Sept. 6, 2022, © Leeham News: Will Europe’s airport passenger caps ultimately save the Boeing 777X?
It may be purely speculative, but Boeing may well be on the verge of being lucky.
Amsterdam and London Heathrow imposed daily caps of 67,000 and 100,000 passengers, respectively. Other airports considered following suit. The caps were imposed because airport operations were melting down. Short staffing across several professions, including passport control, was blamed.
The short-staffing no doubt will be rectified eventually. But some industry observers speculate that the European Union may decide to impose flight capacity restrictions as one way to reduce aviation emissions. This, some think, might result in a sales boost for the slow-selling 777X.
There are about three dozen orders for the 777-8 passenger model. There are about six dozen orders for the 777-8F, some of which haven’t been firmed up yet. Boeing lists 341 firm orders for all models of the X on its website. ASC 606 adjustments are not subtracted from this figure. (There are 85 orders for the 777 Classic freighter, unadjusted for ASC 606.)
Some key industry officials, including the executive chairman of Air Lease Corp, Steve Udvar-Hazy, doubt the 777-8P will be built, and perhaps the entire program is at risk. LNA doesn’t doubt that the program, including the -8P, will go forward. But we don’t see the demand matching Boeing’s public statements of upward of 1,000 aircraft. LNA long ago concluded the future for the program rests with the 777XF.
To use a double entendre, the changing environment might just be the program’s savior. Although today’s airport caps at Amsterdam and Heathrow are on passengers, once workforce staffing returns to normal, some believe the cap on passengers will be lifted. Instead, caps on airplane operations might be stifled as a means of forcefully reducing carbon emissions at airports. This means bigger airplanes like the 777-9 and the Airbus A350-1000 might be in more demand. Airbus has fewer than 200 orders remaining for the -1000.
This means that to accommodate passenger demand, larger airplanes will be needed. This, of course, was the business case for the Airbus A380 in 2000. More capable twin-aisle, long-range airplanes like the Boeing 777-300ER, Boeing 787, Airbus A350, and Airbus 330neo undermined the business case for the A380. The 787, A350 (now with Ultra Long Range options), and even the re-engined Airbus A321LR/XLR and Boeing 737-8 MAX have long-range capabilities that undermined the 777X business case. The 777X business case depends in not an insignificant way on the hub-and-spoke business model. The aforementioned aircraft allow bypassing one hub, operating as a spoke airplane.
Ironically, airport flight capacity caps were the very business model on which the Airbus A380 was based.
The Dutch government announced in July it wants to impose a reduce annual cap on flights at Schiphol from 2023: 440k vs around 500k, a 20% reduction. KLM is obviously fighting back and it is in the hand of the courts now. Keeping the cap will not only help the A350-1000 and 777X, but further screw regional aircraft in favor of larger single-aisles like the A321neo and Boeing 737-10 MAX. If anything, the single-aisle up-gauging is a more powerful phenomenon than the smaller twin-aisle.