On the face of it, it would be reminiscent of the August 2011 high-profile defection of the world’s largest carrier that precipitates the launch of the re-engined Boeing 737 MAX, if American Airlines (AA) places an order for the newly-launched 164-seat Airbus A321neoLR (long-range) aircraft. And unlike in the widebody segment where Chicago-based Boeing has the most comprehensive product line-up and holds a dominance, such a loss would invariably exert pressure on it to formulate a competitive response, in order to address an emerging void between the 162-seat 737 MAX 8 and the 242-seat 787-8 Dreamliner.
The urge for Boeing to act is becoming increasingly acute, industry observers say, as the A321neo significantly outsold the 180-seat 737 MAX 9 with 709 orders versus the latter’s 286, amid a trend of up-gauging in the narrowbody sector, evidenced by the 146 and 128 sales this year of the A321neo and A321ceo (current engine option), respectively, including Frontier Airlines’ latest one for 9 examples of the existing variant.
That said, this seemingly grim picture has a bright side to it. The developmental work of the new small airplane (NSA) would leverage on a decade of lessons learnt on the 787 and may ultimately usher in a new era of volume production of jetliners using the out-of-autoclave (OoA) technology.
The internal target launch date of 2018 for the NSA, with an entry into service (EIS) envisioned in 2024/25, confirmed by Aspire Aviation‘s sources at Boeing, holds the promising potential to address the market’s evolving needs with a complementary game-changing airplane, which could turn the table in not only restoring the 50/50 balance in the narrowbody sector, but also gaining a competitive edge against its Toulouse-based counterpart.
Admittedly, while the timeline is somewhat earlier than the 2030 date Boeing chief executive Jim McNerney disclosed, who was quoted in a Reuters report as saying “by 2030 we will have a new airplane, a good chance it will be a composite airplane. It will be slightly bigger, there will be new engines. The current look of the planes won’t change dramatically”, the time is rife from a number of perspectives.
Engine-makers such as General Electric (GE), Rolls-Royce (RR) and Pratt & Whitney (P&W) will be looking beyond the monumental task currently facing them in ramping up engine production to record-high levels, with all 3 engine manufacturers already started early work on a new engine for the NSA, the same sources say.
In addition, engineering resources within Boeing would begin to free up after the 2017 third-quarter and 2018 first deliveries of the 737 MAX and 787-10, and the 777X’s engineering demand will have peaked in 2017 as Boeing targets a “manage-to” first delivery 6 months earlier than the 2020 second-quarter target, with a 9-month flight test campaign which implies an end-2018 or early-2019 roll-out (“Boeing 787 availability key to fending off Airbus A330neo,” 11th Feb, 14). Boeing will also have made the deliveries of the first 18 combat-ready KC-46A aerial refuelling tanker to the US Air Force by 2017, albeit the programme has taken a US$272 million pre-tax charge in 2014 second-quarter owing to insufficient spacing between wire bundles and is facing further slippages.
Today’s niche, tomorrow’s sweet spot
The most fundamental question facing every airplane designer is what kind of missions in terms of payload/range the new airplane will have to achieve, and how best to serve this need not only now, but over a 20-year or possibly longer timeframe at the lowest operating cost.
There is little dispute that today’s heart of the market lies in the 150-seat Airbus A320 or 162-seat Boeing 737-800, the former of which accounts for 60.1%, or 4,641 and the latter 70.0%, or 4,810 of the respective families’ total net orders, moving up from the smaller siblings A319ceo and the 737-700 which only account for 19% at 1,466 for the former or 20% at 1,369 for the latter. The A321ceo and 737-900ER, with orders for 1,536 and 515 examples, respectively, represent 19.9% and 7.5% of the total tally.
Yet things are bound to change, as the trend of modest up-gauging continues unabated. Airbus’s head of leasing and investor marketing Richard Owen Walker said in a market update in October that the share of annual deliveries of the A321ceo grew steadily over the years from 10% in 2006 to 13% in 2010, then 18% a mere 2 years later and 31% of projected 2014 deliveries. At the same time, the share of A319ceo deliveries dwindled dramatically from 44% in 2006 to just 7% in 2014.
