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

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

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

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

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

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

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

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

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

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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.

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Republic Airways Holdings, Inc., the parent company of Frontier and Midwest as well as 4 other regional airlines, has ordered 40 new Bombardier CSeries CS300 jets with options for another 40 as well. 

 

The CS300 will seat about 120 people in a mixed class layout and has enough range to fit current Frontier/Midwest needs especially if they select the CS300ER (about 2900 nautical miles range).  It’s an aircraft that really begins to infringe upon B737/A320 territory (especially the A318) and which promises very good efficiency, particularly for the kinds of missions Republic flies. 

 

These are most certainly for the branded Frontier/Midwest network.  They fit the missions that both of those brands are flying now and compliment the existing A319/A320 Frontier fleet as well as the EJets currently flying for both Frontier and Midwest.  The CSeries 2×3 Economy configuration has the potential offer a better product than many airlines offer with their larger aircraft since a passenger has just a 20% of getting a middle seat versus 33% chance on a 737/A320 aircraft. 

 

These aircraft will not fly for the regional airlines serving legacy airlines such as Delta, US Airways or United.  The unions for those airlines will never allow that kind of semi-mainliner aircraft fly on behalf of the legacies.  No doubt Republic look to re-allocate some of their EJets such as the E170 back over to such flying and this purchase gives them more flexibility in the future. 

 

This is  a big order for Republic Airways.  Nominally worth about $3Billion, Republic no doubt got significant discount for being the launch customer of this version (Lufthansa has already ordered the CS100) but it does make me wonder if they can afford the order right now since Republic has spent much of its cash holdings and it remains to be seen if legacy airlines are going to be happy about continuing contracts for regional service with an airline that is now competing with them on a mainline level.  Time will tell since these jets aren’t due to enter service until 2013 and there will likely be some delay added to that rough date.

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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.

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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.  

 

Whatever their choice, Embraer is one to watch.

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At the first of the year, I wrote 3 blog posts shown HERE, HERE and HERE.  It was really just my random speculation on what to expect over the next 12 months.  Well, now it’s December of 2009.  Let’s see how I did.

 

Boeing 787:  I guessed at an April 2009 first flight.  It still hasn’t flown although speculation has it flying this month either by December 14th or December 22nd. 

 

Airbus A380:  I guessed they would make their goal of producing 21 aircraft this year.  As of November 30th, 2009, Airbus says they have delivered 7 A380 aircraft this year.  Ouch.  This is a program that is in financial trouble.  No, I don’t think it will be cancelled.  Not yet but please don’t try to tell me this program will make a profit. 

 

My deathwatch had Midwest Airlines going away most likely by a sale.  That did happen and while the airline has essentially evaporated (from its original form), it does remain as a brand being run by Republic Airways.  

 

I speculated that Frontier Airlines would be bought out of bankruptcy but I guessed that jetBlue would be the buyer.  In fact, Southwest Airlines and Republic Airways were the suitors and Republic won.

 

I thought that United Airlines and US Airways would announce a new merger with Continental a dark horse candidate for buying United.  In fact, Continental became a member of the Star Alliance and firmed its relationship up with United but wisely kept its distance otherwise. 

 

I said that Southwest Airlines would maintain its status quo but that Gary Kelly would be under fire from both employees and outsiders and he was.  However, that view is already being reversed again by Southwest’s resurgent strength in the business.

 

I thought that the Middle Eastern airlines such as Emirates, Etihad and Qatar wouldn’t see a bankruptcy or merger but would slow their growth and aircraft deliveries.  That, in fact, has happened and now we see Emirates working hard to distance itself from Dubai World’s financial woes.

 

China:  I said deferred orders.  Pretty much what happened.

 

The Far East:  I said airlines from that region would maintain their status quo, probably would not defer orders and might make new orders to replace existing equipment for greater effiency.  Again, pretty much what happened.

 

Australia:  I saw QANTAS slowing growth, deferring some orders and fighting hard against new entrants.  Again, that’s pretty much what happened.  I also saw two weak competitors on the US-Australia routes:  United and V Australia.  That is pretty much what is happening although V Australia has been pretty smart in working into a relationship with Delta where it appears the two airlines will cooperate with codeshares.  United remains alone and with weakening demand.

