First of two parts.
Earlier this year, Airbus officials said they will concentrate on improving existing airplanes once the A350 enters service.
Boeing followed by saying it would not take any “moonshots” and develop new airplanes, at least for some indeterminate time.
The sentiment on the part of both companies is understandable if not disappointing for aviation purists who want to see new and innovative airplane models rather than made-over sub-types.
This is one of those cases where both schools of thought are right. (Text continues below photo.)
New airplanes are, to state the obvious, very expensive to develop and in this increasingly technological age and demand for “smarter” airplanes that are more fuel efficient and which try to improve passenger experience while cramming as many revenue-paying passengers into the airplane as possible, becoming more and more challenging. Where it once was possible to bring an airplane to market within four years of launch, today airframers routinely look at seven years and even eight. Even derivative airplanes are now taking six or seven years to enter service from launch.
The most recent all-new new airplane programs that suffered delays are the Boeing 787, the Airbus A350, A380, the Bombardier CSeries, the Mitsubishi MRJ, the AVIC (now COMAC) ARJ-21, the COMAC C919, Sukhoi SSJ and the Irkut MC-21.
In other words, every single one. Some are running 18 months late (the A350), two years (the CSeries and MRJ and some are much longer (787, SSJ, ARJ21 and C919). Reasons vary, from inexperience (AVIC, COMAC and Mitsubishi) to industrial issues (787), design issues (ARJ-21, 787) and technical issues (pretty much all in one way or another).
Programs have price tags in the billions before anything goes wrong. Boeing’s 787 probably has set a record for program cost overruns in the civilian sector, with estimates hitting $22bn all-in–Boeing won’t put a price tag on it publicly. So it’s only natural that with these numbers and technical challenges at stake that the OEMs want to “harvest” the technology, as Boeing puts it, not only in derivatives but across family siblings.
Boeing’s 787 was a program debacle but this didn’t stop the company from applying design features and technologies rather quickly across the siblings. The 787’s 21st Century look interior inspire the interiors for the 747-8 and 737. Elements will clearly be included in the forthcoming 777X. The 787’s GEnx engines were applied to the 747-8 and so were elements of the 787 wing design, which were also applied to the 777X. The 787-8/9 begot the 787-10.
At Airbus, the company was sorely hurt by the development costs and delays of the A380 and military A400M. The cash squeeze, in our view, forced Airbus into at first a band-aid response to the 787 and expensive redesigns of the A350 until it settled on the three-member family of the XWB, the -800/900/1000. The -800 was the response to the 787-9; the -900 and -1000 took on the 777-200 and 300ER. The 787-8 went unchallenged, technologically speaking, leaving this battle to the A330, which for clarity we will call the A330 Classic.
Any fair assessment concludes that Airbus fumbled the ball, though it was a fumble induced by the A380 and A400M issues. Trying to cover two competitors, the 787 and the 777, with one family simply wasn’t a strategy that many thought would work. While Airbus was making the argument that the 787 carried too few passengers in an aviation world that was increasing in size, thus justifying the larger A350-800, its A350-1000 was smaller that the 777-300ER it was designed to compete with. This would come back to haunt Airbus in the coming years.
As time passed, it became clear the -800 wasn’t the right solution. Aircraft economics just weren’t good enough. The airplane cost about as much to operate as the larger -900 but it carried fewer passengers. Airlines were beginning to upgauge to the -900 and, in a few cases, the -1000, in part because Airbus had limited resources and were concentrating them on the -900 and -1000. It was clear the -800 had limited appeal and would be better off dropped. But what to do to cover the 787-8 and 787-9 markets? We’ll talk about this in Part 2.
The -1000 had its own issues. the original intent was to have full commonality between the family members, including the all-important (and very expensive) engines. But the performance was proving to fall short as analysis progressed. Airbus and engine maker Rolls-Royce soon tweaked the airplane, but in doing so angered customers because some of the critical engine commonality was lost. Emirates Airlines years later canceled its order for the A350 because it wasn’t the airplane it contracted for, said president Tim Clark.
After Boeing launched the 777-9, which carries an advertised 407 passengers to the -1000’s advertised 369, Airbus is faced with having too-small an airplane against the 777. The company is working to close the gap.
