Two days ago, Emirates announced an additional $11 Billion order for 32 more A380 aircraft. If all of its orders are delivered, this means a fleet of 90 A380 aircraft by 2017 or just 7 years from now. It’s an impressive order and no airline enthusiast can deny that such a fleet is kind of exciting. But it doesn’t make sense. for either Emirates or Airbus.
This certainly allows Airbus to plunge ahead for a while longer manufacturing the A380 but it really doesn’t put them any further ahead on earning any real profit from the airliner when you consider the deferrals and (potential) cancellations from other airlines. In addition, this adds risk to their orderbook rather than reduces it because this indicates a growing dependency on just one airline for this aircraft.
Several airlines have the A380 and most indications are that while they can make money with it, it isn’t a game changer for the airlines. As the world of airline routes continues to fracture due to aircraft like the A330, 777 and now the 787 and A350, more and more flying is becoming “point to point” in the international world. There are a relatively few routes that can support the A380.
Even the largest 747 fleet operators such as British Airways and JAL have made moves to start replacing their largest aircraft with Boeing 777 aircraft on most routes. Yes, British Airways has orders for the A380 but one has to question how many they can support even on their busiest routes such as London-NYC or London-Australia.
If British Airways (at one time they had over 50 747 aircraft) can’t support a large fleet of 747s anymore, how can Emirates do so? Emirates doesn’t have magic working for it. They don’t know something that others don’t. They do have some cost advantages on fuel and labor but as time goes by, even those advantages narrow considerably. So how does Emirates justify a fleet of 90 A380 aircraft?
They don’t. A fleet of 90 A380s means ownership of that aircraft for the next 30 years at minimum. 30 years of operating such aircraft is a long time and let’s not lose sight of the fact that there isn’t exactly hot demand for used jumbos these days. Even relatively new(ish) 747s are now being retired into a life as cargo aircraft as 777s replace them.
Further, Airbus and Boeing aren’t a bunch of huckleberries when it comes to forecasting their markets. In fact, their forecasts tend to agree in most areas except the concept of the super Jumbo. Boeing doesn’t see that market growing and has chosen to focus on serving the fat middle section of the widebody market (220 to 350 seats) with their 787/777 family.
Perhaps Emirates will prove me (and others) wrong. But I’d bet large money against them at this point.
4 days of vacation and not reviewing anything to do with the airlines (or defense industry or the oil leak in the gulf) and it was quite relaxing.
Right. Well, I see British Airways and Unite still haven’t got their act together. These two desperately need binding arbitration. British Airways needs it in order to bring back a degree of certainty to their operations. Unite needs it to, well, preserve some semblance of the idea that they “won” something. British Airways is winning this conflict now. They’re winning it in public opinion and they’re winning it when it comes to employee viewpoints. For Unite to continue without a deal only weakens them week by week.
I see that all kinds of politicians are questioning details of the Continental / United merger. Oddly enough, many of them are from Texas and those folks are questioning the wisdom of Houston losing the Continental HQ. Well, so do I but for vastly different reasons. Houston is not going to be dimished as a hub nor is it going to lose many jobs. In fact, I suspect they won’t lose any jobs in terms of “count” but I do think there will be transitions and changes. This is a prestige objection on the part of Senator Kay Bailey Hutchison. She lost the race for the Republican nomination for Governor in Texas and she desperately needs to appear to be looking out after “the people” in Texas if she expects to keep her seat in the Senate.
I simply think it is stupid to move HQ to Chicago because it is fantastically more expensive there. That’s all.
I saw a few stories about Australian airline JetStar adopting the iPad for inflight entertainment. And, unlike most bloggers on the airline industry, I don’t care really. I don’t see it as an industry trend, I don’t see it as unwise and I don’t think it’ll be but a blip on the airline horizon. iPads are cool and probably cheap to deploy. Oh, and you can deploy them quickly too. Will it be a trend? I doubt it but I don’t care. I really don’t.
Boeing refuses to say whether or not they’ll bring a 787 to the annual flightshow in England this year in Farnborough. They say they’ll make that decision closer to the show. I say they would be insane not to give their customers a taste. If they’re refusing to say, it may only be because they don’t know if their GE equipped test planes will fly their first flights on time. Still, if I were to be money on an outcome, I’d be betting that ZA001, the first to fly, will be there all shiny and spiffy. Maybe they’ll bring ZA003 which has seats. One way or another, I’m betting there is a 787 at Farnborough.
I refuse to talk about the person(s) who were left on United aircraft over the past few weeks.
It’s been over a month since the new “tarmac rules” have been in place. Am I the only one to notice only the soft sounds of crickets so far? We’re 1 month into the thunderstorm season and nary a peep from anyone except Kate Hanni of FlyerRights.Org who wants rules in place to keep airlines from being punitive against people who want off an aircraft. Actually, I somewhat support the notion but I think Kate Hanni is the wrong supporter for such a measure. She’s got too much mud on her.
No, seriously, where is it? This is an aircraft that conversations began on in 2004. It’s 2010 and I still don’t really know much about the aircraft despite being a keen industry observer.
Mind you, I’ve heard the range promises and the seat costs promises but I haven’t seen the meat. In fact, isn’t it a bit distressing that this aircraft is cloaked in so much secrecy that we still don’t know its final definition? The few facts we have heard have actually originated from the few airlines that have ordered the aircraft in numbers. Those facts haven’t been entirely good either.
When Emirates starts talking about how the 777-300 still has an advantage, you might have a problem. This is an airline that loves to play the two majors off each other. Ordinarily, I’d expect Emirates to be trying to goad Boeing into building something new or something revised.
Still, it’s time to start talking about this aircraft in more detail rather than with John Leahy’s rosy marketing promises. It’s time to start hearing more about its real capabilities and how it will compete in the real world with the 787 and 777. Right now, I really don’t know much at all and that really makes me question whether an entry into service for 2013 is even remotely possible at this point.
It’s being reported by Aviation Week that a Morgan Stanley financial analyst is now predicting that Boeing will soon announce a 737 replacement development program. See that article HERE. Her reasoning is somewhat sound but is also tinged with a financial analysts viewpoint.
Financial analysts see a re-engine program adding little if anything to Boeing’s financial performance. A new aircraft would potentially garner hundreds if not thousands of orders during the development period and that backlog of orders would offer confidence to the financial world. Fortunately, engineers run Boeing. Creating an aircraft for the sake of a balance sheet is an unwise move unless many other criteria are met as well. Most of those criteria are engineering related such as engine development maturity, new materials (CFRP for instance) maturity, etc.
This analyst also speculates that a re-engined B737 vs a re-engined A320 could still be 8 to 10% less efficient than the Airbus product. Now her engineering prowess is really showing. The two aircraft are neck and neck now. Both would need substantial engineering changes to accomodate a new engine. The new Pratt & Whitney GTF engine still is not showing the performance that has been promised. In fact, in a Boeing vs Airbus matchup between like models, the Boeing generally has the lowest trip costs so far. It’s an almost insignificant advantage but it exists and it shows this analyst hasn’t done too much homework.
Finally, there is more talk of this new aircraft being a twin-aisle development for faster boarding. This one I doubt. A twin-aisle wouldn’t just require a larger fuselage but it would potentially be heavier if kept as a circular cross section. A new fuselage shape might lend itself to such a development but I really doubt it. The 737 market is from about 130 to 180 seats. A twin aisle means a shorter length and that means things like a taller tail. It would imply more “structure” being necessary and more structure generally means more weight. More weight means higher costs. Perhaps a new fuselage shape might work but that means lots of new engineering and materials potentially. I wouldn’t rule it out completely but I would give it an extremely low probability.
That said, I would be less surprised to learn of a “twin” development of two sub-families somewhat similar to the 757/767 developments. An aircraft family capable of serving from 120 to 160 passengers and, perhaps, another serving 160 to 200 passengers with a great deal of commonality might be the answer everyone is looking for. That would allow Boeing to optimize their aircraft structures for missions in those categories and, at the same time, potentially offer commonality in engines, aircraft systems and pilot ratings.
I continue to believe Boeing will announce a new program in the next 18 to 24 months. I do believe it will be for a single aisle airliner(s) and I do believe that it may have an entry into service late in the decade. Everything else is just a guess. For earlier comments on this, you can read THIS blog entry.