 

South America:  I said the Argentine government would take Aerolineas Argentinas back from Grupo Marsans and the airline itself would muddle along or contract rather severely in some areas.  Bingo.  Exactly what happened.  I also predicted Azul would become the jetBlue of Brazil and its not hard to guess that that airline is pummeling its competitors.  A future prediction was for the airline to fly internationally in 2014 with Airbus equipment.  We’ll see.

 

Africa:  I saw Delta continuing to pursue flights to major African cities (true) and SAA (South African Airways) issuing a small RFP for 777 aircraft to replace its rather inefficient A340 aircraft (didn’t happen.)

 

India:  I thought Jet Airways and Kingfisher might merge with the name Jet Airways being retained.  In fact, both airlines continue to exist but both are suffering severe financial problems, deferring aircraft deliveries and generally flailing about trying to find a way to continue.   One of these airlines will still ultimately have to exit the market and I continue to think it will be Kingfisher.  They have the wrong aircraft and the wrong aircraft on order.  However, Jet Airways is suffering badly from labor actions among its employees. 

 

United States:  I picked United to fail.  It hasn’t happened and while they continue to live, their cash holdings are being reduced, they still have severe labor issues, their service product continues to suffer and I still think they should be the ones to disappear.  I also thought Glenn Tilton would be ousted and, possibly, replaced by Doug Steenland.  That didn’t happen but John Tague has been groomed as Tilton’s replacement.  I still think Tilton should go if United can’t fail.

 

Europe:  I thought we would hear of a surprise from Lufthansa.  I didn’t like their purchase of SWISS and I didn’t like their flying the A340 in competition against the 777 being flown by many of their direct competitors.  They’re still here, still making money and they bought BMI.  I still think we’ll here of misfortune from them but apparently it will take a while longer. 

 

Random Speculations:

• I thought Southwest might add another aircraft type.  It didn’t happen but I think their interest got perked up when they looked at buying Frontier and saw the economics on the Q400.
• I thought Delta might order more Airbus A330 aircraft.  Instead, Delta is parking them in the desert for the winter season.
• I speculated that both China and Japan would defer or drop their regional jet programs.  That didn’t happen but the Chinese jet program appears to be a bad aircraft and unlikely to be used by anyone except Chinese airlines forced to buy it.
• I thought Bombardier would see a major order (20+) for their Q400 series aircraft from a US customer.  Horizon Airlines did up their orders  for 10 more but there were no other significant orders. 
• Airtran to form a small midwestern hub.  Yup, that happened.  In Milwaukee where they’ve taken over from Midwest Airlines and now face Midwest (brand owned by Republic) and Southwest Airlines entry into the market.  I think Airtran will hold on here and continue to develop business.
• Last, I hoped that jetBlue or Virgin America would enter the DFW market.  Virgin’s CEO, David Cush (formerly of American Airlines) did recently speculate about adding flights to either DFW or Austin.   I suspect they’ll choose Austin and DFW will remain a fortress for AA.

 

That’ s it for my 2009 predictions.  I’ll make more at the start of 2010.  On the whole, I probably did as well as anyone in making predictions in this business.

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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And now we come full circle back to the United States and Europe.  Both have highly developed, highly competitive airline markets.  Each has both LCC type carriers and legacy carriers (and Europe’s legacy carriers are the former national flag carriers in many respects.) 

 

This won’t be a rebuilding year.  To the contrary, both markets really need one large airline to be removed from the market.  In the case of the United States, I firmly think that should be United Airlines but in Europe that is a harder guess.  If I had to pick an large airline in Europe for the surprise of the year, it would be Lufthansa.  They are, by all accounts, a great airline but I smell trouble in that group.  First, they have been buying into airlines that have been unable to survive on their own.  That lack of survival, in many cases, isn’t because of poor management but just a lack of market share being available to them. 

 

Lufthansa has bought SWISS, for instance.  I’m not sure why and I’m not sure if they can tell us why.  They could have just as easily taken SWISS’ business  and left them in a heap.  Further, Lufthansa has a lot of Airbus A340 aircraft.  Those airplanes just don’t compete on high capacity, long haul routes anymore.  What’s more, they also have orders in for the Boeing 747-8, another large capacity, four engine aircraft.  Their competitors, Air France/KLM and British Airways, have seen the light in buying more and more Boeing 777 aircraft for their long haul, high capacity routes.  It costs less to operate them and they make more money as a consequence.  So, going out on a limb here, I say we’ll discover that Lufthansa is nearly insolvent some time by the end of 2009. 

