Better to bring capacity back with a 777X or 777-300ER

Subscription Required By Vincent Valery Introduction   April 30, 2020, © Leeham News: The travel restrictions implemented in the aftermath of the COVID-19 outbreak lead to an unprecedented collapse in global passenger traffic. These travel restrictions should remain in place until a COVID-19 vaccine becomes available for the wider population. Combined with the economic effects of the various social distancing measures, travel demand will remain depressed for a substantial period. Leeham Co. predicts that it will take four to eight years before traffic returns to 2019 levels.
Boeing 777-9 on the way to what was hoped to be its first flight Jan. 24. As an experimental flight, the airplane had to take off north with a tailwind. The wind throughout the day exceeded the safe level. The flight was scrubbed. The airplane instead took to the sky the following day. Photo by Scott Hamilton.

Boeing 777-9 on the way to what was hoped to be its first flight Jan. 24. Photo by Scott Hamilton.

Airlines grounded a large number of aircraft due to the collapse in passenger demand. As a result, there will be plenty of aircraft in long-term storage available for lease or purchase at discounted prices once demand recovers. These aircraft will compete against those coming off the assembly line. The 777-9 is planned to enter service in 2021 at the earliest. Apart from Lufthansa, all the airlines that ordered the 777X are 777-300ER operators. Once traffic bounces back, they will have to ponder whether they are better off keeping (or sourcing) older 777-300ERs or take deliveries of 777-9s as scheduled. In this article series, we will compare the economics of the 777-300ER with the 777-9 on the world’s busiest intercontinental route.
Summary
  • Depressed demand brings airlines to the brink;
  • Near-terminal wounds to heal once demand recovers;
  • A perfect storm for new (large and expensive) aircraft;
  • Peculiarities of operating on the busiest intercontinental route.

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