The argument that current 737 owners are afraid that a re-engine or new development program will hurt their aircraft values is barely valid. It may hurt their values but if Boeing can engineer a new aircraft meeting offering a great gain in efficiency, then it is time to start developing it. If they cannot, then they’ll wait. There is no value to either Boeing or the airlines in waiting longer than necessary. When the risks reach an appropriate level, they will launch this. The question is, have those risks gotten to a point that they are acceptable?
There is some new speculation and reports that Boeing is now leaning towards a new development aircraft to replace the 737 instead of a re-engine project. See the Seattle Post Intelligencer blog post HERE. The best of business cases for a re-engine project are usually fraught with risk and I’m sure that is no different in the case of this aircraft. Although the 737 dates back to the late 1960’s, current versions date only from the 1990’s and continue to sell very well.
There are a few variables at play here. First, Boeing doesn’t want to hurt its backlog of 737 orders and that’s understandable given the high profitability they provide. Airbus is in the same position and neither company prefers to blink first. On the other hand, if Boeing moves forward with a new design, it’s fairly certain that Airbus would blink rather quickly.
Airlines want new, more efficient aircraft and they would prefer a leap in efficiency equivalent to what was seen in the mid 1980’s with new models. Newly developed aircraft at that time were offering a 35 to 40% improvement in efficiency (cost per passenger seat mile) over the first generation of aircraft still flying. They would like to see that leap again and, unfortunately, that’s unlikely.
The curve on engine and airframe technology advancements has reached a point where it is smoother and less steep. Our knowledge of aerodynamics, engineering on airframes, new materials and, yes, engines, has become more stable. There is less of a learning curve than there was with our first two generations of aircraft. That means gains of 15 to 25% are probably what is achievable in the next round and that’s still very, very good.
Engine manufacturers are much more confident of their ability to deliver on their end than they were just 2 years ago. Circumstances have changed and that leads to a company like Boeing examining the future and seeing less risk. That’s a good thing. At some point, the risk becomes appropriate and I think they’re approaching that point and realize it.
Boeing has a great deal of new knowledge on using new materials and I suspect that their one challenge in using, say, CFRP for a B737 style aircraft is in figuring out how to scale it down. Now that the 787 program is in production and testing, they likely see that it is a problem they can solve.
Finally, making a move to build a new aircraft is timely for two reasons. First, they’re development work on both the 787 and 747 is winding down. New variants of the 787 will require a fraction of the development staff that the original design required. They have resources that are freeing up and who could be put to use on new programs.
Second, it would potentially put Airbus in a very constrained position. Airbus is constrained on resources and money at present. The A380 program is not earning them money and, if anything, is badly hurting their cash flow. That program refuses to scale up into planned production and, what’s worse, airlines continue to defer their orders without ordering any additional aircraft.
Airbus also is in the middle of developing the A350 and faces a number of technological challenges there, too. They’re as new to the CFRP fuselage as Boeing is and it’s taking time to figure out how to build that aircraft right. While production delays haven’t been announced, there isn’t an analyst out there who believes that this aircraft will show up on time and on budget. It will most likely have as many challenges facing it as the 787 did and that means another program sucking up resources and money.
Finally, Airbus has problems with its military A400M aircraft development and a number of countries are very upset with Airbus performance there as well. To add more fuel to the fire, Airbus/EADS will be attempting to win the KC-X tanker program at all costs and that requires still more resources that are in scarce supply.
If Boeing announces a new build in the next year, it puts the fire to the feet of Airbus to come up with something in response and makes Airbus react to Boeing instead of the other way around. Will they announce a new build? Yes, I think in the next 12 to 18 months we’ll hear of the launch of a 737 replacement program probably taking something on the order of 5 years to complete.
Now that the 787 has entered into flight testing and has shown itself to be what was predicted and, possibly, even better, eyes are turning towards what happens next. With entries into the market by Bombardier and Embraer with aircraft that isn’t quite a regional jet and almost a mainliner of today, new pressure is on Boeing and Airbus to start defining the future.
New Boeing 737 and Airbus A320 replacements were expected to be announced by now originally and airlines were disappointed when both manufacturers stated in 2008/2009 that such aircraft won’t arrive before 2020 or beyond. Airlines have asked that the next generation of aircraft have 20 to 30% better efficiency than the current aircraft or even more. In the past, those kinds of gains were actually possible.
Since both airlines feel that that date is so far in the distance, there has been new talk of re-engining both aircraft lines with new, more modern engines from Pratt & Whitney (GTF) or CFM (Leap-56). Unlike many conversations, this isn’t about offering these engines on existing aircraft but about offering these engines on new build aircraft for the future.
Everyone anticipated a CFRP Boeing being announced just 2 years ago. Another blogger and journalist, Flightblogger, wrote this entry HERE about comments made by Boeing’s new Commercial Aircraft CEO, Jim Albaugh, about the difficulties in “scaling down” CFRP for smaller aircraft. CFRP current requirements make it ideal for medium to large aircraft but present difficulties in making a smaller aircraft because you cannot “thin” the material as much.
Both Boeing and Airbus are studying re-engine concepts at present and the Airbus A320 line is actually a better candidate for this since it stands a bit taller off the ground and is able to accommodate a new engine without necessarily re-designing landing gear, etc to fit a larger engine underneath the wing.
I actually think we will hear about a new 737 replacement sooner than what Boeing has indicated. It’s clear they’ve become more comfortable with the emerging engine technologies or they wouldn’t be talking about a re-engine effort. They’ve also come a long way in using CFRP and learning about its properties and challenges than they were just 2 years ago as well.
The truth is, there won’t be a 40 to 50% gain in efficiency in the next models. Those kinds of gains were attained at a time when jet engine technology, wing technology and aerodynamics were still in their infancy relatively speaking. With the passing of nearly 30 years since that phase, we’ve seen great gains in efficiency but nothing approaching what we saw prior to 1980 or so.
I suspect that Boeing will identify what is straightforward engineering and what needs to be developed to bring an aircraft online sooner than later and may well make the investment. Timing is everything on these efforts and the company is poised to complete two long, challenging projects in the near future (747-8 and 787). What remains are derivative developments of the 787 (definitely a -9 and probably a -10) which will be reasonably easy jobs compared to the last 6 years. Now there is room to work on the next big thing.
Many have speculated that the next big thing is another widebody. But with Boeing poised to continue to reap benefits from the 777 as it appears it will continue to outperform the A350 in many missions, a 737 replacement suddenly looks more logical. More to the point, it’s a response that Airbus cannot afford to make at present given its heavy commitments to the A380 (can’t scale production up adequately), A350 (barely defined as the -900 and with almost no real definition for the -1000) and A400 (way over budget and potentially diminishing orders as they enter into flight test) development projects.
I don’t think we’ll see this announcement this year or next. I do think 2012 might be the year we begin to hear Boeing make noise about a new aircraft vs the Airbus A320.
FlightGlobal has THIS story about Boeing considering a wing extension to improve the aerodynamic efficiency of the Boeing 777 and improve load and range. How the 777 will sell against the Airbus A350 in development is a question everyone is asking these days even though the A350’s specifications and real performance definitions are, at best, still a bit murky.
Although the A350 is definitely a competitor to the 777, engine thrust is really what reveals may be happening here. So far, Airbus has been unable to grow its engine range into thrust ranges that approach what the 777 has with the GE90 engines. Airbus remains at about 93Klbs of thrust from Rolls Royce and its two larger aircraft versions, the -900 and -1000 are, for the moment, have Rolls Royce as a sole source for engines.
Already airlines who are operating the 777 and who have ordered the A350 have said that the 777 will still have a significant payload advantage over the A350. Payload advantages can translate into carrying more passengers, more cargo or more range. In other words, the 777, on first glance, remains a very viable aircraft and with performance improvements, looks to remain so.
But what happens if Airbus is able to convince an engine maker to grow its thrust range into the 105K to 115K thrust range of the GE90? That would probably mean a commitment to some kind of new engine from Rolls-Royce or a stunning reversal of position from GE on supply a version of the GE90 to Airbus. Nonetheless, it’s a hard to ignore how such a development would change the viability of the 777 overnight.
Incremental performance improvements are common on airliners and Boeing knows it can grow the distance between the two aircraft with these improvements but only if Airbus is denied a 100K+ thrust engine. Since Rolls Royce has had quite some time to recoup investment on its large Trent engines and time to spend on research and development, I would not discount the possibility that they’ll commit to such an engine in the future but probably only if they retain some sort of exclusivity.
I think the extended wing, engine performance improvements and other tweaks will keep the 777 in the sales game for the next 4 to 6 years but if Boeing wants to retain supremacy, it’s time to start asking what the follow on successor to the 777 might look like.
