Oct. 5, 2016, © Leeham Co.: The next 15 years won’t bring any relief to crowded airports and airplanes but nevertheless there are warning signs for the likes of Airbus, Boeing and the supply chain.
Looking ahead to 2030 will see aircraft production peaking early in the next decade but begin to fall off or the Big Two Original Equipment Manufacturers as new entrants begin to be felt, predicts Michel Merluzeau, an independent consultant.
Merluzeau presented his forecast yesterday to the British American Business Council Pacific Northwest chapter’s annual one-day conference in Seattle.
“I’m pretty comfortable about the next five years. I’m comfortable in the next five years. The five years after that,” Merluzeau said his confidence level declines because there are so many variables, ranging from issues within the industry to large ones outside it.
While Airbus and Boeing will continue to be the dominant producers of commercial airliners, China’s plans for the C919 single-aisle airplane and the C929 dual aisle aircraft will begin to make inroads in the mid-2020 decade and in the 2030 decade, he said.
At the other end of the spectrum, Bombardier’s CSeries won’t make much of dent, he said.
For suppliers, the next 15 years is about cost reduction efforts, Merluzeau said. “It’s about industrial policy and government interference or support. It’s about getting others into cost reduction programs. It’s about Tier 2 and Tier 3 suppliers asking whether they want to stay in this business.”
The supply chain stress is at highest since World War II, he said, notably at the “bookends:” materials and interiors.
Increasing use of robotics is a certainty, Merluzeau said.
Merluzeau gave specific predictions by equipment type of the market demand over the next 16 years. He sees a future for the Airbus A380, but not the Boeing 747-8.
“Airbus is a little bit concerning toward the back end of the forecast,” he said. “They are so vested in narrow body aircraft. Sales on wide-body will soften toward the back-end of forecast.”
Merluzeau believes Boeing will launch the Middle of the Market aircraft, which he calls the 7M7. It will be a twin-aisle jet that replaces not just the Boeing 767-sized aircraft but also the 787-8, which he says will be discontinued in 2020 or 2021. (Note: this concurs with LNC’s forecast.)
“My outlook on Boeing is pretty good, pretty steady until 2024-25 when MAX production begins to fall. MOM aircraft will enter service and support sales, production,” Merluzeau said.
“Part of the business case for 7M7 is that the 787-8 will go away around 2020-21,” he said. “Part of the market will be covered by 7M7.”
This is not limited to Mr. Merluzeau’s work here:
A320: 9,226 or any of the other numbers insinuating single digit precision. What kind of real precision is attached to these numbers? +-10%? +-20%? even more? 🙂
Agree. The term “Precision bias” comes to mind
Any model that does not give a figure to ‘single digit’ is being artificially rounded out by the modeller. Why add this extra layer? Simply provide the figure the model outputs and state the margin of eror, confidence interval etc.
Re Merluzeau’s work, I wonder whether the 777 and 787 figures did output bang on the 0 or he has added the extra rounding layer.
One further point. If you soften out the numbers you also then lose accuracy in comparing your forecats from date 1 to date 2 etc., so unnecessarily making trend spotting less accurate. Although thesea re only models with too many variables to be spot on, they are the best there is, so keep the numbers.
If your trend is smaller than the available precission you don’t really have trend. You mistake noise for trend.
There are cases were truncating data introduces grave problems But not here.
I’d look at the quality of the input data first.
Clearly truncating will not introduce ‘grave problems’ here. But such manipulation would itself introduce noise. There is only downside, no upside, to doing this. After all, any professional reading these forecasts will be well aware of the reasonablenss of figures.
If the forecaster wishes to communicate a level of certainty or simply gut instinct that the figures are ‘too precise’, provide this as a note, with guidance on the margins in the model and/or opinions.
Personally I arrive at 7,766.5 for the 737, because Boeing won’t have enough money left to complete the last unit.
The times of the finely done Half Model are gone, too sad so it is only integer deliveries that count 🙂
Half witted comment from an Airbus Fan Boy I presume.
No it was full witted.
It was intended as a mockery of Merluzeau’s numbers the way they are presented here. I know of some people who were expropriated for the construction of a very large international airport approximately 35 km from where I live. When they asked the government representatives why me and not my neighbours across the street they were answered that it was because the layout, which was totally arbitrary, looked more “scientific” this way. This story came to mind when I read Merluzeau’s ridiculous numbers. As for Boeing, I am a big fan of the Old Boeing, but since they moved their headquarters to Chicago they seem to have lost touch with reality. So I never miss an opportunity to remind this to our LNC readers, which like you and me are aviation fans.
Excellent insight Normand. I have never thought of it this way. I am really an Old Boeing Fan Boy. You are dead on about the failed Chicago experiment. Run by a bunch of powerpoint rangers who are focused on kowtowing to wall street and are wanna-be GE-ers (McNerney’s lasting legacy). Most of them have been on the fast track for 20 years and have never spent more than 2 years in one position. I never thought I would find common ground with an Airbus Fan Boy!!! Cue the music . . . Ebony and Ivory . . .
Ah yes, there is good and bad in everyone.
Does someone have a hankie?
