The European 2014 ISTAT conference took place in Istanbul Monday and Tuesday. We have reported elsewhere on the presentations by Airbus and Boeing, here follows three interesting tidbits from the rest of the conference. We also comment on the surprising news that Airbus Group will join the US company Aerion to develop the worlds first supersonic biz-jet.
Airline and passenger growth: The ISTAT conference had an inspiring keynote by the CEO of Turkish Airlines, Dr. Temel Kotil. It was all about phenomenal passenger growth.
Turkish Airlines uses its location between east and west for a development in the scale of the Gulf airlines, Turkish is thereby a good example of the doubling of passenger traffic over 15 years as presented by Airbus. From its privatization in 2004 it has gone from 12 million passengers per year to 60 million 2014, spanning 250 destinations with 260 aircraft.
Turkish Airlines feels it is ideally placed at the cross roads to Asia and Africa, both continents with very high growth. They therefore foresee continued growth to 120 million passengers by 2033. They are fortunate that the Turkish state has played its part in enabling such expansion, leasing land to a 3rd major airport in the Istanbul area. This will be necessary should the majority of these passenger streams pass Istanbul, then the area will beat London Heathrow’s present 70 million passengers, calling for additional infrastructure.
Wizz Air CFO Mike Powell: In a discussion over the future of airlines, the development in USA and Europe was compared. In the US the consolidation has led to 4 airlines handling 90% of the traffic, in Europe the numbers are 40 airlines covering the same extent of the market. Wizz Air CFO Mike Powell (fifth largest LCC in Europe after Vueling) predicts that airlines which does not deliver returns on their assets or state-owned airlines not being able to operate without subsidies would be victims of European consolidation. The local traffic will to a large degree be taken over by LCCs whereas long-haul will move to the large hubs and networks in Western Europe like Frankfurt, Amsterdam, Paris etc.
Powell also explained what drove Wizz Air to go from taking delivery of A320 to A321 from next year. Their LCC traffic is very price sensitive but not so frequency sensitive, if they go from an average frequency over their destinations of 5 flights per week to 4 they would normally only loose a couple of percent in traffic margin. Flying the same load factor with a 321 and at lower frequency gains them around 6-7% in cost i.e. going to the larger aircraft will gain them something like 4-5% in margin.
Airbus Group teams up with Aerion: Airbus Group has joined Aerion, the supersonic biz-jet company from Reno, to help them develop the world’s first business jet which can fly at speeds up to Mach 1.6. The aircraft, called AS2, will seat 8 persons in typical biz-jet comfort and has transatlantic range.
Airbus and Boeing squared off once again Monday, this time at the ISTAT Europe conference in Istanbul, once again pretty much over the entire product lines.
Boeing’s VP Marketing Randy Tinseth began with two focal points, the 737 with its latest developments and Boeing’s “superior” Twin Aisle line-up. Tinseth claimed Boeing has caught up to the A320neo with the 737 MAX.
After an A320neo head start of a year, Tinseth says Boeing has kept the same sales rate per year for the 737 MAX. The backlog of 737 MAX now stands at 2,300 aircraft and he described why Boeing thinks it is well positioned in this market segment.
Two of the Middle East’s most aggressively growing airlines said charges that they benefit from government subsidies, artificially low fuel prices, cheap airport facilities and preferential financing refuted these charges at the World Routes conference in Chicago this week.
Neither, however, addressed charges they unfairly benefit from US ExIm Bank funding, a particularly sensitive topic for Delta Air Lines which has been waging an effective campaign to cast doubt over the Depression-era institution intended to support US exports. Boeing is the largest user of ExIm financing and Emirates in particular has been an active participant in the program. Delta claims ExIm provides below-market rate fees and interest charges.
“Our industry is changing and acting like real businesses to return value for shareholders.”
It’s a remarkable statement when you think about it. But this is how Jim Compton, vice chairman of United Airlines, led off at the World Routes conference this week in Chicago.
