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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There have been some truly disappointing revelations about the 787 and its development over the past 2 months.  We have learned that more than 300 aircraft were priced at or below $76 million excluding engines.  A startingly low price for this class of aircraft no matter what it is made of.  We’ve seen just how bad the vendor management has been for this global product and it is highlighted by Boeing buying these facilities to run them themselves to achieve better production rates and quality control.  Finally, we’ve learned that many of the technological approaches involved in this aircraft are going to require a longer period to mature than was originally expected as well.

Richard Aboulafia has referred to this program as a disastrously executed, brilliant vision and that strikes me as real truth at this point in the program.  He also speculates that the 787-8 may well be the “interim” aircraft while the -9 actually ends up meeting the performance needs of airlines in the long run.  That, too, strikes me as real truth.

What hasn’t been considered yet is where the ultimate solutions found for the 787 influence future production.  I continue to believe that Boeing hasn’t laid a complete egg with this aircraft.  I think it will prove to be, in many respects, a legendary airplane over time.  I think it will have a long production run and favorable reviews through its lifetime. 

Once these solutions are found and that oh so necessary experience is, well, experienced, it will have a positive influence on future aircraft development.  Boeing may no longer be poised to earn scads of profit on the 787 but it is well positioned to use its body of knowledge to earn scads of profit on other aircraft it needs to build.  They will have gone through all the pain necessary to know how to apply these new technologies to a 737 replacement or a 777 replacement/enhancement and that will serve them well in the future provided they don’t let lose all those people involved in this program.

The 737 replacement may not use these exact approaches such as CFRP or an all electric architecture but it will use some variation on a theme for that technology and they’ll know how to do it better.  They’ll be past the hump, so to speak.  This speaks well for Boeing in the latter half of the next decade.  Right now, they’re hurting.

But also consider that Airbus hasn’t pushed the envelope nearly so much and they have a great deal of learning to go through still.  And as tough a road as Airbus has in front of them with existing programs, that forecasts still more pain in the future.

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Southwest has indicated its readiness to investigate different fleet types in the future to meet its needs and the driver for this is fuel costs.  Their famous adherence to the 737 was more appropriate even 20 years ago but in this age, they have a large enough fleet and a large enough network to justify multiple types. 

Sticking to one fleet type has its benefits but those benefits don’t grow large when the fleet size expands past a certain point.  There is all kinds of debate on how many aircraft you have to have to make it efficient but I would say that for Southwest, a minimum of 60 to 80 aircraft is probably a sweet spot right now.  Big enough to make maintenance and handling optimum and big enough to offer flexibility through the network.

Does this mean SWA is going to add more fleet types?  No, not necessarily.  It means that it is time for them to put together a different fleet plan for the future.  If there is one thing I’m certain of, it is that SWA will have 737s for a long, long time.  The real question is . . . what kind of 737s?

In addition, SWA still does quite a bit of regional flying on mainline equipment that was efficient with 737s 20 years ago but isn’t nearly so today.  One great example of that is the flights from Dallas to places such as Lubbock and Midland and even Little Rock.  It might be beneficial for Southwest to identify a new fleet type that is smaller (in the 100 seat range) for maintaining frequency to those destinations but also offering better fuel economy and cost of ownership.   And they’ve got choices.

One thing is sure, however:  Should SWA pursue a smaller aircraft to standardize on, it won’t be a Boeing or Airbus.  They’ve got the 717 coming into the fleet via their Airtran merger and they’ll likely play with that aircraft for several years.  However, a 717/737-500 replacement won’t be a Boeing/Airbus aircraft.  It will be one of the semi-mainline regional jets being offered by the likes of Embraer and Bombardier most likely.  And it will be an aircraft that can be punished with high utilization rates.  On the surface, the Embraer E-190 series looks like the best bet to me.

