Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Teamsters, Boeing have a new contract April 29, 2025
- Boeing wants to remarket China’s airplanes. It’s costly and time consuming. April 28, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 19. April 25, 2025
- How good is the C929? Part 2. April 24, 2025
- Boeing First Quarter Results Update: China is 10% of the backlog, with 500 in “Unidentified” April 24, 2025
Single aisle or Widebody over the Atlantic at low load factors, Part 3?
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By Bjorn Fehrm
Introduction
November 11, 2021, © Leeham News: Last week, we compared the economics of an Airbus A321XLR and A330-200 on our thin route over the Atlantic. The XLR improves the capabilities of the A321 quite a bit, not only on range but also on load-carrying ability.
The more efficient use of the space below the floor leaves room for cargo once the passenger bags are loaded. The margin race between the A321XLR and the A330-200 depended on the cargo pricing in the end. Now we finish the series with a more challenging setup for the twin-aisle.
We assume we use an A330-900, a nominal 300 seater on the Dublin to Newark route with only 130 passengers per departure. The load factor is then at 43%. Can the twin-aisle still earn the margin of an A321XLR on this route by virtue of its cargo capacity?
Summary
- The margin generation of the A321XLR versus the A330-200 was close. It boiled down to cargo pricing.
- The A330-900 adds costs but also more cargo room. Will it cover the extra costs?
Air Asia asks Airbus for A321F; chief commercial officer says not yet
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By Scott Hamilton
Nov. 8, 2021, © Leeham News: Air Asia is in talks with Airbus to develop a factory-built A321F, according to a report last week from Reuters. LNA first reported in August that Airbus is pondering a new-build A321F.
Airbus A321 P2F: could a new-production A321F be coming? Photo credit: Airbus.
“AirAsia would seek to convert a “meaningful chunk” of its 362 orders for the passenger version of the A321neo narrowbody to a dedicated freighter, said Pete Chareonwongsak, CEO of AirAsia logistics division Teleport,” Reuters wrote.
But although Airbus has had talks with a few customers, an A321F is not a priority, the firm’s chief commercial officer told LNA last month.
Single aisle or Widebody over the Atlantic on thin routes? Part 2
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By Bjorn Fehrm
Introduction
November 4, 2021, © Leeham News: Last week, we compared the economics of an Airbus A321LR and A330-200 on a thin route over the Atlantic. We found the Widebody could compensate for its higher operating costs as long as the route has a sizable cargo stream and that this is paid at today’s elevated air freight prices. The A321LR has extra center tanks that take away all cargo space and thus has negligible cargo revenue.
Now we repeat the analysis with the more capable A321XLR. It stores four ACTs worth of extra fuel in the space of two. This leaves room for cargo. Will it be enough to restore the supremacy in margin generation over the twin-aisle?
Rendering of the A321XLR. Source: Airbus.
Summary
- The check last week surprised with how close a mid-age A330-200 can come in margin generation to an A321LR on a thin route, thanks to its higher cargo revenue.
- The A321XLR, with its more efficient tank setup, rebalances the fight in favor of the single-aisle.
Engine OEMs pushing ahead for next airplane, even as Boeing pauses
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By Scott Hamilton
Nov. 1, 2021, © Leeham News: David Calhoun may not be anywhere near ready to launch the Next Boeing Airplane (NBA), but the engine makers are actively researching and developing engines to hang of whatever that NBA will be.
Calhoun, the CEO of Boeing, repeatedly said the NBA will be more about reducing production costs through advanced design and production methods. For some time, Calhoun said the next engines available on the assumed timeline—to about 2030—will have only 10% better economics than today’s engines.
And 10% isn’t enough for the airlines or the commensurate reduction in emissions.
CFM/GE Aviation/Safran are developing an “open fan” engine that will reduce fuel burn and emissions by 20%. A target date for entry into service is in the 2030 decade. The open fan builds on R&D of open rotors that have been underway since the era of the Boeing 727 and McDonnell Douglas MD-80.
