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Setting the stage
There's an excellent, wide-ranging piece in Airline Business entitled "On a roll." Since the Web article is accessible only by subscription, the magazine has kindly provided us a PDF version of the article that you can read here.
It's great background on what's happening with the latest models in commercial airplanes, and does a good job of setting the stage for the competition ahead in the twin-aisle market.
This piece covers just about everything from the markets for the 787 Dreamliner, the 777, and the Airbus A380, to an in-depth discussion of the 747 Advanced.
An interesting excerpt on the market for very large airplanes:
"Others share Boeing's skepticism about the size of the A380 market. As a leading aircraft financier notes: 'I doubt it is an 800-aircraft market. It could be nearer 300-400 and I would be surprised if it goes over 500. At present, most people who could trade out of 747's would prefer to have 777-300ERs offering more point-to-point opportunities.' "
And also this on the market in Japan:
"JAL, for example, says it has enough domestic aircraft capacity with 'future increases handled by increasing frequencies with smaller aircraft .. That policy is reflected by our recent aircraft orders for the 787 and the 737NG series.'
"More frequencies at Japanese airports, including Tokyo Narita, means ANA will be shifting from large to medium-sized aircraft domestically, says Yoji Ohashi, ANA President."
One bottom-line point from the story: 2005 will be a critical year for both Airbus and Boeing in terms of long-term product strategies.
Sounds about right to me.
Two launches and a first flight
One of the launches I’m talking about today is actually a new Boeing blog I think you’ll be interested in. But first, the first flight.
A new blue airplane has taken to the skies over Puget Sound. It’s the second 777-200LR Worldliner, an aircraft we’re calling WD002 for the duration of its flight test program.
WD002 taking off into the skies over Everett, Washington on its first flight yesterday.
Yesterday WD002 took off from Paine Field in Everett for the first time. She’ll now join WD001 in flight tests and certification over the next several months before their delivery to Pakistan International Airlines (PIA).
WD002 will have the added adventure of a stopover at the Paris Air Show next month.
And speaking of the 777-200LR, we’ve officially launched the 777 Freighter this week. Air France has ordered five of the freighters, and Air Canada included 777 Freighters in its announcement last month.
The 777-200LR is the platform for this new freighter. And what that means is this airplane will be able to carry a full payload of cargo (229,000 pounds / 103 metric tons) farther than any other freighter – about 5,000 nautical miles (about 9,200 kilometers).
The first 777 Freighter will be delivered to Air France in 2008.
Which all brings me to a launch of a different kind. There’s a new blog in the Boeing universe. This one is dedicated to the ins and outs of Boeing’s flight test program.
It’s a first, really: personal accounts of what goes into making a new airplane ready for delivery - told by the pilots, flight crews, and technicians who make it all happen, as it’s happening.
If you’re at all interested in what it takes to certify a new airplane, I think you’ll enjoy it.
I've been doing a lot of traveling lately. What else is new? London and New York recently, and last month a trip Down Under. That journey got me thinking about airport congestion, which I'll get to in a moment.
My first trip to Australia was back in the early 1980s when I was doing analytical work for Boeing - working with airlines on fleet planning and financial feasibility studies for purchasing new airplanes. In those days I spent a lot of time with TAA (Trans-Australia Airlines) in Melbourne. TAA was folded into Qantas in 1992.
Anyway, over the years I've spent so much time in the region that I developed some lasting friendships. So I like to think of these trips as visits with old friends.
One of my "mates" is still in the airline industry. Another is an industry consultant. And in between catching up with them, I got to talk to media, airline people, investors, and the like in Sydney, Brisbane, and Auckland. I even got to lecture at the University of New South Wales School of Aviation. So I got to talk to aviation management students. A lot of them. We had about 110 turn out. That was fantastic.
In Sydney I briefed about 30 reporters and then fielded a bunch of questions. One of the stories to come out of that briefing focused on the increasing importance of more efficient airplanes in the face of rising fuel costs.
Being interviewed for Radio New Zealand.
Later, I flew across the Tasman to New Zealand for a media session in Auckland. And in the midst of a number of interesting questions in both locations I got a lot of comments about the blog! Seems the folks Down Under are enjoying our little journal.
One question that always seems to come up when I'm out talking is: "Don't airplanes have to get bigger because of slot constraints and congestion around airports?"
This came up during my Australia visit because congestion is very much an issue at Sydney Airport. But as I told reporters, congestion is not going to be solved by adding very large airplanes.
Sydney Airport is much like airports in London, or in U.S. cities like Chicago, or LAX, where there are a large number of airplanes of 100 seats or less (like regional jets), and a lot of jets in the 100-150 seat range (small single-aisle jets).
In fact, in Sydney, three quarters of the departures are airplanes below 200 seats. That's where the congestion is. So if you use the logic that "bigger airplanes" solve congestion, it's not going to be solved at the 550-seat level.
You don't take all these small airplanes and make them 550-seaters. These smaller jets are flying to places where you just can't put an A380!
At Sydney Airport, 90% of weekly departures are aircraft with fewer than 300 seats, and 74% are aircraft with fewer than 200 seats.
