Welcome back, Commercial Aviation Report

May 15, 2017, © Leeham Co.: Welcome back, Commercial Aviation Report.

Today Leeham Co. is re-launching the publication that became the foundation of an international publishing and conference company and which ultimately led to the creation of Leeham Co. and Leeham News and Comment.

Commercial Aviation Report, or CAR for short, was launched Oct. 1, 1989, by Scott Hamilton, Chris Kjelgaard and Bernard Tilbury. The bi-weekly newsletter evolved into a magazine and later the creation of a monthly, Commercial Aviation Value Report.

It’s conference unit, Commercial Aviation Events, became one of the top aviation conference organizers. CAE created the first commercial aviation conference in Eastern Europe, after the fall of the Iron Curtain; and the first commercial aviation conference in China.

CAR and CAE created the first aircraft valuation conference, an event focusing entirely on aircraft values, appraisals and related activities.

Kjelgaard left the company in 1991. Tilbury and Hamilton sold the company in 1999. Ownership changed twice more and the final owner, Reed Publishing (Flight International) folded the brand into the Flight name and operations in 2007.

The new Commercial Aviation Report will be a special report publication. CAR will focus on one topic for special, in-depth analysis and reporting.

The first issue today is a Focus on the Boeing 737-10, an airplane Boeing may launch as early as the Paris Air Show next month.

The second issue will be published next week. It is a preview of the Air Show, compiling what to look for from the airframe and engine OEMs at the show. In the past, Leeham News ran these previews as stand-alone posts, one after another in the weeks leading up to the Paris or Farnborough air show.

CAR will be an added benefit for paying subscribers, who will have access to the publications behind the paywall. Non-subscribers may purchase a copy. The price depends on the nature of the Focus report.

16 Comments on “Welcome back, Commercial Aviation Report

  1. Congratulations, good luck putting in the analyses and added value to make it successful!

  2. “The first issue today is a Focus on the Boeing 737-10, an airplane Boeing may launch as early as the Paris Air Show next month.”

    I think United is very important here. As one of the two substantial 737-9 customers and premier 737-10 / MoM candidate.

    No doubt they are discussing a Leahy A321 LOI with Mc Allister. Made in USA, first aircraft in 2 years, with a choice of 2 proven engines. May the best win, or both. Worked for AA.

    • Keesje -wasn’t AA’s selection of two OEMs driven solely by early availability of only one (perhaps supplemented by an irresistible price for the other, later)? D’you see the same rationale or mechanisms at work here?

      • I think that’s what the official story was, but the split is far from 50/50. AA got less than 4 weeks between getting an RFI and signing the deal for an undefined MAX. They had no choice, AA took them by surprise.

        • Keesje – forgive me, you mean BA had less than four weeks – yes?

    • If UA was concerned about getting the A321 on its property, they would have bought it much earlier. Also, there’s no evidence that they’re discussing a letter of intent. UA does however seem to be a good candidate for the MOM and/or the 737-10.

    • I’m curious what Boeing reads from Delta upping their A321 order by 30 to a total plan of 112. And these are CEOs. Surely they are ‘opportunistically’ priced, since that is part of DL’s strategy.

      But a look at recent utilization of some of DLs 321s show lots of one to 2.5 hour sectors, where cutting edge fuel savings aren’t the key to profitability.

      Delta has bought plenty of 739s, so they are familiar with the economics there, but would a Max10 make sense mixed in with 739s, A321s and potentially Max9s and 321neos?

      Lots to consider there.

      • Hello RaflW,

        According to this quote from the Delta press release at the link immediately following the quote, Delta has been buying A321’s to replace MD88’s.

        “The Airbus A320 family of aircraft continues to be a cost-efficient, reliable and customer-pleasing mainstay of our narrowbody fleet,” said Ed Bastian, Delta’s incoming chief executive. “The order for the A321s is an opportunistic fleet move that enables us to produce strong returns and cost-effectively accelerate the retirement of Delta’s 116 MD-88s in a capital efficient manner.”


        When I first read the above press release, I thought maybe Delta was putting out misinformation to confuse competitors, or that some Delta executives thought that it would be a good laugh to put out an obviously absurd story about replacing 149 seat aircraft with aircraft configured for 192 seats, and then watch as analysts and people who post on websites like this one, tried to come up with explanations for doing something so absurd. I am now convinced it was the truth, since, as you point out, the A321’s have been flying routes that are more MD 88 like than 757 or 737-900ER like, and were apparently ordered in a low range configuration.