I think their larger, single aisle aircraft will continue to be Boeings and I think that, for the near future, those will be 737s.  It is an almost foregone conclusion that they’ll also be pressuring Boeing for a new 737 replacement more and more over the next 2 years.  That replacement aircraft is liable to start with roughly the size of a 737-800 and have several larger types above it.  Southwest will likely choose to purchase several of the sub-types to meet their needs on various different routes that have wildly different constraints. 

This is about fuel efficiency and keeping down the trip costs.  Southwest has never had amazing load factors but the kind of load factors they’re experiencing today are historically high and they are unlikely to fall much in the future.  They need a larger aircraft than the 737-700 in the future. 

In the near future, they’ve got enough differences to work with.  This kind of talk is about pushing manufacturers to start considering what to offer airlines such as SWA in the longer term.

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Southwest made its intention to purchase the 737-800 official a few days ago and while no one is surprised, it is gratifying to hear it has been made official.  This will be a good choice for SWA going forward and it would appear that their first deliveries in 2012 will be 20+ of the -800.  Gary Kelly has said that that is too small a fleet and indicated that about 80 in the fleet would be about right.  These new aircraft will be replacements for SWA’s older 737-300 aircraft rather than in addition to them.  However, the greater size of the 737-800 means that there will be significant capacity growth in 2012.

Interestingly enough, SWA started advertising for an ETOPS manager several days ago and *lots* of people noticed that.  ETOPS will be necessary for SWA to serve Hawaii.  Just a month ago, I wrote about SWA and Hawaii HERE.  Apparently all of the deliveries in 2012 will be ETOPS equipped aircraft so I think that my thoughts on SWA starting a Hawaii route in 4 to 5 years from now is a touch off the mark.

Instead, I’d say we’ll probably be looking at SWA starting routes to Hawaii in at little as 3 years.  They still have to get the aircraft and they still have to learn how to maintain that ETOPS fleet and they also have to figure out how to do the flights and from what cities should they be flown. 

Gary Kelly, CEO of Southwest, also made an interesting comment or two about the 737 and a new engine option and/or replacement for that aircraft.  Kelly rightly points out that Boeing is talking about having something for its customers in 10 years and comments that: “When you talk about something that’s 10 years from now, that’s not a solution, that’s an idea.” 

I couldn’t agree more. 

The Airbus A320NEO isn’t going to be a 737 killer by any stretch.  In that respect, Boeing doesn’t have much to worry about.  But Gary Kelly is right, Boeing hasn’t got anything on the table.  The next generation 737s started to roll out of the factory in 1996 and that isn’t all that long ago if we were talking about a new aircraft.  But the next generation 737 line weren’t “new” aircraft.  They were evolutions of the original designs. 

It’s true that engine technology is needed but nobody is really driving that technology all that much so far.  Both Airbus and Boeing continue to look at new engines as more an annoyance than a need.   The A320NEO isn’t a Boeing 737 killer but a new single aisle short to medium haul aircraft from Boeing is most definitely an A320NEO killer. 

It concerns me that all we’ve heard from Boeing is that their customers aren’t asking for new engines because it’s clear that airlines aren’t asking just for new engines but new airplanes.  And Boeing is behaving a bit too arrogant with respect to their customer base in my opinion.  I wasn’t much of a fan of the Bombardier CS300 so far but now I kind of hope it makes it and it’s a bit of a Boeing killer. 

If Southwest wants a new, efficient (as possible) airliner, it’s time to get to work.  Because of Southwest wants it, I guarantee you that every large operator of the 737 wants it too.  With fuel prices as high as they are and due to be higher in the future, even a 10 to 15 percent efficiency gain is something an airline can’t afford to ignore or defer.

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Southwest Airlines got final approval from its pilot union on an agreement to introduce the 737-800 into the fleet and Southwest did what we all expected Southwest to do:  They announced they’ll be buying the 737-800.

I’m sure we’ll see these aircraft first on flights into and out of slot controlled airports such as NYC La Guardia’s or Washington D.C.’s Reagan National.  The speculative part is Hawaii.  Yes, these aircraft will have the range but that’s just the first issue to overcome.  To fly to Hawaii, Southwest would also have to have these aircraft ETOPS certified.

