Low Cost Carriers dominate Top 10 single aisle customers at Airbus, Boeing

 Low Cost Carriers (LCCs) dominate the backlog of the Top 10 single-aisle customers for Airbus and Boeing, data from the two OEMs show through August.

 

The importance of LCCs to the OEM backlogs has been increasing during the past decade, as has been the shift over the past 20 years from a dominance by US airlines to non-US carriers.

 

The backlog of LCCs today demonstrates the shift toward this sector as well as the shift toward non-US airlines. 

 

 

 

 Boeing 737 (All Models)

 

 

 

Airbus A320 (All Models)

 

1

Southwest

317

18%

 

1

Air Asia

351

21%

2

Lion Air

313

17%

 

2

Lion Air

234

14%

3

American

187

10%

 

3

Indigo

196

11%

4

Ryanair

175

10%

 

4

ILFC

165

10%

5

United

172

10%

 

5

Lufthansa

146

9%

6

Norwegian

162

9%

 

6

easyJet

145

8%

7

Air Lease

151

8%

 

7

American

130

8%

8

GECAS

120

7%

 

8

Qantas

129

8%

9

Delta

100

6%

 

9

Spirit

115

7%

10

GOL

99

6%

 

10

Norwegian

100

6%

 

August 2013

 1,796

 

 

 

August 2013

 1,711

 

 

LCC Total

 1,066

59%

 

 

LCC Total

 1,141

67%

Sources: Airbus, Boeing

 

For Boeing, 59% of the Top 10 single-aisle order backlog is with LCCs–more than 1,000 737NGs and MAXes. Over at Airbus, the dominance of LCCs is even greater: 67% for all A320 family members, including ceos and neos.

 

As we reported last week, Asia’s LCC, Lion Air has more firm orders for single-aisle aircraft than any other customer: 547. Lion Air is said to be planning to place an order as early as year end for a “double-digit” number of Bombardier CSeries. The next closest: the USA’s Southwest Airlines, at 317 737s, and American Airlines, with a combined 317 from Airbus and Boeing.

 

Europe‘s Norwegian has a combined 262 single-aisles on order from the two OEMs.

 

The dominance of LCCs in the backlogs reflect the changing nature of the airline industry, both in terms of service demand but also with the increasing growth in developing nations, with major growth coming out of Asia–the domain of Lion Air and AirAsia. 

 

It also reflects the strategy of flipping aircraft around the end of the maintenance holidays in six or seven years after delivery, which may be a decent strategy for the airline but one which hazards lease rates and residual values and a potential imbalance of supply-and-demand at that sixth or seventh year. With a much greater reliance on LCCs than Boeing, Airbus’ A320s are most at risk on the RVs and lease rates. 

 

19 Comments on “Low Cost Carriers dominate Top 10 single aisle customers at Airbus, Boeing

  1. Scary thought! What are Lion Air and Air Asia REALLY going to do with all of those positions. If I were Leahy and Conner I would be concerned if they will really materialize.

    Tom Odell

  2. The Qantas line in the Airbus chart should also be classified as a LCC as all A320 orders are for Jetstar.

  3. Such statistics are interesting but may give a wrong impression.
    LCCs are mainly mono-type airlines. That is not the case of the other airlines serving several markets (Norwegain is maybe the exception).
    So yes, some LCCs are dominating single-aisle ac customers. They are not necessarily that dominant in the overall ac purchase business.

  4. It makes you wonder if the non-Japanese-Asian legacy carriers will only be used for medium/long haul and LCC will handle short haul.

  5. It seems Boeings management team woke up and smells the coffee.

    http://www.reuters.com/article/2013/10/10/us-boeing-restructuring-idUSBRE9990UR20131010

    Airbus is dominating narrowbody sales, however you look at it. Low picing, financing, fleet commonality, “A320 sold out” and saying you’re the best anyway aint a good enough medium term NB strategy. B doesn’t have to wait for UA to order a pile of GTF A321NEO’s’ first to see the writing on the wall.
    http://www.pdxlight.com/neomax.htm

    The A350XWB isn’t boxed in at the top at all. It is stealing large 777 away at an alarming rate.
    http://i191.photobucket.com/albums/z160/keesje_pics/A350orders777operators_zpsf8017683.jpg

    The 747-8i is ready for a end of life strategy, Saying VLA are out and the the A380 is bad too won’t soften the pain. They have a backlog and CX, UA and ANA will probably order A380s before 2015.