Pratt & Whitney sees an evolution of its Geared Turbofan engine. The GTF was under development for 20 years before an operating engine made it onto the Bombardier C Series (now the Airbus 220), the Airbus A320, and United Aircraft MC-21. The GTF also was selected for the Mitsubishi MRJ90, which launched the GTF program. However, Mitsubishi pulled the plug on the MRJ/SpaceJet program last year. PW remains committed to the GTF for future engines.
Rolls-Royce is developing the Ultra Fan and Advanced engines. GE’s Open Fan and RR’s engines adopt geared turbofan technology pioneered by PW but add new technology.
LNA takes a look at the new engines for the NBA or any other competing airplane in a series of articles.
Single-aisle or Widebody over the Atlantic on thin routes?
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By Bjorn Fehrm
Introduction
October 28, 2021, © Leeham News: The headline seems like a no-brainer. On long thin routes over the Atlantic, we have learned a Boeing 757, or its replacement, the Airbus A321LR, is the right aircraft (as long as it’s within its range).
This was the situation in a pre-pandemic market where freight yields were half of today. The single-aisle has lower operating costs than the widebodies, and if the passenger stream and range fits, it was the transport to have on the route.
With the high cargo prices, does this change? We check for several Atlantic routes.
Summary
- The increased yields for air cargo challenge the mantra; a single aisle is preferred for trans-Atlantic service as long as the passenger number and range fits.
- Going forward it will be all about the cargo prices and the number of passengers to transport.
Airbus sees encouraging signs of wide-body demand recovery
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By Scott Hamilton
Oct. 25, 2021, © Leeham News: Airbus sees some “encouraging” signs wide-body demand is recovering from the global COVID-19 pandemic.
Christian Scherer. Source: Airbus.
Passenger demand is nearing-pre-pandemic levels in key areas of the world where single-aisle aircraft are used. Long-haul international demand remains suppressed, however. Some don’t forecast a return to normal for up to two more years. Others forecast a recovery on key routes next year.
Christian Scherer, the chief commercial officer for Airbus, is optimistic.
“I would say that on the wide-body market, you see encouraging signs,” he said during a press gaggle at the IATA AGM Oct. 3-5 in Boston. “Maybe that has to do with the fact that the ecosystem at large is realizing that the best thing they can do in the short- and medium-term, towards that whole global objective of sustainable air transportation is to equip themselves with the most fuel-efficient and therefore eco-friendly airplanes.
“I think that against that backdrop and the opening of more international corridors sees a regained interest on the wide-body side as well. Now it’s lagging the single arch really and there is no scoop here that rates in the long-range airplanes are going to change imminently, but the general sentiment is positive on the wide-bodies as well and that’s really good.”
Single or twin Aisle for cargo rich routes?
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By Vincent Valery
Introduction
Oct. 21, 2021, © Leeham News: LNA started the cargo-themed series by comparing factory and converted freighter aircraft performance. We followed with the comparison of cargo capacity for different passenger airliners with the same low number of passengers.
The latter showed that freight revenues alone could justify operating a larger variant despite lower passenger load factors. We now continue the cargo-themed series from a different angle.
Several countries, notably the United Kingdom, United States, and Singapore, re-opened quarantine-free travel for non-residents who received a COVID-19 vaccine. After more than 18 months of depressed passenger traffic, airlines are hopeful long-haul traffic will finally restart in earnest.
It will probably take a few more years until long-haul traffic fully recovers to pre-pandemic levels globally. With that in mind, airlines need to decide how to rebuild their long-haul networks gradually.
Launched a few months before the COVID-19 pandemic, the A321(X)LR seems an ideal aircraft to test the market before committing to larger aircraft. LNA has extensively written about the pre-COVID-19 long-haul market fragmentation with the smaller twin-aisle (A350 and 787) and higher-range single-aisle (737MAX and A321LR) aircraft.
However, is a long-range single-aisle aircraft always the best choice to rebuild a network when cargo prices are high? LNA will answer that question in the next part of the series.