Posting such definitive figures in a forecast is of-course a tad silly. The accuracy is +/- 20% at best I’d say. I would have given more cred to the number had he actually rounded them off…
I take the rounded 787 and 777 numbers as a sign that he did not believe his own modeling and rounded them up. Me thinks that he actually rounded them up substacially to avoid trouble of all sorts. Interestingly he rounded them up by just the right margin so they fit the combined A330 and A350 figures (2,800).
I believe that Boeing will actually deliver not much more than 2,000 wide bodies during that period.
I also disagree with the notion that the C-Series will have no noticable impact. Does he think that airlines will not notice the advantages the C300 offers over the A319 and 737-7 or that Bombardier will not be able to produce them?
Maybe he rounded them down so they fit the combined figures.
Perhaps it was an epiphany of computation
@Gundolf: Re CSeries: BBD’s production rate is tiny compared with the combined Airbus and Boeing rates.
Scott, yes, I understand that. But if the CSeries become profitable and demand rises they might just grow it, right? Airbus has once been a tiny company too. In the 70s they delivered only like 10 planes in a year, then in the 80s around 40, going to 300 at the end of the 90s.
What do think is the fastest Bombardier might grow their production like?
BBD’s total capacity is 120 airplanes a year. Airbus and Boeing can or will do this in one month. Mind you, Michel’s forecast is 15 years. It took Airbus 30+ years to reach parity with Boeing on sales, and it still hasn’t reached parity on production.
Airbus pulled up to Boeing around 2000+.
After that it is mostly waltzing around each other
depending on who currently does a type transition.
Airbus formed 1970, parity 2000; that’s 30 years.
Boeing still produces more airplane annually than Airbus. To this day.
“Boeing still produces more airplane annually than Airbus. To this day.”
The numbers indeed clearly show year after year that Boeing produces more airplanes than Airbus. The question is why? Since Airbus has been using automation more extensively, and for a longer period of time, one would expect its output to be larger. Especially in view of the number of airplanes it sells, which is often more than Boeing does in a single year.
Normally selling more airplanes means a bigger cashflow. And I believe it does, but perhaps not to the same extent one would expect. Because there are costs associated wth an increase in production, and there are also some risks involved. To increase production can be expensive, and if it becomes necessary to decrease it, this can be even more expensive. In that respect I think Airbus is more cautious. Some would say Boeing is reckless, but I don’t think they are. They just have a bigger appetite for risk. And Boeing’s employees are more willing to do overtime.
In Europe overtime is perceived as an encroachment on private life. One example of this is UPS when they started to expand their delivery business in Germany. They were shocked to learn that employees systematically refused to do OT and just went home after work. And of course we must not forget the one month vacation that prevails at Airbus and which is sacred. In the US many people don’t even know what it means to be on vacation. If I am not mistaken Airbus’s production schedule extends over a period of 11 months, while it is more or less 12 months at Boeing, if we include OT.
It is my understanding that Airbus has recently taken exceptional measures to mitigate the current production shortfall in order to catch up with the production problems they have encountered with various suppliers. We have seen similar disruptions at Boeing before when management were trying to increase production too abruptly and under less than ideal circumstances. It is obvious that if the current downturn was to last much longer both A&B would be forced to reduce production. The 787 might be the first casualty. And if it lasts long enough the A320 and 737 might also have to be dialled back a bit.
But if we take the glass-is-half-full view, a bigger output will bring more cash to Boeing. And this is exactly what they need to complete the 777X and to tackle new projects like the MoM and NSA.
“Some would say Boeing is reckless, but I don’t think they are.”
Boeing lives in an environment where hire and fire is easy.
Workers are cheap and do not introduce big liabilities.
This is reflected in the massive ups and downs of Boeings production output.
Airbus does not and the workforce is more expensive but also more of a partner and probably better educated/qualified.
Thus it makes sense to invest money in tooling and automation. ( compare the almost tool less assembly at Boeing with the intricate system of manufacturing aids seen in an Airbus FAL. )
Workforce “breathing” is expensive in the long run but seems to be invisble to management or shareholders.
( Shares jump up on the slightest hint of redundandcies.
What the shareholders like can only boost managements narcicissm. )
When we compare the 919 to the C series and the 919 is taken as seriously and the C series is not?
We know which of the two is going to be successful and sold world wide.
We know which one will sell in China, North Korea (well give away is more accurate) and Zimbabwe (assuming Mugabe does not croak too soon and still another give away)
He lost all credibility with me at that point.
“When we compare the 919 to the C series and the 919 is taken as seriously and the C series is not?”
I agree with that sentiment TW. Also a CS500 is on the cards. And thats a very big market. The C919 is only as good as China is. Who knows where it will go?
Pretty much no where
I agree there is something wrong. The numbers for the a320/a330/a350 appear to be the available slots for the next 16 years. So Airbus will be fully booked. The numbers for Boeing are all over the place. Boeing will have to educe production for the 737 and 787 by nearly a half but nearly double production of the 777. A lot of fish around
The reduction of the 787 production is based on the asumption that the 7M7 will replace the 787-8 and that the A330 will cut into new possible sales with its much lower price and similar performance.
The reduction of 737 production is also correct as only the -8 will be selling in the future. If I’d run an airline I would buy C100, C300, A320 and A321 for single aisles and have a perfectly asorted fleet.
The surprising large number for the 777 poses a great miracle to me.