    Despite all the promotion the 787-10 got bypassed by the A350-900 at LH and JL during the last few weaks. Its a promissng design but has its limits (payload (cargo) range network flexibility).

    Ignoring the PR damage the broad variety of 787 reliability issues does.

    • Interesting article, thanks. Strategy will be moved into the finance department. This seems to be almost the opposite of what most observers think would be a good move (ie, liberate strategy from MDD beancounters).

  6. I question the reliability of some LCCs to actually take delivery of many of their ordered NBs. Frontier is not on your list, they have about 80 A-320NEO models on order too.

  7. From the Reuters piece: On Thursday, Norwegian Air Shuttle (NWC.OL) revealed that Boeing had recently redesigned another part – a hydraulic pump that activates wing flaps that steer the plane – after the unit failed repeatedly on a new 787 that the budget Nordic airline received in August.
    Impressive technical knowledge…

  8. If the residual values drop too much, it will be worth airlines taking the maintenance hit because the lease rates are low enough to compensate. Lease rates in theory should reach an equilibrium.

    Alternatively airlines may keep older planes for use on demand, as the fixed costs are relatively low. This is what is happening right now with the A319, to the disadvantage of the CSeries.

  9. Respectfully keesje, your chart showing orders since launch/days since launch essentially shows an identical rate through 725~800 days since launch on the two (Max vs. NEO). There are a lot of ways to show 60/40, and that’s a true number right now, plus the Max was undoubtedly launched late (relatively, to customer demand), but really what is to be expected of Boeing, now?

    Timing for an all-new NSA is important, and quibbling over 10-15% of the market is probably not going to warrant it’s launch nearer term. The Max seems to be doing fine. My theory is it probably would do a bit better if it also offered a P&W option, but Boeing obviously felt otherwise.

  10. Hi Scott,

    i read this, and thougt that some things not correct in this Report.

    1. I think the numbers are a little bit strange, in my mind. It seems hard just to take the top 10 orders into account. With all orders for the narrowbodys it would look quite difffent.

    2. the next closest to Lion should be AirAsia

    3. The order from Quantas for A320 is used for Jetstar, in this case a LCC too.

    So far, that should be all.^^

    Chris

  11. texl1649, if you look at the total 737 and A320 backlogs, production rates, aircraft specs and customers, IMO Boeing will have to act sooner then they hoped. Denial didn’t help them sofar.

    • The overall backlog is the best indicator, I think. Looking at order rates this year or last, or in the first X days since launch is problematic.

      It’s not a crisis for B yet, but I have to believe that there are some people thinking hard about strategy in the B corporate offices.

  12. Harry Truman had a plaque on his desk that said “The buck stops here”
    Maybe Mr Mcinerney could not afford a replica?

  13. A had a 35/month x 2 year head start on the new model with new engines vs. B. That’s the delta. Full stop.

    Sure, the A350xwb looks to be doing well vs. the un-launched 777x right now. This is not a particularly persuasive line of reasoning though!

    A denied needing an all-new successor to the A330/340 for around 10 years as 777 cleaned up, and they are ok today despite dithering away on various concepts for a decade. These issues don’t play out over 12-24 month time frames.

    The 787 EIS has indeed been a train wreck, helping XWB sales pitches, and the (complementary) 777x isn’t launched yet, so again 350 sales comparisons are difficult to extract meaningful data from when analyzing current 777 operators who have ordered these products lately. The 773 was dominant for 12 or so years, so if A is now contracting for competent replacements one would hope they are targeting 777 users.

    In reality B have a backlog of around 1,000 787’s still, and I think many of these are going to 330/340 users, just as many xwb’s are going to 777 operators. Meanwhile, the mere prospect of the imminent 777x seems to have completely stanched the sales of 380’s.

    • What’s your point about the unlaunched 777X? Can airlines not still order it?

  14. The total number on order from Lionair is about the size of the current Southwest in-service fleet.

    Either Lionair will be the next Southwest (that is they take all the airplanes) or the manufacturers have production at risk.

    • I think LIon has access to capital and a succesfull business model. They plan to set up multiple low cost carriers in Asia. They were said to consider a significant CSeries fleet too (160 seats).

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