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.
All Nippon Airlines (ANA) is lamenting the new delay on Boeing delivering the Dreamliner to one of its launch customers and I don’t blame them. I don’t think anybody regrets ordering the 787 even at this point but I do marvel somewhat at the patience being displayed by several of the customers. This was an aircraft that Boeing arguably needed in its product lineup several years ago.
These delays have added up to something well past 2 years now and we don’t know what else may show up causing further delays. The most disturbing part of these delays, to me, are that many have been caused by quality control issues with manufacturing partners and with problems centered on systems that arguably should have been robustly tested and matured at this point.
It begs the question as to what the hell were these partners doing during the long delays involving fasteners for instance. Engines could have been tested more. There was no high rate production impeding Alenia’s abilty to ensure strict quality control. Even power panels could have been tested much more in a integrated systems environment.
Additional testing would have greatly reduced risk in delivering this aircraft and I just don’t get the sense that there was a financial commitment to this. Certainly quality control problems on horizontal stabilizers shouldn’t have been discovered after so many airframes had already been built.
This smells like a former aerospace company that used to be based here in the United States: McDonnell Douglas. It’s notable that it is former MD people who are largely running the business today and the truly successfuly Boeing people are now elsewhere. What Boeing needs is an Alan Mullaly and at this point, I don’t think one exists at Boeing anymore. If he/she does, they’re being kept hidden well.
Blaming these delays because this airliner is on “the bleeding edge” of technology really doesn’t quite pass the sniff test anymore. That was OK in 2007 and 2008. It was even somewhat acceptable in 2009. But this 2010 and it is about to be 2011. Agressive and thorough testing should have eliminated most of the risks that are being realized at this moment and that is very disappointing.
The dirty little secret in aircraft sales are the subsidies that are used both in the United States and Europe to bolster their exports. You see, you can actually affect your trade balance by selling just a few extra aircraft and that really isn’t possible to do with virtually any other industry.
Right now, foreign airlines such as Emirates or Ryanair can purchase airliners using financing from sources such as the US government in the form of low cost loans. If we sell and deliver more 737s to Ryanair or 777s to Emirates, it helps our trade balance. The airlines get to grow with lower costs that are a function of these loans that offer lower than market interest rates.
And let’s face it, Ryanair and Emirates aren’t exact airlines in need of subisidies.
The same situation exists in Europe with Airbus. You didn’t think that United Airlines and Northwest Airlines bought those Airbus A320s at market rates, did you?
To date, it’s been the dirty little secret among governments and the manufacturers. Recently, US airlines started pointing out the inherent disadvantages of this when it comes to their ability to compete and they’ve got a strong point.
The truth is, sudsidies aren’t necessarily bad if we’re using them to bolster transportation in parts of the world where obtaining any financing is difficult. But we’re not. Not really. It’s a good idea that has been turned on its head with loopholes for situations that just no longer exist.
Now a pack of airlines who are major beneficiaries have indicated that they are open to relaxing the “home country” rule that forbids such subsidies being offered to airlines in home countries as long as no restrictions are put into place that would inhibit their own great deals. Read more about it HERE.
How nice. It’s notable that removal of this “home rule” would also permit several of these airlines to get the same great financing in Europe on Airbus models in addition to Boeing aircraft.
How about we end all subsidies to all airlines with the exception(s) of those in true third world areas? Is it appropriate that an airline like Ryanair can purchase airliners from Boeing at already ridiculously low prices and then finance them with such low cost loans that they’re able to buy a 737 and re-sell it for a *profit* 3 years later?
No, of course not.
A better idea would be to come to an agreement on how to offer these subisidies to airlines in poor countries who might really benefit from such a subsidy and then eliminate such things for any airlines operating in modern economies.
This means you Ryanair/Emirates/Virgin Blue/Etihad/CargoLux/Oman/Norwegian/Pegasus/Wizz airlines. Not a one of you is a disadvantaged airline. Instead, you’re all airlines who are pounding your competition into the ground with lower costs that really are a direct function of these subisidies.
Tim Clark says Emirates wants more range from Airbus and its A350-1000 than it presently offers and it expects more from Boeing’s 777-300ER, too. The airline is unsatisfied with the inability to serve ultra-long haul routes from Dubai with what it considers adequate payload. Adequate payload is carrying 350 passengers from Dubai to Los Angeles with a full cargo/baggage load in about 16.5 hours.
