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23 March 2006

Latin rhythm

In the commercial airplanes business, there's been so much talk lately about burgeoning markets in places such as China and India, that sometimes another rapidly growing region gets left out of the discussion.

That's probably what led Carlos V. to send along this comment recently from San Antonio, Texas:

What is the strategy to compete in Latin America? Have we written Latin America off? In my view L[atin] A[merica] has a growing customer base that we should be taking advantage of.

It's a great comment. And it bears emphasizing that no, far from writing off this vital region, Boeing is very much involved in engaging Latin America, including Mexico.

As a matter of fact, we just delivered the very first 777-200ER to Aeromexico today. It will replace 767s on routes to Madrid and Paris and to Brazil. Aeromexico is now the first airline in the Americas to take delivery of an airplane with a Class 3 Electronic Flight Bag, and the first Mexican airline to operate a 777.

Aeromexico Boeing 777-200 photo

With today's delivery in Seattle, Aeromexico is the first Mexican airline to operate the 777.

And last week we delivered the second of 12 767's ordered by Chile's LAN.

Latin America is an increasingly important region, as our airline customers there share in the worldwide airline recovery and benefit from increased liberalization.

Take Argentina, where four airline startups recently received operating licenses, and Air Madrid plans to launch a subsidiary airline there.

Or Colombia, where the country's heritage airline, Avianca, recently emerged from bankruptcy. Avianca now operates in financial health under new ownership from the Synergy Group, owners of Brazil's expanding Ocean Air.

And in Mexico, investors are backing five new low-cost startups, two of which began operations in 2005.

Our market outlook for South America predicts air travel growth in the neighborhood of 7% a year over the next 20 years - second only to domestic China. As we saw elsewhere, longer-range single-aisle airplanes such as the Next-Generation 737s have made more frequent nonstop travel possible. In the past 10 years, nonstop markets between the U.S. and Latin America nearly tripled to 984 airport "pairs."

As for market potential, we think airlines in Latin America will need more than 1,700 airplanes - worth nearly $98 billion - in the next 20 years. Mexico, at $19 billion, and Brazil, at $40 billion will be the two largest markets.

And we're seeing growth across the airplane spectrum. Last year, as I mentioned earlier, Chile's LAN Airlines ordered six new 767 freighters and passenger airplanes, adding to the six 767s ordered the previous year.

In Colombia, Tampa Cargo continues modernizing its fleet with 767 cargo conversions.

GOL Boeing 737-800 takeoff photo

Brazil's GOL will take delivery of 11 more Next-Generation 737s in 2006.

Elsewhere, Brazil's low-cost sensation, GOL, which started just five years ago, has more than 100 Next-Generation 737s on order and will receive its first 737-800 with enhanced short field performance capability this summer. GOL currently has 57 Boeing 737s in its fleet.

Aeromexico has taken delivery of 17 Next-Generation 737s in the last several years. The airline also booked the first order of 2006 on the Boeing ledger with six 737s.

And Panama's Copa, securing its position as the "hub of the Americas," continued a profitable relationship with the 737 family with five new orders last year.

In all, Latin America accounted for 67 new airplane orders in 2005.

And let's not forget the 787. Aeromexico assisted us with establishing some of the high altitude, hot weather specifications for the 787. And we're talking right now with several Latin American airlines about bringing the Dreamliner to their fleets.

Simple answer, then: we think we have the right airplanes and the right strategies to help our Latin American customers compete in the world marketplace. So yes, Latin America and Boeing are very much "in the swing" and working together for the future.

14 March 2006

War of inches

Airplane interiors - now that's a topic that really gets people squirming in their seats!

The blog we did a couple of weeks back about the so-called "7 inch" difference between the A320 and the 737 turned out to be one of the more controversial topics we've done.

Some people took it quite personally. We've now posted your thoughts on the subject in our comments section. For example:

"I am convinced that Boeing senior management does not fly their competitor's product in coach class."

