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Introduction
As Brazil’s budget airline GOL reportedly evaluates whether to acquire 20 Boeing 737-7s or Embraer E-195 E2s, the principal of the “CASM Paradigm” is a concept worth examining.
This head-to-head evaluation of the E-195 E2 and the 737-7 MAX is a rarity. Typically the head-to-head involves the Bombardier CS300 and the Airbus A319neo. All three have the same seating capacities. The E-195 E2 has slightly fewer passengers than the 737-7 with similar seat pitch.
The competition is also what might be seen as a contrary competition. Airframers agree: the airline industry is upgauging. Capacity discipline, long elusive until after the global financial collapse of 2008, has been driving load factors higher. But lowering unit costs, or the Cost per Available Seat Miles (CASM) has long been the principal measure by which airlines, OEMs and aerospace analysts measure efficiency.
Although Trip Costs of aircraft operating over a route is important, the trend toward upgauging at all levels clearly is the driving force.
Figure 1. It’s an age-old debate: the cost per available seat mile (CASM) vs trip cost. CASM typically wins, and the airline industry is migrating toward larger aircraft. Embraer, not surprisingly, thinks this has gone too far. Graphic: Embraer, reprinted with permission. Click on image to enlarge.
Embraer takes a different view, arguing that trip costs and a smaller airplane should trump the CASM obsession. A smaller airplane will mean higher yields, EMB says. A larger airplane provides lower trip costs but drives yield lower.
We visited Embraer’s headquarters earlier this month and received a full briefing on what EMB calls the CASM Paradigm. In our report today, we detail the presentation and discuss other considerations beside CASM vs Trip Costs that drive the size of the aircraft acquired.
Summary
- The CASM Paradigm becomes a vicious, circular cycle, driving airlines to larger aircraft but lower yields.
- Extra seats on larger aircraft mean lower unit costs but at the cost of profits.
- Scope Clauses remain an issue in the US.
- Connecting traffic, pay scales also are issues.
- We analyze the operating costs of the E-195 E2 vs the 737-7.
- We discuss the GOL competition.
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Odds and Ends: 787 donation; Alenia sues Bombardier over CSeries; 2016 777 delivery slots opening up
787 donation: The Boeing Co. handed over 787 test airplane #3 (ZA003) to the Museum of Flight Saturday in an elaborate ceremony marking an unprecedented donation of a modern airliner to an aviation museum.
Boeing 787 ZA003, which went on a world sales tour, was donated to Seattle’s Museum of Flight Nov. 8, 2014. The logos of customers bracket the #2 door. Photo by Leeham News and Comment. click to enlage.
To be sure, the donation was made possible by the fact that ZA003 (and 002 and 001) can’t be sold due to the massive rework necessary, and these three airplanes have been written off for more than $2bn. But this doesn’t make the event any less significant.
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12 Comments
Posted on November 9, 2014 by Scott Hamilton
Alaska Airlines, American Airlines, Boeing, Bombardier, CSeries, Douglas Aircraft Co, GE Aviation, Leeham News and Comment, Rolls-Royce
707, 727, 737, 747, 787, Air Force One, Air India. 777, Alenia, Boeing, Boeing 40A, Bombardier, Concorde, CSeries, DC-3, Douglas, GE Aviation, GEnx, Lockheed Constellation, Museum of Flight, Rolls-Royce, Shen, Trent 1000, ZA001, ZA002, ZA003
Fundamentals of airliner performance, Part 1
By Bjorn Fehrm
As part of our premium content we provide a briefer form of our airliner performance analysis than we provide to our consulting clients. As we present this material, we presume a lot of knowledge on the part of the reader on the definitions we use and how these are employed. We thought it would be appropriate to give an easy-to-digest clinic on some of these definitions and concepts that we are using. Aired at the same time when we run our analysis series, we thereby present the background to our different analysis steps and some of the key parameters that influence these.
We will fly this aircraft in the latest MAX 8 version on a typical short haul mission of 2.5 block hours covering a distance of 1,000 nautical miles. Starting from the cruise we will explain the factors that determine the performance of the aircraft and how we can estimate their influence. As we present the real values for the performance for the aircraft, we can also give the background to the different characteristics that contribute to the overall efficiency of the aircraft. Read more
10 Comments
Posted on November 4, 2014 by Bjorn Fehrm
Airbus, Airlines, Boeing, Leeham Co., Leeham News and Comment
737, 737 MAX, 777X, A320, A320NEO, Airbus, Boeing
Part 3: Boeing 757 replacement: 757 and Airbus A321neoLR versus clean sheet designs.