Frankly, that’s expecting a lot from even advanced technology. We’re getting there but the big problem is how much fuel you have to carry to achieve those distances with those loads. Those distances begin to require airliners to carry more fuel in order to carry more fuel for range and you can guess how quickly the diminishing returns show up on such a prospect.
Lighter but stronger aircraft can solve that but we’ve already seen what a challenge that can be with the 787. There is no doubt that the manufacturers will figure out how to do it somewhere along the line but my gut tells me that this isn’t a problem solved with a better wing or better engine. It’ll require re-thinking the large widebody airliner in a way that will require even better composites and other lightweight materials.
It takes time to develop and test those materials. It can take a lot of time to even figure out how to ramp up production on these exotic materials. We still haven’t seen 787 partners prove they can meet production demands for CFRP fuselage barrels. I think they can but the proof is in the pudding and we haven’t tasted the pudding yet.
My gut tells me we are at least 15 years away from producing a truly revolutionary widebody capable of carrying 40+ tons of payload for those ranges. We’ll get there and it’s time to start thinking about it but don’t look for such an aircraft in the next 10 years. It won’t be showing up.
Besides, it’s a relatively limited market and it’s become clear that the manufacturers need to turn their resources towards producing a better short haul, single aisle airliner. Frankly, that’s where the real money is at in the next 10 years.
There has been a lot of talk about the Chinese aircraft, the COMAC C919, over the past year and what it means for Boeing and Airbus. From my perspective, it’s not the aircraft that is a threat. To the contrary, I do not believe this aircraft will be any more successful than any other Chinese made commercial airliner. However, I do think that there is a signal to be read in that the way the Chinese have chosen to engage in this project signals that they are learning and they do want to be a player.
To build a successful Boeing/Airbus competitor, you really do have to have quite a bit more experience than what the Chinese have. The real threats to Boeing and Airbus come from Bombardier and Embraer, in my opinion, because they not only know how to build an integrated system called an aircraft, they also know how to meet an airline’s needs as a function of having built their businesses from the ground up.
Bombardier and Embraer have doing what they do for a long time and they’ve learned through both successes and failures as well as from working with airlines to find out what they need in the next product they make. There is no substitute for experience when it comes to building that integrated system. That has never been more true than it is today.
China has a robust airline industry, to be sure, but it is one that has been dominated by the sublime customer service that Boeing offers every customer and even Airbus has struggled to bring itself to parity with Boeing in this market. Chinese airline executives understand and, more importantly, value what Boeing brings to the table when it comes to a complete customer product.
Chinese aviation industries would have been far better served with the goal of producing a world competitor in the regional jet class and taking their time to do it right. I’ll point out that Japan’s aviation industry has decades more experience building aircraft systems and even they are just getting their feet wet with a total system in the new Mitsbusihi regional jet.
A good jet engine isn’t the key to success in producing a Boeing/Airbus competitor. Competitive jet engines are easy to find. The harder part is the airframe, the avionics, the testing, the wing and many other things. It comes from knowing how to squeeze out even 1% more efficiency from an already mature system. You can’t buy that experience off the shelf. You have to earn it.
All that said, China has decided to get partners and good ones at that. They learn and they’ll listen and they’ll build their upon their experiences and as long as they keep trying, they will succeed more and more with future generations of aircraft. They key is to be in this for the long haul.
Traditionally, executing a strategy in support of the long view is a strong point for the Chinese but in this particular case, I sense a very un-Chinese like impatience to be a player. The real thing Boeing and Airbus should pay attention to is whether or not they regroup and re-engage when the C919 isn’t the killer app they think it is. If they do, it’s time to start getting worried. If they retreat and allow their experiences to wither, it’s over.
You can’t even build a modestly good aircraft and expect to succeed. You have to not only be able to make it look attractive from a performance point of view, you have to be able to service and support that product 100% of the time. Even Boeing and Airbus will tell you that it isn’t easy to do.