If you wanted the most cost-effective aircraft in each size (and didn’t care about commonality for training and parts purposes), wouldn’t the “perfectly assorted fleet” be the E195-E2, CS-300, 737-8, A321LR?
That’s probably right, but it would be much more difficult and costly to handle pilot training and maintanance. It might also make the planes more costly as you had little leverage to any one of the sellers.
The 737-7X, the 737-8 and the 737-9/10 will continue to sell.
No question the 10 does not compete with the A321, but as adjuncts to the 8 as the 9 is, some success.
The prediction is about _further_ demand not deliveries afaics.
In that scope Mr. Merluzeau thus predicts a backlog contraction on the Boeing side. Not surprising.
It is a given imho that pressure to come up with a “modern” design is much higher for Boeing than for Airbus.
.. and insinuates that neither airframer will go full hog on NB production.
I think these numbers would satisfy both Boeing and Airbus. These market forecasts seem far too ‘balanced’ to my liking. I predict that at least one of these programmes run into substantial difficulty (maybe A380 is the best bet). There is a natural balance to aircraft orders based upon availablility and pricing that tends towards evening out orders but we have many instances of ‘winner takes all’ in some segments that suggest a more contentious sharing out of the market going forward
I can’t see the C929 gaining significant penetration in the next 20 years. Boeing and/or Airbus will see what is being developed and counter the move with a more sophisticated offering developed over a shorter timeframe. That is unless the C929 is truly radical which would scare the airlines away anyway or given away for free (eastern airlines A300 like)
No doubt that the Chinese gouvernment will make the Chinese airlines buy the C929, and as China makes a good part of the future market it will certainly have an impact. The big question is when the C929 will be certified and at what rate Comac will be able to produce them. I would expect a serious consultant would have to offer a little bit on such topics.
I agree that the market in China is lost and also affiliated countries where China’s influence is strong. At the same time this presupposes that the quality and service associated with the C929 is comparable to that offered by other OEMs. Looking at the recent offerings from China it appears that in spite of what must be substantial government pressure to take up indigenously produced aircraft the orders ‘accepted’ by the airlines for ARJ21 and to some degree the C919 are limited
The key markets for all commercial aircraft have matured considerably from the time when Airbus could adopt ‘the silk route’ strategy.
Yes, I think most uf us were in fact talking about the 919 here. The 929 is the the twin-aisle project.
No point buying a 929 if its not certified to fly to international destinations.
Even considering Chinese buying “logic”, at best they’d end up with very split fleets.
Logic has nothing to do with China, Imperialistic Ambition’s and Nationalism are the drivers at any cost.
Big stir now that number 1 has not appointed his successor the way he is supposed to.
Logic is everything. That applies to China without a doubt like in most other places.
The difference is in objectives.
My crystal ball says the A330 and 777 will have a hard time breaking 1,000 deliveries in the next 16 years. A380neo, I would give 1 in 10 odds. CSeries will pick up speed and delivery 1,000 in 16 years and gain traction with new derivatives.
I think the assumption Airbus will launch no new aircraft apart from a A380NEO in the next 15 years is a risky, unlikely one.
Looking back, Airbus launched A300 in 69, A310 late seventies, A320 mid eighties, A330/340 late eighties, A346 /A380 late nineties, A350 mid zeros, NEO early tens, A330NEO mid tens.
So 7-8 major civil programs in the last 30 years. Of course they were building a portfolio. Still, no new Euro programs in the next 15 years seems highly unlikely.
– A322 MoM in EIS 2021,
– Smaller A300 /A310 / 330 successor for EIS after 2028
– A350-1100 launch 2018,
– 120-180 seat 1500NM (ultra lean) launch 2020?
I have no signs R&D, product development is holding back. Well manned and financed at this stage & room for projects. Airbus seems stronger then ever & history shows they won’t wait for anyone.
– A322 MoM in EIS 2021,
– Smaller A300 /A310 / 330 successor for EIS after 2028
– A350-1100 launch 2018,
– 120-180 seat 1500NM (ultra lean) launch 2020?
Do you have any evidence of this or is this just wishful thinking?
Some element of wishful thinking re all of it but as Keesje says the lack of any new development is highly unlikely. Airbus has focused on the low hanging fruit of neo since the A350 programme and so it is reasonable to suggest 2 programmes will be launched over this timeframe.
Possibly the A380neo if they can make that one fly and probably some sort of major or minor response to the MOM (A322 most likely) in the medium term. Both relatively cheap (everything is relative).
At some stage the A320 needs revisiting to a greater degree. The main cash cow will eventually need replacing or at least a complete revision to reflect Irkut/Comac/BBD competition.
At one level it would allow Airbus to retain its core current engineering expertise by giving them something to do
I’d say they really need and want to keep the key skills in place, so something requiring wing work (update or new) is going to be appearing relatively soon after Boeing solidfies its MOM position with detailed plans and too much money spent to afford significant changes.
Enhancements of current programs are on going. The 2017 Airbus formation flight will probably be A321 NEO, A350-1000 and A330-900 accompanied by the A380.
If oil prices grow again, I can see priority going to a quiet, lean payload-range limited A30X, the longest variant overlapping in seat capacity with A320 but not in payload range.
Markets Western Europe, China East coast, US East, CA etc. where most people live.
I think keesje has a point here with expecting that the R&D at Airbus will keep up working, improving existing aircraft but also develop new ones.
