others are best demoted to smaller aircraft over time. Southwest wouldn’t be flying 737s to places like Lubbock, Texas if it didn’t need a one-stop location to continue that flight to a larger city from the Dallas area. Southwest flights to Lubbock and El Paso on 737s continue on to other cities such as Las Vegas, Phoenix and Los Angeles.
But when the Wright Amendment goes away, the need to fly those one-stop flights goes away. I actually look for Southwest to start evaluating aircraft such as the Embraer E170/190 series or Bombardier C900/1000 or CS Series in the next 5 to 8 years.
You’ll find that the one fleet strategy is effective today only for airlines requiring a fleet to fly between mainline destinations. Once they enter into smaller markets and larger markets, two or more types are not only required but justified.
Last week, Delta announced that it had agreed to buy 9 Boeing (McDonnell Douglas) MD-90 aircraft from JAL. After these aircraft are refurbished, they’ll start entering Delta’s fleet next January. Delta’s President, Ed Bastian, refers to these aircraft as “capital efficient” for Delta and it does simply add to Delta’s existing fleet of 19 aircraft. In fact, Delta now plans to add a total of 39 MD-90 aircraft going forward. These will primarily replace aging and inefficient DC-9-50 aircraft.
Capital efficient means that the cost to acquire these aircraft combined with the remaining lifecycle costs including fuel makes them worth operating for Delta. In addition, these aren’t your grandfather’s DC-9s. These aircraft have current generation IAE V2500 engines that are fairly fuel efficient compared to brand new aircraft presently. They also replace fuel guzzlers and represent a net gain going forward as long as fuel prices remain somewhat stable (and by stable I mean out of the $4/gallon territory.)
Delta has so far pursued a strategy of making do with what it has and employing older aircraft longer and this is somewhat in conflict with most other airlines’ strategies. As fuel has climbed in price over the past 4 years, airlines have, if anything, accelerated their purchases of newer, more efficient aircraft.
Is this the right strategy for Delta? Well, as an interim strategy, it works. These aircraft are good for a variety of routes that can largely transit 3 timezones out of 4 in the continental United States. There are a finite number of them available (only a bit over 100 were ever built) and in the near future I suspect that many won’t be worth buying when considered against a new Boeing or Airbus aircraft. From a financial standpoint, these are good buys for Delta and should work for them well over the next 4 to 8 years.
Delta’s fleet is pretty varied since its merger with Northwest Airlines a few years ago and while they have made an excellent show of managing this fleet, there are a number of types that could be pared down over time. Reducing the number of fleet types would allow Delta to be even more flexible with its crew resources and more cost efficient when it comes to maintenance needs. Remember that every fleet type requires an inventory of parts and employees trained to service that fleet type.
This doesn’t mean that I advocate that Delta buy Boeing only or any other manufacturer exclusively either. With its fleet size, it could quite rationally settle on both the Airbus A320 and Boeing 737 aircraft and operate them simultaneously. The same is true for long haul aircraft. It could probably employ both Embraer and Bombardier regional jets as well. However, for each category (regional jets / single aisle / medium to long haul aircraft), there should be at most two basic fleet types.
In fact, by working with multiple manufacturers, it can speed deliveries, fit the most perfect aircraft to a variety of routes and maintain efficiencies in maintenance and repair at the same time. What I don’t see happening is Delta operating Boeing and Bombardier CSeries as mainline aircraft. I think Delta will play it smart and use the manufacturers that have proven products in each category.
I think that over time, we’ll see Delta order Airbus A320NEO aircraft to replace existing aging Airbus A320s. I think we’ll see an order for Boeing 737 replacement when and if Boeing offers a replacement officially. I think we’ll see Bombardier CRJ900/1000 aircraft come online to replace older CRJ700/900 aircraft and I think we may well see Embraer E170/190 jets for other areas of the country such as shuttle-like operations. In the long haul category, it’s not inconceivable to see 787 orders pulled forward again but for a mix of both 787-8 and -9 aircraft. I think we’ll see them pick either Airbus A350s or 777s for their larger trunk and long haul routes. I might give the 777 an advantage here to become a single type for that category as Delta could very efficiently operate both 777-200LRs and 777-300ERs in a nice mix. They’ve already got very new 777-200LRs (and ERs) that are using the same GE engines the -300ER would use. I’m not sure the Airbus A350 quite fits in as well as one would like it to when it comes to the trunk route / long haul category. I do believe firmly that the 747s will ultimately go away and not be replaced.