This is also evidenced by the changing mix of the 3,272 strong A320neo aircraft family orders backlog, 22% of which or 709 aircraft being ordered are the 185-seat A321neo. The 737 MAX 9 with a total order of 286, according to Bloomberg’s data, represents 11.86% of the 2,412 orders backlog, up from the -900ER’s 7.5%. Airbus, for instance, is going to start assembly at its new Mobile, Alabama final assembly line (FAL) with the A321ceo first whose first example will roll out in April 2016, instead of the A320ceo originally planned. Only 49 and 55 of the ordered examples are the A319neos and 737 MAX 7s, respectively, casting significant doubt if there is a strong business case for these aircraft variants to be produced at all.
Indeed, the clamour from customers for higher-gauge narrowbody aircraft is growing, with aircraft lessor Avolon predicting in its latest 2014-2033 forecast that the average seat count will rise by 17% to 198 seats over the next 20 years. In particular, the call for a 757 replacement for long, thin routes is fast becoming loud in the market. Such customers include American Airlines (AA), whose vice president (VP) of fleet planning Peter Warlick said in an October 30 newsletter that “we will be evaluating the economics and the range and performance capabilities of the long-range version of the A321neo, and Air Astana which aims to reach a decision to replace its fleet of 757s with 11 Airbus A321neos or 737 MAX 9s as early as next February.
The unique role played by the Boeing 757, with its 115.7 tonnes maximum take-off weight (MTOW) and 200-seat 4,000nm capability, is made clear when American announced its second daily Philadelphia-London Heathrow from 29th March, 2015 onwards, followed by Delta’s new service on the same route beginning 7th April, and United’s seasonal Chicago to Dublin service between 4th June and 17th August next year, all aboard the 757-200 aircraft.
Intriguingly, there are some that question whether there is a business case for a clean-sheet 200-seat 4,000nm airliner to be built at all. The central argument behind this school of thoughts is that the 200-seat segment is a niche, with the extra range capability unnecessary and leading to deadweight and hence fuel penalty, as OAG data shows 65.1% of the world’s narrowbody flights are under 800nm, 76.3% under 1,000nm and 98% are below 2,000nm.
The introduction of slimline seats has also decimated the needs for such an aircraft, the rationale goes, with United adding 12 seats to its 737-900ER and raising the seat count from 167 to 179 seats, Delta spending US$770 million on 49 domestic 757-200s to renovate their cabins and raise the overall seat count to 199 in addition to 197 seats on 7 international 757-200s. A noteworthy point is the renovation will also see the seat count on Delta’s A320s increasing to 160 from 150 and from 126 to 132 on its A319s, although the slimline seats are actually an improvement in comfort with a wider seat at 18 inches, up from 17.2 inches. Even jetBlue is adding 15 seats to its A320s, albeit this provides product consistency and better aligns it with the carrier’s 190-seat A321 over 33-inch pitch economy seats.
After all, with the 737-900ER and the A321ceo already covering 95% of today’s 757 missions, why spend billions of dollars in capital developing a clean-sheet design instead of working existing assets harder?
Marginally higher trip cost, lower cash operating cost (COC) per seat is a recurring theme – be it the 737 MAX 200, enabled by the addition of a -900ER-styled exit that was firstly reported by Aspire Aviation (“Boeing to make up lost grounds on all fronts“, 27th May, 13), has a 1% higher trip cost than the MAX 8 but a 5% lower COC per seat; or the 189-seat A320 with both forward and aft doors equipped with wider slides; to the 240-seat A321neo featuring a new design standard that dovetails the elimination of the second pair of main doors, 2 pairs of overwing exits while moving the third pair of exits 4 frames further aft, that will provide an extra 5% in block fuel burn per seat reduction and hence bringing the overall reduction to 21% over today’s A321ceo.
Airbus and its proponents assert that the A321neoLR will have a “true transatlantic range” with a 4,100nm range, or 100nm more than the 757-200W (winglet), boasting a 27% lower trip costs and a 24% lower COC per seat, according to Leeham News. The 164-seat A321neoLR, with 20 lie-flat business class seats, will feature a 3rd additional fuel tank, compared to United’s transatlantic 757s that have a 169-seat configuration, Delta’s 171-seat configuration on its 75E, and American’s 176-seat international 757-200s.
With the A321neoLR having a 97 tonnes MTOW, or 3.74% more than the 93.5 tonnes on a regular A321neo, combined with a 2% lower TSFC from the Pratt & Whitney 35,000lbs PW1135G-JM engine from 2018 onwards, this theoretically gives a 5.74% better SAR, that will boost the A321neoLR’s usable range to 3,900nm from 3,650nm. Comparing the 89-tonne A321neo with the 97-tonne A321neoLR will yield the 4,100nm advertised range.