        Here are the ranges stated for A321’s , MD88’s and 737-900ER’s, as ordered and configured by Delta, on Delta’s fleet page.

        737-900ER: 2,870 miles.
        A321: 2,565 miles.
        MD88: 1,370 miles.

        Comparing the stated ranges in miles to the values stated in kilometers, it appears that the mile ranges are stated in statue miles.

        See the links below for the source for this data.




        For comparison , the ranges stated on the same webpage for the various sub-types in Delta’s 757 fleet range from 3,228 miles (75Y = 757-300) to 4,705 miles (75S = International and Premium Domestic 757-200 with lie flat seats). Unless somebody checked the completely wrong box in the optional fuel tanks section of the A321 order form, it is pretty clear that to date, Delta hasn’t been thinking across the board 757 replacement when ordering A321’s. Could it be the case that some airlines ordering 200 seat aircraft, or even 200 to 300 seat aircraft, are looking, at least for a portion of their orders, for something to cover busy short routes and medium haul routes, and might regard aircraft with trans-Atlantic fuel capacity as too much plane for their needs?

        In contrast to the press release about Delta adding more A321’s to drastically up-gauge from MD88’s, Delta’s press release about its original 737-900ER order, from an earlier time when down-gauge and/or capacity neutral was the fad, declares prominently and proudly that Delta’s purchase of 737-900ER’s to replace both larger (767-300), smaller (A320), and roughly similar size aircraft (757’s) will be capacity neutral. Note that it is stated that the 737-900ER’s have enough range to “operate on any domestic route offered by Delta”, and that the range stated is different from the one stated on Delta’s fleet web page.

        “ATLANTA, Aug. 25, 2011 /PRNewswire/ — Delta Air Lines (NYSE: DAL) today announced plans to purchase 100 Boeing 737-900ER aircraft for delivery between 2013 and 2018 as it retires older mainline jets and upgrades its fleet.

        The order will enable Delta to add 100 fuel-efficient, state-of-the-art 180-seat aircraft to its fleet, replacing on a capacity-neutral basis older technology aircraft that will be retired from the fleet. The new aircraft will improve the company’s profitability while providing customers with an industry-leading on-board experience. With a range of 3,200 nautical miles, the Boeing 737-900ER can operate on any domestic route offered by Delta.

        As a result of maintenance efficiencies and a 15 to 20 percent improvement in fuel consumption per seat, the Boeing 737-900ER will have lower unit costs than the older technology Boeing 757 and 767 and Airbus A320 aircraft that it will replace. The aircraft will be equipped with CFM56-7B engines produced by CFM International, a joint venture of General Electric Co. of the U.S. and Snecma of France.”

        The above quote is from the following link.


        Six years after the above press release, the domestic 767-300’s are almost gone, some older 757’s are gone, the standard non-premium domestic configuration for remaining 757’s has been up-gauged from the same 180 seat capacity of the 737-900ER’s to 199 seats, and older A320’s are just starting to be retired (these are among Delta’s oldest narrow bodies). If and when a Delta 737-900ER replaces a Delta A320, a 150 to 157 seat aircraft is being replaced with a 180 seat aircraft.

        • Luckely we do have payload range graph available with a321 and 737-900ER. Some times people give max ranges at max payload, without mentioning the A321 an carry 5t more. Handy specially for moving AKH containers and pallets. Or ignore the fact the 737NG simply has bigger fuel tanks, compensation its higher sfc CFM56’s.

          It’s not so much that what is stated is incorrect, it’s what is left out to create perceptions.

      • Hello RaflW,

        As usual, my posts are just the speculations of an armchair airline executive. I don’t claim to know what Delta management is thinking; however, I have observed that Delta is very aggressive about matching aircraft size to the expected number of seats sold, not only by route, but also by time of day and day of the week on the same route. Suppose that you want to fly from Atlanta to Salt Lake City, leaving Salt Lake around 11 AM. What type of plane would you be on at Delta? According to Delta’s schedule the answer for 5-1-17 to 6-15-17 is either an A320, a 737-900ER, an A321, a 757-200, or a 757-300, which is a seating capacity range of about 150 to 234. Day of week codes go from 1 for Monday to 7 for Sunday.