Summary
- A pre-COVID19 fragmentation momentum;
- Pandemic turns long-haul business upside down;
- The appeal of long-range single-aisle aircraft assumes normal cargo prices;
- What a single-aisle airplane can’t provide.
Air freight demand explosion: a long-term trend?
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By Judson Rollins
Introduction
October 18, 2021, © Leeham News: Much ink has been spilled over the surge in demand that has washed over every corner of the cargo world: air, sea, road, and rail.
Amazon Air’s first parcels being unloaded at Amazon.com’s new Cincinnati (US) sort hub. Source: Amazon.com.
Before the COVID-19 crisis, air transport was reserved primarily for items with high value and/or time sensitivity, such as laptop computers or express documents. And growing competition in the cargo market meant that average yield (revenue per ton-mile) was declining by more than 2% per year, according to past editions of Boeing’s World Air Cargo Forecast.
But now the cost of sea transport has exploded, shifting a significant chunk of cargo from ocean freighters to their airborne equivalents. This is driving some retailers to use air transport. Home Depot, an American home-improvement retailer, is resorting to air freight to bring in smaller, higher-value items like power tools that it needs to keep on the shelves at all times.
Even before COVID-19, a growing share of air freight has come from e-commerce — thereby shifting the volume-to-weight considerations relative to “traditional” freight.
Will these trends continue even beyond the COVID crisis? And what impact will it have on the market for factory-built freighters and passenger-to-freighter (P2F) conversions?
Summary
- Soaring sea freight yields mean small shipments are now more economic by air than sea.
- Volumetric capacity matters more than max gross weight.
- New freighter options will compete with a glut of conversion feedstock.
- Air freight yields will eventually revert to historical trendlines in most regions.
With high cargo prices, will airlines fly larger aircraft in their widebody fleets?
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By Bjorn Fehrm
Introduction
October 14, 2021, © Leeham News: Over the last weeks, we’ve seen that the present cargo crunch and high yields will influence what aircraft variants airlines purchase. Models that are too large passenger-wise for years to come will be paid for by a longer belly that can take more cargo.
This trend will remain as long as cargo prices are high. Will the high cargo yields also affect what aircraft to keep stored and which to fly of an existing fleet? We apply the analysis to an airline with a fleet of Boeing 777s.
Summary
- The increased yields for air cargo changes the fleet planning for the widebody fleet. The most suitable passenger models stay in the desert, and the longer siblings fly despite lower load factors.
The Regional Aircraft Fleet
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By Vincent Valery
Introduction
Oct. 11, 2021, © Leeham News: The regional aircraft market, defined as aircraft seating 100 or fewer passengers in standard configurations, has fewer OEM players than before.
Embraer’s E175-E2
The Bombardier CRJ, purchased by Mitsubishi Heavy Industries, ceased production earlier this year. De Havilland Canada will stop Q400 production later this year once it clears its backlog. Both programs might not start production again in the future.
The only latest-generation design, the E175-E2, does not have a single firm order. (There is a conditional order for 100 from the USA’s SkyWest Airlines.) MHI’s SpaceJet development has been “suspended,” but nobody believes it will be restarted.
Therefore, the only regional aircraft in production for the near future will be ATR’s 42 and 72 series, COMAC’s ARJ21, Embraer’s E175-E1, and UAC’s SSJ100.
The ARJ21 and SSJ100 are almost exclusively in service in their respective domestic markets. In practice, that leaves only the ATR42, ATR72, and E175-E1 as new regional aircraft in production for most operators from next year.
However, it is far from guaranteed that ATR and Embraer will enjoy near-monopoly status for the foreseeable future. Embraer has been pondering the launch of a turboprop program for years and is currently looking for an industrial partner.
One also must mention that potential jet fuel alternatives, notably hydrogen-powered aircraft, are likely to come to the regional market first. Therefore, the regional aircraft market could see some significant changes.
With the above in mind, LNA thought it relevant to look at the in-service regional aircraft, both for regional jets and turboprop aircraft.
Summary
- Segmenting the regional aircraft market;
- Regional jet and turboprop prevalence;
- Breakdown by OEM and operator region;
- Age of in-service fleet.