 

Both markets in Europe and the US will continue to face challenges in costs (fuel and more particularly labor) and LCC competition will continue to press air fares downwards.  The real solution for large legacy carriers won’t be found this year.  Expect more losses (with some exceptions such as SWA and jetBlue) and more merger talk in general.

 

Here are a few more random predictions:

 

• United Airlines will ask Glenn Tilton to resign and hire an experienced airline executive.  One possibility will be Doug Steenland, most recently Northwest Airlines CEO and now Vice-Chairman of Delta.
• Southwest Airlines will, for the first time, examine adding another aircraft type to their fleet.  My guess is it will be the Embraer 170/190 series.
• Airbus will land a major order for aircraft from a traditional Boeing customer in the United States.  My bet is that Delta orders more Airbus A330 aircraft.
• China and Japan will drop their regional jet programs or, at the least, defer them for up to 5 years.
• Bombardier will announce a major order (more than 20 aircraft) for the Q400 Turbo-Prop from a US Airline.
• If fuel prices remain steady, Airtran will seek to form a small mid-western hub.
• Last but not least, one LCC type carrier such as jetBlue or Virgin America will attempt to fly to DFW Airport (wishful thinking on my part.)

 

 

Happy New Year Everyone.

 

 

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USA Today’s Today in the Sky blog brought attention to Porter Airlines announcement that they’ll be entering the Chicago (MDW) to Toronto (City Centre) market.  Porter Airlines flies sub-500nm routes using Bombardier’s Q400 aircraft, a turbo-prop commuter airplane.

 

The Q400 offers 4 abreast seating (no middle seats), near jet speeds and a 34″ pitch economy seat for up to 70 passengers while using as much as 40% less fuel (per seat) than mainline or regional jet aircraft.  Makes you wonder why more airlines don’t use this aircraft, doesn’t it?  Me too.

 

Porter Airlines is flying this aircraft on exactly the right routes.  They experience similar block times as mainline jets (the time used from departing the gate and arriving at the next gate) with a better than average on time record in part because this aircraft can use shorter, less crowded runways and also because it flies in less congested airspace (from 15,000 to 25,000 ft). 

 

I would love to see an airline like this operate in the Midwest area or Texas as I firmly believe it is a winning model.  Porter Airlines will have to prove this out in Canada and perhaps one day someone in the US will take notice. 

Filed under: Airline Fleets, Airline News, Airline Seating, Airline Service by ajax
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India’s Hindustan Aeronautics Ltd (HAL) has announced plans to build yet another 70 to 90 seat Indian regional jet.  While we don’t have details on its configuration yet, it will likely be powered by a version of the Pratt & Whitney GTF engine (Geared Turbo Fan) and with that seating configuration, I expect a 2 x 2 seating configuration.

 

But does the world need yet another regional jet in that configuration?  Probably not.  Right now Embraer and Bombardier are both offering highly efficient regional jets in that seating configuration and Embraer’s family ranges from 70 to 110 seats and offers cross cockpit compatibility.  Bombardier of Canada has the CRJ700/900 at present and is close to flying its prototype CRJ1000.  Russia’s Sukhoi is hard at work producing their Sukhoi Super Jet, another regional jet in yet the same configuration as all the others.  China’s AVIC I is producing the ARJ21-900, a 5 across regional jet for China’s growing routes.  If you thought I was done, I’m not.  Japan’s Mitsubishi is also producing a very similar regional jet using the new Pratt & Whitney GTF.

 

While both Bombardier and Embraer have enormous backlogs for their aircraft, they also have a very credible track record in building aircraft.  They also have families of aircraft that allow airlines to right size their fleets to routes while at the same time keeping maintenance costs reasonable.  I question whether Mitsubishi, AVIC I or Sukhoi can offer airlines the same capability for some time to come.  I also question whether these airplanes offer the right economics for many airlines.