Look for Delta to be making more and more announcements about its fleet over the next 2 years. I believe its strategy will be incremental rather than huge orders for a particular family of aircraft and it will be done with strong emphasis on preserving its capital going forward into the next few years.
Later today, I’m flying from Dallas to Chicago and this time I’m trying out Southwest Airlines’ service from Love Field to Midway Airport. Both airports are the quintessential second airports for their respective cities and both have a strong Southwest history.
Why this airline and these airports? I’ve long advocated that you can enjoy a better, less expensive flight on Southwest that is essentially the same time elapsed “door to door” as a flight on a carrier such as American Airlines.
So, I’ll be making a much quicker drive to Love Field airport where I’ll make a much quicker transit through security to my gate. I did pay the $10 Southwest Fee to early check in to improve my seating options (and it’s a fee that, for Southwest customers, does provide extra value). My flight, however, is not non-stop. I’ll be on a one-stop Southwest flight that pauses briefly in St. Louis. Total programmed flight time? 2 hours, 55 minutes.
I paid $408 for this trip last Saturday compared to American Airlines fare for similar departure times on the same days of $659 and that does not include the fees for one checked bag that I’ll have to take with me. All in, AA would have cost me (or, rather, my client) over $700.
If I had taken AA, I would have had a much longer drive to DFW airport and a much more expensive one as well. (One takes a tollway to DFW if one expects to get to DFW in a reasonable amount of time from where I live.) The difference in time to get to each airport for me on a day where there are no traffic jams? About 20 minutes less to access Love Field.
My Southwest flight time will be 2 hours, 55 minutes (if they’re on time) and a similar choice with American Airlines would be 2 hours, 30 minutes. With the difference in drive time alone, I’ve just made up 20 minutes of a 25 minute difference. When you account for the fact that I can arrive at Love Field with a bare minimum amount of time for passing through vs DFW airport where I would arrive about 15 minutes before my one hour deadline prior to flight time (because checking bags and passing through security at DFW can be easy or it can be real lengthy), I’ve just gained another 10 minutes.
Since I”m arriving at Chicago Midway Airport, I’ll have a drive to my hotel in downtown Chicago that is nominally 6 miles shorter in distance and about 20 minutes quicker than if I arrived at Chicago O’Hare. I’m now up by 30 minutes using Southwest.
At least in theory.
But let’s take a look at the contrasts in experiences I’m liable to enjoy between the two airlines. On Southwest, I paid the $10 Early Bird Check-In fee so I’ll have a very high likelihood of obtaining a good, front of cabin seat on a 737-700. It will be a fairly new aircraft and possibly a brand new aircraft. It won’t be old and it won’t have old, worn out seats either. I’ll enjoy 32″ to 33″ of seat pitch, most likely a friend flight attendant and no charge for a beverage. Because of the nature of my trip, I have to check a bag and that comes free and on an airline with a good reputation for baggage handling and security.
If I had taken American Airlines on similar flight time, I would have enjoyed a 20+ year old MD-82. Since I would have bought AA’s best economy price, I would have likely been at the back of the aircraft and sitting in old, worn out seating with 31″ of seat pitch. My flight attendants would have most likely been cranky, older crew who have a reputation of taking out their job dissatisfaction on their customers. (AA flight attendants can be good but in my experience the DFW and Chicago based crews are frequently hostile to customers.)