Au contraire. As it happens, I just rode back-to-back flights on the 737 and A320 during my recent trip to Australia. I flew on Virgin Blue, on a Next-Generation 737. And I also flew on a Jetstar A320. They were both in an all-economy six abreast seating configuration. And quite frankly there was not much difference.

But I'm not trying to convince anybody one way or another, or trying to say that the 737 is better from a comfort point of view. I'm just saying that the difference is not great. And that on short-range flights, most people are more concerned about their fare and schedule. I'll talk more about that in a minute.

Boeing Next Generation 737 interior photo

The 737 interior stands out in a number of ways. It offers soft, indirect lighting. It has a smooth, sculptured ceiling, giving the cabin a more open, spacious feel. The curved ceiling panels offer up to three additional inches of headroom. And longer overhead stowage bins give passengers more storage space by eliminating the need for an internal support brace.

Anyway, the idea of the earlier blog was simply to set the record straight. To point out the fact that when Airbus talks about "7 inches," that dimension is on the outside of the A320. And that an outside measurement has little to do with interior comfort.

Yes, the A320 is a wider fuselage. And on the inside, at seat bottom, or knee level, that equates to about 5.8 inches wider - or less than an inch per passenger in six abreast economy class.

But at the level people perceive comfort - around head and shoulders - the difference is less than three inches in the cabin, or less than a half inch per seat. For all practical purposes, most people can't tell the difference.

Now, in one key way, I think this all accomplished something interesting. It got a robust discussion going. Airliners.net has had quite a few posts on the subject.

And some of the people posting to that site caught on to another key point I was trying to make: that schedule reliability can be a much higher decision factor from a passenger point of view than a minor difference in cabin width.

One participant in the Airliners forum, after flying an A319 and then getting on a 737, conceded there may be a slight difference in width, but concurred with the fact that the A320 family has more technical delays:

Our A319 flight was delayed over 1/2hr when we had to shut down the engines and reset the computers because of what the pilot called "a slight computer glitch." Our 733 left right on time. Ok, sure, that's just one time, but in my 100,000 miles a year of flying over the past 2 1/2 years, I've only had one delay on a 737 aircraft based on mechanical problems, and that was a microphone in the pilots emergency oxygen mask was not working properly. It was fixed within 20 minutes. They're a very reliable aircraft.

As I said in the blog before, most people, when surveyed, say what they're really interested in on a short-range flight is on-time performance. And statistics from both manufacturers, when you compare them, show that the 737 has better on-time reliability - the A320 series has a 40% higher chance of having a delay.

But if somebody still feels that they want to ride on an A320, that's okay, too.

09 March 2006

Breakfast in New Zealand

I'm back in the office, and getting caught up after several weeks' travel. And since I've been gone I've noticed that trees are now in bloom and Spring has sprung already in Seattle, which is always a good sign.

Anyway, I just returned from my annual visit Down Under. As you know the trip began with Singapore and the usual air show excitement at Asian Aerospace 2006.

From Singapore I had the opportunity to fly on Air New Zealand to Auckland, on their new 777-200ER service. It's more than a 9-hour flight, but the new business class service on that airplane has lay flat seats, and very nice amenities. A tremendous way to travel.

Boeing Market Overview image including downtown 

Auckland NZ

Beautiful Auckland graces the opening page of my presentation to media in New Zealand.

In Auckland I had some great conversations with a number of New Zealand media as well as executives from ANZ. But I started my first day quite early, enjoying a business "Breakfast" on TV New Zealand.

Moving on to Sydney, it was breakfast time again, on the Channel 7 "Sunrise" program. I also took part in two major media events, talked with bankers about the benefits of financing airplanes, and visited with Qantas Airways.

The focus of one of my days in Sydney was the Centre for Asia Pacific Aviation. This is an independent research and management consultancy firm that's very influential and often is quoted by the media regarding aviation in the Asia-Pacific region. I've been meeting with these folks now for a number of years. It's always a fun, spirited discussion.

Then it was on to the University of New South Wales. This was my annual lecture at the Department of Aviation there. I spent a couple of hours with about 100 students who are going for a degree in Aviation Management. Based on their challenging questions for me, I'd say they're heading in the right direction.