Of course the list is very speculative. And has to be, as Airbus itself will not know now what it will be. Too much depends on technological breakthroughs and suppliers, not least the engine makers.
Here are my top candidates:
1) A380NEO with RR Ultrafan and significant weight reduction through CFRP implementations.
2) Regional aircraft with electrical/hybrid engines (which is why they don’t develop a successor to the ATR right now)
3) A new single aisle plane to replace the A320. Made almost entirely from CFRP, but most probably not with prepregs in the autoclave. There are several possible way to bring the cost down and the productivity up like resin transfer moulding, waving rowings with robots, heated toolings etc.
But I also have to point out the Keesje has stated that derivatives are more than enough to meet any future Boeing threat.
So they have no need to put out a new aircraft.
The need for new designs is intrinsic.
( animals start to “play” when their skills are not honed
due to lack of day to day use while truly capitalist incorporations start to eat their seed corn.)
“So they have no need to put out a new aircraft.”
Maybe that’s the (IMO false) starting point.
Boeing acting & Airbus reacting.
For the A300,A310, A320, A330, A340, A380, NEO, this wasn’t the case.
Since then, they hardly lost self-confidence or resources.
If there’s a good business case, they’ll upgrade something or design a new one. Ignore and they’ll still do it.
From a product strategic point Airbus has so far made mostly rather wise decisions. And that is to take the initiative when possible. So far, every new airplane they have developed, had something entirely new on it or at least a very clever new combination of features.
The A300 was the first widebody with only two engines and the first one with a supercritical airfoil.
The A310 was the first airliner without a flight engineer and the first to be built with a significant portion of composites.
The A320 introduced fly-by-wire to airliners.
The A330/A340 was the first airliner to be available with two and four engines. The first widebody with fly-by-wire. Again many more parts were made of composites.
The A380 is the first airliner with two full passenger decks. More composites again.
The A350 introduces “only” a new kind of CFRP-panel-body, and though it is the most modern plane, it is the one with the least innovations and actually the only one of which you could say it was a reaction to a Boeing model (the 787).
“The A350 introduces “only” a new kind of CFRP-panel-body, and though it is the most modern plane, it is the one with the least innovations and actually the only one of which you could say it was a reaction to a Boeing model (the 787).”
I don’t want to be too facetious but it is the A350 Mk1 that was a reaction to the 787, while the A350 XWB was a reaction to the market acceptance of the former. That is how it became a response to the 777 as well as the 787. It was an audacious move and Airbus eventually proved me wrong, because at the time I viewed the XWB proposition as extremely risky.
Hmmm, there seems to be a bit of spinning here.
The DC-3 had two pilots and no flight engineer (as did the B247 etc)
Also I believe it was Boeing with two pilots but band limited and can’t look that up (737?)
A300 sold in Asia as it got around the ETOPs that were the reasons for the DC10 and L1011. Looser rules, limited market.
Airbus got annoyed when Boeing then pushed it into the next realms with the long ETOPs 767 and 777.
And the A330/340 will be the only two and 4 engine offering off the same airframe (though you could argue the Lancaster started out as two and went to 4)
That’s not to diss Airbus but its a bit more complex dance that goes on.
I think engine tech alone in the next few years will drive NEO mk II and NEO programs on all lines except the A320 during this timeframe. Then Boeing will respond or if they are smart pre-empt with NG/MAX/some other sales force inspired name re-engine programs. Economic climate very open and I don’t think the current Chinese management will be in the driving seat forever, so their ability to peddle the C919 might be hampered. C929 won’t impact this time frame at all as far as I can see.
“I’m pretty comfortable about the next five years.”
– I am extremely worried about the next five years and I think we should all be because the huge backlogs could melt away fast. Unless I am wrong about my economic forecast.
“At the other end of the spectrum, Bombardier’s CSeries won’t make much of dent, he said.”
– Hopefully A&B will heed his advice and stop worrying about this new aircraft. I would have liked to hear the rationale behind the statement, but I can only surmise there was none.
“The supply chain stress is at highest since World War II.”
– This is one of the very few points on which I agree with Merluzeau. But it’s also the most obvious one.
“He sees a future for the Airbus A380.”
– So do I, and it’s ugly.
“My outlook on Boeing is pretty good, pretty steady until 2024-25 when MAX production begins to fall. MOM aircraft will enter service and support sales, production.”
– I can’t help it and have to ask myself if this guy is on Boeing’s payroll. When I read the above comment I immediately asked myself what about the NSA? It is not even mentioned, let alone discussed.
I can’t help it and have to ask myself if this guy is on Boeing’s payroll. When I read the above comment I immediately asked myself what about the NSA? It is not even mentioned, let alone discussed.
Because it won’t be first delivered in the 15-year timeframe that’s being discussed here?
If Boeing were to launch/deliver the NSA in that timeframe, surely MAX deliveries would start to slump much, much earlier than 2024/25.
And as I’ve said time and again, Boeing would be absolutely crazy to do that, because it’d mean launching NSA just as MAX would finally start to be delivered in numbers, i.e. once it’s starting to generate lots and lots of profit.
If, as Leeham and Merluzeau assume, the MOM ist going to be sat across the MAX-9 to 787-8 size category and it’s not going to be the starting point for the 737 successor, it makes sense to launch this for a ~2025 EIS.