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By Bjorn Fehrm
Part 3 of 3
Introduction
In Part 2 of our three-part 757 Replacement analysis, we took a close look at Airbus’ new 97 tonne take-off weight A321neo, revealed in a world exclusive by
Leeham News and Comment October 21. We analyzed the A321neoLR’s capabilities and limitations when compared to Boeing 757-200W and we saw that it could do the international flights that the 757-200 does with about 25% better efficiency. In this final Part 3, we will now compare the 757 and A321neoLR against what can be Boeing’s reaction, a clean sheet New Single Aisle, NSA, or New Light Twin Aisle, (NLT). First the conclusions from Part 2:
Summary
For Part 3 we can summarize:
Figure 1. Fuselage cross sections of our models of NSA and NLT. Source: Leeham Co.
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5 Comments
Posted on October 28, 2014 by Bjorn Fehrm
Airbus, Airlines, Boeing, CFM, China, Comac, CSeries, Embraer, GE Aviation, Irkut, Leeham Co., Leeham News and Comment, Pratt & Whitney, Premium, Rolls-Royce, Uncategorized
737, 737 MAX, A320, A320NEO, Airbus, Boeing, Bombardier, CFM, Comac, CSeries, Embraer, GTF, Pratt & Whitney, Rolls-Royce
CASM Paradigm: Lower Seat Mile Cost or Higher Yield; Evaluating the GOL competition
Subscription Required
Introduction
As Brazil’s budget airline GOL reportedly evaluates whether to acquire 20 Boeing 737-7s or Embraer E-195 E2s, the principal of the “CASM Paradigm” is a concept worth examining.
The competition is also what might be seen as a contrary competition. Airframers agree: the airline industry is upgauging. Capacity discipline, long elusive until after the global financial collapse of 2008, has been driving load factors higher. But lowering unit costs, or the Cost per Available Seat Miles (CASM) has long been the principal measure by which airlines, OEMs and aerospace analysts measure efficiency.
Although Trip Costs of aircraft operating over a route is important, the trend toward upgauging at all levels clearly is the driving force.
Figure 1. It’s an age-old debate: the cost per available seat mile (CASM) vs trip cost. CASM typically wins, and the airline industry is migrating toward larger aircraft. Embraer, not surprisingly, thinks this has gone too far. Graphic: Embraer, reprinted with permission. Click on image to enlarge.
Embraer takes a different view, arguing that trip costs and a smaller airplane should trump the CASM obsession. A smaller airplane will mean higher yields, EMB says. A larger airplane provides lower trip costs but drives yield lower.
We visited Embraer’s headquarters earlier this month and received a full briefing on what EMB calls the CASM Paradigm. In our report today, we detail the presentation and discuss other considerations beside CASM vs Trip Costs that drive the size of the aircraft acquired.
Summary
Read more
2 Comments
Posted on October 26, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, CFM, CSeries, Embraer, Leeham News and Comment, Pratt & Whitney, Premium
737, 737-7, 737-700, A320, Airbus, airlines, Boeing, Bombardier, CFM, CSeries, E-195 E2, Embraer, GOL, Pratt & Whitney, Southwest Airlines, WestJet
Exclusive: Airbus launches “A321neoLR” long range to replace 757-200W
Airbus has started marketing a long-range, higher gross weight version of the A321neo that it says will have 100nm more range than the Boeing 757-200W used on long range, trans-Atlantic routes, Leeham News and Comment has confirmed.
We learned three weeks ago Airbus was working on what we will call the A321neoLR (Long Range); Airbus doesn’t yet have a name for it, but began showing the details to airlines a week ago. The airplane is a higher gross weight aircraft, at 97 tonnes, and will have three auxiliary fuel tanks. With most long-range 757 configurations around 169 seats (United Airlines), the A321neoLR will have 164 seats, a slight loss, with 20 lie-flat business seats and the remainder in coach configuration.
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110 Comments
Posted on October 21, 2014 by Scott Hamilton
Airbus, Boeing, Leeham News and Comment
757-200W, A321neo Long Range, A321neoLR, Airbus, Boeing, Kiran Rao, Leeham News and Comment
Leeham News undergoing maintenance Tuesday night/Wednesday morning
We’ll be off line for a few hours overnight Tuesday/Wednesday morning. We should be back on line Wednesday morning at 5am Pacific (Seattle) time.