Boeing has the 787 back on the right track and while they’ve got some work to do in getting the 787-9 and the speculated 787-10 into production, that has become straightforward engineering now. The 747-8 has come into its own test program and since that is an incremental re-development of the 747, there isn’t much there that isn’t straightforward engineering as well.
The 737 successor is by all accounts something to be deferred for development until late in this decade. Instead, it will receive a new engine almost certainly which will require some changes to the existing design but nothing that would warrant calling it a new aircraft. Instead, such an aircraft will be much like a 747-8 development.
That means there is potentially a 5 to 6 year gap there in which a new development program can take place before the 737 development must start in earnest. I rather think that’s the moment of opportunity for Boeing to go forward with that new large wide body replacement aircraft. It will push the company, certainly, but that development, particularly with what they’ve learned in developing the 787, would almost certainly dominate the markets for 20 or more years if they were to make the commitment.
Ordinarily I stay away from non-commercial aviation subjects because they don’t interest me that much and they aren’t subject matter that I have a lot of knowledge on most of the time. The KC-X Tanker RFP is something I’m very much interested in and I do know a bit about this one.*
Imagine you are a mountain climber. Moutain climbing is difficult and dangerous work and you need the right equipment to succeed as much as anything. Now, suppose you need an energy bar that will help you climb a particularly difficult mountain and you decide to ask for a price on products. It turns out there are really just two energy bar makers and they do things kind of differently but both make a very acceptable energy bar depending on your requirements.
Now you have to figure out your requirements. You decide you need an energy bar that is compact so that carrying lots of these doesn’t take up all your backpack space but you need a minimum amount of calories from it so that when you have one, you don’t want another right away and consume all your bars prematurely. You decide you need a mimimum of 200 calories from these bars and they shouldn’t be greater than 1.25 inches wide by 4 inches long by 0.3 inches thick. That lets you carry enough bars with a margin of safety but also lets you have space in your pack for other necessary items.
The US energy bar maker produces an energy bar that can be tailored somewhat. It’s nominal size fits your requirements within tolerances and all you have to do is remove one bar from your count to make them fit and leave room. It offers 210 calories so it meets your calorie needs too. It’s a pretty good fit although not perfect. The price is within reach but you need the best price possible because mountain climbing is expensive and every penny counts.
The French energy bar maker has a nice product too. It’s a bit more tailored and was originally made for mountains of higher altitude than the one your climbing. It’s size is 2 inches wide by 4.5 inches long by 0.5 inches thick. It’s a bigger bar and you’ll have to leave out 3 or 4 bars from your count to make them fit. Since this bar was designed originally for a different mission, the maker has increased its calories to 270 calories per bar. There is a lot of energy stored in that bar. It’s price is a tad higher but the French government wants to sell more to US mountain climbers so it has already subsized the cost of this bar so that it is competitive with the US manufacturers bar.
On the surface, the French bar looks like a heck of a deal but you still dive into the details. You think about the climb ahead of you and realize that you might have a problem. These bars go stale after you open them and if you don’t eat all of them, it goes to waste. Your body can only take so much in at a time because extra contents can slow you down on your climb. You only *need* 200 calories and you can’t cut those French bars in half because they go bad once you open them. Then you realize that the French bars only allow you to carry a margin of safety of 2 bars whereas the US bars allow you to carry a margin of safety of 7 bars.
Space and weight is at a premium in your backpack and now suddenly you realize that an energy bar that is tailored to your needs as closely as possible is probably the right choice. More is not necessarily better if it goes to waste. Space and weight is at such a premium that the only way to carry more French bars is to get a bigger backpack. That means spending more money on a backpack and carrying more weight as you climb which means you may need more energy in the first place. More requires more which requires more.
You look at both selections and realize that price is, in most respects, the least important requirement. The goal is to get up the mountain and back again quickly and efficiently. Now that you’ve thought this through, you realize that the US bar is the best choice because it meets your specifications almost exactly without being burdensome. The French bars meets your specifications too but it is so much “more”, there is a penalty implicit in its use for your application. On a per ounce basis, the French bar offers the better deal. On a mission basis, the US bar is a better deal.
So you buy the US bar because it meets the mission better. That, my friends, is what the KC-X tanker deal is really all about. It isn’t that the Airbus is a bad tanker. To the contrary, it’s a fine tanker made by an aircraft company that has an excellent reputation. The problem is that it doesn’t fit the mission.
The Airbus tanker does offer more nominal refueling capability and more cargo area. No question. But this RFP is to replace a fleet of tankers numbering in the hundreds. No other country other than the United States projects its power through a fleet like that. Even the really big western military powers like the UK or France only have a fleet of, at the most, a couple dozen tankers. We can send a couple of dozen tankers on a single mission if we want.
The tankers are a force multiplier but the way you really multiply your power is by being able to refuel several aircraft at once. 5 tankers takes care of a mission much better than 2 tankers because it allows the mission to refuel and carry on quicker. On almost all missions, our current fleet doesn’t come back dry very often. Almost never in fact. The KC-135R tankers meet our needs just fine in terms of capacity for either cargo or fuel. They’re just old and inefficient when it comes to operating expenses. But they can still meet our needs fine. We have a smaller fleet of larger tankers that fill the other needs when that occasion arises (which really isn’t often) called the KC-10.
So although the Airbus carries more fuel, it isn’t carrying fuel we’ll really use. That means extra expense for flying the extra weight of the aircraft that was designed to carry more fuel that isn’t needed.
Our bases which house this current fleet were built years ago and have been fine tuned to our needs over the past 5 decades. Again, our current fleet meets our needs so our facilities meet our needs. The B767 basically fits the infrastructure footprint we already have in place and that means we can do a one for one replacement without needing to upgrade hard stands (concrete areas to park the aircraft on), refueling facilities, hangers, runways, taxiways, etc. That means the KC-767 kind of “plugs in” into our existing infrastructure already.
The Airbus tanker requires more than 80% greater footprint in the infrastructure than the current fleet. That means upgrading and changing our infrastructure in every location and systems changes for every part of the fleet. As you can imagine, that adds significantly to our costs to operate that fleet as those changes will have to be done over the lifespan of the fleet and we’re not talking about changes that you can go to Sears for either.
The Department of Defense cannot write requirements for an RFP that make both aircraft competitive. These aircraft are too different from each other to be an apples to apples comparison. Eliminating politics from the equation for the moment, they have two choices: Buy by the ounce or buy by the mission. When it comes to the military, buying for the mission is much more economical in the long run as we’ve seen time and again. Remember when we had thousands of nuclear missiles? The question was how many times did we want to destroy the Earth over and over again when a small fraction of those missiles would end civilization as we know it. Buying by quantity isn’t always the best choice for these situations.
Let’s consider the politics though. Yes, we are for free trade generally. That said, we do a pretty bad job of enforcing fair and free trade when it comes to our political partners in the world. France (and Europe) have massively subsidized Airbus and its aircraft development. You know what? That’s kind of OK to me. They did it to redevelop an aerospace industry which is a strategic industry for any country and makes them militarily less reliant upon the kindness of others. That isn’t a dumb move. The problem is, they did it commercially instead of militarily because there was profits to be had. I really don’t fall on the side of “punish the French” when it comes to these subisidies providing they stop it. So far they haven’t. They’ve got their industry, now they should let it sink or swim. But subsidies are addictive (and we’re not innocent of such addictions ourselves either.)
Because an aerospace industry is strategically very important, we, too, should consider where this work goes. No, we don’t want to be gouged for it but we don’t want to lose that knowledge and know-how either. Were Airbus to win the tanker competition, that would effectively be the end of our capability to produce tankers 20 years from now. The people who know how to do it would be retired or dead. It would be extremely expensive to redevelop that knowledge base and it’s a knowledge base that is at the heart of our ability to project power as a country. Stop and think about that for a few minutes. I’ll wait.
Another consideration is the French and Germans themselves. Both of these countries have some history of being non-cooperative with the US when they disagree or don’t want to participate in a conflict. The Germans to a lesser extent but it still happens. That is perfectly OK and their right. However, DO WE WANT TO BE DEPENDENT UPON COUNTRIES WHO HAVE A HISTORY OF NOT NECESSARILY COOPERATING WITH US DURING IMPORTANT CONFLICTS? What if you need spare parts from Airbus and the French government forbids Airbus from delivering those spares to us at a particular time because it disagrees with us? That’s an important and critical consideration.