Take a look at the ARJ21 aircraft being built in China at present. It’s an aircraft that has already, for all intent and purpose, been exceeded by Bombardier and Embraer. It won’t fly for any airlines outside of China most likely and even then it’s unlikely to be even much of a political success. It’s an exercise to learn how to build an integrated system and China will have to work mightily to build upon that effort with the C919.
Even the Chinese airlines who made “orders” for the C919 at the recent Zuhai aviation show signaled some doubt. Most only made firm orders for 5 aircraft each with options for more. Frankly, that implies resignation to political realities, not enthusiasm. China is a country to watch in this business but this particular aircraft isn’t a threat whatsoever.
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.
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?
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.
Now we have a picture, although somewhat fuzzy, of the WTO findings against both Boeing/USA and Airbus/EU that frankly brings me to a different conclusion than some. Without going into the complex findings on both sides and we really don’t have a public ruling on the EU claim yet anyway, we can begin to see the disparity come into focus slightly.
The disparity comes in two forms. First, the value of the violations. Most conventional wisdom saw about $20 Billion in various subsidies that the EU and/or Airbus would need to remedy over time. More important, it was a fairly loud condemnation of certain practices that will require fundamental restructuring in the EU to accomodate. In other words, the Airbus business model, at first glance, will have to change pretty substantively.
The first analysis of the WTO claim against Boeing and the US is a bit different. The value of the violations is somewhere in the rough vicinity of $5 billion with about $2 billion of that already remedied by Congress. The real kicker is that remedying these violations doesn’t require a fundamental business model change.
The EU is already positioning itself to call, once more, for negotiations on this subject. A number of US and EU based analysts predicted a need for negotiations on this. I’m going to go out on a limb and say that I’m not so sure the US will be that interested in negotiations. The incentive to negotiate usually comes from two parties having a roughly equal interest in having something settled. At first glance, that doesn’t exist here. Boeing takes far less of a hit by simply sucking it up, making the remedies and continuing their stance that the EU must take care of their own house. It puts them on the high ground both politically as well as in a business sense.
I think the US/Boeing will likely make some nominal objections to the WTO ruling but I suspect they’ll breath and comply and then press their case even harder against Airbus. The EU and Airbus will fight, kick and scream about changes on their own ends. I think political leaders from the EU, in particular leaders from France and Germany, will press their case directly with our President and other members of our government. While I do think there are some in our government (mostly Republican oriented members) who will be willing to negotiate, the truth is that it is not politically smart to engage in that over here.
We have an economy that is staggering still. We have a population of 350 million people that our government has a responsibility to and most of those people are entirely unconcerned with the health and welfare of European nations who, quite frankly, have been rather snide and ineffectual during the global economic crisis over the past 2 years. For Europe, the chickens have come home to roost and the crowing is going to sound awfully loud in the mornings.
In the long run, making those changes actually benefits Airbus. Bringing them into a market driven business model as opposed to a subsidy driven business model will bring tangible benefits such as real profit and revenue. The political leaders of the EU are the ones who really have to take the hit. Airbus has been a huge jobs program for many of them and there will be a lot of fallout if and when Airbus leans itself out.
I think this will affect the KC-X tanker bid as well. Secretary of Defense William Gates has repeatedly said that subisides shouldn’t play an issue in this award. In fact, he may well be right about that. However, right and what is politically smart are frequently entirely different things. With this conflict on subisides receiving new light and a more clear picture forming, there will be massive political will being exerted towards a US based award and that means Boeing.
I think the KC-X tanker award gets pushed away from a November award. With it scheduled so soon after mid-term elections, the wise thing will be to take stock of who will be in power and measuring the responses to each potential award. Given that, I suspect this award will definitely push until January and potentially gets pushed until March of next year.
Boeing needs to win this on merit this time. A delay makes that more possible rather than less possible. It allows emotions to settle and a rational decision to be made rather than a politically reactive decision. They’ve lost this award twice now. Once through corrupt practices and once with a bad set of requirements. They can’t afford a third loss because of political winds shifting after an emotionally made award to them. Play it by the book, offer the best price and make certain that your bid fully describes the work and realistic delivery.
This latest (confidential) WTO ruling isn’t going to settle everything soon. There will be appeals and counterclaims for a few more years. However, it does put Boeing on higher ground and if they’re smart, they’ll refrain from crowing (too much) and get to work on selling aircraft.