Boeing is quick to retort that the A321neoLR is nothing more than an A321neo with the addition of an extra fuel tank, with vice president (VP) of marketing Randy Tinseth telling Reuters that “we are very happy with where the MAX 9 sits and feel the competition is simply doing things to catch up with it. Anything that you look at in that market segment to increase the range of that airplane, I think it would come with small returns”. The 180-seat 737 MAX 9 is also 6% lighter in relative operating empty weight (OEW) per seat and has a 7% lower total trip cost against a 183-seat 2-class A321neo, Tinseth said.
Boeing also believes that, according to Aspire Aviation‘s understanding, the most efficient solution in addressing the 200-seat segment is the 737 MAX 200 which gives the lowest OEW per seat and hence the best fuel efficiency, and while the 189-seat A320 with the seat pitches decreasing to 28 inches after mid-cabin provides low-cost carriers (LCCs) flexibility, as is the 240-seat A321neo, doing the same on the 737 MAX 200 after the mid-cabin turns into a perceived “problem” all of a sudden.
Putting the usual trades of blows between Airbus and Boeing aside, however, the simple truth remains that neither the A321neo nor the 737 MAX 9 could truly replace the 757-200, both of which still have to trade range with payload. This is unmistakably clear with the 795 still active 757s, or more than 76% of the 1,050 757s ever built, according to airfleets.net.
Furthermore, with jetBlue’s 190-seat A321ceos, Delta’s 197 and 199-seat 757s as well as up-gauging at other carriers, in addition to the International Air Transport Association (IATA) forecasting a compounded annual growth rate (CAGR) of 4.1% for worldwide air traffic growth in the next 20 years, it is clear that the narrowbody market is converging towards the 200-seat sweet spot. Given the current sustained high level of load factors, with 1.8 billion extra annual passengers from Asia/Pacific at a 4.9% annual growth rate, 559 million extra annual passengers in the US market and 266 million in India over the next 20 years, airlines will be able to keep up-gauging, without having significant dilutions in yields. Boeing’s new small airplane (NSA) would give the Chicago-based airframer a first-mover advantage; but also turn the table by wrenching the leadership in the narrowbody market from Airbus’s hands, which has enjoyed a 58% market share in re-engined narrowbody market. “They [Boeing] made absolutely clear that this [NSA] is now firming up and that they’ll be making an announcement soon. That for us is very interesting,” Air Astana chief executive Peter Foster told Bloomberg. “The smaller end is the next battleground. Someone is going to move on it at some point. I’m sure that Airbus are not sitting back and just enjoying the views of southwest France, I’m sure they’re thinking about it too”, Foster said.
Boeing contends that the 737 MAX is selling at a similar rate to the A320neo and that “don’t believe the hype”. The 737 MAX garnered 2,412 sales 35 months since first firm order, versus the A320neo’s 2,462, although the 737 MAX lags the A320neo at 2,241 versus 2,462 35 months since launch in August 2011 and December 2010, respectively. Nevertheless, it would be interesting to watch the next several campaigns to see if the gap widens or narrows again, especially with Avianca Colombia’s ongoing campaign for 100 aircraft and Avianca Brasil for 62 aircraft, according to Aspire Aviation‘s sources. For Boeing to narrow the existing gap with the A320neo, Avianca Colombia and Avianca Brasil are ‘must wins’. “We’re working on a campaign right now to introduce the MAX there. They have, but when we show the numbers to their fleet planners, the 737 MAX 8 – which is the heart of the fleet when it comes to size – is the right size for Avianca and has better economics than brand A. If you’re pragmatic about it and even taking in to consideration the cost of introducing a new fleet type, the MAX 8 is a better solution for Avianca on that size of airplane,” Boeing vice president (VP) of sales for Latin America Van Rex Gallard told flightglobal.
In this volume game, with Boeing announcing a production ramp-up to 52 aircraft a month by 2018 after completing a previous one from 42 to 47 by 2017, in addition to close to achieving 9 days from 22 days in the time taken to complete the final assembly of a 737 aided by automation such as the new panel assembly line (PAL), both aircraft manufacturers could become a ‘dangerous animal’ when getting aggressive. Airbus’s chief executive Fabrice Bregier, however, said “it is not the time for us to announce additional rate increases” and the French planemaker has been converting A320ceo orders into A320neo ones in order to meet the 2018 cut-over date.
A lot more at …. http://www.aspireaviation.com/2014/11/26/boeing-nsa-2018-launch/