Airbus and Boeing weren’t the only OEMs to encounter problems with new airplane programs. Mitsubishi is two years late with the MRJ regional jet. Bombardier is 18-24 months late with the CSeries. China’s AVIC and COMAC, building their first jet transports that aren’t mere “Chinese copies” of other Western jetliners, are finding great difficulty and endless challenges. Russia’s Sukhoi and Irkut, integrating Western technology into local designs, are running into challenges as well.
Embraer, on the other hand, elected to take a bye on going with a new airplane design to succeed its popular E-Jet, electing instead to proceed with derivatives. It’s too early to know whether EMB is going to have challenges, but other OEMS found that derivatives can be anything but easy.
Part 2 tomorrow discusses this.
“After Boeing launched the 777-9, which carries an advertised 407 passengers to the -1000’s advertised 369, Airbus is faced with having too-small an airplane against the 777. The company is working to close the gap.”
An opinion not widely shared in the industry. I think it remains to be seen if the A350-1000 is too small, or if the 777-9 is too large. Does Boeing believe its own forecasts regarding sales potential of larger vs smaller widebodies?
A second question could be if the 777-8 and 777-9 aren’t too late. If 777 production sinks to 4 per month in a few years, while the A350 goes to 12, the 777X is too late.
I wonder when it will start to sink in Boeing has a large gap between the 787-9 and 777-9. The 777-8 and 787-10 both are compromised in the middle of the market. IMO the 787 needs to be beefed up somehow to do 350 passengers with credible cargo from hot places in Asia. It won’t go away and will be on the agenda, read my lips 😉
An opinion not widely shared in the industry. I think it remains to be seen if the A350-1000 is too small, or if the 777-9 is too large.
Oh, so you speak for the industry now? All you’re really doing is repeating John Leahy talking points.
Sorry, I’ll go with Leeham’s analysis:
Trying to cover two competitors, the 787 and the 777, with one family simply wasn’t a strategy that many thought would work.
Scott, great read. I look forward to part 2. Keesje, no matter how many graphs you put up to spin your agenda, in the end it’s the same thing. Demand for the A351 will tell you that it is too small for some hence why some carriers have both of them (777-9) in their backlog portfolio. QR, CX, and EY seem to think so. Boeing believes its own forecast as much as Airbus, MRJ, and COMAC so that comment is invalid.
Explain to us how the A350 will be at 12 per month in the next four to five years when come 2015 they MAY be at 2, 3 at the most?? We have yet to see what rate the 777 will drop to so unless you know someone on the inside. 4 to me seems very low since they are working on all cylinders to sell as many as they possibly can. The possible Kuwait 77W order should give it a push in the right direction.
The argument of Asia, the 787-10 and 350 passengers is not really worth noting. It seems to be an issue only with you and no one else. 323 passengers in a class arrangement is just fine for more than 90% of the missions it predecessors are and were flying.
.. Keesje, no matter how many graphs you put up to spin your agenda ..
You didn’t perchance notice the copyright on that “spinning” graph?
” The argument of Asia, the 787-10 and 350 passengers is not really worth noting. It seems to be an issue only with you and no one else. 323 passengers in a class arrangement is just fine for more than 90% of the missions it predecessors are and were flying.”
Interesting. What would that mean for the 777X?
It sounds like the A350-1000 is to much aircraft compared to the 787-10 and the A350-1000 is to little aircraft compared to the 777X-9. Therefore the A350 is right in the gap between the 787 and 777X no airline needs – really?
Btw. was the 747-8 development on time? The 747-8 program was not a derivative aircraft. It was about an 80 % new development. The 777X will be a completely new aircraft with just the outer fuselage skin in common with the traditional 777. How much delay can we expect according to the latest projects mentioned above? In my opinion the 777X program is more than half way to the moon. I doubt the “lessons learned” statement by Boeing’s management if they try to modify the 777 instead of a clean sheet design.
“The A350-1000 is slated to enter service in mid-2017.”
According to what I read the A350 production is at 2 or 3 aircraft per month right now. By the end of 2015 about 5 aircraft are expected per month. Boeing right now produces 10 787 per month. That is 4 years after the first flight. So why should Airbus struggle to reach also 10 or maybe 12 aircraft per month by the end of 2018?
2 aircraft more per month in 2019 and 2020 are about 20 777X less for Boeing (an Airbus’ year has only 10 or 11 months). Two years may not hurt much but with an increased production rate Airbus can suck up every delayed 777X. E.g. Lufthansa has 30 options for the 777X and also 30 options for the A350.