My bag would be handled by an airline who had a less than positive reputation for baggage handling (and strangely I’ve had many bags delayed over the years on the DFW-ORD route) and only for a $25 fee each way. If I had paid AA’s fee for priority boarding, I’d get earlier access to overhead bins but no options to sit in a preferred seat up front and an economy passenger on an AA MD-80 flight is going to have the options of “bad” and “worse” when it comes to seat assignments.
Savings in dollars: About $300
Savings in time: About 30 minutes door to door (if this works out as I expect).
What do I give up? I don’t get frequent flier points on American Airlines. Let me point out that my dollar savings alone just bought me a “free trip” if I wanted it. Which would you rather have? about 1600 frequent flier point or $300 in savings? Which would you rather fly on? An old MD-80 with old seats and a hostile flight crew or on a fairly new 737 with new seats and a friendly flight crew?
Once I complete this trip, I’ll write up what actually happened.
The Boeing replacement for the 737 may end up as the most hotly speculated about aircraft in history. This aircraft was first delivered in 1967 as a 737-100 seating about 100 people. In fact, it was an exceptionally slow seller for most of the 1970s. It’s now nearly 45 years old and the largest of the currently family, the 737-900ER, can seat potentially as many people as 200. The first 737s had a range of about 1600 miles and the current longest range 737 can fly about 3000 miles.
This aircraft has doubled its size and range over its life in what has been really 3 model ranges over that lifespan: The original -100/200 aircraft, the -300/400/500 and then the -600/700/800/900. There are over 6000 of this type delivered with more than 2000 still on order and it possesses possibly one of the best records out there for reliability.
Replacing this aircraft is no small task and Boeing gets one chance to do it right.
It’s all about efficiency and the low cost per available seat mile that can be obtained. Airlines want to see a replacement that gives them not just a good gain upon delivery but which also affords them the best advantage over the life of ownership.
Capacity: Most likely we’ll see an airliner family that seats from 150 to 210 people. Airlines are already seeing the value of switching from the -700 model to the -800 model because they can fill the seats without really any additional cost. (This was the main reason why the -600 never really took off: airlines could fly the -700 for about the same costs and enjoy more flexibility.) In addition to a robust passenger range, I expect that we’ll see the lower cargo area designed to accomodate a bit more payload than the present airliner. While this aircraft will never be an uber freight hauler, the present 737 has always been a bit constrained both in volume and payload weight. An improvement in that area will be desired.
Fuselage: Boeing has already expressed doubt that their approach with CFRP for the 787 won’t necessarily scale down to a 737 type replacement. That’s probably true but that approach is already several years old and don’t rule out some sort of plastic airliner for this development. New materials are developed every year and the big advantage to this approach for such an airliner is that it helps with maintenance. There would be reduced corrosion over the life of the aircraft and reduced fatigue as well. Whether it is a composite barrel or plastic panels on a metal skeleton, it’s liable to be plastic of some sort. In addition to reduced maintenance, it will also lighten the airframe even a small amount and reduced weight translates into carrying more payload a farther distance.
Range: The base range for the next replacement will be, at the least, somewhere between 3000 and 3500 nautical miles. In other words, expect North American transcontinental range at minimum. Will it be designed to fly a 757 style mission across the Atlantic to Europe? That’s anybody’s guess but I think probably not. I don’t see a 5000nm range being designed into this aircraft as it really pushes the weight of the airframe in directions that designers are unlikely to want go in. The 757 was an anomaly in aircraft design because engines available for that aircraft during its design were uncharacteristically robust. Generally speaking, engines have to be pushed to meet such requirements.
Engines: I don’t see a twin tail, open rotor design. Instead, I see a relatively conventional layout with engines on the wings. I do, however, expect two engine choices on the next design. Why? Because so many will be ordered that two engine manufacturers can enjoy good economies of scale and buyers like choice when it comes to engines.
I think we’ll see engine thrusts starting somewhere between 20,000lbs to 22,000 lbs and ranging upwards to somewhere around 30,000lbs to 32,000lbs with bypass ratios in excess of 6 .0. These engines will have big fans and they will drive the aircraft to be higher off the ground. That’s OK because the typical airline using this aircraft today is nothing like the typical airline who used it originally. Airports and airlines are better equipped and while loading will require equipment by default, it will still be easy to turn around this aircraft. I expect we’ll see some cargo hold innovation to speed loading and unloading in this aircraft.