Negotiations to settle this between the EU and US are unlikely if not for the reasons stated earlier in this post, then for world political reasons. Several countries have emerging aerospace industries that will be encroaching on Boeing / Airbus territory. They want a seat at the table and a negotiation between the US and EU over this doesn’t afford them much say in how they can advance their interests. Boeing can best fend off that encroachment by continuing to take the most free enterprise approach it can in this market. The move above board they are, the more the US can advance their interests and access to markets from this point forward.
Boeing can, however, appease some of those countries by working even harder to bring those companies into partnership with Boeing. One of the best actions to take would be for Boeing to draw those companies in both manufacturing as well as marketing partnerships that are profitable for both sides. The first company I would approach is Embraer despite Embraer’s lean towards Airbus at this time. Embraer has the most mature product line and it’s a natural fit to slide into markets in partnership with Boeing and just behind the Boeing product line.
But I wouldn’t ignore Russia and Japan either. Russia knows how to build aircraft and with just the right nudge, they could be a very effective partner for Boeing. They could potentially even be a low cost manufacturing center in a decade. They are the only other country outside the US and the EU to ever build large aircraft successfully. Japan offers great engineering resources and manufacturing skills that embody the kind of quality control that is a must. If Japan had built hose 787 horizontal stabilizers, we would have never heard about quality problems on them. That’s a lesson learned for Boeing.
Yes, everything has a way to go yet but Boeing suddenly looks a lot better today than it did a month ago as a result of the preliminary WTO ruling. The picture isn’t in perfect focus yet but it did get much more clear.
Video of airliners doing crosswind landings never fail to fascinate me. They are, in my opinion, one of the best examples of airmanship going on in a commercial airliner. Here are some videos taken of the 787 doing its tests in Iceland.
Regardless of whether or not a new 787 delivery delay affects Boeing’s financial guidance, this is a huge disappointment. Not just for fans of the airline industry either.
These days, we tend to see companies as cold and calculating and making business decisions based on logic rather than emotion. It’s a part of our culture to view particularly large companies like Boeing in just that manner. It is also a strong habit among the financial industry to view and analyze things on that level and that’s not entirely unjustified.
However, companies are run by human beings. Human beings do react emotionally to developments whether in their personal lives or within their business. Think I’m wrong? Go walk around a company on the day of a big layoff.
This latest delay is going to emotionally disappoint quite a number of people in the airline industry. It’s going to disappoint decision makers within the airlines themselves and it’s going to disappoint lessors too. These repeated disappointments are going to be the stuff that goes into books about Boeing and the airline industry 10, 20 and 30 years from now. It’s going to be described as the often delayed, highly problematic 787 program and the only thing we don’t know yet is whether or not the 787 is actually the success we think it is.
That kind of stuff gets remembered not just by today’s decision makers but by tomorrow’s decision makers. The junior managers who may well be the VP of Operations or VP of Maintenance at an airline and an influential person on future aircraft purchases.
Boeing isn’t the only game in town and there is bad news knocking on the door, too. The threat isn’t Airbus. Boeing knows how to compete with Airbus. The threat comes from the aerospace capabilities being developed by Bombardier, Embraer, Mitsubishi and others. Regional jet aircraft now, yes, but they’re acquiring intellectual capital that will permit them to build them bigger and bigger. That’s the threat.
And Boeing keeps giving airlines a reason to continue to look at the other guys and wonder.
You see, Boeing keeps setting a schedule and assuring everyone that they have plenty of safety margin built into these schedules to account for risk. And then those schedules slip again. Credibility on this program and, frankly, future programs, is swirling downwards in the toilet.
At some point, you have to be a company who keeps its word. You have to see the leaders of that company decide to make something happen *despite* the risks and problems encountered. It seems that about 8 months ago, Boeing’s leadership and particularly the leadership of the 787 program should have declared both internally and externally that this is it. No matter what it takes, this program will be kept on schedule from here on out.
But that didn’t happen.
This isn’t a slight schedule slip. First deliveries were going to happen early to mid Q4. Then they unofficially slipped to late Q4. With the latest announcement, no one really credibly expects deliveries until early Q2 despite Boeing saying it will be a Q1 2011 delivery. The truth is, none of us know when this aircraft will be delivered. The people backing that schedule just haven’t made things happen.