Randy Baseler delivering a presentation photo

No Baseler briefing would be complete without a discussion on Boeing's twin-aisle forecast and strategy. Here I'm chatting it up at a media event in Sydney. (Photo courtesy: Peter Ricketts, Asia Pacific Aviation Report)

And no trip to Sydney can be complete without a stop for fish and chips and a couple of pints! Let's just say my visit to the Lord Nelson Pub qualified.

After Sydney I flew to Brisbane in time to do an hour and a half lecture and Q&A with 130 students and teachers from Aerospace Project high schools. This is a great program across a number of high schools to help create opportunities for young people in aviation. They even videotaped the discussion to be used in schools in other surrounding communities.

Next, I headed to the Boeing Australia offices, to present our market and strategy overview for 120 local Boeing employees. And believe it or not I still had time to wrap things up later that same day at an executive briefing for members of Virgin Blue Airlines management. At Virgin Blue I spent a little time talking about our market projections in the very dynamic Australia, New Zealand and Pacific Island region. And they told us how successfully they're using the 737 in their low-cost operations.

From there, it was on to Coolum, a town about an hour and a half drive from Brisbane, where I attended the 7th Heads of Australian Country Operations (HACO) Retreat. This is a unique meeting of executives of Australian operations of international companies. I had the opportunity to speak to the group about the future of air travel.

And I'm sure those executives are particularly motivated to see how new airplanes such as the 777-200LR and the 787 are going to reshape the future. Australian country managers, as well as many other travelers from Australia and New Zealand will tend to spend long hours on airplanes and in airports around the world. Needless to say they place a high value on comfort and on the overall quality of their travel experience.

And I guess that goes for just about everyone I ran into on this trip. From the air show in Singapore to the complete diversity of people I met Down Under, one thing stood out in common: a keen interest in and fascination with the latest developments that promise to make air travel quicker and more enjoyable.

Well, as I close this posting, I just looked up and noticed some snow flurries coming down outside my office window. I guess Spring hasn't quite sprung after all.

02 March 2006

Width is which?

There's a misleading statement popping up lately in the media.

It's even come up in discussions with reporters here in Australia and New Zealand this week. So I think it's important to take a moment to set out some facts about the Next-Generation 737 vs. the A320.

The statement I seem to keep hearing and reading is that the A320 cabin is "7 inches wider than the 737." And that this somehow makes the Airbus product a more comfortable, more preferred airplane.

Well, okay, the A320 is about 7 inches (18 cm) wider. But the interesting thing about that assertion is that the "7 inch" difference is actually not a cabin measurement, but is measured from the exterior fuselage of the airplane.

Now, I'm not sure how many passengers choose to sit on the outside of an airplane, but I would think it's kind of breezy out there!

So let's talk about the inside, where you and I ride. Inside the cabin is what really matters, and that's where you'll realize there's little comfort difference between the Next-Generation 737s and the A320 family.

Boeing 737 - A320 comparison image

At seated eye height, the passenger cabins have a difference of less than 3 inches. That's less than a 1/2 inch difference per passenger.

When we talk about how and where seated passengers perceive cabin comfort, we've found that this occurs at your head and shoulder level - or at about 50 inches above the floor - not at the level of your knees or seat bottom.

And at head and shoulder level - or seated eye height, as it's sometimes described - there's only a 2.8 inch (7.1 cm) difference between the two airplanes.

Once you realize that, you see that this amounts to less than a half inch more space per passenger. Or about the width of a pencil!

So, which width is which? Well, think about it again. It's not the outside dimension that means anything to the passenger. As I mentioned, when I travel it's usually on the inside of the airplane.

And when talking about these two airplane families, you might also want to consider something else. For short flights, passenger survey results tell us that the major influence on whether you think you had a good flight experience is on-time performance. And the Next-Generation 737 is the industry leader in technical reliability. In comparison, the A320 series has 40% more technical delays.

Which gets us back to the comfort factor. I travel a heck of a lot. And to me, "comfort" also means knowing that I'll get where I want to go, and get there on time.