However, I still don’t see that sort of MOM as a given, to be honest. It’s still a somewhat niche product that I’m having some trouble seeing enough demand for to warrant the billions of investment required for a new airplane. It’d – to me – make more sense as the as the starting point for an NSA, i.e. a bigger family than just MOM. This of course would sort of preclude it being launched for a 2025 EIS because it’d eat into the attractiveness of MAX.
Yes, the 787-8 is going to be abandoned, but I see the 787-9 as the chief replacement, to be honest, just like the A330-300, as it became more capable in terms of range, replaced the A330-200.
Similarly, there was no size equivalent for the 767-200 when it went out of fashion, and there didn’t appear to be any need for it. The larger 767-300 and A330 took care of that.
My point being – just because a certain size variant goes out of fashion doesn’t mean there’s much point in developing a replacement for that variant.
To me, talking about redefining the 757 replacement market as MOM and then trying to cover the 737-9/A321-to-787-8 category with it, seems like an attempt to somehow make the projected market appear large enough to justify development of a new aircraft when actually, the business case isn’t quite that solid at all.
(Never mind that this particular size category requires venturing into that scary, uncomfortable “single- or dual-aisle?” twilight zone.)
The “perfectly assorted fleet” be the E195-E2, CS-300, 737-8, A321LR.”
Many airlines would indeed be very happy if such a mix composed their fleet if only fuel burn was the consideration. But many would prefer the A321 over the A321LR if they don’t need the extended range. Others might need the performances of the CS100 if they need the range and if they have to operate from short runways, or from those located at higher altitudes or in hot climates. In the middle the CS300 and 737-8 would indeed be an ideal mix, and that is why the CS500 is so eagerly awaited by many observers and several potential customers. But if we are to believe Merluzeau the C Series won’t make much of a dent. And that statement is even supported by LNC. If I was astonished by what Merluzeau said I am flabbergasted by Scott’s endorsement. If we were discussing the next five years only I would agree with both of them that the C Series won’t make much of a dent. But Merluzeau was talking about making “inroads in the mid-2020 decade and in the 2030 decade.”
“BBD’s total capacity is 120 airplanes a year.”
Bombardier does not currently have the facilities to produce 120 airplanes a year. To produce that many BBD would need to build a FAL and they don’t have one at the moment. Today once the airplanes are assembled they are rolled to the modified CRJ hangars which are used as a temporary FAL for the C Series. Over there the integration is completed and the engines are installed along with other activities like cabin completion for example. As a FAL the CRJ facility cannot support a rate of 120 a year. Therefore Bombardier will have to build a brand new FAL right next to the existing Pratt & Whitney engine integration hall. But for the time being P&W also has to roll its engines to the CRJ temporary FAL, which is located across the tarmac. Production is still too low for this to be a problem, but something will have to be done soon because the learning curve is steeper than expected. This means they now believe to be in a position to produce as many as 150 aircraft per year with the existing facilities, including this new FAL they will have to build. But we have to keep in mind that the airport area where the assembly of the C Series presently takes place was chosen because the installations can be doubled. I have seen a sketch of this industrial complex and there is indeed room for two sets of assembly buildings side by side. By set I mean one assembly hall plus one FAL. Two sets mean two assembly halls and two FALs. Provided the sales would justify it we can therefore expect that the maximum production potential at this particular site will be 300 aircraft a year. That is still well below the 500+ that A&B are each capable of, but it is certainly a bit more than a dent. That being said I do recognize that Airbus has a thirty year head start with the A320. They started to assemble the first aircraft in 1986 on a modest assembly line in Toulouse and now have four different industrial sites located in four different countries. I mention this in the context of Merluzeau’s projections for “the 2030 decade”; i.e., 2030-2040. In my opinion this timeframe should be sufficient for Bombardier to be able to challenge the Big Two duopoly in the narrowbody sector. For I leave the challenge in the widebody sector to the other Big Two: China and Russia.
I think the CSeries is well positioned under the A320 and 737. Technology is not revolutionairy, more evolutionairy but not 25 years ahead of the A320.
At some stage Airbus will probably launch something new to cover the lower end of the NB segment. As they once considered.
But then with latest technology in materials, propulsion, systems and focussed on a narrower market segment.
Airbus will respond to the challenge in due time but they don’t have to a the moment because of the outstanding performances offered by the A320neo family. Of course it all depends if you look at it from the CS100/300 perspective or from the CS500/700 perspective. Below 150 seats there is nothing Airbus or Boeing can do with any of their existing six-abreast models. The 100-150 segment essentially belongs to the C Series. Embraer will certainly appropriate a large portion of the bottom part, but for any operator who would want to occupy this segment there will be no other options once the CS500 will have been introduced.
Where it starts to be interesting is above 150 seats, in the A320/737 territory. The 737-8 remains out of reach for the CS500, but perhaps not for the CS700, if an operator does not need the range; it’s the same logic as for the E190/195-E2 versus the CS100, if one doesn’t need the range and performances of the latter. The A320neo will not have more to offer, like for example the 737-8 does with its 12 extra seats, for it has the same engines and same capacity as the CS500. It’s main advantage, apart from its large cargo capacity, lies with the fact that it is part of a very strong family of aircraft that incorporates the A321. The choice between the CS500 and A320 will depend on the segment that needs to be covered by any given operator: 100-150 or 150-200. I also see a possibility for the 100-200 segment that would include both the C Series family and A320 family. That leaves the 737-8 as an orphan. And that’s why in my opinion the 737 family is at risk over the long term despite its impressive backlog. I view the 737 as a dysfunctional family and that is why I have been so vocal about the NSA.