My own prediction: At the earliest it will be early Q2. It’s just a guess.
But at this point my guess is as good as Boeing’s.
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.
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.
Recently the FAA has required operators of 767 aircraft to inspect the engine pylons on their fleet because cracking was found on a few pylons in the American Airlines fleet recently. A co-worker expressed concern about this because they will be flying an American 767 in a few weeks and asked about it.
I would have absolutely no worries about flying on a 767 of any type despite this discovery. As aircraft age, they do develop new trends in how their structures age. While the pylons found had cracked, very few, so far, have been discovered to have actual cracks. I have no doubt that there will be increased inspections on this area of the aircraft and if pylons are showing fatigue, they’ll be replaced immediately.
Yes, it stirs up pictures of a certain DC-10 from the 1970’s in Chicago. However, there are differences between the two aircraft. First, the DC-10 cracks developed because of improper maintenace procedures. The cracks found on the 767 result from simple metal fatigue. How is that different? In the latter case, the progression is much more preditable typically. In the former situation, severe stress was being placed on parts and in areas where it wasn’t supposed to be. It is kind of like feeling sore and tired and how you got that way. If you were beat up by someone, you’re sore and tired and you may have other injuries. If you’re just old, it’s a natural consequence of age and something you can do something about but it doesn’t necessarily indicate catastrophe or other injuries either.
Yes, fly the 767 with confidence. It’s an aircraft that will be around for some time to come.
United Airlines announced a second quarter profit of $273 million and that’s an impressive result. If Continental’s come in as impressive as that, the heat will be on American Airlines in ways we can only imagine.
Speaking of United and Continental . . . their respective pilot groups have come to an agreement on transition. There is a transition agreement now in place for them but don’t think this means that the groups are near a final merge agreement. The transition agreement just governs how the two airlines will operate with the pilots during the merger transition. I suspect that obtaining a final agreement is still going to be a bit bloody.
BA cabin crew have rejected the latest British Airways offer for settlement. After voting was completed, the latest offer was rejected by about 2/3’s of the labor group. While that isn’t wholesale rejection, it’s significant enough to be a real problem. The hold up is the restoration of flight benefits. BA did finally agree to restore flight benefits to crew that had originally had them taken away for participating in the first round of strikes earlier this year. However, they were restored with loss of seniority and that means they were restored as if these crew were entry level again. This is an area that I’m afraid I side with the union on. Those flight benefits shouldn’t have been taken away as a punitive measure and its the one big misstep by Willie Walsh. The smart move would be to cave in, get another vote going and come to a final settlement.
At the Farnborough International Airshow, single aisle aircraft orders are happening at a rapid clip. Both lessors (GECAS, Air Lease Corp, etc) and airlines themselves (LAN, Flybe, etc) are ordering large amounts of aircraft for delivery over the next several years. LAN has an agreement for up to 50 Airbus A320 class aircraft and Flybe has ordered 35 of the Embraer E-175 jets. GECAS, GE’s leasing arm, has ordered 40 737-800 aircraft. Still, I think this reflect the rather dismal orders placed last year more than it does resounding growth for the next few years. In other words, I think a lot of these are replacement equipment rather than aircraft purchased for growth.
There are several reports out now that Emirates Airlines is going to announce an order for 30 Boeing 777 aircraft at this year’s Farnborough International Airshow in the United Kingdom this week. I’m sure that this will further strike fear in the hearts of airline executives and I’ll repeat THIS response. Just because they order it doesn’t mean they’ll know what to do with it when the time comes.
Another interesting piece of news is that Air France has invited Airbus and Boeing to respond with a proposal for supplying as many as 100 widebody aircraft over the next decade. The assumption is a mix of both the Airbus A350 and Boeing 787. I suspect conventional wisdom will give Airbus the upper hand (we are talking about Air France based in France where Airbus aircraft like the A350 will be made and where the French insist on buying local) but I like Boeing chances for this. Boeing could win this order by offering a mix of 787 and 777 aircraft with GE engines. Air France already has a large fleet of 777 aircraft, experience with the GE engines and may well be attracted by the expected quick and relatively cheap transition for pilots to move between the two aircraft.