748 certainly had its own problems, one was proper documentation of the -400 airframes as delivered another one was significant scope expansion.
787 resource constraints agravated that significantly.
Production ramp up.
Boeing started serial production before the fake roll out. i..e ramp up of the 787 production starts in early 2007 ( ..to late 2014 is 7.5 years ?)
Nobody does “real” prototypes these days. Today’s prototypes are just the first coming off the production line.
One could discuss if the delays hampered or aided ramp up. I’d go for hampered?
The 777-9 is an engineering challange, but Boeing does not have a choice needing to make it bigger than the A350-1000 to get better seat mile costs and input alot of high tech improvements into an aluminum hull aircraft to beat the all composite A350-1000. Similar Airbus made the A350 bigger than the 787 to get the numbers right. Airbus should not hold back but strech the A350-1000 with a modified carbon wing to the A350-1100. That will force Boeing to do the 797. Airbus might wait until it is too late for Boeing to halt it and hence aviod the 797.
“Explain to us how the A350 will be at 12 per month in the next four to five years when come 2015 they MAY be at 2, 3 at the most??”
Production is ramping up to 5 by the end of 2015, but output will be expanded to 10 aircraft per month by 2018. Airbus will take a decision on further production increase next year. http://aviationweek.com/commercial-aviation/airbus-look-higher-a350-rates
“We have yet to see what rate the 777 will drop to so unless you know someone on the inside. 4 to me seems very low since they are working on all cylinders to sell as many as they possibly can”
Aviation Week reports that some aerospace analysts believe the production rate of the Boeing 777 Classic should be reduced to as few as four per month.
Please, don´t do a new round of A vs B with the same arguments over and over again! The world of civil aviation needs both manufacturers at any given time and you know it!
Agreed wholeheartedly. Iron sharpens iron.
Still intensely watching how the P2P versus H2H thing will work out.
Latest news: http://aviationweek.com/commercial-aviation/opinion-airline-industry-must-step-solving-slot-shortage
This bodes well for the A380-900, it’s a derivative.
From the article you linked to:
Airbus’s now 15-year-old predictions about the need for and growth of VLTs have not gained much traction.
Looking back at the market-consolidation-versus-fragmentation debate that was raging at the time (when the A380 was still the envisioned A3XX concept), we see that Boeing was right: Passengers prefer more nonstop routes; they seek to avoid hubs. This means there is less demand for ultra-high-capacity aircraft than expected and runway saturation at major airports is strangling growth.
Which will do more to relieve congestion at Heathrow, H2H flights on A380s and may require passengers to make a connecting flight, or P2P flights that bypass Heathrow completely?
I believe in upsizing of aircraft:
737-8 to 737-200
A320 to A321
767 to 787-8
A330 to A350
777/747 to A380
This could keep the traffic stable for several years while the amount of pax will grow. Airport planning takes a while so airlines know what aircraft to order.
I even expect some US airlines to order the A380 for Pacific routes. You can’t compete against an A380 with a 777 on certain well booked routes. A380NEO vs 777X would be the same.
Oh dear – the old H2H vs P2P debate again, as if there was ever going to be a completely black and white world where only P2P existed. EK itself and the tons of A380s and 777X they ordered are a pretty good example showing that H2H is alive and well – and note how EK are not even connecting via LHR…
The very concept of the 777X shows that Boeing themselves don’t believe that P2P is the only way forward, as you’ll need trunk routes with very healthy load factors to make money with a plane of that size.
Also – there is never going to be a direct flight Cork-Mumbai (I’m even doubtful about ORK-JFK, for that matter), or Dublin-Sao Paolo. There’ll always be a need to connect.
Oh – and lastly, look at how well “bypassing LHR completely” has worked out so far. It sees more A380 flights than any other airport, and Heathrow traffic shows no sign of waning off. BA has, if anything, increased LHR’s status as a hub in their network.
So you can attack Airbus’ projections from 15 years ago (which neither saw 9/11 nor 2008 coming), as it – in hindsight – overestimated demand for A380-size planes for the 20-year period between 2000 and 2020.
But that’s nothing to do with P2P taking over and H2H dying.
It also doesn’t negate the fact that the average aircraft size has been slowly but steadily increasing and continues to do so.