In short the CS100 has strong competition at the bottom, the CS300 has no direct competitor, the CS500/700 are potential rivals for the A320/737. With Embraer, Airbus and Boeing the C Series is in very good company, but being a late-comer it is normal that those who feel threatened by it would try to put it down.
I think Airbus first priority must be to replace the ATR line, A318 and A319neo. But I think they are not able to develop something revolutionary now (electric or hybrid powered).
If no revolutionary design can be done now, they need to differentiate from competitors by the price. Airbus is big enough to set up a large assembly line designed for big throughput. Than the scale effects would bring the costs down to a level, which kills similar aircrafts like the C-Series.
If Airbus (and Boeing) can keep the competitors small, they don’t need to do much to sell the bigger models.
Merluzeau didn’t mention if his forecasts are predicated on the current low oil prices or has he factored in a return to higher prices over a period of time. The recent massive orders of new aircraft and the launch of new models and derivatives are partly the result of very high oil prices until a couple of years ago.
The cost of replacing older thirsty aircraft was justified by the fuel savings of newer aircraft despite the significant capital cost of acquiring them.
Airlines are now keeping older aircraft in their fleet longer than they had planned a few years ago – the cost of extra fuel consumed at $50 a barrel doesn’t make a case for replacement.
I would have expected Merluzeau to offer several forecasts of aircraft demand for the next 15 years based upon various different oil price scenarios. It would involve a fair degree of crystal ball gazing but it is a necessary exercise given the huge impact oil prices can have on new aircraft sales.
StickShaker, my impressions is that commercial aviation has… stalled. And obviously oil prices have… tanked. But the cost of capital is likely to remain stable for the foreseeable future. Growth is so anemic throughout the world that it is indistinguishable from inflation, which remains fairly low. All this is happening in the context of Brexit, terrorism, unprecedented government and private debt burden, China’s economic slowdown and political unrest around the globe, to name a few indicators that we are heading towards difficult times for commercial aviation.
The Big Two are about to initiate a descent, but we don’t know what kind of landing awaits them. In the case of Airbus I expect a relatively smooth touchdown. As for Boeing they may go through some turbulences before landing, and my radar actually indicates a possibility of severe wind shear that could bring them down real fast. But as always the sky will clear up after the thunderstorm.
Chance, the gardener. 🙂
Carbon pricing, emissions and noise will ensure a lot of perfectly good aeroplanes are sent to the desert. The fact is, Cseries economies are not just in fuel savings, but a lot of operational enhancements. It may look evolutionary but it is in fact revolutionary. Still in the context of success, if BBD sells 3000 planes in 20 years that will be a HUGE success and it still will not make a huge dent in A and B..it will repesent over 5B/year in sales which is HUGE!…for BBD anyway.
A likely shooting war in the South China Sea (in the next five years) will make quick dogs’ breakfasts of this– and Airbus’s and Boeing’s—forecasts.
It was a thrill for me to read your post. Lots of food for thought there. I don’t want to refute anything you say, I just want to discuss it.
“If Boeing were to launch/deliver the NSA in that timeframe, surely MAX deliveries would start to slump much, much earlier than 2024/25.”
In 2025 the MAX will have EIS for about eight years. If no orders were taken in the interval, which admittedly is impossible, the backload would be completely depleted by then. My view of the situation is twofold. One aspect to consider is that orders for the 737 could stop abruptly for various reasons, and this happens all the time across the industry, the CRJ being a good example of that. The other aspect to consider is that it takes a very long time today, perhaps seven or eight years, to bring a new aircraft to market. What I am saying here is that the 737 backlog could be depleted before the first NSA is delivered. But I do recognize that it will never be the right time to launch the NSA. One way or another damage will be inflicted, and one day or another Boeing will have to bite the bullet. But the risk for Boeing is this: eviction from the narrowbody sector.
Now, if what you say about the MoM is true, that it would start “across the MAX-9 to 787-8 size category”, it would mean that Boeing is itself planning to abandon the narrowbody sector. Here I start with the premise that the MoM will be a twin-aisle, therefore a widebody. So if I get this right, and I am not sure I do, Boeing’s strategy is to skip the NSA to go directly to the MoM, which would be small enough to encompass the larger 737 variants, all the way up to the 767-300. I must admit that I find this proposition very interesting. It would be a bet on the assumption that the market will keep moving up. I find this prospect fascinating to contemplate.
I still have a technical objection though. Like you have mentioned in your post, there is a twilight zone between the largest narrowbody aircraft and the smallest widebody aircraft. My point has always been that any widebody aircraft designed to cover that zone would be too big at the lower end to be as efficient as the largest narrowbody, and perhaps also too small to be an efficient widebody, because in my judgement it would necessarily have to be a seven-abreast (2-3-2). But there are still many talented engineers left at Boeing that might prove me wrong.
A big narrowbody could be the inbetween IMO.
It is still a six-abreast, and I believe its capacity is not what Boeing has in mind, for it has “up to 230 seats”, just where the fun starts. That is why I said it had to be a seven-abreast (2-3-2).
