Guy Norris/LOSANGELES
Boeing plans to deliver the first MD-17 Commercial Globemaster in early 2000 if it can launch the programme by the end of this year. The company believes it stands on the verge of a new market opportunity, but first it must convince the air cargo industry that the MD-17, a civil version of the C-17, is a risk worth taking.
"It's an education challenge," says MD-17 business development director, Chris Raymond. "The operators see the price of entry as high at $175 million in 1997 dollars, but we think they would benefit from a FedEx type of growth," he says, referring to the explosive, and largely unexpected, growth of the express parcels cargo market. In the case of the MD-17, the market would be for heavy and outsize goods, rather than parcels.
In marketing terms, the MD-17 has never been stronger. It received authority to offer the aircraft from the McDonnell Douglas board in December 1996 before the merger with Boeing was completed the following August. An application for type certification was accepted by the US Federal Aviation Administration in May 1997 and, by the start of this year, the Boeing Commercial Airplane Group (BCAG) had endorsed the project. "We've just made a couple of visits with BCAG as part of combined sales tours in the Asia-Pacific area," says Raymond.
Despite the strength of BCAG's marketing behind it, the MD-17 sales team knows it faces an uphill struggle. "Until recently, most of the operators had never even heard of the product. They still don't know much about it, but we're trying to talk to them about a new commercial market," adds Raymond. "When you go and talk to an airline, the biggest aircraft they know is the 747, and they are familiar with the revenue for conventional freight in terms of $/kg. But the idea behind this is a different kind of market and a new kind of revenue."
Both have been sparked by the Antonov An-124. Since 1989, when just two An-124s were in commercial operation, the civil fleet has grown to about 15-20. Thanks largely to wet-lease partnerships with two UK companies, Air Foyle and HeavyLift, the An-124 has become an increasingly familiar sight round the world.
Current operators also include Aeroflot. Ayaks, Rossya, Transcharter Airlines, Titan and Volga-Dnepr (in a joint venture with HeavyLift). This latter partnership has seen An-124 charter business increase sevenfold since 1991. In 1996 Volga-Dnepr carried around 40,000t of outsize freight for an operating revenue of $101 million. Including all operators, it is estimated the An-124 earned in the region of $170 million in 1996.
Boeing, ironically, therefore, views the success of the An-124, and even the Airbus/SATIC A300-600ST Beluga, as critical to the launch of its MD-17. Just as Aerospatiale and BAC, the makers of Concorde, supported Boeing's proposed 2707 supersonic transport in the early 1970s as a benefit to the growth of the overall market, so Boeing now encourages use of all outsize aircraft and the change in attitudes toward them from operators. "Because of the An-124, people are moving from an 'I'm in trouble' mentality to using it in a planned role," says Raymond. "It's a realisation of the use of heavy lift capability in logistics," he adds.
MARKETING FOCUS
Much of Boeing's marketing effort is focused on making operators look differently at the use of outsize aircraft for everything from use in the space and telecommunications industry to oil and gas exploration and large infrastructure projects. "No matter the size, there is a growing desire for rapid delivery to minimise inventory, insurance, handling costs and other elements of the total logistics chain," says the company. "If you can reduce the critical path of a project and, say start generating power two months earlier then the revenue benefits are huge," says Raymond. "You could pay for a lot of transportation with that."
Boeing says the MD-17's short field capability makes it uniquely qualified to shorten the chain further by being able to operate from airfields inaccessible to other types, and much closer to where it is needed by the user. Based on landing distance calculations with a 49,900kg payload, Boeing estimates the MD-17 could use more than 4,900 civil airfields around the world, compared to around 2,770 for other widebody freighters and almost 3,100 for the An-124.
The marketing effort has also been boosted by the flexible sustainment agreement between the US Air Force and Boeing. Commercial MD-17 operators would benefit as "-it allows us to support them anywhere in the world", says the company. Further encouragement also came in March from the commander of the US Air Mobility Command, and commander in chief of the US Transportation Command, Air Force Gen Water Kross, who says the MD-17 could be of use to the military if it becomes available for hire as part of the Civil Reserve Air Fleet. Boeing is itself studying the potential use of the aircraft as a logistics transport.
In the meantime, efforts continue to establish a certification basis with the FAA by the end of June, and to clear export approval by transferring jurisdiction from the State and Defense Departments to the Commerce Department. All will culminate in the fourth quarter when, pending customer interest, Boeing will either launch the MD-17 into production, or decide whether to continue marketing the freighter.
Source: Flight International