ETOPS certification would have to be kept up on every aircraft or on a small subset of aircraft that would operate from the West Coast.  There is a certain complexity there that, to me, doesn’t smell like something Southwest would be immediately ready to accept.  They know the value of Hawaii already and I think they would like to fly there via a partner or by themselves again at some point but how soon?

Look for these aircraft to show up in about 1.5 years.  They’ll first deploy to the slot controlled airport routes.  Next, don’t be surprised to see Southwest introduce some trans-continental services with these aircraft.  I don’t think we’ll see a lot of trans-con flying but I think we might see a few select routes get developed with the -800.  If those go well and they like how those distances feel, we then might see SWA prepare to fly to Hawaii provided they can figure out how to maintain ETOPS on either the whole -800 fleet or a subset of that fleet.

In other words, Hawaii is probably at least 3 years away if not more.  SWA may well try to link up with another partner and that isn’t necessarily a bad idea.  However, I think the unions have made it clear that they want to keep the flying “in-house” going forward as much as possible.   With the Airtran merger still on its plate and the integration of the two airlines over the next 2 years, I think a more realistic time to see a flight to Hawaii might be in as much as 5 years.

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The Nordic airline, Scandinavian Airline(SAS), is looking to modernize a good portion of its current fleet of 737 and MD-80 aircraft and Bombardier is reportedly favored to win with its CS300. 

SAS owns a pretty varied fleet which includes both Airbus A320 series aircraft as well as old and new generation 737s (including the unpopular 737-600).  A more harmonized fleet would help.

The problem is, SAS doesn’t necessarily need aircraft that are necessarily big players on medium haul routes.  While it does need some higher capacity aircraft for leisure destinations, it needs smaller capacity aircraft in bigger numbers for frequency.

The CS300 has a nominal maximum range of at least 2200nm and that’s enough for SAS’s world in Europe.  That would allow them to serve all of europe from their hubs of Copenhagen, Stockholm and Oslo or any of their other focus cities as well.  Take a look at what 1900nm range gets you from Stockholm by clicking HERE.

It’s notable that this airline is the only airline that found a real use for the 737-600 and bought 28 of them.  They also have a number of -500 models as well.

The Cs300 would probably fit well into their strategy and offer them a light aircraft with good capacity for flying frequency in their stronghold(s).   They would get an efficient engine for this kind of flying as well.

My guess is that the Boeing aircraft will go away completely over time and SAS will buy more Airbus aircraft for routes requiring more capacity.   Boeing just doesn’t have anything in its product line up that fits the SAS model.

A lot of people believe the CS300 isn’t going anywhere and even I wondered but it seems to me that this might be just the kind of niche Bombardier needs to serve.

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Southwest Airlines CEO Gary Kelly speculated that Southwest could one day be flying to Hawaii and that has tongues wagging in the airliner world.   Kelly mentioned this possibility in connection with their decision to purchase the 737-800 which they should arrive at very soon.

The fact that no one confirmed that Southwest would in fact buy the 737-800 at their recent media day leads me to believe that they are still in negotiations with Boeing and probably it has to do with price more than anything.

Still, even if they add the 737-800, it doesn’t mean they’ll do Hawaii.  Flights to Hawaii require more than just that aircraft.  It means proving you can do ETOPS flights and it means keeping a sub-fleet of aircraft that can do ETOPS flights.  ETOPS means flight crews get more training and aircraft are specially equipped and specially maintained. 

Alaska Airlines is doing such flights at present and they appear to be succeeding well enough that they’re adding flights to Hawaii from other cities.   It is doable and it may well be profitable.

However, if this does happen, I think it might happen in 4 or 5 years, not next year or the following.  Southwest has a bunch of things to chew on at present such as their merger with Airtran, phasing in new IT systems and just adopting not one but two new aircraft types:  the 737-800 and the 717. 

If this does happen, it’ll happen once they’ve managed to digest their other challenges.  Don’t go looking for that Honolulu destination on their website just yet.