And if you took all the departures on the 300-seats-and-larger airplanes and put those passengers on 550-seat airplanes, it just wouldn't make much of a dent in airport congestion.
Another thing that some people don't realize is that the more giant-sized airplanes you bring in to an airport like Sydney, the more little airplanes you need to feed them.
One way to address congestion is for airlines to bump up the smaller airplanes about 20% in size (the next size up). That's how you reduce the number of departures significantly.
Once you recognize this, you understand that "bigger airplanes" helping congestion doesn't mean super jumbo jets. It really means moving from 100 or 150 seats up to the next category, say 151-200 seats.
Another way to handle congestion is to not take passengers through an airport they didn't want to go to in the first place. What you want to do is take people point-to-point. That's how you reduce congestion and get people where they want to go at the same time.
Speaking of places you want to go, my first night in Sydney landed me at my favorite pub, the Lord Nelson. It's one of the oldest "hotel" pubs in Sydney. They brew their own beer there, so there's lots of great selection. For me, the Lord Nelson is a place to grab a brew, have some fish and chips, and start tuning my ear to the local Aussie dialect.
By the way, Boeing has taken on an Aussie dialect of its own. Boeing and Australia have a history going back more than 77 years. We've kind of become part of the fabric Down Under, employing about 3,300 people. If you want to find out more, we've added a link to Boeing in Australia.
And in keeping with today's theme, I just want to leave you with this brief commentary from the Melbourne Herald Sun. But you'll definitely have to do your own research to find out what they mean by "spruiking."
Back to the future
A few days ago I talked about the fact that Airbus airplanes can certainly fly nonstop, point to point, but that their forecast and product strategy is rooted in a historic hub and spoke system.
They're selling a huge 550-seat airplane and telling the world the A380 is the airplane of the future. The dilemma is that with their forecast for 1,250 very large airplanes, built on a hub to hub strategy, there isn't a lot of room for more nonstop, point to point travel, or for new city pairs.
And that's where this gets interesting. Because now, Airbus is actually validating Boeing's point to point approach with their new twin-engine offering called the A350, which is an A330 derivative with longer range capability. Maybe they're shifting their product strategy "just in case."
Boeing and Airbus do agree on one thing: that air travel will grow about 5% over the next 20 years. So the argument really comes down to the 3 ways of handling that growth:
- Increasing frequencies (adding more flights to existing city pairs)
- Adding city pairs (flying nonstop, point to point to new places)
- Increasing airplane size (handling more passengers on a single flight)
If you're an airline, you can choose to keep flying to the same cities with the same amount of frequencies - and then accommodate future growth by increasing the size of airplanes.
Or, you can accommodate growth by increasing frequencies on the city pairs you serve today, and by adding new service or new cities to the network. In other words, increasing nonstop, point to point flights. This is the way Boeing accommodates growth in our forecast.
It's clearly the way things have been going for a decade or more now.
Since 1995, air travel growth has been met by increased frequencies while adding new nonstop markets. In fact, during the recent downturn, airlines helped maintain frequencies by reducing airplane size.
So we offer airlines multiple-size models of long-range airplanes between 200-450 seats, so they can provide service on new city pairs as soon as passengers demand it. Airlines can start with a smaller size and bring larger models along as demand increases.
But Airbus' product strategy is focused on "consolidation." They claim that city pair growth has stagnated and will continue that way. In other words, more hub to hub flying, where passengers will have to connect one or more times to get where they really want to go.
If you're Airbus and you believe that, the math works. No question, you then build bigger airplanes. The problem is, there's nothing on the horizon to justify airlines needing a whole lot of airplanes the size of the A380.
So you have to ask yourself, what is the likelihood of a future with little or no city pair growth? Especially when you read nearly every day about airlines adding more city pairs.
A good example: last month Continental Airlines announced plans to launch daily nonstop flights between New Delhi and Newark, the first nonstops ever offered between the United States and India. Continental plans to fly that route with a Boeing 777-200ER, a perfect airplane for this kind of service.
The bottom line is, we're focused on nonstop, point to point travel because we believe this is where the market is going in the next 20 years. The other guys have hitched their wagons to big airplanes and big hubs.
Well, maybe that isn't a fair metaphor. "Hitching a wagon" is a 19th Century mode of travel, while Airbus' back to the future strategy really seems more suited to the 20th Century.
What's the point of P2P?
On my recent trip to Europe I flew non-stop from Seattle to London. But my destination was actually Geneva, so I had to make a connection at Heathrow Airport.
Do you think that if there was a non-stop option of Seattle to Geneva I would have taken that rather than have to connect in London? Of course I would! That would have saved me 2 or 3 hours, the hassle of connecting, and a bus ride at Heathrow.
That's the point of "point to point" travel. Seattle to Geneva. Miami to Taipei. That's what people want. Not to have to schlep through huge hub airports.
If I were to ask anyone at Boeing the difference between the strategies of itself and Airbus, I'd guess they'd say that Boeing believes in point to point transport, taking people exactly where they'd like to go. Whereas Airbus believes in large transport to major hubs with smaller planes carrying passengers to less-major destinations.