Airbus wants a foothold in the US. An opportunity to build a factory here would be a huge advantage for them because they currently sell aircraft for dollars but their costs are primarily in euros. If they builit aircraft here, their costs would be inherently less. Add in the subisidies this company receives and that puts our own aerospace companies which have to sink or swim on their own at a dramatic disadvantage and potentially erodes our domestic strategic aerospace capabilities. Is that what we want as a superpower in this world?
We shouldn’t be encouraging Airbus to compete for this stuff. We should be encouraging another domestic company to re-enter commercial aviation. We should re-develop that industry for our own benefit by encouraging someone like Lockheed to go back into that business so that in the future, we have healthy DOMESTIC competition for RFP like the KC-X Tanker.
Is this tender a boon for Boeing now that Northrop Grumman has withdrawn? No, not really. Boeing can and should make a profit but let’s not forget that they’ll have opportunity costs involved in this and the current RFP requires them to offer a fixed price for a very long time. There is a lot of risk involved in that.
Will this mean an extension of life for the 767 commercially? No, probably not. Maybe for freignters a bit but commercial airlines depend too much on new technologies to continue with the 767 for much longer. Does that make the 767 an outdated purchase for a tanker? No, to the contrary. It’s not the same 767 rolled out in the 1980’s for one. Frankly, other than the basic design, little of that aircraft resembles the original 767s. Not the wing, not the engines, not the avionics, nothing but the basic fuselage which was always a very efficient design. The military is getting an extremely durable, long lived aircraft that should provide capabilities for another 30 to 40 years.
* I am employed by a first tier vendor to Boeing on this program and even work in a group that will be directly involved in the program. However, I’m involved in military software rather than avionics or other hardware.
Both Boeing and Airbus have a great selection of single aisle aircraft for domestic/trans-continental service in their B737 and A320 series families. Both have excellent widebody families for medium to long haul service too. The single aisle families can carry anywhere from about 130 to 190 passengers and that’s a pretty nice cross-section. The current widebody families (and I’m excluding the 767 from this characterization but you’ll see why in a few minutes) accomodate a broad range of passengers ranging from about 270 to 400+ passengers. Each even has new widebody family aircraft being introduced now and over the next 5 to 7 years that promise fantastic efficiency at incredible ranges.
Where is the aircraft to serve the 200 to 250 passenger count on a trans-continental/trans-Atlantic system? Yes, the A330 and B767 are there but they’re really not quite the aircraft for that anymore. The A330 is best as a -300 series aircraft and that encroaches into the 270+ territory. The 767 is still being built but it is, for all intent and purposes, a discontinued aircraft.
Previously we had the 757 and 767 capable of carrying that 190 to 250 passenger range on routes ranging from 2800 to 5500 miles and that market remains very active. But no one is building a new aircraft for that segment. The 787 misses it by a touch too many passengers and the A350 misses it by much more. Neither the 737-900ER nor the A321 is capable of traversing the Atlantic ocean from the east coast of the US to points inside the middle of Europe. They can barely make it across the continental United States.
Everyone is interested in aircraft for long haul routes that are intercontinental / trans-Pacific routes that yield quite a bit of revenue but for which there remains a fairly limited market. Who is going to build the aircraft capable of flying from Northeastern United States to Berlin or Rome or Athens or even Helsinki without being too much aircraft? Yes, the 787-8 can handle that route and probably handle it pretty well but it offers only a small marginal improvement on efficiency for those routes.
It would appear that the world market could stand to see another A300/767 sized aircraft that offers the kind of efficiency we see being promised in the 787/A350 aircraft being built today. And that really shouldn’t be difficult at all for either manufacturer. The fuselage sizes and engines necessary are known quantities. The technologies to raise the efficiency needed for those routes are all available today. There is no challenge to building this kind of aircraft but it doesn’t even appear to be on the drawing boards (or, rather, CAD screens) of either company.
There are a lot of 757/767/A300/A330-200 aircraft still out there but they’re aging fast and have a limited lifecycle left at virtually any airline. I do wonder why airlines aren’t pushing more for a 200 to 250 passenger, 5500nm aircraft particularly since we’re talking about routes that are medium haul, bread and butter routes for much of the global airline system. It is a sweet spot being ignored and I think that the manufacturer that identifies it and addresses it sooner, rather than later, is the manufacturer who enjoys a healthy order book for the next 2 to 3 decades.
Today, part 2 in my views on whether or not we’ll see a real “Ryanair” style airline here in the United States.
Watch what you fly here. The most recent LCC entrants here have bought Airbus. No real surprise as Airbus likes to make a heck of a deal on an aircraft for new airlines in the hopes they’ll have the “in” for future orders if that airline succeeds.
Boeing isn’t too interested in that. They want to see a solid business plan and a real possibility of success. What’s more, big orders aren’t the enticement they once were for Boeing. Boeing got burned on a few of those deals with Ryanair being the most notable since it allowed Ryanair to buy aircraft, fly them for a couple of years and sell them at a profit. Boeing isn’t going to let that happen again any time soon.
Is Airbus the right aircraft? Yes. No. Maybe. I kind of think not. I think it is well suited to the jetBlue and Virgin America airlines of this country because they can support that upgraded service product nicely. That said, those airlines would have done just as well with Boeing aircraft. In fact, jetBlue went with Airbus because Boeing refused to offer a decent price for a decent order.
But Airbus doesn’t strike me as quite the right choice for an LCC. They’re a bit higher off the ground, have a little worse operational dispatch rate and don’t always have the best range vs weight ration for certain routes. Yes, they’re a family of aircraft that offers a range of size that captain can fly across the type range.
Boeing seems better. Supported here in the United States, you have better access to mechanics, parts and plenty of maintenance contractors to keep you going. They’re a little bit closer to the ground, a little easier to turn around and have a little bit better dispatch rate. In addition, their range of capacities is a little bit better for routes and virtually every model has trans-continental capability now without being weight restricted.
The model I would look long and hard at isn’t either of those. I think a new LCC carrier trying to emulate Ryanair ought to take a serious look at the Embraer 170/190 aircraft. They’re cheaper to operate and can carry a full load of passengers and baggage although little cargo (which isn’t an LCC’s concern anyway.) They offer a family of sizes, have a good dispatch rate, offer quick turn arounds, great range, good comfort and great potential for routes requiring frequency and low costs. It is no wonder that David Neeleman chose them for his new airline, Azul, in Brazil.
But you can go used in the US and do pretty well too. Allegiant Airlines buys used MD-82/83/87 aircraft, for instance. They MD-80’s are overbuilt, cheap to buy and still pretty cheap to operate. They have range, good dispatch rates, ease of maintenance and they’re abundant on the used market. The same is true of older Boeing 737 models (pre Next Generation models) and those are becoming to cheap to purchase as well.
In the end, an LCC needs an aircraft type that is relatively easy to expand into a fleet, keep one class of pilots flying it and which has a ready source of aircraft to augment and/or replace the fleet with.
One type, many sizes should be the rule. Ryanair uses one size, the Boeing 737-800 and Southwest basically uses one size, the Boeing 737-700 but they can afford to do so. A new LCC needs operational flexibility and being prepared to use the three basic sizes of either type would be a good thing.
But you can split your types too. Airtran did this successfully by entering the world with DC-9s, transitioning to Boeing 717s and then growing in capacity by bringing on the Boeing 737. That worked because while they needed two different pilot groups, the pilot groups could be kept “rational” with the same pay rates. jetBlue split their types between the Airbus and the Embraer(190) and split their pilot groups pay rates too. There was risk involved in that but jetBlue avoided that by offering pay rates on the Embraer that were as generous as that being offered other pilots flying mainline aircraft at other airlines.
Find airports that welcome you and that have demand to locations you can serve. Sounds easy but it isn’t. In the US, airports tend to be wedded to airlines that have served them for decades. When DFW opened, it was served by a number of major airlines and each terminal served one or more airline. Now, DFW has been taken over by American Airlines (nearly 4 of 5 terminals) and does little to serve the needs of airlines who aren’t AA.
Airports need to figure out that putting all their eggs in one basket with a major, hubbed airline isn’t a good strategy in the long run. Once those airlines have that dominance, they use it to beat airports down on fees and coerce airports into paying for infrastructure the airlines then get to own. It doesn’t benefit the local economy to have one dominant airline as prices rise and service falls. This isn’t just true for DFW either. When airports begin to aggressively pursue new entrants, everyone will win.