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It’s always been hard to make the case fo re-engining commercial airliners.  The government does it because their aircraft see far fewer cycles and are therefore used for a much longer duration. After 20 years, the government may well have another 20 years of service life left in the aircraft and re-engining makes sense.

I can’t honestly think of a re-engine program on a commercial airliner that was a financial success and that’s why both Boeing and Airbus are backing away from this idea.  Admittedly, Airbus isn’t exactly backing away yet but it is growing quieter and quieter about the subject.

Boeing has openly discussed building a new design as a 737 replacement and several airlines have openly expressed interest in the idea.  It is the obvious pathway to go forward on but the timeline is what is giving manufacturers fits.

Boeing and Airbus want to offer a quantum leap in efficiency with new aircraft and they sense that they don’t have the right technologies to make that happen on a small, single aisle aircraft yet.   It is going to be very difficult if not impossible to offer 30%+ gains in efficiency on the next airliner.  There has been too much learned in the art of making an airliner efficient now and that means the gains will be incrementally smaller as time goes forward. 

The engines are close enough to make that call.  With a firm build committment, engine makers could make an engine that would be a leap ahead of the rest in time for first flight.  It would require a big investment and hard work to make that happen but it is possible at this point.  Of course, the numbers of aircraft that would use these engines make the business case for that investment so the likely road block on engine development going into high gear resides with Boeing and Airbus. 

We already know quite a bit about wings and there isn’t much to be gained there.  Use of new materials could help with weight and that will help a bit but huge gains from new wing designs are likely a thing of the past.

Fuselages are one area that everyone speculatese about.  We see the gains to be had from CFRP (carbon fibre reinforced plastic) in the 787 project and assume we can get those in a 737 project.   Well, with the existing technology, those gains aren’t quite there.  That solution doesn’t “scale down” to a single aisle, 150 to 190 seat aircraft very well.  In addition, Boeing and its partners haven’t quite gotten their production to scale “up” to a level that would support high volume production that a 737 replacement would require from day one.

There are newer technologies emerging that may be satisfying for such a project’s fuselage but we’re not quite there yet and this is where the delay is coming from, I think.   I don’t think that Boeing and Airbus quite have a handle on whether or not the technologies are viable enough to pursue for production and I think that is requiring more study and thought before a committment.   The fuselage (and interiors) are the last place to make big gains and the “efficiency” needed is going to have to be won from that area. 

At the end of the day, it isn’t engines that is driving these decisions, it’s fuselages and their weight.  The manufacturers want to offer everything they can because this is an aircraft they’ll likely be building for decades and you want to have what people want when you make that kind of committment.

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We’ve heard all about the soaring profits at airlines this past week but I wonder if many have noticed the other element in the news:  new flights being added at various legacy and SuperLegacy hubs. 

So far, these new flights have all the appearance of being targeted towards building core strengths at various hubs and focus cities.  American Airlines is building LAX (although mostly through American Eagle flights) for instance and United and American are starting long haul flights from LAX to Shanghai, too.

While we’ve seen very modest capacity growths in the first 2 quarters indicating that airlines were just (barely) keeping pace with demand, this most recent quarter finds announcements that indicate that everyone is trying to nudge themselves towards a bit more growth than before. 

Let me point out that even Southwest’s intentions on buying the 737-800 is a form of capacity growth.  They’ll use that aircraft on routes where there ability to fly frequency is constrained. 

The signs are there but it’s the 4th quarter results and announcements that should signal a trend.  We won’t really know where things are headed until announcements on intentions for next summer are made.

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Southwest Airlines has reached a tentative agreement with its pilots union that, if ratified by the pilots, will permit Southwest to choose to adopt the 737-800 into the fleet.  Southwest says it is still evaluating the choice and will make a decision soon. 

Some have speculated that doing this and adding Airtran into the mix would be unattractive to Southwest.  I say it that aircraft is coming and sooner than later.  Despite Southwest’s potential gains (via the merger) at airports where this aircraft would be most useful, it still has great potential for the airline in those markets and others including, perhaps, some routes that Southwest will harmonize between itself and Airtran in the future. 