That would be up to 288 seats single class.
The short range variants would have light wings, engines, wingbox, landing gears. Market potential justifies.
In my previous post I forgot to congratulate you for your list of firsts at Airbus. I have produced a similar list in the past, but yours is more complete. When Airbus introduced the forward-looking-crew concept in a widebody aircraft Boeing was quick to follow and modified the 767 accordingly, even though the cockpit had been designed with a flight engineer station in mind. This is immediately noticeable when we walk inside the 767 cockpit. If Boeing had applied the concept earlier in the design, say during the conceptual phase, they would have been able to add one more row of seats.
However, when Airbus introduced the fly-by-wire technology, and in the process got rid of the antiquated yoke, Boeing was so deeply humiliated as a corporation that they never acknowledged the breakthrough. Yet, many American pilots, especially the younger generation, swear by it. But at the time it was such an apparent leap into modernity that Boeing immediately went into denial, just like when one learn that a close relative has suddenly passed away. In this case the mourning process was in accepting the technical superiority of the Airbus design. This was simply inconceivable for Boeing, and that is why they took the ridiculous decision to retain the outdated yoke concept in the ultra-modern Dreamliner.
I can imagine how a Boeing engineer might feel when he happens to walk inside an Airbus cockpit. This fact alone is sufficient to explain why Boeing went so far and so wide in trying to implement avant-garde technologies in the 787: they simply wanted to regain technological supremacy. It didn’t work for the reasons we know, and the pair of control columns in the middle of the 787 cockpit stands as a monument dedicated to the inability of the Boeing crowd to acknowledge defeat. More importantly, it is a testament to the incapacity of the Americans to appreciate what other people can accomplish outside the United-States.
Thank you Normand, that list is really quite impressive, isn’t it?
I have often made it a sport trying to predict exactly what products companies come up with next. It has actually often been a very important part of my work trying to properly understand the competitors (for my own companies or for companies that I was consulting), as a correct prediction can make or break you next productline.
It appears that Airbus has done the same thing quite well, while Boeing might not have spend enough energy on this exercise. (Which is a behaviour you can often find in market leaders).
The pattern that I discovered in Airbus is that they come up with one big-step innovation on every new plane they make. Their rhythm is 5-10 years, so a new plane is due in just a few years from now.
Looking at Boeing I can not find a logic or rhythm in their product development after the 777.
I would really love to know who made the decision at Boeing not to switch to sidesticks. And who is responsible for the aluminum body of the 777X? These two grave mistakes are of course only minor compared to the almost unbelievable blunder of outsourcing pretty much the entire 787. But then, the half-clever 777X might cost Boeing dearly too.
Thinking a little more about this: Are they in denial here again, that the panel-construction of the A350 would have been the right solution for the 777X but they would not use it simply because it would break their hearts to copy a design that they had claimed inferior only a couple years ago?
I think it is very unwise not to copy the best ideas of your competitors – trying hard to avoid the workd “stupid”. Well, now I failed. 🙂
I think market definition is very weak in Boeing, they seem to take every operators comments 100% at face value and assume they can do everything. B787 is a good example, if they had replaced the 767-200 with a 787-8 that was a MOM, ie 250 pax 5000 mile, they could have gone on to a stretch and a larger wing which would have given the smaller version more range and a 787-9 that might not have had the range but would have killed the A330 line dead on economics. Instead they let some comments about more payload/range talk them into building too much aircraft, leaving space for the shorter ranged but much cheaper A330 line instead of taking all the business. I agree with Normand that a Boeing MOM now might well be an orphan and not recoup the cost. Then the initial B777 wasn’t a great success until Boeing figured out where the market really was and whoever decided to do the 747-8 with similar CASM to the 777-300ER?? A lot of Boeing’s problems aren’t in the engineering but in the customer relations and product definition phase of new aircraft.
Right Martin, that is exactly the problem here: drawing a strickt line between customers talk and their true future demand.
Many of the most successfull planes (and other products) have never been asked for by potential customers. They were no demand-pull, but technology-push. I think this is true for most of Airbus innovations, by the way.
It can be exptremely difficult though to differentiate between today’s blabla of your customers and their true future needs. One example: You customers will always ask for a lower price. But, if you present a product to them that is quite expensive but offers fantastic performance, they will buy it like crasy and will have surprisingly little difficulties to find the funds.
My impression is that Boeing is just making this mistake again. They may have proposed a much more expensive all-composite single-aisle plane to their customers but is was rejected only because of its price. But hey, that is probably exactly why you have to build it and once it shows its performance, exactly the same customers will buy it by the dozen.
I firmly believe a full-carbon large single-aisle is the next big thing. Leeham’s NSA is pretty much spot one I think:
It would certainly sit above the 737/A320 in terms of size and capabilities and leave its smaller brother enought room to breathe, similar to the A350 and A330neo setup.
For Boeing is would be more important to make such a plane, but I guess it will be Airbus again to take the initiative.
“B787 is a good example, if they had replaced the 767-200 with a 787-8 that was a MOM.”