 

A similar turbo prop aircraft can offer similar seating, comfort and travel times for less than half the operating cost on stage length of 400 nm or less.  I continue to believe that there will be a shift to aircraft that offer both the operating economies and capital costs that make such routes go from marginal to profitable.  Indeed, many mainline legacy airlines have contracts with pilots that are far less restrictive when it comes to seating capacities on such aircraft.  For instance, American Airlines has contracts in place that disallow American Eagle (and other commuter airlines serving American Airlines) from flying these new, higher capacity jets.

 

Continental Airlines showed us the way to a new profitability when they introduced the Bombardier / De Haviland Q400 on routes in the northeast.  Horizon Airlines confirmed their future by choosing to eliminate their CRJ aircraft and older Dash 8-200 aircraft and now they are being replaced with new, modern Q400 airplanes. 

 

The world doesn’t need another new regional jet no matter who built it.  It needs high capacity turbo-props and 110 to 140 seat mainline aircraft.

 

 

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The latest on-time statistics are out on US airlines and the Dallas Morning News has them here.

 

I’m struck by  more than one item. First, how strange is it that 2 commuter airlines that fly for legacy airlines have better on-time numbers than any 48 state legacy airline? These airlines fly aircraft that is subject to more technical delays and cancellations. It boggles my mind that SkyWest and Pinnacle Airlines are at the top.

 

Skywest flies for United, Delta and Midwest as their feeder “connection” airline using CRJ200/700ER/900 aircraft (and a few Embraer EMB-120 turbo-props).  Ordinarily, the Bombardier aircraft is not universally known for its dispatch reliability but the new(er) CRJ700/900 must be doing much better than its older cousin the CRJ200. 

 

Pinnacle Airlines flies the CRJ200/440/900 aircraft, all similar or the same as Skywest, for Northwest Airlines and Delta.  Right now, you could drop me with a feather.  In addition to the aircraft, these airlines fly out of major hubs that are often disastrously affected by summertime weather. 

 

What is a bit more surprising (if you can believe it) is that US Airways is the top on-time non-LCC legacy carrier.  There are reports that they’ve made drastic improvements at their Philadelphia hub.  Right now, they are neck and neck with Southwest Airlines and, frankly, I’d say you are doing pretty good to be playing ball in Southwest’s neighborhood.

 

What I have to ask is this:  Is it an anomaly (unlikely as US Airways has been climbing steadily) or is because they’re able to depart on-time more often since instituting charges for checking bags?  If this climb in reliability is due to changes in customer baggage habits, look out. 

 

Three LCC carriers, Southwest, Frontier and Airtran, are virtually neck and neck in these ratings and, again, I wonder if this might be due to people traveling with more carry-on luggage than in the past. 

 

American Airlines is dead last (even beat by American Eagle) in the ratings and that, to me, indicates graver trouble at that airline.  There have been some reports of pilots becoming slightly inflexible with respect to work rules.  I believe it is more a symptom of an airline that has become sick in morale and flexibility.  Gerard Arpey won’t fix this with more mattressmakers.com analysis, better financing or capacity constraints.  It gets fixed with leadership.  Something that American Airlines really hasn’t been blessed with since Robert Crandall retired. 

 

Finally, if you offered me a bet that Mesa would have better on-time ratings than American Eagle, I’d have taken the bet with glee.  When you are worse than Mesa, you’ve got real problems.

 

 

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Not you, the consumer. Oh, we know your type these days. You buy on price and frequency. Next is loyalty to your frequent flyer plan (and some of you even buy based upon gathering your FF miles ahead of price.) You aren’t going to change. You never really have and you never really will. You are the girlfriend/boyfriend who promised to change and never did.

 

It’s time for airlines to fly smart. No, really, it is.

 

Southwest Airlines pioneered the modern strategy that most airlines try to emulate in one form or another. They have a single type of aircraft (Boeing 737) and trade high load factors for high utilization of aircraft and crews. It’s a model that works for them and even for some others. Legacy airlines have adopted a modified model that included narrowing the fleet types which allows not only fewer costs in equipment but also permits airlines to use their staff across a broader range of aircraft.

 

But it appears (to me at least) that that strategy in the current economic climate is going to prove flawed. The truth is, the airline industry tends to have to re-invent itself every 30 years or so. That reinvention has taken the form of a revolutionary change in aircraft or, in the case of the 70’s, a new regulatory climate. Traditionally, it’s aircraft.