Steven Udvar Hazy has his new company, Air Lease Company, and reportedly will be at Farnborough on the hunt for building his new portfolio of lease aircraft. While money is starting to flow back into the lease business, I do wonder if the game hasn’t changed since the early 2000’s. Airlines have seen the benefits of owning their aircraft because in bad times, they can leverage those aircraft for more operating capital in those bad times. In addition, I don’t think Airbus and Boeing are in the mood to offer huge discounts to the lessors anymore. If Michael O’Leary of Ryanair can’t get a deal for 200+ aircraft, why should we think lessors will?
Randy Tinseth, VP of Marketing for Boeing, will be releasing Boeing’s most recent current market outlook at Farnborough and it’s quite a positive one. Boeing sees a need for 30,900 new aircraft between now and 2029 of which they expect 21,000 to be single aisle airliners. They’re forecast is based on a growth rate of 5+% per year in the airline industry and that’s based growth rates since 1978 deregulation in the US (which have averaged 5% per year.)
What’s interesting to me is that they see the regional jet share of that outlook as being significantly less than in the past. I think that depends on what you call a regional jet. If you’re speaking of 50 or less seats, I agree. If we’re talking about 75 to 110 seats, I’m not sure I do agree. Indeed, I think that the 90 to 130 seat market is going to be very hot and I think that Boeing and Airbus ceding that market is a mistake. Even car manufacturers have discovered that it’s wise to cultivate customers at the entry level as opposed to waiting 20 years for them to be able to afford your product.
Finally, I understand that Boeing’s 787, ZA003, has landed in the UK and that marks its first appearance in Europe. FleetBuzzEditorial.Com got some photos of the 787 landing at Farnborough which can be seen HERE. I still really dislike the demo interior they’ve installed in that aircraft.
The Boeing 787’s introduction to a fleet is something that anyone who follows the aviation industry has been looking forward to. It was greatly disappointing that it did not meet its first flight schedule originally but anyone who follows this business was hardly surprised.
What was a bit surprising was a 2+ year delay in that first flight. However, Boeing was pushing its limits when it came to both technology and vendors. In many cases, both were factors in various delays. Boeing was right to push its limits, however. If Boeing expected to be an aviation leader, it needed to stretch itself and it quite rightly did so in this project. In addition, it was right to push its outsourcing as well. Boeing had already experienced good partnerships in outsourcing other airliners production work such as on the 777.
Even with all that has happened over the past 3 years in the 787 program, I still think Boeing was right to push its technology development for this aircraft. It remains a revolution for aircraft and continues to promise a great deal for airlines who use it.
However, perhaps Boeing pushed its vendor outsourcing too much. Actually, we knew they did when they purchased some vendor operations for the 787 outright. I think that, perhaps, Boeing didn’t have as much knowledge about outsourcing as it thought it did. It was, perhaps, viewed more like outsourcing on defense projects where such projects are often pushing the limits in every direction and commercial viability isn’t necessarily a key driver and meeting requirements is.
The latest announced delay finally frustrates me. The vague references to instrumentation and the fact that “test programs” experience unknowns just doesn’t fly anymore. As someone who works for a major aerospace and defense company, I’ve seen good programs and I’ve seen bad. This one is starting to stink from an execution point of view.
The truth is, a lot of risk could have been reduced in the test program using time before the first flight to ensure systems were extra mature. To a degree, it’s clear that was done in some areas and completely neglected in others. Issues with the horizontal stabilizer and how it was manufactured and/or installed should have been identified before first flight. There was so much time to staff and plan the flight test program, it should be going *faster* than its schedule, not slower.
In short, I don’t think Boeing has done nearly enough to reduce risk on this program. They keep getting surprised by things that just point to a too lean program and not enough investment in retiring risk. Airlines have a right to be frustrated at this point. Boeing has yet to have gotten their production up to anything above low rate initial production and its delays to allow manufacturers to catch up is shameful at this point.