Ultimately, this means Southwest is suddenly looking at operating 2 types and 3 classes of capacity in its system in the near future.  The Boeing 717 on the bottom end w/ 117 passengers and the Boeing 737-500 sitting there right next to it at 122 passengers is the first “class” of capacity.  The Boeing 737-700 at 137 passengers will remain the mainstay aircraft for mst routes and represents the second “class” of capacity.  Finally, the Boeing 737-800 will offer increased capacity at about 175 passengers. 

I wouldn’t expect the Boeing 737-800 fleet to be that large for a long time.  Look for a sub-fleet of these that will probably range from 40 to 60 unless and until Southwest decides the entire fleet needs to bump up in size.

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Aviation Week has a great photo of the first ContiUnited aircraft to be painted in the new combined livery of United Airlines (merged).  You can see the Boeing 737-900ER HERE. 

Many find the “United” part of this livery boring.  From a design point of view, I think everything looks much better than when this all started.  Continental’s livery has always been a bit Euro-White-Boring.  But it’s a clean and modern look and I don’t think the name “United” detracts at all.

Nice touch making the first aircraft a Continental aircraft.

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Regulatory authorities are going to start seeing Southwest Airlines differently as a result of this merger.  SWA has done a great job of characterizing itself as the small underdog.  In truth, it’s a big airline and this merger is going to get authorities such as the Department of Transporation and Department of Justice to see it a bit differently.  SWA flexes more muscle against its own competitors than most realize and this move does eliminate a lot of problems that Airtran was giving it.  Airtran had lower costs and a nice service product and competed very, very well against SWA on major market routes.  SWA will forever be seen differently going forward now.

Southwest’s fleet strategy has always been a popular topic of conversation.  While it’s true that they’ve stayed close to their 737 roots, different aircraft types aren’t unheard of for them.  In the 1970’s and 1980’s, they briefly operated 727 aircraft.  In the 1980’s they bought Muse Air and operated their MD-80 aircraft for a while too.  The addition of the 737-500 was, in some senses, the addition of a different type for them as well. 

Adding the 717 isn’t quite the challenge for them that many think it is.  This purchase grows their fleet from approximately 550 aircraft to 602 737s and 86 717s or 686 aircraft total.  Let’s put that in perspective for a minute.  American Airlines has about 630 aircraft, Delta about 728 and the soon to be ContiUnited will have 700.  Southwest leaps past AA and plays in the SuperLegacy category on fleet numbers.  It will continue to lag behind on capacity measured as revenue passenger miles.  Nonetheless, SWA is a huge player on a global scale. 

There is already speculation about SWA “de-hubbing” Atlanta.  Well, I think the structure  of the routes into and out of Atlanta will change dramatically.  I think we’ll see a SWA-like operation in Atlanta after a period of time.  However, it will remain a “hub” in the sense that will be a major player in the SWA system just like other cities such as Phoenix, Los Angeles, Houston, Dallas, Denver and Chicago.  Those cities are hubs too.  SWA just doesn’t operate flights into their “hubs” like a network carrier does. 

I wonder if SWA isn’t missing an opportunity to reinvent itself with this purchase.  Airtran did many things very, very well and they are a profitable and very competitive carrier.  They introduced Sirius/XM Satellite Radio on their flights.  They were one of the very first airlines to have an all Aircell GoGo Wifi fleet.  Their business class product is popular and upgrades to that business class product were also profitable. 

There are some elements here that SWA could stand to step back and examine.  They aren’t nearly as far from their own business model as they think.  SWA is working hard to attract the business passenger and that business class product might well be worth keeping and even introducing across the fleet.  Southwest is introducing Row44 Wifi (too slowly in most people’s opinion) and now they have an airline that knows how to do it quickly.  They have a unique opportunity to take a look inside the viability of Aircell’s GoGo product and see if they don’t want to reverse course. 