 

One of the criticisms of the proposed Delta / Northwest merger is the mish-mash of fleet types they’ll have. The CEO’s of both Delta and Northwest have responded that it in fact appears to be a big advantage in the merger because it will permit them to “right-size” each city pair with the proper aircraft. What this means is that with different fleet types comprimised of aircraft capable of varying efficiencies and loads allows them to fit the right aircraft to the right flight.

 

For example, a flight from Atlanta to Nashville might typically carry an average of 90 passengers per flight and Delta might be using a Boeing 737 for the flight segment that carries about 130 passengers. That means their using a new (high capitol costs but more fuel efficient) airplane to fly the route with an average load factor of 69%. It’s a short flight segment so the fuel efficient engines of the 737 don’t play as big a role in savings as they would on a longer flight. Post Merger, Delta may put a Northwest DC-9-40 on the segment that carries about 110 passengers. Suddenly the capital costs are extremely low (the airplanes were paid for years and years ago and the costs to operate it are maintenance and periodic refurbishment), the load factor is now 81% and flight has about similar fuel and labor costs. What’s more, that 737 can now fly on flight segments with average loads that are much closer to its capacity and which provide greater revenue yields as well.

 

More airlines in the US need to re-examine their fleet strategies. Almost all flights being flown by regional jets of 50 seats or less *lose* money now. Particularly when they are used for “long and thin” routes such as DFW / CLE (Cleveland). An airline of real size (US Legacy carriers but also LCC carriers such as SWA, Jet Blue and Airtran) can benefit from a diversified fleet.

 

There are countless “shuttle” type routes that could yield far more profit by using new, advanced turbo-prop aircraft such as the Bombardier Q400 and ATR-72. There is no rational justification to use regional jets on short segment routes when compared to these advanced turbo-props for instance.

 

An airline could, for instance, fly a Q400 on flights between Dallas and Austin offering 70 seats per flight and make money by filling only half of them per flight. Time flying between cities would be virtually the same as Southwest Airlines’ Boeing 737 and seating would be about as comfortable. The capital costs, maintenance, fuel and labor costs for that aircraft are all significiantly less than the 737 but offer about the same comfort and convenience.

 

Reduced fleet types made sense in the 80’s and 90’s because airlines were focused on the hub and spoke model. It allowed an airline to use aircraft interchangeably and since fuel costs were extraordinarily low, load factors could be as low as 60% and an airline could still make money.

 

Today, airlines need aircraft that are more pin-point appropriate for their routes. Short segment shuttles should be flown by Q400’s while longer segments with greater density should be handled by 737s and A320s. Large trunk routes should be served by Boeing 757s, Airbus A320/321s and even smaller widebody aircraft such as the Boeing 767 and Airbus A330. Longer, thin routes should be served by the upcoming Boeing 787 and A350-900 aircraft while long, high density routes will be better served by the Boeing 777, Airbus A350-1000, Boeing 747-800 and Airbus A380.

 

There will be increased demand for a new kind of aircraft. One that is a re-birth of the original DC-9 and Boeing 737. A 100 to 120 seat aircraft that can fly 25% more efficiently over route segments of 500 to 1000 nautical miles. Bombardier (Canada), Embraer (Brazil), Mitsubishi (Japan), AVIC (China) and Sukhoi (Russia) are all working on such aircraft or already have such aircraft available for order. Boeing and Airbus don’t.

 

The days of flying a regional jet such as an Embraer ERJ-145 or Bombardier CRJ-200 are over. They cannot fly profitably short or long, thin routes anymore as they offer, at best, only 50 seats and a product that is quite unpleasant for trip durations over 1 hour.

 

Legacy airlines no longer can afford to “sit” on routes to protect them for use at later date. All of the capacity cuts made so far are squarely aimed at routes that do not generate sufficient revenue to justify their existence. To serve those routes in the future, they’ll require an aircraft whose economics ENSURE profit.

 

That means airlines will seek to merge and become bigger because size permits greater fleet diversity and fleet diversity means more revenue per passenger. Even airlines such as Southwest, Airtran and Frontier will have to begin considering the value of “right sizing” their fleet to their customers. To some degree, Airtran does that with their mixed fleet of Boeing 717/737 aircraft.

 

Greg

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