Leeham News and Analysis
There's more to real news than a news release.
American easing away from continuous hubbing, returning to peak banking
American Airlines will ease away from the continuous hubbing that smooths operations at key airports, increases aircraft utilization and cuts costs as it returns to the peak-and-valley hub-and-spoke system adopted decades ago under former CEO Robert Crandall.
Although this will mean higher costs and big gaps in airport activity, the increased revenue potential–called the power of the hub under Crandall–will offset the increased costs, says Derek Kerr, CFO of American.
We were at American’s Leadership Council meeting for 1,500 employees yesterday. The meeting itself was off the record but we talked with Kerr afterwards on the record.
Kerr, CFO at US Airways prior to the merger between AA and US, said that the continuous hub can’t connect as many passengers as the traditional hub, leaving revenue on the table. Continuous hubbing allowed a 45 minute ground time, which is too short–an hour is needed to maximize connections.
Re-hubbing will occur this year at Chicago, Miami and Dallas.
Southwest Airlines was a pioneer in continuous hubbing, though it wasn’t called this until perhaps a decade ago. Southwest essentially rolls the airplanes up, deplanes, enplanes and departs. At its origin, long before carry on bags, bag fees, security issues and other factors arose, Southwest “turned” its planes in as little as 10 minutes. Today turns are 30 minutes or longer, in part as planes get larger and carry-on bags slow the enplaning process. Still, Southwest eschews the term hubbing and indeed its connection percentage is far lower than American and other traditional airlines.
The de-hubbing is just one step the US Airways management team is taking to remake American following its emergence from bankruptcy last year and the merger in December.
Airbus Innovation Days, Part 3: the A320neo
Klaus Roewe, SVP of the A320neo Family:
There are 2,700 A320neos in the backlog. Roewe provided a program update during the Airbus Innovation Days. Here is a paraphrased synopsis.
- The first flight remains on target for 3Q2014. Final assembly began in the spring.
- No further modification will be required to meet the target of 15% fuel burn improvement.
- The GTF has been delivered to Toulouse; the LEAP-1A is in testing at the CFM factory.
- Production rate is shown at 46/mo from mid-2016 through 2019. We are investigating rate 50 and above.
- Within the supply chain, the first NEO components are 70% better than target. More than 2,000 lessons learned from the A380 and A350 are incorporated into the NEO program. We are already testing control laws for the neo, a lesson learned from previous programs.
- Airbus has discussed with regulators to determine that evacuation of the A320 for up to 200 passengers is possible but a configuration of 189 passengers is more feasible.
- Maximum capacity A321neo (240 pax) reduces per-seat fuel cost by 6%.
- Slim line seats at 28 inches feels like 30 inch seat pitch.
- A321neo could carry 25 more passengers on a 2,500nm route departing Phoenix or Las Vegas, two hot airports that were challenging for the A321ceo (based on the CFM56 engine).
- We are “well below” weight targets.
- Meeting 95% commonality target.
- There has been an increase of airlines configuring the A321 with more than 200 seats from 5% to 40%, which drove the larger-capacity design of the A321neo.
- Flap extension will go up from 27 degrees to 34 degrees, and some changes to spoilers will be incorporated into the neo.
Pratt & Whitney’s lean, additive manufacturing
Airframe manufacturers have long been transitioning to Lean Manufacturing, improving efficiency, increasing production rates, going to robotics and just-in-time supply chains. Engine manufacturers haven’t received the same headlines but this doesn’t mean they’ve been standing still.
We talked with Alan Epstein, vice president of technology and environment at Pratt & Whitney during the firm’s Media Day last week, about PW’s efforts to streamline manufacturing and undertake advanced techniques.
Additive or 3D manufacturing is gaining popularity in industry, and in training for new-hires to go into industry.
The additive manufacturing is used to test concepts, highly complex shapes and create molds, but Epstein said it isn’t new.
PW Media Day 1: next gen GTF to cut fuel costs 10%-15% over today’s GTF
We’re at the Pratt & Whitney media days today and tomorrow. This is the Technology at PW panel. Participants are:
Alan Epstein, engineer and moderator. (AE)
Michael Winter, chief technologists (MW)
Graham Webb, MRJ, CSeries and EJet engines. (GW)
Jimmy Kenyon, advanced military programs. (JK)
All information is paraphrased.
GW: At $4/gal, over 60% of cost to an airline is for fuel. Engines must cut these costs. A380 and 787 consume less than 3 liters per passenger, about that of a compact car.
GTF is certified [on CSeries]. GTF now on five airframes with 12 sub-types. The engine reduces fuel and maintenance costs, reduced emissions. Fuel savings now demonstrated at 16% less than today’s engines.
Next generation of GTF will further reduce fuel burn by 10%-15%.
MW: The noise footprint will stay predominately within the airport boundaries, using 2,000 fewer foils, about half of our competitor’s engine. Emissions are about 50% below current regulations and working with NASA toward 88% below current levels.
Current bypass ratio about 13:1 and currently testing with NASA 15:1 and 18:1.
375% improvement in efficiency since the days of the Whittle jet engine.
We have the most advanced cooling system in the industry and we are exploring inserting advanced materials into the engines when there is real benefit to the customer.
JK: We’re seen similar trends to improve efficiency in military as with commercial. The Department of Defense is the biggest user of energy in the country, with about 80% in engines.
The military has seen really tight budgets in recent years. There is more than just a cost issue, it’s also an energy security issue (Iraq, Afghanistan challenges). There is a real interest in cutting energy usage and aviation being such a large part, it is a natural place to look.
The strategy considers places where you have to fly farther and/or stay on station longer. We’re working on technology to provide fuel management and efficiency to reduce costs, fly father and stay on station longer.
We’re working with USAF to obtain 25% improvement in fuel efficiency on next engines, and with Navy to also improve efficiency, and leveraging work in the commercial arena to improve thermal efficiency.
AE: Are you a one-trick pony? What have you got besides the gear?
GW: We have advanced fan module, bringing forward light weight fan cases, the next generation combustor, advanced core, state-of-the-art high pressure turbine and high speed low pressure turbine, all of which designed for the very high speeds. There are control system enhancements, working on next gen of the fan-drive gear system, short inlets for enhanced efficiency.