As we migrate to a new host, there will be a few days to transfer all the Notifications you have signed up to receive, since this transfer has to be done manually.
2 Comments
Posted on October 13, 2014 by Scott Hamilton
Leeham News and Comment
Leeham News and Comment
Odds and Ends: Boeing firms 52/mo for 737; Product strategy; Aircraft demand and production rates
Boeing firms 52/mo for 737: Boeing this morning announced what we reported in June 2013: that it will go to a production rate of 52/mo for the 737 in 2018. This will not be the last rate increase for the 737.
Airbus previously notified suppliers to be prepared for a rate of 54/mo in 2018 for the A320, which we reported some time ago.
Product strategy: In the continuing tit-for-tat in product strategy debate between Airbus and Boeing, often show slides representing their view of how their products line up vs The Other Guy. We’ve often criticized Boeing for taking liberties with how it views Airbus seat; for example, Boeing assigned fewer than 350 seats to the A350-1000, while Airbus now promotes the airplane as having 369 seats in a J/Y class configuration. Boeing assigns 467 seats to its 747-8I while Airbus to now viewed the 747-8 at 405 seats, a figure we generally use in our analysis to represent typical airline configuration.
Airbus recently showed the following slide presenting its current view of the product line up.
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12 Comments
Posted on October 2, 2014 by Scott Hamilton
Airbus, Boeing, Leeham News and Comment
737, 747-8I, 777-300ER, 777X, A320, A350, A380, Airbus, Boeing, UBS
Odds and Ends: Coming soon–new Leeham News; Boeing v SPEEA; 86-seat Q400; Boeing 326; Budapest Air Show
Coming soon: We will be rolling out changes this month to Leeham News and Comment. We will expand our News and Analysis, providing the most insightful commentary of aviation issues of any on-line publication. Most on-line news resources either collate into one portal news from around the world, or report news without analysis, or offer superficial analysis. We’re famous (or infamous, depending on your viewpoint) for providing insight in a no-BS manner.
We often report the news before anyone else, and we spot market trends long before others.
For example:
These changes include transformation into a combination paid and free content site. We’ll have paid content several times a week in addition to our free content.
Changes are coming to Leeham News and Comment this month. Watch this space for details.
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31 Comments
Posted on September 30, 2014 by Scott Hamilton
Airbus, Boeing, Bombardier, IAM 751, International Association of Machinists, Leeham News and Comment, SPEEA
777 Classic, 777X, A330neo, A350-1000, Boeing, Boeing 314, Boeing 326, Bombardier, Budapest Air Show, IAM 751, International Association of Machinists, Leeham News and Comment, Q400, Q400 Combi, SPEEA
GE analysis post Farnborough
Our wrap up of Farnborough would be incomplete without looking closer at the world’s leading engine supplier, GE Aviation, which together with partners (like SAFRAN in CFM joint venture) garnered more than $36 Billion in orders and commitments during the show. This figure was only significantly bettered by Airbus ($75 Billion) and it came close to Boeing’s $40 Billion. With such level of business the claim by GE Aviation CEO, David Joyce, that the Airbus A330neo engine business was not the right thing for GE as they have more business than then they know what to do with, was certainly no case of “sour grapes”. Read more
68 Comments
Posted on July 28, 2014 by Bjorn Fehrm
Airbus, Airlines, Boeing, Bombardier, CFM, Comac, CSeries, Embraer, Farnborough Air Show, GE Aviation, Leeham News and Comment, Pratt & Whitney, Rolls-Royce, Uncategorized
737 MAX, 777, 777-300ER, 777X, 787, A320NEO, A330neo, Airbus, Boeing, Bombardier, CFM, Embraer, Pratt & Whitney, Rolls-Royce
Airbus A330-800 and -900neo, first analysis
Airbus cleared the air about the A330neo, which we concluded was a must last December, and made the 2014 Farnborough Airshow go off to an exciting start. A lot has been speculated about the A330neo, and in the end it did come out a bit stronger than what most had anticipated. Some of that is marketing but a lot is real, and here we give a first assessment of what was launched.
Let’s start with the specifics as given by Airbus and Rolls-Royce today in presentations and discussions. Here are the A330-800neo and -900neo’s main features: Read more
69 Comments
Posted on July 14, 2014 by Bjorn Fehrm
Airbus, Airlines, Boeing, EADS, Farnborough Air Show, Leeham News and Comment, Rolls-Royce, Uncategorized
777X, 787, A330, A330neo, A350, Airbus, Boeing, Rolls-Royce
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