        Jun-12 – ATL 11:00am SLC 12:57pm 1 2 3 4 – – – DL1802 320 0 3h 57m
        May-27 May-28 ATL 11:05am SLC 1:03pm 6 7 DL1802 753 0 3h 58m
        May-6 May-20 ATL 11:05am SLC 1:04pm -6 – DL1802 321 0 3h 59m
        Jun-3 – ATL 11:05am SLC 1:04pm – – – – – 6 – DL1802 321 0 3h 59m
        May-24 ATL 11:05am SLC 1:06pm 1 2 3 4 5 – 7 DL1802 757 0 4h 01m
        May-26 Jun-2 ATL 11:05am SLC 1:06pm – 2 3 4 5 -DL1802 757 0 4h 01m
        Jun-4 Jun-11 ATL 11:05am SLC 1:06pm 1 2 3 4 5 – 7 DL1802 757 0 4h 01m
        May-25 May-29 ATL 11:05am SLC 1:07pm 1 – – 4 -DL1802 739 0 4h 02m

        If you would instead like to fly the same route at about 8 AM, you will be on a 767-300 with 261 seats. The 8 AM 767-300 increases the seat capacity range used by Delta on this route to 150 to 261.

        May-6 May-27 ATL 8:10am SLC 10:13am – – 6 – DL1105 763 0 4h 03m
        May-28 Jun-3 ATL 8:10am SLC 10:13am – – 6 7 DL1105 763 0 4h 03m
        Jun-10 – ATL 8:10am SLC 10:13am – – – – – 6 – DL1105 763 0 4h 03m
        May-26 ATL 8:10am SLC 10:15am 1 2 3 4 5 – 7 DL1105 763 0 4h 05m
        May-29 Jun-11 ATL 8:10am SLC 10:15am 1 2 3 4 5 -7 DL1105 763 0 4h 05m
        Jun-12 – ATL 8:28am SLC 10:30am 1 2 3 4 – – – DL1105 763 0 4h 02m

        A possible answer to your query “would a Max10 make sense mixed in with 739s, A321s and potentially Max9s and 321neos?”, acccording to the mind of Delta, might be as follows.

        739 (180 seats) – Good plane for days and routes, and times of day, when you typically sell significantly more than 16o seats (738) but probably won’t sell more than 180.
        MAX9 – Same as 739, as long as you can get it at rock bottom prices.
        A321(192 seats) – Good for days and routes, and times of day, when you typically sell more than 180 seats but don’t have much chance of getting near 234 (757-300).
        A321 neo – Same as A321, as long as you can get it at rock bottom prices.
        MAX 10 – (Probably 192 seats for Delta? 739 plus 2 rows of economy?) – Potentially a good plane for days and routes, and times of day, where you sometimes sell more than 180 seats, but don’t do so consistently enough to justify committing to a larger aircraft with trip costs significantly higher than a 739 for that day, route, and time of day.

        I assume that a full A321 with 192 people on board will make more money than a full 739 with 180 people on board; however, if you only sell 180 tickets for a flight. which will make more money operating that flight? An A321 or a 739?

  3. Pundit,

    I assume you are referring to American’s split between 737’s and A32X’s. Do you have some source for the theory you are suggesting for the reason for AA splitting their order, or is it just what you surmise may be true? Myself, I have no inside knowledge of what AA management was or is thinking, I can only speculate from the outside looking in.

    The following information is from Wikipedia’s page on the AA fleet.

    A319-100, 125 in fleet with 128 seats (8F, 18 MCE, 102Y)
    A320-200, 48 in fleet with 150 seats (12F, 138 Y). Five to be retired in 2017.
    A321-200, 211 in fleet and 8 on order, with 102, 181, or 187 seats.
    A321 neo – 100 on order, seating TBA.
    737-800, 291 in fleet, 13 on order, 160 seats (16 F, 30 MCE, 114 Y)
    737 MAX 8, 1oo on order, 172 seats (16 F, 36 MCE, 120 Y).

    Seems to me that having a 304 737-800’s in service or on order, vs. 219 A321-2000’s in service or on order, and an even split on A321 neo vs. 737-8 orders is suggestive of AA having made a positive decision that 737-800’s or Max 8’s were a good fit for some subset of their routes, instead of just having been stuck with them at a certain point in time due to availability concerns.