EK is not exactly H2H. They are more of a “PHP” – Point-Hub-Point. Their geographical advantage allows them to draw passengers from multiple points and send them to multiple points on the other side of the hemisphere with DXB being the “mix-and-match” centre.
True enough. A lot of connections these days work like that, actually. In that regard, it doesn’t make that much of a difference whether I fly (as I have in the past) ORK-LHR-BLR (which is really PHP) or ORK-LHR-DXB-BLR (PHHP or PPHP, depending on which way you look at it).
“Passengers prefer more nonstop routes; they seek to avoid hubs.”
– Indisputable statement.
However, as often mentioned under these comments sections, the price will be the most important factor. Most people want cheap while some may be willing to spend a bit more for the convenience. It remains to be seen if airlines can get the pricing right to draw passengers away from the hubs to relieve congestion.
That’s surely true but also quite oversimplified.
As you already pointed out, ticket price will come into it.
As does flight availability. The more P2P nonstop flights on thinner router you offer, the fewer of them you can offer for a given city pair. And the fewer airlines will offer them, giving pax less choice and possibly higher prices. A simple example to illustrate the point: There is exactly one daily flight DUB-SFO. Departure 12:20, arrival 15:20.
But there are 19 daily flights to LHR, and 5 daily flights LHR-SFO, departures between 10:35 and 14:15, arrivals between 13:45 and 17:10.
Also, for quite a lot of routes (I gave some examples above) there simply isn’t any nonstop route, nor will there ever be one. So there will always be a need for connections, which means there’ll always be a need for hubs; not all hubs are going to be the same size as LHR, SIN, CDG, ATL, of course. But such mega-hubs will continue to exist and especially in Asia I would expect to see a few more of them spring up in the future.
Ah frequency. That’s another important thing often discussed here as being relevant to the customer. And you’re right. As you pointed out, it is difficult to get the same level of frequency on P2P than any of those combinations involving hubs.
I have my doubts that frequency really makes or brakes the attractiveness of some service. There is price and than price again. Even non managerial business travel looks at cost aspect these days. What can reduce Hub centric traffic is a political thing.
Fewer people accept the hassle attached to transiting through the US to get to other places.
Airlines don’t care what passengers want, its al about making money.
If that means a fight into San Jose from Narita, great. If not, they will shuck you into SFO and you can catch the bus.
If enough are willing to pay MORE then yes you get your point to point.
Frankly it’s a mix, a major international hub to a less common destination or a less common original to a major hub. Less traffic on one end, more on the other.
Trying to cover two competitors, the 787 and the 777, with one family simply wasn’t a strategy that many thought would work
The mistake goes back all the way to the A340-600. If Airbus had developed a serious competitor to the 777 at that stage, the A350 Mark I would have been a reasonable medium term answer to the 787 and Airbus would have a two family lineup for the widebody market. They didn’t so they only have one family.
They are where they are. It doesn’t make sense to have three families – one below and one above the A350 – there isn’t a big enough market at either end.
If they stretch the A350-1100 they will have an alternative to the 777-9x in terms of size, beating it for economics but trailing that plane in terms of capability. It will suit some airlines and not others. If they re-engine and rewing the proposed A350-800 and A350-900 for efficiency, rather than payload and range – let’s call it the A360 – they will have competitors for the 787-9 and -10 (the 787-8 doesn’t matter any more).
With one and a half families they can broadly match Boeing’s two families, if not model for model. Boeing doesn’t match Airbus model for model either – eg it doesn’t have a direct competitor for the A350-900, nor the potential A350-1100.
Leahy on A350-1000 stretch.
“I don’t know that I want to give that up. The added seats will be marginal,” he said, referring to the low fares for which he believes the capacity can be sold. “I think we might be better off staying where we are.”
For Leahy the need for Airbus to match the 777-9 seems absent, it just aint there. IMO Boeing would have been better off putting a bigger wing under the much lighter 787. And invest in a real 400-500 seater replacing the 747.
The main customers for 777-X are the ME3, they MUST have the 778 as a 77L replacement to fit their one stop to anywhere strategy, and they are not going to get it from Airbus, and no way Boeing will do it without the 779. So the ME3 are committed to 777-X no matter what. How many other 779 orders are there outside the ME? It doesn´t look like justifying the A350-1100 just yet. I guess it will come sometime though.