I believe the engine suppliers will be CFM(or, perhaps, just GE) and Pratt & Whitney. Rolls Royce has never played well in the single aisle market and their basic Trent 3-spool design just appears to be too cumbersome to scale down for this aircrafts needs. A Rolls engine in that approach would be heavier and less optimal for the typical flights. In addition, Rolls Royce has done very little innovative work for these kinds of engine requirements.
Wings: Boeing has always done a good job of giving its aircraft enough wing for growth. That won’t be any different here and this is where I think we’ll see some real gains in fuel efficiency. Wing design has come along way at Boeing and they’ll push their technology quite a bit in this area. I think we’ll see raked wing tips rather than winglets in the next aircraft. They’ll likely resemble the 787 more than anything else although without quite the gull-like appearance in flight due to being shorter. I think they’ll be largely plastic and I think they’ll retain good short airfield performance to keep the LCC airlines happy since they have a habit of flying into smalller, more obscure airports as a rule.
Twin Aisles: I doubt it. It’s a concept that has received attention but, at the end of the day, a wider fuselage to accomodate two aisles translates into a wider fuselage. A wider fuselage translates into more drag and that means more fuel to power it through the air. What I do expect is an ever so slightly wider fuselage that is likely more “round” a la Airbus.
What I do think we might see is some sort of innovative approach to making it possible for the airline to load and unload from front and rear doors on a regular basis. LCC’s like their fast turn-arounds and offering the ability to do this in a more self-contained, efficient manner will only make them happier.
Passenger cabins: I expect Boeing will certainly work hard to design an open and pleasant passenger environment that resembles their approaches with the 777/787/747 as well as their new signature Sky Interior. We might even finally see some suggested seating innovation but no one owns this domain very well. Boeing works with outside suppliers on behalf of its customers rather than supplying the seating themselves.
When: I expect a target for initial entry into service of 2019 to 2020. Anything past that offers Airbus too much opportunity to steal customers. It can be done and it is going to require quite a few resources. That’s OK because this kind of effort should be flawless in meeting both requirements as well as in its execution. This is potentially an airliner that sells in excess of 10,000 aircraft. You can’t let Airbus continue to fill needs for customers (especially customers who have blended Boeing fleets a la United and Delta) while you dither around waiting for the perfect opportunity. Once another guy’s airliner is purchased, it can take from 15 to 25 years to have another opportunity to fill that need.
It will be a more revolutionary aircraft than evolutionary certainly but expect it to not look entirely different from what it does today.
I was amused last week by a comment originating from Airbus that they believed that Boeing would actually re-engine the 737 rather than proceed with the new build replacement so frequently talked about lately at Boeing. Amused because while I do think the Airbus decision was right (in that it did offer good gains and it was what they could do between now and the middle of the next decade) but also because the 737 is reaching a level of maturity in efficiency that the Airbus A320 hasn’t come close to yet.
I always kind of marvel out how just a 1 or 2 percent increase in efficiency can yield such huge savings for airlines. Not because I don’t understand but because it takes such determination to find these savings. Engineers at Boeing have been doing this for a long time on the 737. It wasn’t just adding winglets but lots of tiny things adding up to small percentages of efficiency gains that net big dollars in costs savings. The driver for this initially was to compete better with the A320 but the truth is that a good aircraft manufacturer always pursues these incremental gains over the product lifespan.
But as time goes by, there are diminishing returns for the effort (read: work) that has to go into finding these gains. The latest generation of Boeing aircraft have seen those pursuits for nearly 15 years and they (Boeing) have been relentless in their pusuit. Finding those gains going forward for the next 10 years is going to cost a lot more for a lot less gain.