    It seems to me that a plausible alternative to the theory you are suggesting as to the reason AA has ordered both 737-800’s and A321’s, might be that they saw a need in their fleet for both an approximately 16o seat aircraft and an approximately 180 seat aircraft, and the 737-800 looked like a good choice for the former, while the A321 looked like a good choice for the later. When your sub-fleets of aircraft types run from 200 to 300 aircraft in size, I don’t think mixing and matching types is necessarily a big concern.

    On a more or less entirely different subject, I thought it was interesting to note that AA will be increasing seating from 160 seats on their 737-800’s, to 172 seats on their 737-8’s. Would 172 seats be possible on a A320 in a similar class mix? Does this suggest that AA’s 321 neo’s will see their seating increase from 181 or 187 to something around 200 in non-premium configurations? I wonder how trip and per seat mile costs for a 181 or 187 seat AA A321 would compare with the following 737-900ER configurations used by some other US airlines.

    Alaska: 178 seats (16 F, 24 Y+, 138 Y).
    Delta : 180 seats (20 F, 21 E+, 139 E)
    United: 179 seats (20 F, 42 E+, 117 Y) 0r (20F, 39 E+, 130 E)

    Does an A321 beat a 737-900ER on CASM if it is fitted with only 2 or 3 more seats than a 737-900ER? I know you can put more seats in A321 in a FC/ E+/E configuration than AA does, for instance, Delta uses 192 seats split 20 F, 29 E+, 143 E), what I am wondering about is how many more seats you need to have on an A321 than on a 737-900ER in order to make the A321’s CASM lower.

    According to Wikipedia the 737-900ER has 24,00o to 27,000 pound thrust engines vs. 30,000 to 33,000 pounds for the A321, i.e. engine thrust is about 20% higher for the A321. Is it too simple minded to expect that this would imply that an A321 would have to carry 20% more passengers than a 737-900ER in order to have the same fuel consumption per seat?

    • Do you think it is possible that AA made it a long term strategy to have both Boeing and Airbus aircraft in substantial numbers in their fleet. That way neither supplier could bid higher for a new contract simply because AA would find it costly to introduce the other supplier into the fleet.

      This way AA can choose either supplier with no significant introduction costs.

      • Hello Robert W.

        Good point. I think you may be correct that the US majors, who often have 100 or even hundreds of aircraft per type, see advantages to splitting orders among manufacturers when the decision between their offerings is close, in order to keep manufactures sufficiently insecure about getting orders to offer their lowest pricing.

        For smaller airlines with less than 100 aircraft in their fleet, it may instead be better to pick a manufacturer or even a single type to be married to. The cost savings potentially obtained by shopping around or closely matching aircraft to route, might not offset the added costs of having multiple subfleets of only a few dozen aircraft.

    • I’ll answer my own question.

      Q: Is it too simple minded to expect that this would imply that an A321 would have to carry 20% more passengers than a 737-900ER in order to have the same fuel consumption per seat?

      A: I’ve been doing some reading trying to answer my question, and it appears that this is too simple minded. Assuming that fuel consumption will scale linearly with engine thrust doesn’t seem to give answers that agree well with a few different analyses that I have read from sources that I think are credible.

      I have to admit that I don’t understand why this doesn’t seem to work. It does work fairly well for some single engine piston light planes that I am familiar with, which is admittedly a quite different technology.

      Piper Comanche 250 vs. 180.
      Ratio of horsepower: 250/180 = 1.39
      Ratio of fuel consumption in gph at 75% power: 14/10 = 1.40

      Beechcraft Bonanza S35 vs. P35
      Ratio of horsepower: 285/260 = 1.10
      Ratio of fuel consumption in gph at 75% power: 15.3/13.8 = 1.11

      • “According to Wikipedia the 737-900ER has 24,00o to 27,000 pound thrust engines vs. 30,000 to 33,000 pounds for the A321, i.e. engine thrust is about 20% higher for the A321. Is it too simple minded to expect that this would imply that an A321 would have to carry 20% more passengers than a 737-900ER in order to have the same fuel consumption per seat?”

        Take into account an A321 can carry more 2-3 rows of seats than a -900 plus 3t of freight from shorter runways, more silently. Its engines are not only larger but have lower sfc and noise levels because of higher BPR’s.

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