I fully agree with Martin. There is no reason to believe that the 779 will do better then 300ER. Look at the USA for example, only American Airlines just recently acquired the 300 ER and no other airline has expressed real interest. The 777-X was basically designed by and for Emirates so to speak, and by extension, for those airlines that want to compete with it.
An A350-1100 with a range of lets say 7000nm would be complete different animal than the 779, and ironically, one Emirates would probably be very interested in since it would be the largest and most efficient plane in that range category.
I also feel that the A50-900 and 1000 are better positioned than the 777-X. The 7779 however would make an ideal 747 replacement given its larger size.
The 778 will remain a niche aircraft but a good one at that.
Just like a politician’s policy, a new aircraft program is impossible until they decide it’s necessary. Airbus have reasons to delay any announcement of an A350-1100 model.
A commercial reason: they are sold out on the A350 program. Any new model in the family will incur development costs earlier than they need be, given they won’t sell any additional planes in the short term.
A design reason: the stretch will reduce payload/range relative to the 1000 model. They will have to enhance the base model get that ratio to the acceptable minimum. They will want to see the 1000 in use with real data and have already got the initial updates out the way before investigating what further aerodynamic or engine enhancements are needed to get to the required spec for the 1100.
As Joe points out, the 1100 would be an excellent fit for Emirates given most of their routes are heavy but medium distance. I don’t know if they are overcommitted on the 779X to consider it.
“With one and a half families they can broadly match […]”
More about family values:
According to the certification the A350 is for pilots just a subtype of the A330-200.
Therefore A330 pilots need just a rather short type rating to fly the A350.
For pilots A330 and A350 are only one big family!
The “half family” I was talking about would replace the A330, except on regional routes. That’s because I believe the 787 has the advantage over the A330, if nothing else, in supporting an acceptable 9 across seating arrangement. Airbus has a readymade 9 across fuselage in the A350, so I do expect a more serious A350-800 style product about 2025.
Boeing will produce 14 787s a month in 2018 (168 a year). That’s a huge number of WB aircraft but the order book supports it. Presumably 787-9 and 10 demand will continue or increase.
It’s clear the 737 line will sell out as neither manufacturer can meet demand in this segment. The 747-8 will close after AF1 is replaced ceding (at least temproarily) the VLA quad market to Airbus.
Boeing will produce somewhere between 4-8 777s a month in 2018 (current backlog of 280 777-300er/f will take it to late 2017) presuming they don’t sell more or convert MOUs to some extent. It appears they have to make up roughly 220 sales to get to the end of 2019 while delivering the 777-x in end 2019 and ramping up to 8-10 a month from 2020-2022. Then start the NSA program.
Challenging, yes. Doable, yes. Slam dunk, no.
For Airbus, the 350 line is sold out until around 2023 (2014-2017 = 200 or so, then 110 a month x 6 years). Airbus will have to make significant capital investments to increase the rate. Therefore, the 330neo line is important to keep something going in the under 325 seat market without ceding the market to Boeing. Time will tell if a 330 neo optimized for 4000-6000 nm will sell enough, but regardless, it is something to keep cash flow going.
The 320 line is the gravy train and is sold out. The 380 is what it is. Maybe its prospects will get better, but it also may not. The Large Twins are cheaper, more flexible and offer less maintenance costs.
Challenging, yes. Doable, yes. Probably easier path than Boeing.
Trying to be neutral, I would say the Airbus position has more significant gaps than Boeing. IMHO, Airbus needs to revisit the 350-800 and optimize it once the 350-900 and 1000 are launched. Or focus on a 777-x challenger (if the 350 fuselage can be made to work). The 380-900 business case would be tough for a decade or two I would think.
there are two President 1s and 6 looking glass or whatever the CCC airborne bird is called these days.
If Boeing does not get the orders, they will build 2 white tail 747-8I (or 8F as its plenty big enough) and shut down.
AF1 does not keep a line going, looking glass ads 8 months at most.
When Airbus will have to invest in an A330 NEO replacement depends on fuel prices, and they are not going up much now. (more down if anything) I can see the A330 going until 2025 and hurting Boeing´s cash flow if nothing else. The one family WB twin strategy should have been a failure but Boeing´s decision to optimise the 787 for longer ranges made it heavier than necessary and saved Airbus´ bacon.
