By Bjorn Fehrm
Nov. 10 2015, ©. Leeham Co: The Dubai Air Show is on its second day and there are no mega orders. The one that should have been, the mid-range requirement for Emirates Airline, has been postponed, not only to “next year” but for “another year.”
What is the reason? Are we seeing a widebody oversupply fueled by used Boeing 777s/Airbus A330s being available in the market “for very low prices,” as suggested by Delta Air Lines CEO Richard Anderson? Are these the first signs of a damping of an order bonanza which has been going on for five years? Will things be more quiet (or should we say normal) going forward?
We don’t think so. Emirates just want to make the right choice and the equation has got more complicated as it has been working the problem. And it is in no hurry.
Emirates mid-range, Phase 1
Emirates placed an order for 70 Airbus A350-900s and -1000s when they were in their original definition “and the A350-1000 “was a good 10-12 hour airplane,” according to Emirates CEO Tim Clark. Not only was it less capable than today’s A350-1000, it was also more efficient.
The increase of the range of the -1000 that followed (without asking Emirates for consent) increased the fuel consumption on shorter distances, as it now was a heavier aircraft. At the same time, Boeing launched the 787-10, designed to be the perfect mid-range aircraft with a size which would be between the A350-900 and -1000 and with better economics than both.
Emirates mid-range phase 2.
Consequently Emirates use their right to cancel the A350 order as changes had been done and it was not consulted. The mid-range project now went from information gathering to a request for proposal, with decision during 2015. The experts saw it as a slam dunk for 787-10, the shoe-in for a mid-range requirement in the 300-350 seat range. The A350-900 was invited a second time to keep Boeing honest.
As Emirates did their numbers, they started to see the good and the less good sides of the proposed aircraft. The 787-10 was indeed the economical aircraft for up to 10-12 hours they sought but its roomy cargo pit could not be fully loaded all days of the year. On the Dubai hot days, the engines lacked the necessary grunt for maxed-out take-offs.
Boeing was asked to come back with stronger engines. The problem was the engines were already stretched 20% for the -10 and there is nothing more to give. At the same time, Airbus increased the A350-900 and -1000 seating with 15 seats by rearranging galleys, and the seating advantage of the 787-10 over the -900 was now gone.
Emirates mid-range phase 3.
As issues with 787-10 surfaced, the A350-900 went into service with first operator, neighboring Qatar Airways. Feedback was good, not only from the airline but also from the passengers. Feedback from 787 passengers in comparison was mixed. While business class passengers praised the comfort, the economy passengers complained. Emirates know full well what a rumor of a comfortable aircraft can do for their load-factors. Their Airbus A380 passengers vote with their money.
As the gap between A350-900 and 787-10 got closer, the -10 is the maximum size in the family. Emirates “are creatures of size and scale” says Clark. An A350 choice has the attraction of a larger variant if needed, the -1000. But its economics will be very dependent on how well Airbus can keep the weight creep under control. Better wait until the first test aircraft prove where Airbus is on this touchy subject and on overall performance.
This is all known this time next year. This is in our view the real reason for the Emirates postponing their decision from “next year” to “in one year.”