This may seem like an obvious question, but it hasn't been answered on the blog yet. What stops Airbus aircraft flying point to point also? It's made to sound like Boeing's are the only aircraft capable of flying "P2P." I can't quite see how Boeing can justify this to be such a unique selling point.
A good comment. And the short answer is, yes, Airbus can do it too. In fact Airbus does have airplane models that airlines use to fly point to point. For instance, Singapore Airlines flies an A340-500 from SIN to LAX, an ultra long-range flight.
So, the issue is not that Boeing has the only airplanes that can fly point to point. But an important thing to remember is that while Airbus can do it, Boeing airplanes are the ones that are optimized for it. They're more efficient and more economical.
Another big difference is that Boeing sees non-stop, point to point travel growing over the next 20 years, and our product strategy has been clearly focused on helping airlines evolve and advance accordingly.
Airbus thinks the trend is going to shift to larger airplanes flying hub to hub, meaning passengers connecting one or more times to complete their journeys.
So Airbus is selling its super-big A380 and trying to convince airlines that they need these very large airplanes. But we see this as a small market. And the world has been evolving away from that outdated travel model for some time.
It's just not today's - or tomorrow's - reality.
Couldn't help noticing that the trend toward point to point travel got a lot of attention in a New York Times article on May 4: "In Airline Shift, More Nonstops Make Schedule." How significant does the Times think this trend is?
This movement could turn out to be one of the biggest shifts in the industry since it first adopted the hub-and-spoke approach after deregulation in the late 1970's. Already, major airlines have added 134 nonstop routes in the last year, and flights promise to be cheaper than they have been in the past.
In the article, Southwest Airlines' CEO Gary Kelly pretty much sums it up: "Customers want non-stop flights."
On Cinco de Mayo many people celebrate with food and song. What do you say, today we also celebrate a cornucopia of new possibilities for air travelers?
Think Detroit to Shanghai. Non-stop.
Northwest Airlines (NWA) just announced a significant order for the 787 Dreamliner. The order includes 18 firm 787-8s, with options and purchase rights for an additional 50 Dreamliners.
Northwest Airlines joins the Dreamliner family.
The airline will take initial delivery in August 2008, which would make Northwest the first North American carrier to put the 787 into service.
With the NWA announcement, the 787 family adds a third U.S. carrier, after previous announcements from Continental and Primaris airlines last year.
Considering all the challenges U.S. carriers have had in the past several years, these orders represent a strong commitment to the future of air travel. For airlines looking at rising fuel and other operational costs, this airplane is a clear winner. I have to believe that a big part of the remarkable appeal of the 787 is its super-efficiency. Not to mention that passengers will love it.
The Dreamliner is really going to add value to NWA hubs such as Detroit, its "WorldGateway," and will enhance a growing international route system, including Asia/Pacific and European destinations, with an economical, fuel-efficient fleet. That, of course, will mean more choice and convenience for the passenger.
So, to sum up the news so far, 20 airlines around the world have announced 255 orders and commitments for the 787 since we launched in April 2004.
ANA, Air New Zealand, Blue Panorama Airlines, First Choice Airways, Primaris Airlines, Japan Airlines, Continental Airlines, Vietnam Airlines, Xiamen Airlines, Shanghai Airlines, Hainan Airlines, China Southern Airlines, China Eastern, Air China, Ethiopian Airlines, Icelandair, Korean Air Lines, Air Canada, Air India, Northwest Airlines.
The dream team. And counting.
Boeing 001 Experimental
This is an amazing airplane, and they're putting it through the full gamut of stall tests, engine shutdowns, you name it. As senior test pilot Capt. Suzanna Darcy-Hennemann puts it, they're going "way beyond where an airline would ever fly the airplane."
If you have any interest at all in the paces our test pilots put new airplanes through, you'll really enjoy reading this piece.
Your point of view
The other day we were talking about the "rapid rewards" of non-stop flights. It was a fun play on words. But the fact is, non-stop flights are designed to get passengers from point A to point B without getting slowed down or exposed to the hassles or risks of missed connections or luggage.
Sometimes there's a mistaken belief that Boeing is suggesting hub and spoke operations are going away. We don't think they're going away as a structure. In fact, that system still helps airlines give passengers more frequencies. And it helps maintain service to cities that couldn't be sustained without a connection. This does, though, cost airlines more than non-stop service.
But really, point to point is all about the passenger's perspective. It's not necessarily about how the airline operates its network.
Here's what I mean. Let's say your home airport is a hub operation. For example, Chicago is a huge hub, but for you in Chicago flying non-stop to Manchester, UK, Chicago is your "point."
For you, that's point to point flying, even though it's out of a hub airport! The important thing for you is, you don't have to make a connection in London, "hub-to-hub," to get where you really want to go.
What's happening, even at "hub" airports, is that more spokes are being added, which gives people more point to point flying opportunities. And by eliminating connecting flights, some of these "hub to hubs" are being changed to "hub to point." Which again, opens up more non-stop service.
So, regardless of what kind of airport you depart from or arrive at, if you did not have to make a connection, for you, this is point to point travel.