New and existing LCC entrants need to make a better argument too. All too often, LCC’s tend to fear competing in those markets dominated by a major legacy carrier and that’s a mistake. Airtran wasn’t afraid to go up against Delta and it paid off. jetBlue wasn’t afraid to compete in one the most competitive markets in the world (NYC) and against some of the biggest airlines. In the past, there weren’t good examples of what an LCC can do for both an airport and a metropolitan area. Now there is and new LCCs in particular need to use that to their advantage.
Treat your staff well. Airlines sell a service product and while you may get customers on price, you’ll keep them with service. Offering strategies to your crews that permit you high productivity and your crew a living wage along with a good working conditions can only lead to your success. Treat them like commodities and you’ll fail. Southwest, Ryanair, jetBlue and Airtran get this. Skybus and Mesa Airlines don’t. Look at who is making money.
Quality of life is just as important to airline crew and staff as wages. Airlines that offer good quality life tend to have happy crew flying their flights and treating their customers right. At the end of the day, it is a lot cheaper to keep a customer than it is to find new ones every week.
Will we ever see a close replica of Ryanair’s model here on a national basis? Yes, I think so. Right now, no. The market is too crowded but that will change again and new airlines will be started again. US attitudes towards fees and advertising are changing, although slowly.
First we need to see a major airline liquidate or merge with another to reduce capacity some more. Then we need to see an uptick in the economy that induces people to spend some money on travel again (both leisure and business travel.) There needs to be a glut of aircraft useable for such a venture (and that’s happening already) and airports need to figure out that it is in their best interest to find space for these new entrants. That really hasn’t started to happen yet but it may yet still happen.
Ryanair is certainly the darling of LCC carriers and, to a certain degree, they even kind of outshine Southwest Airlines. Lots of people look at the US market and wonder about having a Ryanair-style carrier here. Skybus Airlines (read more about them HERE) was supposed to be the one but tanked miserably and by every appearance, the only people who didn’t expect them to fail miserably was their executive staff.
Could such a carrier exist here? Sure they could. In fact, I think it already does in the form of Allegiant Airlines (find out more about them HERE.) Allegiant is all about flying routes point to point using secondary or even tertiary airports and providing extreme low cost prices which are augmented by fees galore. And they make a considerable profit doing so.
What does it really take to be a Low Cost Carrier in the United States? First, let’s really define what that is. Interestingly enough, US Airways uses LCC as its trading identifier on the stock markets. Is it a LCC carrier? Not by any definition. jetBlue and Virgin America both style themselves as LCC carriers but, let’s face it, while they offer great value, neither are a Ryanair style LCC.
Southwest Airlines and Airtran Airlines are probably both the best examples of true low cost carriers operating nationally here in the United States. Allegiant certainly is but they’re still focused much more on the leisure markets and many of the routes they serve compete with quite literally no one.
Skybus failed for a few reasons. First, they picked a hub that defied rational thought in Columbus, Ohio. As you can imagine, there isn’t a whole lot of traffic trying to leave or get there. Hubs don’t work well for LCC carriers. Focus cities do but not hubs. If you want to make money as any kind of airline, you had best be offering flights between two places people want to go.
Second, you have to pick between offering frequency and relative value or absolute lowest cost and infrequent service. You can’t be all things to all people. Skybus kind of offered high frequency and absolute lowest cost and hoped it would stimulate new traffic. The problem is, there is only so many people who want to fly between Columbus, Ohio and Greensboro, NC. You really can’t do that route once or twice a day every day of the week. Not at any price. Not with large, mainline aircraft anyway.
Third, just because you can fly to a secondary or tertiary airport doesn’t mean people will go to that airport to use your airline at any price. Case in point, Bellingham, WA and Skybus again. Bellingham, Washington is a long way away from most anyone in the Seattle-Tacoma area. It’s 90 miles from downtown Seattle, 122 miles from Tacoma and it is a tortuous drive in traffic for anyone in that metro area. Bellingham is convenient to, say, Vancouver, British Columbia but that means crossing a border. In the case of the SEA-TAC area, you need to be flying from their main airport. And the lesson is that you have to look long and hard at each area you’re serving.
LCC carriers have succeeded in flying from secondary, smaller airports such as Love Field (Dallas) and Midway Airport (Chicago) and even Long Beach (LA area) because those airports remain highly accessible to a large number of people. And as both Southwest and Airtran will tell you, sometimes if you want to enter a market, you have to bite the bullet and fly where people want to go. I take note that since Airtran has decided to defend itself against Allegiant, even Allegiant figured out it needed to change airports in the Orlando area to remain competitive.
Choose your fees and advertising carefully. The United States is a different place than Europe. Advertising that is racy or in bad taste doesn’t go well here under the best of circumstances. It doesn’t matter if you think it should or not. It just happens to be that way and a new airline is going to change the moral outlook of this country. Oh, yes, Spirit Airlines has gotten away with it now and then but they remain a minor player and it has possibly turned off as many people as its turned on.
An a la carte fee system (a la Ryanair) is something that this country is completely unfamiliar with when it comes to airlines. Now, that is changing and it will likely change more but it is an evolutionary thing, not revolutionary and some fees are going to make customers feel burned no matter what. Skybus’ Ryanair-like approach to charging a fee for even looking in their direction was offensive to customers here in the US particularly when, at that time, no one else had even really dabbled in it.
While I do think more a la carte offerings will and should be instituted among airlines, it will be done differently here. Luggage fees have generated a massive amount of resentment with customers and while they have generated significant additional revenue for major airlines, it has also caused many customers to more carefully consider their options. Southwest has bucked that luggage fee trend and the results are showing.
There is place for an airline that charges for checked luggage, beverages, meals, blankets and airport check-in. But the amounts of those fees still have to have some value. Particularly when legacy airlines already have those fees as well. Charge more for checked baggage than American Airlines and you run the real risk of turning people off. We’re really not a true a la carte culture here.
Be careful of your publicity. Ryanair’s CEO, Michael O’Leary, gets away with outrageous statements and even expressing a certain outright hostility to his own customers. That works in Europe and, in particular, within the UK and Ireland. Those are cultures who know how to take such statements with a bit more of a wink and a smile. Here in the United States, it’s a flat turn off. Our culture is based more on politeness and friendliness. Bark at your customers or even insult them and they will walk elsewhere.
Bombardier, unlike Embraer featured yesterday, has become the aerospace company it is today by combining a number of companies together over the past 25 years. Its first purchase was Canadair (maker of the Challenger 600), then Short Brothers (maker of the Shorts 360), LearJet and, finally, Dehaviland (Canada) from Boeing.
Notably, products from 3 of those 4 manufacturers exist in one form or another today. The Canadair Challenger business jet is the basis for the regional jet CRJ-100/200 series. The Dehaviland Dash 8 / Q400 continues in production today and LearJet is still selling small, affordable business jets.
Bombardier has pursued two lines of growth in the commercial airline world in the form of its regional jets (CRJ series) and the Q400 turbo-prop from its DeHaviland subsidiary.
The Dash 8 Q400 is arguably the most efficient regional “jet” available today in that the Dash 8 series is powered by 2 Pratt & Whitney (Canada) turbine engines (and actually does derive some tiny percentage of its forward speed from jet “thrust” in addition to its propeller propulsion). The Q400 has seen some renewed interest in its product line and finds itself in the enviable position of airliners showing strong interest in the far greater efficiency of these aircraft over 500nm sectors (or less.)
Colgan Air (serving as a regional airline to Continental) has adopted a fleet and Frontier Airlines and Horizon Airlines both have new fleets of these aircraft. Operating costs that are about 1/3 to 1/2 of a regional jet, the Q400 offers comfort (equivalent to a E-Jet), speed (no substantive differences on sectors of 500nm or less from “real” jets) and low entry costs.
Expect Bombardier not only to continue this line of aircraft but also to improve it over the next few years. Its conceivable that a still larger model with stronger engines could be offered and become quite competitive on both intra-state (Texas, California) and regional (upper North East, Midwest) routes that are currently served by mainline aircraft. Their only real competitor, ATR, does offer similar aircraft but lacks the financial muscle and diversification of most other aerospace companies.
Everyone wants to fly a jet.
Bombardier has a strong, successful line of regional jets that began with the CRJ100/200 series seating 50 passengers and first offered in 1991. This series has now been superseded by the CRJ700/900 series seating from 70 to 90 passengers and first offered in 2001. The CRJ1000 is in development and offers a 100 passenger capacity and should enter service some time in 2010.