That is indeed another example of poor portfolio planning. Why do we need a MoM today? Because Boeing decided to go for the long range concept and practically abandoned the idea of replacing the 767, even though that is what the 787 was all about. Clearly, something got lost in the translation. They were conscious of that and that’s why they wanted to do the 787-3. But like Airbus on the A350-800 they did not do their homework properly. Those are costly mistakes. At least Airbus still had the A330 to fall back on, but Boeing did not because the 767 was not up to the task. According to my own estimate this mistake is going to cost approximately 15 billions dollars to fix. And in the process Boeing may very well do its biggest mistake ever.
I bet the engineers in China who are developing the C919 are scratching their heads and asking themselves, “How can we possibly design this plane to be significantly better than the 737 or a320?” I don’t think they can, and that’s not because they aren’t good engineers, it’s just that the 737 and the a320 have been “perfected” over a long period of time and with a lot of development money. Given that, I think the Chinese are going to take their time with the c919, for it will not be – can not be – a world beater any time soon. If the c919 can service China and nearby countries well, then I think it’s done it’s job until something new comes along, or until Comac gets the know-how to internationalize the C919 (FAA Certs, world-wide support and everything).
However, the potential market is good for the C919….even if it is limited to China and surrounding countries for awhile. That’s still a lot of aircraft delivered. A lot of support infrastructure to build. A lot of experience gained…especially if they can become #1. I mean, being #1 in China is not like being #1 world-wide, but it’s a rock-solid foundation to build from.
“I bet the engineers in China who are developing the C919 are scratching their heads and asking themselves, “How can we possibly design this plane to be significantly better than the 737 or a320?” I don’t think they can, and that’s not because they aren’t good engineers, it’s just that the 737 and the a320 have been “perfected” over a long period of time and with a lot of development money.”
Sorry, but I don’t buy your theory Jimmy. But mine might not be better than yours, mind you. I don’t think the Chinese have the knowhow and experience required to design a modern jetliner. We must not underestimate what is required to get to the same level as Boeing. If Airbus were able to get there relatively quickly, it is because the company was built on the fondations of highly experienced companies like for example Aérospatiale, which was the new name for the same Sud-Aviation that had given us the elegant Caravelle that inspired the DC-9, and the superlative Concorde that still has no equivalent to this day.
Bombardier is another good example, perhaps a better one than Airbus because they came from nowhere. How did this Ski-Doo company come to produce, in less than 27 years, the best commercial aircraft in its category? Very simple: they bought their way into this exclusive club. First they acquired Canadair in 1986. This was a company that was trying to commercialize what was at the time the largest business jet in the world. Prior to that they had produced the CL-84 Dynavert, a tilt-wing V/STOL. And a few years before they had produced the CL-41 Tutor, the same jet trainer that the Snowbirds aerobatic team still flys today to the amazement of ground spectators. Canadair had been, for a long period of time after the war, by far the most profitable division of General Dynamics. Following this extraordinary transaction Bombardier acquired in 1989, against the will of Margaret Tatcher, Short Brothers, the oldest aircraft manufacturer in the world. They actually manufactured for the Wright Brothers the first outsourced aircraft in history. That was in 1908, exactly one hundred years before the launch of the C Series at Farnborough in 2008. Needless to say, without Shorts’s expertise there would be no C Series today. Then in 1992 Boeing wanted to get rid of de Havilland Canada, which had become a burden for this giant. Bombardier snatched it for a song and made it thrive again. Then Grumman Aerospace, which had produced the LEM for the Apollo programme, asked Chrysler, its owner at the time, for the authority to make an offer for the struggling Learjet line of aircraft, but they were denied this privilege and that’s when the Northern Vulture made a dive and snatched another aerospace jewel. These four companies now formed a conglomerate under the name of Bombardier Aerospace. The first decision taken by the new Canadair owners was to launch a stretched version of the Challenger, which made history by becoming the first regional jet.
All this to say that it is impossible today to start from scratch in aerospace. Like my old friend Isaac Newton once said, if I have seen further than other men it is because I was standing on the shoulders of giants.
“Boeing might not have spend enough energy on this exercise. (Which is a behaviour you can often find in market leaders).”
Market leaders try to create value for their shareholders, and in the process they slowly destroy the same company that brought them wealth. We see that not only at Boeing but across the entire industry, and it is driven by greed. Here is a fitting quote from Molière: Writing is like prostitution. First you do it for love, and then for a few close friends, and then for money.
“Looking at Boeing I can not find a logic or rhythm in their product development after the 777.”
Neither do I. But I think it started before the 777. Just look at the 757, there is nothing like it in the Boeing portfolio. Now, look at Airbus: from the A320 all the way up to the A380 it’s always the same aircraft, only bigger. The 757 doesn’t even look like a Boeing. Like the 737 it is a six-abreast, but it came after it and quickly disappeared. I am of the opinion that the 737 and 757 should have been a continuation of one another. But the way they were conceived they could not coexist and one had to go. This is a very good example of poorly conceived portfolio planning. The most laughable part of this farcical episode is that Boeing has always touted the 757 for its commonality with the 767. This is only true for technical details like common parts and similar systems, but the fundamentals are entirely different and the 757 has nothing to do with either the 737 or 767. But Boeing wants you to believe that they are almost the same aircraft. After all it’s a good selling point. But when I look at the 737, 757 and 767 I see a Kafkaesque concept. Like the characters in “Der Process” the Boeing engineers never seem to have a clear course of action. For all I know, the MoM may very well be another example of that.