I don’t think onboard entertainment is necessary but I do think the Airtran satellite radio offering is a great value added item on their flights and, again, it’s worth taking a look at.  I don’t want SWA to be jetBlue but the satellite radio quite possibly “fits” within their quirky nature. 

I don’t think many airlines, if any at all, will object to this merger.  It eliminates a lower cost competitor for them and replaces them with someone who has rising costs that are moving closer to legacy airline costs these days.  In addition, the sheer size of SWA and the access it gains to major slot-controlled markets such as NYC and Washington D.C. mean that legacy airlines can now argue that there *is* enough competition in those areas.  I wouldn’t be surprised if Delta and US Airways wanted to revisit their proposed slot swap deal in the near future.

Finally, there is another airline out there that kind of fits neatly into this mix.  An airline that would be as unconventional as a purchase for SWA but which would really be a west coast mirror equivalent of Airtran purchase.  Alaska Airlines.   If SWA is willing to take on integrating an LCC carrier like Airtran, it could take on integrating a sub-legacy carrier such as Alaska Airlines.  Especially one with a fleet type that remains compatible with SWA but which offers even more potential since Alaska Airlines operates a broad range of the 737 family. Such a purchase gives SWA a strong presence in all of the regions in the United States and an opportunity to see how a regional airline (Horizon Airlines) works using a very cost effective type:  the The Dash 8 / Q400.

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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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Lufthansa has announced a 48 plane order and while that isn’t all that remarkable compared to many aircraft orders these days, it’s an order that highlights two emerging developments in the airline world.  The Lufthansa order is for all Airbus equipment and it isn’t all for Lufthansa.

Some of this order is for its SWISS subsidiary (A320 family and A330), its Germanwings subsidiary (A320 family) and Lufthansa is getting more of the A320 and A330 family for itself.   The Airbus family concept is clearly allowing Lufthansa to take advantage of greater buying power as well as greater flexilibility amongs its various operations. 

Lufthansa can shift equipment to various subsidiary operations as demands change and can reconfigure that requipment relatively easy to meet the requirements of each subsidiary.  While many already knew and predicted this behaviour, it’s really remarkable in that its now become kind of matter of fact for an airline like Lufthansa.

This isn’t something Boeing really offers.  Not yet.  Boeing offers its 737 family, yes.  But it doesn’t have that type transition flexibility between a narrowbody family and a medium range/ long haul widebody family.  Not quite. 

The 787 and 777 will offer reduced transition times between the two types and that’s a good thing.  But there is no such animal between the 737 and its bigger siblings.  In addition, there is no real such thing between the 787/777 and the new 747-8i either. 

Boeing builds a great airliner and arguably they build a more cost efficient airliner in many respects when considering the aircraft and the trip itself.  What Boeing hasn’t yet instituted is a product line that is friendly across all kinds of operations that a large airline might have. 

It’s a core strength of Airbus and, frankly, a differentiator that, I think, will prove itself more and more valuable over the next two decades. 

The 737 replacement is a good place to start.  This will be a family of aircraft designed to meet the needs of airlines from about 150 seats up to 220 seats where the 787 will take over.  The 787 is advanced enough that making the 737 a baby 787, operationally speaking, could offer some additional value to airlines in the coming years. 

US Airlines haven’t exactly gone for this kind of family concept.  Not yet.  Northwest and United Airlines and US Airways all bought Airbus but they bought them without intending to realize the family concept from narrowbody to widebody.  I think that will change.  As we see SuperLegacy airlines develop, I think we’ll see a desire to harmonize more, not less over time.  More on that tomorrow.

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There is a rumour that Sun Country Airlines may be in play for being purchased / merged with another airline.  Candidates suggested are Delta, Airtran and Southwest Airlines.

Delta?  Never gonna happen.  They don’t need Sun Country and they don’t need the regulatory headaches that a Sun Country purchase offers.

Airtran?  Kind of doubt it.  Airtran has been avoiding direct competition with legacies lately and they’ve got that area of the country covered with their operations in Milwaukee.  In addition, Aitran isn’t a 737-800 operator and doens’t need that headache at present.