The carbon-hype is over. Then you look at the basics (weight) there is no big difference between an aluminium or carbon airframe. Carbon is said to have advantages due to inspection intervals. It was thought carbon aircraft would be much cheaper to build (see early 787 prices). Airbus now can offer the A330 much cheaper then the 787.
The A330 is as fuel efficient as the 787 with the same engine generation!
The A330 will be history then Airbus can produce a carbon fuselage much cheaper than the proven A300 fuselage design. In 2020 Airbus may put RR Ultra on the A330 and the A380.
Btw. the A330 replacement is already certified.
Seriously speaking, do you really believe that the simple marketing trend forecast allowed to open is able to provide a comprehensive picture of the B777X purchasing activities? As all the buyers already have quantities of B777 in hand, as well as the supporting equipments and crews etc. So IMO merely tangling in the capacity gap makes little sense, let alone the not large one. Moreover, to a great extent, IMO one of the most severe defects in market analysis is the subjectivity and even when mistakes occur instinctively people tend to find evidence in their favor to reinforce it (which the worst influence Plato brought us) . For example the A380, hardly to say that it is a failure at least breakeven is close at hand and R&D as well as brand value she had, however the marketing forecast didn’t act as Airbus expected.
And for the article, curious about that will the common delay and risks for brand new aircraft development lead to an invisible agreement between A and B not to invest much in new aircraft for an amount of time to avoid the risks and cost? (As the market pattern is stable especially the WB
The SonicCruiser, 787-3 and A350-800 may seem like product strategy failures for “outsiders” not privie to the discussions that happen behind closed doors.
But sometimes its a poker game where you “bluff” the lower sector of the targeted market, have an ace up your sleeve for the upper end, but only show your cards for the middle of the market.
My only comment is that the ‘gaps’ referred to consistently really do not exist in practice. Airlines do not select aircraft merely because their stated capacity fits an abstract number – the number is a range and of course it is a moving range, which varies with competition and with travel trends. Far more important are, in no particular order: quality, delivery dates, price and financing. Similarly I am utterly unconvinced by airframe claims of comparative cost per seat, since this assumes among endless others, assumptions that the plane is full and that one carefully specified (and in the real word unlikely) in terms of seating class and number.
In terms of what matters when generalisations are floating around – I think that in the last 2-3 years Airbus has finally demonstrated that it is at least equal to Boeing in terms of reliability of product, response to customers, costing practises and reliability of both product and production.
What really matters is the current and hoped for future route structure (flight distances) and the carrying capacity you can get out of that.
That’s why some aircraft work better than others.
That’s also why its hard to analyze as you have to come up with a composite index when what you really need is an airline specific tabulation and what fits. And then do that across all the airlines.
And within any route structure, there are few if any perfections, so you have to average out the best for the best average.
Not an easy thing to do, Leeham does that with some interesting data. Have to see longer term how it does.
If your aircraft does not work for the average of enough, then its toast (A340) so it goes
“in the last 2-3 years Airbus has finally demonstrated that it is at least equal to Boeing in terms of reliability of product …”
To achieve sales and significantly gain market share Airbus must have provided for these properties from the get go.
What changed is that it can not be ignored and/or “written away” anymore.
The reality distortion neccessary to supress that fact has become much too big.
A credible first part analysis, but consider what you unreasonably refer to as made over sub types are for a host of reasons the only option without major development in numerous technologies. I reflect on over forty years industry experience and justly say the last fifteen years have been dramatic progress compared to the previous twenty odd years.
You may recollect I have first hand awareness of one manufacturer, the satisfaction we get as a team is immense as we see how our expertise extends our only prime competitor.
As professionals we imagine our competitor gets equal satisfaction when they extend us. Our objective is to minimise their ability to do so, so from becoming a bit of a rash & irritation to them we have the glee of knowing every aircraft exiting ours doors should have been theirs.There are few things more rewarding in state of the art engineering than that feeling.
Now if you can get management to buy into that!
I guess hindsight is key. Some say the A350-1000 is too small, but why then produce the B787-8 which has basically equal cost as the B787-9 and even worse range? It seems that there is a race to the bottom when it comes to seat-mile costs (CASM), and larger aircraft have inherently lower CASM. However, this always assumes that I can utilize my seats and still generate sufficient yield. If all airlines jump on the “best CASM through large aircraft” band waggon, the market will cripple due to massive overcapacity (compare: container shipping business).