Those partners have had 3 years to figure out how to ramp up production and prevent traveled work from happening. Having to “pause” the production to prevent traveled work at this point ought to be resulting in at least a few project managers getting fired. At this point, the only thing that should potentially delay entry into service is flight test revealing a near catastrophic development found only in real flight test. Seriously, all the systems should have an exceptional maturity and all the vendors and manufacturers should be capable of spinning up production beyond 2 to 2.5 aircraft per month.
Lean is good but this program’s project planning and execution stinks of being run on the absolute best case scenarios with very little provision for managing risk and retiring risk along the various waypoints of development in a sensible and, more importantly, responsible manner.
This aircraft will be a successful one. I firmly believe it remains a game changer for airlines. However, I’m left with a sense that Boeing continues to treat this program as “just another program” instead of treating it with a sense of urgency and acting as if its future depends on it.
The fact that there is as little outcry over these latest announcements demonstrates just how little this industry has come to expect from Boeing and this program when it comes to doing what Boeing says it is going to do.
Since the widely known WTO ruling on Airbus and it’s launch aid from member countries came out, there has been a lot of speculation on its implications for the airliner market, Boeing, the KC-X tanker and what the WTO might rule against Boeing on in its counter-claim. Conventional wisdom is that both parties will get slapped heartily and that might end up being somewhat true although I suspect that far less will be found against Boeing.
The difference is in the business models. In many respects, Airbus/EADS has been run much like a state owned entity and its financing has largely derived from loans from member countries or with member countries’ backing. Boeing, on the other hand, operates much more as a commercial entity and while it does benefit from things like tax breaks (on a state and local community level) as well as from participating in research and development efforts on the part of the government, it’s primary method of financing its commercial product line is from the financial markets.
When Boeing needs money, it goes to the markets and obtains market rate financing in the form of loans, bonds or through stock sales. That’s the key difference between Airbus and Boeing. Boeing follows a traditional and, more importantly, acceptable model for its financing. A model that makes it difficult to show harm to Airbus/EADS.
I think both parties will have to modify their behaviour going forward but I think Airbus’ compliance will have far greater and far more long lasting effects on its business model than anything Boeing will have to do. I also think that Airbus/EADS remains tied to answering to its member countries on things like exports and employment and that makes it much more difficult to outsource (a la Boeing) and/or manufacture their aircraft in other countries.
In the long run, Airbus’ compliance will make them a stronger and more competitive business because they’ll retain the advantage of selling to their member nations but they’ll also understand how to respond to their financial needs as well as their customer markets.
In the short run, it just got a lot more difficult for Airbus/EADS to launch new models because they’ll likely have to “pay back” that launch aid and obtain commercial rate financing. In addition, their commitments to the A380, A350 and A400 projects make it very tough for them to obtain financing for and launch a new project such as an A320 replacement or a model that competes more effectively with the bottom end of the 787 model lineup.
For Boeing, it probably means forgoing or even paying back tax incentives and it will mean Boeing having to examine where it builds its aircraft much more closely in the future. Don’t be surprised if more of their production moves out of Washington State over the next 20 years.
It’s hard to find any video on the Boeing 727 that is truly interesting. That’s a shame because if there is one commercial airliner that lights my fire more than any other it is the 727. I’m prejudiced, however, because it’s the aircraft I flew for hundreds of thousands of miles as a child and teenager when my father was an executive at Braniff International.
Designed in the early 1960’s, the idea was to meet requirements for the trunk airliners in the United States which were pretty diverse. Eastern Airlines wanted more than 2 jets so it could fly overwater routes longer than 60 minutes. United wanted superior takeoff performance because of its flights to and from Denver. American Airlines (and most other trunk airlines) wanted 2 engine efficiency. The three engined 727 answered all of the requirements.
It would suprise most people to learn that it was the 727 that long held the record for most aircraft built and its production spanned 20+ years with 3 basic variants. The original 727-100 (seating about 150 people), the 727-200 (seating about 180 people) and the 727-200 Advanced which seated the same number of people but had better range and take-off performance over the original -200.
To me, the aircraft always had the same sex appeal that a sports car has. It was sleek, slow the to ground and the very swept wings had a very racy look. This aircraft, in all 3 forms, was the mainstay of the Braniff International fleet from the mid-1960’s until the early 1980’s and the time I spent on them remains a very fond memory. Despite the fact that Boeing’s cabins from the 707 to the 757 are all the same in width and basic configuration, the 727 always seemed a bit “bigger” and “wider” to me. Indeed, the only aircraft that feels similar to me is the 757.