The early CRJ100/200 jets were 2×2 seating that was cramped and had limited headroom whereas the new(er) CRJ700/900/1000 offer increased headroom and legroom using the same size fuselage. Both series have seen extensive service with a wide variety of airlines around the world.
The next generation of aircraft, the C-Series, launched in 2008, offers the promise of a wider fuselage accommodating 3×2 seating and from 110 to 140 passengers. This aircraft will be among the first to use the Pratt & Whitney Geared Turbo Fan engine and, with the use of extensive composite materials, should be among the most efficient in its class.
In addition, the range offered by these aircraft put them into near trans-continental reach and certainly encroach a great deal of territory currently held by Boeing and Airbus.
This program, first launched in 2006, first saw a suspension due to a lack of orders and then it was re-started in 2008. Currently, only Lufthansa has made a commitment to the aircraft (30 options) but the range and efficiency of this proposed series should attract other airlines in the next year or so.
Like Embraer, Bombardier must grow and growth means launching future aircraft into Boeing and Airbus’ territory. Bombardier, so far, has shown an inclination towards going it alone into this territory by pushing forward with its next series.
The next step for Bombardier (in about 10 years time) may be a real mainline aircraft seating from 140 to 180 people in a 2×3 or 3×3 configuration. This will be dependent on whether or not their CRJ-700/900/1000 series aircraft require an update and whether or not the market for a sub-100 seat regional jet continues to exist (likely).
Bombardier is challenged by its location in Canada (Montreal) with strong ties to unions and an expensive supplier base. In addition, Bombardier has experienced difficulties in ramping up and maintaining high volume production. Although they have experimented with assembly in China by shipping complete assembly packages there for construction, they have no real ties to other parts of the world that could lead to reduced manufacturing costs (most particularly labor costs.)
Bombardier will continue as a viable and competitive aerospace company. Whether it can last in competition with Embraer and (in the future) Boeing and Airbus remains to be seen. Embraer has the advantage on costs while Airbus and Boeing have an advantage in knowledge. They may become the regional airliner firm to beat with Embraer moving up a class against Boeing and Airbus.
I don’t spend a lot of time on two aircraft manufacturers who really are the first real potential competitors to Boeing and Airbus in the future. Embraer and Bombardier.
Let’s take a look at Embraer today. Embraer, a Brazilian aerospace company, got its start in the 1960’s and entered the commercial aviation world with its EMB 110 Bandeirante (1968) and EMB 120 Brasilia (1983) serving the small commuter turbo-prop market.
These tough aircraft from Brazil managed to serve a need in many US markets and I remember them flying for American Airlines in the 1980’s and 1990’s. American Airlines used them to fly multi-stop routes from their DFW hub and others such as Delta and United used them similarly from their hubs.
It was the ERJ-145 that Embraer brought to market in 1995 that took this company to a new level. This line of regional jets were the first to combine small size (as few as 30 seats and as many as 50 seats) with modern turbine jet engines to provide a (near) mainline aircraft experience to the small feeder routes of major airlines. Unfortunately, these aircraft were only economical to operate when jet fuel was inordinately cheap through the 1990’s and early 2000’s.
Embraer knew this and began development on a larger, more capable family of airliners that aren’t quite regional jets and aren’t quite mainliner jets. These new jets, now referred to as “E-Jets”, are the ERJ-170/190 family and this is where Embraer signaled its willingness to encroach on the territory of Boeing and Airbus.
The E-Jets, introduced in 2002, have a seat capacity ranging from 80 to 120 people in an all coach configuration and, at first glance, that doesn’t seem to quite reach into the 737/A320 territory but its worth another look. The E-Jets, at least the larger E-190/195, offer similar size and range to the early 737-100/200 and the first DC-9 series aircraft. This was confirmed when David Neeleman (founder of Morris Air and jetBlue) chose them to start his new airline in Brazil, Azul. US Airways is now deploying this aircraft on its East Coast shuttle routes.
These aircraft offer something that neither the 737, A320 or DC-9 never offered: no middle seats. Designed for a 2×2 configuration, these aircraft offer a coach experience that really is no different than the current offerings from Boeing and Airbus and, in some cases, really better. These aircraft are now serving the routes originally serviced by first generation 737’s and DC-9’s.
And what’s next? Embraer has shown it has the technical expertise to offer a mainline aircraft and if it expects to grow as a company, the next step will find it offering a 737/A320 competitor. If timing is anything to go by, I would be unsurprised by a new airliner being offered in 5 years or so and quite likely offering the new Pratt & Whitney GTF engine.
With both Boeing and Airbus deferring development on the 737 and A320 series of aircraft for as much as 10 more years, there is an opportunity there for makers such as Embraer and Bombardier since even major US airlines are eager to re-develop their fleets with more fuel efficient aircraft.
At some point, both Boeing and Airbus will have to make a few choices. They can choose to cede the 100 to 140 seat market which is tough to imagine given that this where aircraft are truly mass produced.
They can choose to form a partnership with Embraer and/or Bombardier and co-market a new aircraft under one or the other’s brand names. Airbus has some ties to Embraer and Bombardier has had contact with Boeing over the years but neither has anything approaching what would be called a close tie. I think there is some likelihood of this happening and, frankly, I expect that whoever forms ties with Embraer is likely to succeed. Embraer has a bit more financial strength and a much cheaper labor base to manufacture from than Bombardier (located in union-heavy Canada).
The final choice is to go head to head with Embraer and Bombardier. From a personal viewpoint, I hope that both Boeing and Airbus take this route. It can mean only better aircraft in the future for everyone. However, both Boeing and Airbus are currently manufactured in areas with strong union ties (Boeing is reducing this risk with the establishment of an assembly line in South Carolina and Airbus is “experimenting” with an assembly line in China for low production volumes) and with a relatively expensive supplier base.
There is no doubt that Embraer offers a great product and certainly possesses the ability to take it to yet another level. They are poised to take advantage of another family of aircraft that could be made in a way that type ratings between the E-Jets and a new, larger family could be shared. This would be very attractive to a wide variety of airlines.
The Boeing 787 and Airbus A350xwb are commonly compared to each other over the past few years but are they really similar aircraft?
In one sense, yes, they are. Both aircraft make substantial use of CFRP for instance. Boeing makes the fuselage of the 787 as a full “barrel” and Airbus plans to use CFRP panels using an more conventional structure underneath. Both will also use similar engine and engine technologies although Boeing is using a system that eliminates “bleed air” from its systems for the first time while Airbus retains it.
They are both aimed at the medium to long range market although Boeing’s 787-3 (if it ever comes to fruition) is aimed at domestic markets primarily in Japan with a planned range of about 3000 nautical miles maximum. When the introduction of this aircraft was delayed in favor of the 787-8 and 787-9, Japan Air Lines transferred its orders to the 787-8 and All Nippon Airlines reduced its order and transferred the remaining to the 787-8. Ultimately, I suspect this aircraft may be developed to offer trans-Atlantic, US transcontinental and Japanese domestic capability. That would mean a range increase of probably as much as 1000 nautical miles which would still be 1500 or more nautical miles less than other 787 models.
Both were initially introduced as 3 models. Boeing has firmly offered the 787-3/8/9 and Airbus has firmly offered the A350-800/900/1000. However, the variants of each manufacturer do not match up one for one.
The 787-3 and 787-8 will be a bit smaller than the first A350-800 model. Instead, Airbus targeted its A350-800 model to match up against the 787-9. The A350-900 and 1000 more accurately match up against the Boeing 777-200/300 aircraft.
What drove the development of each of these aircraft is more important and shows the difference. Boeing needed a replacement for both the 767 and the 757. Those models were more than 20 years old and had issues with continuing to be capable aircraft for airlines. The 767 was unable to carry cargo competitively with the A330 and A300 Airbus models and its engines were becoming fuel inefficient for many routes. The 757 had morphed to a medium haul / trans-Atlantic model but didn’t quite have the legs to reach Europe except from extreme East Coast destinations.
Boeing already had the 777-200 which filled a gap between its 747-200/400 models and it didn’t need to replace it since the 777/200ER was quite young and it had the 777-200LR coming online shortly. It needed an aircraft that was capable of carrying a passenger load from 230 to nearly 300 with a full cargo load on at least medium range routes of 5000 nautical miles or more.