Container shipping has made rather big steps in efficiency ( via engine sfc, now at ~160g/kWh, and ship size , what a surprise 😉 ) while transport volume has had really massive fluctuations.
( For Germany paint in some tax evasion schemes that let people sink significant amounts of money into container ships )
New ships appear to dominate the main routes, while the replaced ships saturate the used ship market.
In contrast the airplane second hand market isn’t really overflowing and anyway spare parts reclamation is a much better value preserver than scrap metal.
Fortunately, the people that sunk the money in container ships now pull it into aircraft fonds that base on observation of values of used aircraft of the last 20 years. I guess if EK returns the A380 after 12 years and there is no one to take it over, the aggregated return on investment for the investor will be zero (or less).
B787 and A350 are now appearing on the market, and if produced in the epic numbers proposed, will be felt in a few years (2020: 800 B787 and 500 A350 in service). I would assume that residual values of current generation widebodies will then approach the cost of aluminium multiplied by their respective Manufacturer’s Empty Weight.
By the way: most “old” (many being less than 15 years, well above the normal retirement age for ships) container ships aren’t worth anything any more.
Cheap and old A380s could be a nice workhorses for inter Asia flights with a seat count close to the exit limit.
You could buy some cheap 767 now and sell them in 20 years to US Air Force as spare parts for KC-46.
You miss two items re shipping. Ships are largely just steel, they don´t cost so much for their size. (exclude off-shore and fishing vessels here) When you scrap them they are still a lot of steel and worth something. Secondly a ship has a major dockyard and inspection every 5 years, so a 14.5 yo ship is worth a lot less than a 15.5 yo one.
The A350-1100 won’t be a 7K n.m aircraft but more likely an 8K one. According to Ferpe’s analysis in a Leeham Article dated a year ago (22-10-2013) for a 6m stretch over the A350-1000, the OEW will be ~160tn. With “Y type winglets would keep the engines at 100klbf and still have the V2 speed within kts of the -1000. With a natural TSFC evolution of -3% a 320t MTOW variant would fly 400 pax 8300nm.” Also from the same article “The modeled -1100 would consume 90t fuel over a 7000nm trip where the -9X would require 99t”. That is 10% more efficiency for a relative minor upgrade (no wing upgrade, no MLG upgrade), while carrying 30 more passengers in EK’s configuration (400 vs 369). What prevents EK to drop all its orders (A340-600 reminds you anything) and order the A350-1100 in two years from now? I think Airbus waits for Boeing to freeze the 779 design and drop its answer. Boeing sees this, but they don’t have any other solution,just to proceed to the 777X. They should have started the 779 project by 2010 with delivery in 2017, but B787 screwed up and the consequences are reflected to 779. Overall the 779 depends on EK’s decision. If EK withdraws its orders, then 779X is a dead project. Just take this into account when US airlines complain to the US government about Open Skies Agreement.
Now regarding the A330, Airbus is very lucky. After all the hype about composites, it was revealed that for the size of a 330-300 size aircraft, the delta performance between metal and plastic is not more than 4% for a 4k mission (Leeham’s analysis again). The fuel prices are not going north of $3/gallon, so Airbus has a good case. Even if they don’t win the orders they are using their pricing for leveraging lower B787 price. This hurts 787’s program profitability that is deferred somewhere in 2025. The nonexist advantage of composites is what Airbus saw back in 2010 and choose the NEO option for the A320.
What Airbus needs in this segment is just new wings for A321 (folding tips?) and A358.
Ferpe we miss your data.
McNerney’s no more “moonshot” comment is an insult to the intelligence of business observers.
The subtext of the statement seems to be entirely political .. . gee Boeing took a moonshot on the 787 so who can fault the top executive for his dismal performance overseeing the program in my opinion. Nevermind that McNerney routinely made north of $20 million per year. My understanding is that the 787 is literally billions of dollars over budget.
The company should have made Mulally the CEO. He knows how to run a company and boost company morale. A rather unusual quality among today’s CEOs. Let’s face it, when McNerney retire,s no one is going to ask him to be on the Google Board of Directors.
Who is the best candidate to replace McNerney?
There must be at least 10 good folks meeting the specs in a company like Boeing.
Chris Chadwick? Muilenburg, Tracy? Fancher? an inspiring outsider, like O’Donoghue to match Enders?
Hill, Conner seem too experienced / involved.