Southwest?  Now that’s a marriage.  One that I suggested at the New Year in this post.  Mind you, I don’t think it will be for the weekly flights to London.  The fleet is compatible and despite concerns over it being entire leased, it’s a good fit and allows SWA to start 737-800 ops just that much sooner and on routes that are that much more lucrative. 

It also offers MSP gates and more opportunities to fly more places.  In fact, it offers just the right kind of opportunities:  international flying.  Southwest Airlines recognizes that international flying is something that they need to consider.  However, it involves an area of expertise that just isn’t at SWA and within their business model.

Sun Country offers that ready-made expertise and to a variety of destinations.  With that experience, SWA suddenly has the ability to go to Mexico and Canada which are already a part of its codeshare work (and where is that codeshare with Volaris, by the way?).  But the experience in the backend, reservations, visas, handling foreign currency, etc. is all offered with a Sun Country purchase. 

It’s a ready made solution for growth but it has one risk. Union agreements.  And Sun Country has a lof of employees who feel that Sun Country was never given an unfettered opportunity to grow.  Whether that’s true or not, it’s an obstacle.  If SWA can convince its unions to offer senior merging on a date of hire basis, it might work.  If SWA’s unions insist on a purchase being “stapled” to the back of the seniority list, it’s unlikely it will work.

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Southwest Airlines’ flight attendant union has come to a tentative agreement on introducing the larger 737-800 into the SWA fleet.  By all I can see, this is a reasonable agreement  and reached in what has to be nearly an all time record time even for SWA.  When this originally came to light a bit over a month ago, there was rampant speculation (even on my part) that SWA made this public in order to cajole a recalcitrant union.  Now, the agreement has been reached and SWA is still working with their pilots who, if anything, should have even less of a problem agreeing to the addition.

So what was the fuss about?  Perhaps this once it was what the flight attendant union said it was.  They were contractually obligated to talk and they really saw no large obstacle to making it happen.  This just doesn’t feel like there was a real conflict brewing.  Suddenly it feels like the pilots might be hemming and hawing over this. 

Actually, I doubt even that.  Perhaps SWA and its unions will have complete agreement in a few weeks and make their order with Boeing.  No one yet has found a reason why adding the -800 is a bad idea for SWA.  Yes, there will be a slight change in the number of FA’s on these aircraft and, yes, it will add a slight level of complexity for managing scheduling.  However, the benefits are bigger and this potentially gives SWA a chance to find out if they’re ready to go to another level in the future.

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The Southwest Airlines Flight Attendants say that they don’t want to obstruct SWA from getting a larger 737 at all in response to speculation that this internal debate at SWA went public in order to force the hands of the Flight Attendants union. 

Instead, they simply point out that adding another aircraft, according to their current agreement, opens that same agreement up to renegotiation on issues such as pay and working conditions. 

Huh?

I don’t see any reassurances that they are for or against this still.  Instead, I see language that I would interpret to mean that they see an opportunity to renegotiate their contract earlier than the first date it becomes amendable.  It would appear that this remains a potential obstruction, to me anyway.  At the least, it appears opportunistic.

One thing to come out last year during SWA’s attempt to purchase Frontier as well as during its controversy on codeshares with WestJet and Volaris was that SWA employees wanted to see more flying ( and more employment opportunities as a result of that additional flying) on their metal, not another company’s.

This addition to the fleet of the 737-800 does just that for the Flight Attendants with absolutely no change in their working conditions on a per person basis. 

That would lead me to believe that SWA Flight Attendants do, in fact, present a possible obstacle to the addition of a new 737 type to their fleet.  And until they speak more clearly on their intent, I think they continue to present the most risk to this decision.

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Southwest Airlines admits it is considering adding a bigger 737 to its fleet and its the 737-800 that it is interested in.  The 737-800 would give the airline more revenue opportunity used in and out of airports that have slot restrictions such as La Guardia or on routes with ever increasing density but where frequency isn’t justified.