In addition, airline trunk routes were fracturing so it needed its next aircraft to be capable of flying much longer routes so the new aircraft had to be capable of flying routes from 5000nm to 8000nm efficiently. Something that the 767 wasn’t capable of and the 777 wasn’t very suited to capacity wise for the shorter ranges. So Boeing defined the 787 to fill that gap.
Airbus was faced with a different problem. The A330 was and is still a strong seller and an excellent competitor for the 777-200 on medium range routes. It had the A380 coming online as a competitor to the 747 which left a large gap between the A380 and A330 because airlines had never really bought into the A340 model line. The A340 was an inefficient competitor to the 777-200/300 line of aircraft because it used 4 engines (as opposed to 2 engines) and possessed a fuselage that was slightly too narrow to be stretched for more capacity without other problems cropping up.
What Airbus didn’t have was a real 777 competitor and that’s what it needed. After going through several definitions of the new aircraft, it arrived at the A350xwb. The A350xwb-900/1000 compete directly with the 777-200/300 models in capacity and range. However, where customers are already seeing a deficiency is in cargo capacity.
Although the A350 is not yet completely defined, it appears that while it may have lower costs per available seat mile, the 777 will continue to be able to lift and carry several tons more cargo in addition to its passengers. In real world operations, the two may be very even competitors unless and until Airbus is able to offer higher thrust engines (100K pounds of thrust or better), this deficiency will remain. Currently, Rolls-Royce has shown some willingness to build to that thrust capability (borrowing on their engine technology for the 777) but GE has shown no interest in developing a new engine using GEnx technology to meet the specifications of Airbus’ A350-1000 model leaving a large gap. GE sees such an engine cutting into its current customer base on the 777. Current 777-200LR and 777-300ER models have GE engines capable of 110K and 115K thrust respectively.
Both models promise to be excellent, successful aircraft because they fill needs for each manufacturer’s customers. Both brands needed those models to fill very important places in their lineups. Even airlines see these aircraft as more complimentary than competitors as evidenced by many large airlines ordering both models.
The Boeing 787 promises to be successful with US, European, Japanese and, possibly, Australian airlines. South American airlines will likely follow in 5 to 10 years. This aircraft will serve airlines whose routes are either long and thin or those that have high frequency.
The Airbus A350 will serve routes that are fat and long primarily and will likely be used by airlines based in the Middle East, South East Asia, India, Australia and by some in Europe. This aircraft is more a trunk route airliner that will serve routes with lots of density, low to medium frequency and of 5500nm distance (at the least).
It is notable that Airbus faces an issue that Boeing doesn’t have with the 787 and that is customer base. Nominally, both companies have a healthy order book for each respective aircraft. The 787 has well over 800 orders and the A350 has well in excess of 500 orders. Both have an average of 15 orders per customer even. However, the customer base for the A350 is really quite a bit more narrow than Boeing’s.
Airbus has roughly 505 orders for its A350 aircraft line up and of that, the only truly significant large quantity orders come from a few airlines based in the Middle East or South East Asia. More than half of those orders (284) are attributed to just 13 customers from Africa, the Middle East and South East Asia. Of those 13 customers, 7 customers should be considered as somewhat dubious in light of the present world wide economic climate in the airline industry. Of the remaining 6 customers, 3 airlines and one leasing company (Emirates, Etihad, Qatar and DAE Capital) account for 205 of those orders. The A350 will need to find a wider customer base for all its models to reduce the risk the order book currently has. Those three main airlines are each based in the UAE (United Arab Emirates) and while successful today, have dubious opportunities for their continued growth over time.
Boeing’s order book is stretched more evenly across airlines of the world and on most continents. While Boeing does have some dubious order holders, they are fewer overall and comprise a vastly smaller portion of the order book both percentage-wise and in total orders. Boeing has much less risk in its order book.
Boeing should begin deliveries to customers in the 4th quarter of 2010 or about 10 months from now. With a second production line expected to come online in 2 to 3 years, Boeing is well placed to fill its orders and have enough production slack to fill new orders from major airlines. Within the next 2 years, expect to see the 787-10 defined and design work begun. The 787-10 will likely be a 777-200 competitor in some respects but it also allows Boeing to define a new 777 or replacement model that reaches further upwards in capacity in the future.
Boeing’s next moves are likely to be, in order, the 787-9, the 787-10 and then either a refresh of the 777 model as a next generation enhancement with extensive use of composite materials, new engine technology and likely following a systems approach similar to the 787. If it isn’t a refresh of the 777, it will be a new model to replace the 777 with capacities just above the present 777-200 and finishing with capacities a bit past the current 777-300. A 737 replacement should follow once that 777 issue is nearing production.
Airbus currently has the A330 and plans to continue production for several more years. However, Airbus is due to be left with two serious gaps. First, the gap between the A321 and the A330 which nominally should be filled with a 787 competitor. This is likely where Airbus goes next but not before 2015 or later. Then, Airbus also has a bit of a gap between the A350-1000 and the A380. This gap really isn’t so important for the next 10 years but its one they’ll have to watch since Boeing will be positioned to offer a right-sized aircraft in that market in the form of a 777-refresh, 777 replacement and their about to be introduced 747-8i. After filling the A321/A330 gap, Airbus will likely go to work on their A320 series replacement which, I suspect, will be sized at slightly larger capacities than the current A318/319/320/321 lineup.
For more than 10 years, much has been made of the “launch aid” given to EADS/Airbus for producing new aircraft. A recent preliminary WTO (World Trade Organization) ruling has said that the aid given for launching and producing the A330 was illegal.
Europe/Airbus has prosecuted a counter-claim to Boeing stating that the tax incentives given by both states and the federal government as well as defense industry contracts illegally aids Boeing.
To a lot of people, it seems as if both sides have a point. To Louis Gallois, CEO of EADS/Airbus, it certainly seems that way. He’s actively pursued independent negotiations to settle the issues away from the WTO. Boeing, on the other hand, has remained steadfast.
Like a lot of conflicts such as these, there are valid points on both sides. I think the best way to look at the issue(s) is to test them according to a standard of transparency and economic competitiveness.
Airbus actively competes with Boeing around the world and does a fine job of it as well. There is no doubt that their aircraft are world class and quite capable of competing in the marketplace against Boeing’s products. An airline who buys Airbus isn’t putting itself at a disadvantage.
It’s how Airbus got there that rankles most. Originally a state financed consortium of aerospace manufacturers, Airbus received open funding from national governments to produce aircraft. Ordinarily, this tends to be a bad idea since the product produced is often not market competitive. That certainly wasn’t the case with Airbus’ products. They sell on features and capability. The A320 series can be considered the equal of the Boeing 737 series. The same is true across the line.
It was important to Europe to find a way to continue building airliners and there is a good argument that the rise of Airbus has kept Boeing (and, previously, McDonnell Douglas) honest. I would certainly agree with that. Indeed, one could say that the demise of McDonnell Douglas’ commercial aircraft business was due, in part, to the rise of Airbus since MD found it very difficult to compete against Airbus’ aggressive pricing strategies in markets where McDonnell Douglas was the legacy supplier (Europe and parts of Asia as well as the United States.)
The line was crossed when Airbus didn’t transition to a self financing entity as the A330/A340 aircraft were being developed. Airbus didn’t have to go to the market to borrow money, they went back to the respective European governments for more “aid”. And the biggest part of the problem is that the aid wasn’t exactly required to be paid back. The conditions were that *if* Airbus sold that line into profitability, the governments would start receiving a portion of those profits.
That’s a big if. Indeed, the current Airbus A380 program points to the problem with such a murky requirements. This is an aircraft that, at best, has an extremely limited market and continues to struggle even with low volume production. Deliveries are massively delayed and Airbus continues to depend on orders from a relatively few airlines to support the production. At the same time, there is no pressure from the financial markets and/or shareholders to justify the production with potential profits. Lacking that pressure, Airbus continues with a program that could never last in the United States.
The same was true for the A330/A340 program. While the A330 is an unqualified success, the A340 never was. The problem with this program is that the A330 succeeded not just on capability but price. Airbus didn’t have to pay the rent on the money it borrowed to develop and sell the aircraft and was able to offer a capable aircraft at a price competitive with the Boeing 767. It’s notable that, in many respects, it should have been competing on price with the Boeing 777 instead.
In the United States, it’s true that we do support our manufacturing base with certain tax incentives. However, it is notable that while Boeing might not have kept its production in Washington state, its laughable to believe it would have traveled outside of the United States. Those tax incentives merely kept production where it was inside the US and even those incentives no longer seem to be enough. Witness Boeing setting up a second production line for the 787 in South Carolina.