The US airline industry for years seemed to be operated more for market share than for profit. At least this is how many chief executive officers often characterized things until after 9/11, when US carriers wrenched through the aftermath of that horrible day. Even so, CEOs often complained there was too much capacity to allow for profitable operations. It wasn’t until after the global financial collapse of 2008 that US airlines began to consolidate, reduce flights and take capacity out of the system. Profits began to return.
With the formal launch by Boeing of the 737 MAX 200, the 200-seat high density version of the 737-8 with an order for 100+100 from Ryanair, Airbus was quick to launch its own critique on the airplane.
Kiran Rao, Executive Vice President, Sales & Marketing for Airbus, was quick to take aim at the advertised seating capacity of the MAX 200 and at the 197 seats Ryanair CEO Michael O’Leary says will be in the carrier’s configuration.
In an interview with Leeham News and Comment, Rao said that Boeing has to eliminate too many galley carts, even at reduced food and beverage options, to adequately service passengers. One cart is needed for every 40 passengers.
Airbus could decide within the next six months whether to re-engine the A380 with Rolls-Royce powerplants, says Tim Clark, the president of Emirate Airlines, which has ordered more of the giant airplanes than any other customer.
Tim Clark, president of Emirates Airlines. Emirates Airlines photo.
Clark, speaking to a press gaggle on the sidelines of the World Routes conference Sunday in Chicago, said a RR engine would likely be based on elements of the Trent 1000 and Trent 7000 engines on the Boeing 787 and Airbus A330neo.
The Boeing P-8A Poseidon program has been termed a model of procurement by the US Defense Department, reports Boeing program managers. It came in on cost and on time, and as more P-8s are delivered to the US Navy, the per-airplane cost is coming down—saving US taxpayers $2.1bn.
The Royal Aeronautical Society-Seattle Branch sponsored a public briefing Tuesday at the Museum of Flight at Boeing Field in Seattle at which the P-8 program was described.
Boeing 737-based P-8A Poseidon. Boeing photo.
Boeing will deliver its 20th P-8 to customers this year—the US Navy and India—in a program that eventually is expected to sell well more than 100 aircraft worldwide. The P-8, based on the 737-800, is replacing 50-year old Lockheed Martin P-3 Orions. The P-3 is based on the Lockheed Electra, a four-engine turbo-prop that entered commercial service in January 1959. The P-3 entered service in 1962, just in time for the Cuban Missile Crisis.
Stephen Tripp, P-8A Business Development Senior Manager for Mobility, Surveillance and Engagement for Boeing, spent more than 30 years in the Navy, including flying P-3s and “chasing submarines.” He joined Boeing upon retirement on the P-8 program.
“Submarine threats are not going away,” Tripp said. “China and [Russian Premier Vladimir] Putin are launching subs at a rate not seen since the 1960s.”
At a time when Boeing continues to assure Wall Street that all is well with the 787 program, industrial partner Alenia of Italy and traveled work from Boeing South Carolina continue to plague the program, according to a report from The Everett Herald.
The Herald’s report also comes on the heels of a “documentary” by Al Jazeera English calling into question the competency of the Charleston 787 plant. The documentary was widely criticized, including by this column, for its tactics.
The newspaper, which is located in the same city as Boeing’s wide-body plant, reports that barrel sections made by Alenia continue to have quality control issues, six years after production began on the composite airliner.
A320 interior upgrade: After nearly a year of denying a story by Mary Kirby of Runway Girl Network and avoiding our own report from two years ago, Delta Air Lines, Airbus and interior OEM Zodiac revealed a new interior for the A320 family.
The announcement was made at the APEX convention by Airbus. The interior will appear beginning in Q12016, in this case in Delta’s A321ceos.
New pivot bins will be installed on the Airbus A320 Family beginning in 1Q2016. Delta Air Lines will be the first customer in the A321ceo. Airbus photo.
The overhead bins, which mimic the A350 design, are available for retrofit. Airbus says there is 10% more space compared with today’s bins.