Designed with a clean wing and the ability to produce a lot of “lift” at low speeds, the 727 had a fairly high sink rate that caught several early 727 captains off guard resulting in accidents. One captain said “You didn’t try to grease the landing, you just flew it into the ground. If you did have a smooth landing, it was a complete accident.”
Its take-off performance was equally fun. A take-off resulted in being pushed *very* firmly back into your seat and then a very high angle of attack seemed to shoot you into the sky. It was noisy too. It was really, really noisy and I must say that it was these jets that really caused a lot of the pushback on aircraft noise. Many younger people marvel at how loud a MD-80 aircraft sounds on take-off. The 727 was far louder than that.
The 727 was also fast. Of course, in its hey day, pilots didn’t worry too much about fuel either. Nonetheless, it cruised at a far higher speed than is typical of today’s mainline domestic aircraft. I frequently flew between DFW and Chicago in the 1970’s, for instance, and that trip, gate to gate, was at or just shy of 2 hours flat. I also frequently flew between DFW and PDX nonstop and those flights were often done in at little as just over 3 hours. Today, those same flights take nearly 4 hours on an MD-80.
Its undoing was the 3-man cockpit and the 3 jets it had. I think airlines could have survived the 3 jets a bit longer but the 3 man cockpit wasn’t a tolerable condition anymore and airlines looked elsewhere. It’s next generation development was the 757 but I think it’s unfair to refer to it in that way as the 757 is clearly more than just another evolution.
Here are a couple of videos that I did find interesting and I hope you do too.
Delta says goodbye on its last 727 flight.
The restoration of the 1st 727, N70001U.
A Boeing 727 Rocket Assisted Take Off (RATO) Test.
And, no, jetBlue isn’t buying the 737. I’ve found three interesting items to comment on involving the 737 and jetBlue and New York city separately.
First, Southwest Airlines COO and Exec VP Mike Van de Ven has made a statement that re-engined aircraft whether they are a 737 or A320 won’t offer enough improved performance to be attractive to Southwest. And I think there is a message here, particularly to Boeing, about what SWA wants and may be willing to buy. Southwest is a huge customer for Boeing on the 737 and Southwest is just the kind of customer Boeing wants to kick-off with.
I think Southwest wants a new 737 replacement from Boeing and I think they’re signaling that they would be willing to become the launch customer for the right aircraft. COO Van de Ven said:
“I believe that a new narrowbody aircraft will produce one of the single most significant steps toward meeting our economic challenges.”
If nothing else, it’s a message to Boeing saying “please don’t re-warm the 737 again, we need you to work on a new replacement and deliver that as soon as possible.”
The Fort Worth Star Telegram Sky Talk blog has THIS story about the DFW Airport Board and its recent retreat. It’s notable that they mention that they’re trying to use incentives to get jetBlue to start service between DFW and Boston. Currently, American Airlines is the only non-stop airline on that route and, no, the fares are not cheap. Frankly, I don’t think jetBlue will cooperate given their recently announced interline agreement and slot swap with AA.
However, this points up my chief rant about my home town area. We do not have enough competition at DFW airport and I believe that AA is challengeable on both fares and service. Delta has begun challenging American on the Chicago – NYC (La Guardia) route and American is responding, currently, with triple air miles awards to retain its customers.
More significant is that Delta has decided to go head to head with American on a route that American has *owned* for decades. The big worry is about mergers and reduced competition they might create in the US market. To the contrary, I think the latest round of mergers is going to lead to 4 legacy carriers who are going to start looking at each other’s dominance at various airports and, in particular, who isn’t making money and cannot afford to indefinitely “buy” routes with low fares.
That would be American Airlines. US Airways is a bit weak in its route system but they earn profits. AA doesn’t and hasn’t in a long time. Delta’s incursion on the NYC-Chicago route is novel and it may or may not work but Delta has enough financial staying power to sit on that effort for a long time in hopes of building the business. What happens when someone like ContiUnited comes along decides that AA shouldn’t own DFW-LAX? I think we’re going to see plenty of competition in the airline world.