Current SWA aircraft, the 737-300 and 737-700 carry 137 passengers and a 737-800 would probably carry about 175 people in a Southwest configuration.  That’s an additional a potential increase of 38 passengers for those critical routes with costs that wouldn’t be all that much more than their current costs.  A little bit more fuel and an additional flight attendant is all that is really required.  That spells more profit.

And I like the idea.  Frankly, I think Southwest could stand to add all 3 models of 737 to their fleet and I think they ought to seriously examine the potential of Hawaii and trans-continental flights.  But, then, I also think they could stand to look at smaller aircraft for regional routes with high frequency too.  It’s going to be the only way they can continue growth in the future.

However, don’t go thinking you’re going to see a 737-800 in SWA colours next year either.  Southwest likes to mull decisions like this for quite a while and it would require negotiating amendments to their union contracts with the pilots and flight attendants at minimum. 

Take note here, SWA pilots and FA’s, here is your chance to be industry game changers again.  Pilots, you shouldn’t ask for a dime more to fly these aircraft.  They require no extra effort on your part and it keeps the flying in your house, not SWA codeshare partners’.  Flight Attendants, the same goes for you.  The passenger count per flight attendant actually *drops* by two passengers with these aircraft.  Be game players and make this happen.  It costs neither union anything to make this work and most likely will add profitability to the company as well as future stability to your jobs. 

This really is win-win.  Get greedy and it is the beginning of a long end to SWA.

If SWA does adopt this idea, expect aircraft in the fleet 12 to 24 months after the decision is announced.

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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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During and after the Farnborough Airshow, there has been a lot of speculation and commentary on Bombardier’s inability to announce a new order for their C-Series.  Many speculate that it is because it’s a bad aircraft and it has no hope of competing.

I think it’s because what orders did show up at Farnborough were for immediate needs, not future fleet replacement and/or growth.  Those who bought aircraft, bought them for near term delivery and they bought aircraft that fit into existing fleets.  While the industry is recovering, it isn’t exactly flush with cash for making long term purchases yet. 

Will the C-Series fly?  Yes, I think so.  In fact, I’m a bit unsure of why everyone is so ardently against this aircraft.  Bombardier knows how to make a jet and they know how to grow a jet from a base model.  Their current aircraft are well liked, frequently purchased and as efficient as any other in their class.

I am a bit dismayed that Boeing and Airbus have decided to cede the 100 to 130 seat market.  I think there is more opportunity there than is being identified but I’ll also concede that it requires a sub-737 class development that neither company likely has the money for right now.  On the other hand, a partnership with another manufacturer to design and build an aircraft for that market that would allow fast transition between one jet and another would be very advantageous.  It’s doable.

The 3×2 economy seating layout is a bit of a risk for them but not as much as many seem to think.  Frankly, it’s my preferred arrangement vs a 3×3 layout.  Let’s face it:  anyone who has owned DC-9/MD80/MD90/717 aircraft knows that the arrangement can play well.

Range is the real concern.  I’m not sure these have to have trans-continental capability but I think they need the ability to fly at least 2/3’s the width of the country fully loaded.   Nominally, they have that capability as “max range” at the minimum.  Practically, I don’t know if they do and I suspect they may be a bit deficient.  I also suspect their cargo capability may be a bit anemic as well. 

The real risk on this platform is the engines.  Pratt & Whitney Geared Turbo Fans are the choice and we have not seen engines that are meeting their fuel consumption targets yet and it remains to be seen if those engines are as reliable as they need to be.  They cannot be merely “reliable” for that class.  They need to be CFM-56 reliable because those aircraft are going to see a lot of cycles each day.  I think that is far from proven when it comes to the P&W engine.

Yes, I think the aircraft will be built and I think it will be used here in the United States.  Successful?  I don’t know.  It depends on what you define as successful.  I don’t see this aircraft selling thousands of units but it isn’t fully defined yet either.

Look for similar speculation and derision about Embraer building a similar aircraft.  I think people just don’t want to see these guys moving in on traditional Boeing/Airbus territory.

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