There are always outside new developments. Just last week we learned that easyJet is painting their aircraft (Airbus A320) with a new paint technology that is much thinner than previous paint techniques. Provided the paint proves to be durable over an appropriate lifespan, easyJet expects to see efficiency gains of 1 to 2 percent due to less weight an and an aerodyamically smoother surface across the aircraft. Provided the process isn’t terribly more expensive and it is as durable, this could save countless airlines a great deal of money over the ownership of an airplane.
No matter what each manufacturer does in its product line of significant note such as re-engining or designing new aircraft, the relentless pursuit of small incremental gains in efficiency will always go on and never more so than for the kind of airliners that the A320 and B737 represent.
In the latest financial results, most underperforming airlines attributed their lack of success to rising costs and specifically fuel costs. Fuel costs did rise but let’s return to early fall when airlines were gleefully setting expectations for the winter season.
Many airlines were so confident that they actually raised prices and talked confidently of record profits. The problem is, the traffic didn’t materialize in many cases and I would attribute that to the fact that demand for the winter/holiday season is very dependent on price. A few airlines did see that and held their prices or even had some sales. Notably, Southwest Airlines kept a close eye on their demand and lowered prices were necessary.
But the development that no one has talked about much but which is showing up is a rise in capacity. That rise in capacity isn’t showing up in great numbers with new routes or increased frequency nearly as much. Instead, it is coming from an increase in the size of aircraft on some routes. Airlines are upsizing some routes and also increasing capacity through the aircraft they’re adding to the fleet to replace older aircraft.
Delta, for instance, has retired its smallest DC-9s in favor of Airbus A319 equipment. American Airlines is replacing MD-80s with 737-800s. Southwest is adding 737-800s to its fleet in about 1.5 years. US Airways is adding A321s to replace 737-400s. At first glance, these “replacements” are perceived to be a 1 to 1 exchange but in reality they’re often as much as a 10% increase in capacity per aircraft.
The creeping rise in capacity shows that the industry isn’t necessarily in agreement on capacity restraint going forward and that could foretell a collapse in prices as these airlines chase customers to fill their aircraft. I don’t think we’ll see huge losses in the next year but I do think we’ll see an erosion of profitability. The airlines who possess fleet flexibility should fare better than those who are largely locked into large blocks of fleet types. Think Delta vs American Airlines.
Mergers didn’t solve an excess of capacity. Not really. They did bring some costs down but neither of the two big mergers had much overlap and capacity was therefore not really reduced much in that sense. Since there are no merger candidates with much overlap in existence right now, I don’t think this problem is going to go away very soon. The real solution is to actually let an airline go out of business. The only candidate for that is American Airlines and they have lots of maneuvering room left presently.
Look for capacity to be a bigger talking point among financial analysts over the next 3 months and particularly at the end of the next financial quarter.
Boeing’s CEO, James McNerney, reiterated Boeing’s view that re-engining the 737 even in light of Airbus’ A320NEO announcement is not the pathway to success for Boeing. They continue to believe that if a new 737 replacement is forthcoming in the 2019/2020 timeframe, customers will wait. I agree.
However, if customers are asked to wait until 2025, I’m not so sure. There is only so much more additional performance that Boeing can get from either the airframe or the engine on the 737. Let’s not forget that, in many respects, the current 737 lineup continued to perform well against the A320 in part because of the development of the winglets and the evolving refinement of the CFM engine. Additional gains are going to be increasingly difficult to find.
Also of concern is McNerney’s announcement that research and development will be going down over the next couple of years and that they intend to cut back on some of their engineering resources which are extraordinarily high (say McNerney) at present while retaining their core capability. While I understand the cravings for normalcy, this worries me.
To really get a 737 replacement out in the 2019/2020 timeframe, it’s time to get started now. You have effectively just 8 years to redesign another technically innovative aircraft that will compete for 20 years or more. Schedule is more critical in accomplishing this than budget is. It takes time to design innovative technology and implement it into a product that must be 99% reliable “out of the box”. Boeing’s schedule for doing so is, in some respects, already eroding.
