All the sizes in all the colours. If Boeing's product range was available in the local department store, even the most picky customer ought to find something that suits.
Convinced that capacity is the key to the future requirements of the airlines, Boeing has sewn together a product range that offers all possible combinations of seat capacity and range. From the 100-seater to the 400-plus, across all ranges, there is an aircraft tailored to fit any customer.
But the downside to this offer-it-all approach is possible confusion through so many choices - some of them seemingly in conflict with each other. So does this ultimate in airline ready-to-wear collections delight or baffle the customer? Some of the stretched variants that Boeing has launched, although seeming the perfect fit for certain markets, have failed to attract large orders. And no matter how completely Boeing fills all the gaps, there remains the seemingly unbridgeable chasm between the narrowbody and widebody families.
The good news for Boeing is that analysts mostly agree with the company's philosophy of having something for everybody. Fred Klein, president of GRA Aviation Specialists in Washington DC, says: "Manufacturers are making sure that every single niche is filled and Boeing certainly does that. Everything is there, from the short- to medium-haul 100-seater way up to the big mother narrowbody, the 757-300. Then you have the widebody 767 way up to the 747. They have all the holes filled.
"If you look back over the last few years, airlines have become more and more cost and efficiency conscious. They are trying to cut costs and one way to do that is to fine-tune aircraft to the mission in hand. I think airlines are fine-tuning their aircraft a lot more than they did 10 years ago. As a result, the manufacturers are trying to meet airline needs as closely as possible. They are looking very carefully at what the airlines want and I think they are trying to do one thing obviously, which is have something for every need. More subtly, they are also thinking: 'If I have the right product and can sell it, then I lock that customer into the family and screw the other guy.'"
Klein adds that Boeing, in filling all the niches, has created logical replacements for outgoing types. "Some of the new products are designed to take over slots currently filled by older aircraft," he says. "For example, the 777-300 is a two-engine, two-pilot, very efficient aircraft that is designed to kill the 747-100 and -200. It's a logical replacement. Similarly, the 777-200 kills the DC-10-30 and the [Lockheed] L-1011 TriStar, while the -200ER competes head to head with the MD-11."
Dan Olason, director of product marketing at Boeing, confirms this logic. A quarter of future sales, he says, will be for replacement aircraft and Boeing intends to be fully prepared for that market. "There are 1,800 727s out there and we had to make a strong case that they should be replaced rather than hushkitted. We have the 727 replacement in the 737-800. It has 11 more seats than the 727, which is heavier and has one more pilot. We have cracked the code."
Olason believes the 737-800 will be the manufacturer's star performer. Looking across the new generation 737s, he points out that the-700 costs $750 more per trip of 500nm (925km) or more, but carries 18 more seats than the baseline -600. "The airline just needs to ask, can I get another $750 revenue with those 18 seats? Then, for another $1,260, you get 42 more seats with the -800. That's why its going to be our best-seller. And if you don't need the range of the 757, it's only another $360 for the 737-900."
This step-by-step approach to launching stretched variants across the product line certainly fills niches. But do they simultaneously cannibalise the product? Craig Jenks, president of New York-based Aircraft/Airline Projects, believes the problem lies not with the product but in convincing the airlines that some stretches will do what they are designed for.
"Where the stretches do seem to bump into each other, then Boeing says they are different because by the time you have stretched an aircraft to its maximum, there is no range left," says Jenks. "For example, the 757-300 has a larger capacity than the -200, but its range is limited compared with the 767-200. For that reason, I don't think there is an intrinsic product clash. But what is strange is that the airlines have not snapped up some of these stretches."
Jenks points out that stretches are usually "smash hits", but that has not always been the case with latest offerings. "The 757-300 makes a superb European aircraft and is also very good for US transcontinental routes, but there are not a host of appeals for it."
Boeing's Olasen, not surprisingly, flags up the 757-300's selling points and plays down that they do not seem to be luring orders. "This is a 225-seater that is easy for us to do. I can drop my seat mile costs by 15% with this aircraft. If I was a charter, I would jump on the 757-300 because it's very important for a charter to get very low seat costs and this aircraft does that."
Olasen argues that if the -300 and some of the other stretches, such as the 737-900 and the 777-300, are not being lapped up now, they will sell in the future and are part of Boeing's long-term planning. By having the most comprehensive product range, Boeing believes it is best positioned for the next industry cycle. "We have just had a wonderful production peak and are going into downturn after a rather large feast. What we are trying to do is posture ourselves for the next upturn. We are very pleased with the proportion of sales of all our 737s, 757s and 767s."
Value and capacity
As airlines ponder future fleet choices, Olasen believes that value and capacity will be the key factors. "The prime thing that either Boeing or Airbus can do to offer value is to offer more revenue," he says. "So, with the 737-800 you get an extra 74in [1.9m] and that means two more rows of seats." Looking across Boeing's narrowbody family, Olasen sees each aircraft offering the potential to add value in a particular market. "There are seven different aircraft in the Boeing narrowbody family and there are reasons for all seven."
At the top of the narrowbody family is the 757-300, which also has a place in Boeing's planning at the bottom of the widebody family. With the family concept increasingly important to airlines, it is critical for Boeing to offer a product that at least appears to straddle both ranges and the -300 and 767-200 share a common pilot rating. But Boeing admits it is a long stretch, describing the -300 as "-less of a bridge and more of a ladder" between the two families.
Boeing remains convinced, as with the narrowbodies, that capacity is the key to the future widebody market. "The dynamics have changed," says Olasen. "You see it most clearly in the North Atlantic market. You could not fly from Hamburg to St Louis with a 747 and fill the aircraft if your life demanded it. That is why the 767 has done so well in that market." The 777-200 and -300 were "must-do" launches, he says, because of a void between the 767 and the 747-400. Boeing calculates that an airline would need to be certain of a 24% more passengers to justify a 747 over a 777-200. "We had to come up with the 777-200," says Olasen.
Looking further up the range, Boeing remains suspicious, but not totally dismissive, of the very large aircraft market. "We may put another box at the top, but we won't do it right now," says Olasen. "But things change. We will wait and see what the customer asks us to make."
Tough market
Boeing is less coy about its cuckoo-in-the nest, the 100-seater 717. It says that any question mark hanging over this aircraft is to do with the market, not the product. "The 100-seat market in a deregulated environment is very tough," says Olasen. "But the 717 has as good a chance or better of succeeding over any 100-seater because Boeing knows how to build it efficiently. It has excellent performance.
"If we get the price and operating costs where they need to be, more airlines will look at it. We have got to communicate that to the airlines. We are under pressure in this market from the car and the train, but the 717 is the best vehicle we have and no one has anything better."
Whether or not it decides to top and tail its product range, Boeing is convinced that a manufacturer must offer as wide a selection as possible.
"We are giving the airlines lots and lots of choices and that's because the airlines have asked for those choices," says Olasen.
Source: Airline Business
