March 9, 2017, © Leeham Co.: Proceeding with a New Mid-range Airplane (NMA) is “an important step for Boeing,” says the CEO of one of the world’s preeminent leasing companies. On the other hand, Airbus probably is covered in the Middle of the Market sector.
John Plueger, CEO of Air Lease Corp, agrees with Airbus claims that it has the MOM sector covered.
“From Airbus’ perspective, I think that’s true,” he said in an interview with LNC during the ISTAT annual general meeting in San Diego this week. “I don’t think they feel they have a gap. They’re quite happy with the A321neo. The success of that airplane speaks for itself. They’ve got the A330neo. It would be very easy for them to just do a lighter weight version of the A330neo and whack $7m to $10m off the price of that airplane to compete.
“The question is whether operators will need the range of the neo in that equation,” he said.
“I also think…they are looking at modifying the wing for the A321 possibly even a new wing, which could increase the performance capability of that airplane significantly. For the Airbus product line, I would agree, I don’t think there is a need.”
Plueger was not as sanguine about Boeing.
“For the Boeing product line, I think there is a gap. It’s probably fair [to say the Boeing gap is from the 737-8 to the 787-9].”
Does Boeing have to do the NMA?
“I think it’s an important step for Boeing. The issue is one of cost. With all the talk about NMA, what is really boils down to is price,” he said. “That will determine whether the airplane sells 5,000 units, or 3,000 or whatever. That’s something the engine manufacturers have to know pretty shortly.
“I think the whole effort can be produced at a point that makes sense.”
Plueger believes a potential market for the NMA is the Low Cost Carrier and Ultra LCC sector. Norwegian Air Shuttle and AirAsiaX already are using Boeing 787s and Airbus A330s for long-haul LCC service. Legacy airlines are planning their own LCCs to compete. Others, including Norwegian and Lion Air, are experimenting with long haul, single-aisle service with the forthcoming Boeing 737-8 and Airbus A321neo.
“The LCC’s have to have ultra-low pricing or it will not compete with what they already have on 788/9 or A338/9 or A321/B738,” Plueger said.
“The next step will be for LCCs and ULCCs. It’s probably too expensive at this time, but when you stop and think about it, those carriers tend to be constantly up-gauging in size. They’ve gone to the A321neo. “If they could get it cheap enough, which I question, it’s not just the legacy carriers, but there’s an opportunity for the LCCs. For the first time, they would enter a small twin-aisle.
“There’s a lot of work to be done, but if you look out 10-15 years, you could see a type that could be a game-changer in the LCC space. Again, only if it is priced aggressively.”