I think there is more time to consider options for the 777 line than there is for the 737 replacement. Enough airlines and, in particular, 737 customers have signaled the very strong desire for a better airplane. To act as if you have all the time in the world or even little competition for these people is a bad idea. Even Southwest acknowledges that they can handle transitioning to a new type and they don’t mean just transitioning to a new Boeing.
There are 3 SuperLegacy airlines who’ll be shopping in the next 1 to 2 years for fleet replacement and 2 LCC carriers who need to find new efficiency gains in their fleet (Southwest and Ryanair) who could literally place enough orders to pay for the 737 replacement. Having something that will significantly beat the A320NEO in the stated time frame that also provides for future efficiency and a product line capable of lasting 20 years is almost a necessity rather than something to study for another 2 years.
The 737 replacement won’t be an evolution of the 737. It will be much more a revolution for single aisle aircraft much as the 787 is for medium capacity, twin aisle aircraft. Furthermore, I think you would want to have that program on firm footing and about to produce new aircraft as you begin to enter into engaging on a 777 evolution or replacement later in the decade.
Vision Airlines is a new entrant into the Florida leisure markets suddenly and I don’t see this going anywhere anytime soon. Vision is a charter company that owns a number of 737s and a few 767s as well. The truth is, they do a bit of everything. Vision runs a tour operation using Dornier aircraft out of Las Vegas. They do charter flights to Cuba. They work for the United States government transporting spies for a spy trade. And now they’ve decided to find a way to use their 737s a bit more and they’re going to operate scheduled services.
These scheduled services are primarily to the Destin, Florida area although there are a few flights into Gulfport/Biloxi. Their flying routes from places like Macon, GA and Asheville, NC and Shreveport, LA to Destin/Fort Walton Beach Florida. They do have some flights from Atlanta, Orlando, Tampa, and Miami but not because they have other flights to those cities feeding traffic.
Frankly, I see this going nowhere in a great hurry. The smaller destinations aren’t going to originate enough traffic for 737 flights and the larger destinations have, you know, real airlines like Southwest and Airtran serving them.
In New Mexico, I read THIS interesting story about New Mexico Airlines. New Mexico Airlines plans to offer service between Clovis, NM and Albuquerque. Currently, that route is serviced by Great Lakes Airlines using Beechcraft 1900D aircraft twice a day during the week and once a day on the weekend. A quick look at the Great Lakes Airlines’ website reveals a non-refundable fare of about $89/each way and a refundable fare of about $189/ each way. This service is subsidized by EAS (Essential Air Service).
New Mexico Airlines (a division of Hawaii’s Pacific Wings) intends to come in with an even smaller, unpressurized aircraft and charge $600 round trip between the two cities. But they’ll offer 1 more frequency each day. They’ll have to since their Cessna Caravan’s can seat 9 people and the Great Lakes Airlines’ Beechcraft can seat 19. NMA’s President said:
“There has to be more to your business model than collecting subsidies,” NMA President Gabriel Kimbrell said. “Otherwise, it’s just airline welfare.
“It’s the only sustainable approach.”
And I find that attitude interesting since they themselves were established in New Mexico by EAS contracts. The truth is, New Mexico is sparsely populated and it will be decades before some cities grow enough to justify unsubsidized service. While I’m no fan of EAS in general, it would appear that this is working OK in Clovis and at what appears to be an economically efficient price.
If New Mexico Airlines really thinks it is going to succeed by doubling prices, well, I don’t. I think they’ll fail miserably. For anyone wanting to travel beyond Albuquerque, they can drive to Amarillo or Lubbock which are just 100 miles away and fly on Southwest Airlines. Don’t kid yourself that they won’t. If Great Lakes Airlines goes away and New Mexico Airlines takes over at those prices, people will simply drive. It is the only economical thing to do. If they’re traveling beyond ABQ, they’ll drive to Amarillo or Lubbock and fly from there. If they’re going to ABQ, they’ll drive the 220 mile trip.
Then New Mexico Airlines will fail and Great Lakes Airlines will come back under the EAS program.