When Boeing needs to raise money to launch such a venture, it has to go to the international capital markets and borrow money. Boeing must pay market interest rates for that money and, most importantly, it must make a solid case for the product they want to produce and its potential profitability. I assure you that capital markets are an unforgiving place and without justification for their request for money, no one would loan it to them.
Boeing does receive research and development funds for defense work that does contribute to its body of knowledge for building commercial aircraft. Boeing’s capability in manufacturing CFRP (Carbon Fibre Reinforced Plastic) derives from such defense programs. However, there is a difference in how Boeing gets those funds.
Boeing must compete with a number of aerospace companies for those funds and justify its ability to deliver. Those aerospace companies are largely US based but also include companies from Europe such as BAE, Airbus and others. In order to receive that funding, the companies must make a financial case for them being the best to receive funding and if those companies prove incapable of delivering results on a funded program, it usually is terminated by the government. The US Defense Department doesn’t just continue to fund a program for the sake of funding it.
The difference in these arguments about illegal funding between Boeing and Airbus is really about transparency and competitiveness. Boeing must be transparent and routinely demonstrate to the markets and the US government that it is not only doing what it said it would do but also succeeding in the world market place. Airbus, on the other hand, answers to governments whose prime interest is in supporting an aerospace industry and has yet to have to justify itself to the world marketplace.
I suspect that if the European governments involved in Airbus had adopted a hands off approach with the A380 program, the US government and Boeing would have declined to pursue a WTO case against Airbus. I think some sort of arrangement would have still been possible if Airbus had justified their new A350 program in the world marketplace but they once again gratuitously accepted launch aid from governments who brazenly offered it in spite of their pledge to be fair participants within the WTO.
Both France and Germany have been particularly bad in their behaviour on all things Airbus. National leaders of both governments have been known to fly to countries where Airbus is competing for a sale and nakedly pitch the Airbus product as a national interest priority and make the sale with inducements such as defense sales and other side trade agreements. The United States has been known to flirt with this but never has engaged in such open pimping of their own industries.
The KC-X tanker program is the next battlefield. Pitched against the DoD’s desire to have a real competition for the program (there are only two remaining manufacturers in the world capable of producing the aircraft: Boeing and Airbus) and the fact supported case that the Airbus A330 derived tanker was and continues to receive state sponsored support and aid.*
What happens? The United States has a decision to make in the next 2 to 3 years. It either aggressively stops the unfair trade practices of the European governments (primarily France and Germany) or it must decide to fight fire with fire. Wisely, the US government wants to avoid having to resort to the same tactics to support the US aerospace industry because they know the consequences are potentially very bad. Competitiveness in our aerospace industry is, quite literally, what has kept us on the top of the hill when its comes to our nation’s defense.
Those same European aerospace industries supporting Airbus, also participate in the US defense contracts and have become essential to the US defense. Companies such as BAE Systems are now prime contractors producing for the US and to ban them from competition is both bad for the US as well as the US industries. Such is the web a global marketplace produces.
My guess is that the US will seek to defend its ground by offering even more support to businesses and governments around the world in the form of low cost or no cost financing. US Trade Representatives will be empowered to offer better and better terms to facilitate those sales and its hard to compete with the financial might of the US government.
Until the US starts to aggressively combat EADS/Airbus and their supporting governments, the practices won’t stop. Those governments have always pursued such policies and have never stopped engaging them until it became unprofitable to do so. There is no historical precedent for them to play “fair” with, possibly, the exception of the UK.
* Nominally the KC-X tanker program is a competition between Boeing and Northrup Grumman. However, Northrup Grumman essentially is the “front” for Airbus where Airbus will produce the base airframe and Northrup Grumman will do the conversion modifications in Alabama. NG and Airbus have promised to ultimately produce the A330 in Alabama after the first 20 or so airframes are built. However, the A330 airframe isn’t that much younger than the 767 and the market for the aircraft is already quickly diminishing with the rise of the 787, A350 and even the 777. The idea that a single tanker program could justify setting up such an assembly line without commercial demand is far fetched at best. It’s a promise that is easily taken back after production started.
It’s been two days since the 787 took flight for the first time and it certainly was one of the most anticipated first flights of an aircraft. Anyone who has followed the development of the 787 program certainly knew that it would indeed be a special aircraft and no one would doubt that there is a lot of promise in it.
Although I’ve seen countless photographs of the first aircraft, ZA001, I was pretty surprised by a couple of things. First, the wing flex. All the promotional photos for the airplane showed it but , intellectually, I didn’t believe it would look like that. But it was, if anything, even more dramatic than renderings in my opinion.
Second, if you saw video of the take-off, how about how they time the chase planes? Those T-33 jets were just the right whipped cream for that take-off.
At some angles, the 787 reminds me more of the 757 than the 767. At others, it reminds me of the 777. Those huge Rolls-Royce engines throw me off because they are much larger in proportion to the airplane than any other common aircraft. They look larger than the 777 engines (but aren’t.)
Here are two the better videos I could find of the take-off:
I genuinely look forward to seeing that airplane land at DFW airport one day.
One note: My wife and a couple of friends commented on the fact that all photos of the plane show its landing gear extended. Typically the landing gear is left deployed on a first flight simply because it provides a little extra margin of safety. Most likely, the gear was left deployed the entire first flight or, at best, cycled once and then left deployed again. As the testing continues, the gear will be retracted and the normal “envelope” of handling for the aircraft will be found through more and more tests.
Edit #01: Depending on the weather, this flight may be cut short. Currently it is scheduled for 5 hours with the initial circuit being north of Everett, Washington. However, with weather closing in, the flight could be cut short at any time. The 787 will be landing at Boeing Field when it does return.
Edit #02: A few moments ago (It’s 1:18pm CST), Flightaware.com showed the 787 slowing to just 87 kts (100mph) and then speeding up again, slowly, to nearly 200kts. Ordinarily, I’d be inclined to think that speed reading a fluke. Today, I think they really did slow it down that much. I can only imagine what it must be like to be the test pilot that takes those chances with an aircraft that cost billions (with a “B”) to develop on its first flight.
Edit #03: The 787 is flying patterns that take it over I-5 over and over again at relatively low altitude. Anyone traveling on that highway may be getting quite a surprise now and then.
Edit #04: Boeing is now saying that the 787 may land in about 30 minutes. This would result in a 2.5 hours first flight and given the weather, a complete success.
Edit #05: The 787 has nosed towards the south and should make a long loop heading south to approach Boeing Field from the south and land.
Edit #06: Matt Cawby’s website has a photo of the 787 Dreamliner lifting off in the rain HERE.
Edit #07: The 787 Dreamliner has landed at Boeing Field now. There is a rumour that the second aircraft, ZA002, will fly on or about December 22.
Edit #08: You can watch a short video clip of the 787 taking off HERE. Notice the wing flex and the chase plane that flies right above/beside the 787 as it rotates.
The Associated Press is reporting that United has decided to order (25) Boeing 787-8 and (25) A350-900 aircraft with deliveries starting in 2016. Options for 50 additional aircraft (of each type) are also included.
The order isn’t a surprise in that it has been commonly known that United was considering a purchase. Even the split between types doesn’t really come as a surprise. United Airlines is already an Airbus customer and United Airlines is *not* a party to the gentleman’s agreement to buy only Boeing aircraft. American Airlines, Delta Airlines and Continental Airlines are parties to that agreement which gives them access to early positions on the production line(s) and preferential pricing. That is how AA managed to land early delivery slots when they made their order for the 787 earlier this year.
Some will be surprised that United didn’t buy more 777 aircraft but I’m not sure that would have made sense for them. They don’t necessarily need the cargo lift that a 777 offers and, frankly, this order wasn’t for 777 replacement aircraft. These aircraft will replace 747s (with more frequency) and 767s (one for one) as United retires those two types from its fleet.
I suspect United decided to not keep all their eggs in one basket and chose the A350 because it would be newer and more efficient for the type of routes United serves. Nothing more, nothing less.
Lack of a firm offering for the 787-10 is starting to become visible. This is the dawn of that omission and it will be a glaring one in another 12 to 18 months. Airlines would like to have some confidence that they can purchase a fleet that spans the three basic types for various missions and which doesn’t require a different pilot rating for each type. Confirming the 787-10 and preparing an offer to airlines wouldn’t be an unwise thing on Boeing’s part.
