The unusual became the unprecedented last week when Boeing, having launched its original 777 programme giving airlines the choice of three competing engines, decided it would revert to a single exclusive supplier for a new variant of the aircraft, to the exclusion of the two rival powerplant manufacturers. This is exactly what has transpired with the decision to give General Electric a monopoly on powering the ultra-long-haul -200X and stretched 300X.
The decision has been applauded by some for bringing commercial common sense to the cut throat engine business and jeered by others believing that it flies in the face of free and fair competition. What is not in dispute is that Boeing has made a bold move in selecting an engine ahead of a launch order and from a supplier that at best commands only one-third of existing 777 patronage.
While two-thirds of the airline community might well bemoan Boeing's decision, it could be argued that this turn of events is as much their creation as it is Boeing or the engine companies. Major operators over the last nine years have repeatedly played one manufacturer off against another to the point where $12 million engines have virtually been given away in the hope of redeeming a 20-year return on spares sales.
It was at the urging of GE and Pratt & Whitney that Boeing staged an engine competition, with neither manufacturer prepared to stump up the $500 million needed to develop a new 115,000lb-thrust (510kN) engine without exclusivity. While Rolls-Royce, on the surface at least, was prepared to continue with the status quo, selection of the Trent 8115 and the refusal of the other two companies to compete would have given the company a de facto monopoly.
P&W and R-R, having consented to compete in a winner-take-all game, have subsequently sought to play down their loss to GE by characterising the 777X as a niche market product. The aircraft, however, has evolved from the -100X first pushed in 1995 progressively growing in weight and range to the point where the -300X is being promoted as a 747-400 replacement.
Projected sales in turn have exponentially risen from a couple hundred to 500 aircraft, a figure some regard as still being on the conservative side if Boeing's positioning of the -300X as a Jumbo successor pays off. There are then related sales of the 777-200,-200ER and -300 to consider, which all told makes the 777X no more a niche aircraft than the 737 is. Having made the case on the 777X, will Boeing also go down the same monopoly route on any future 747 stretch development?
For those airlines that have ordered and inducted Trent 800 and PW4000-powered 777s on the basis that larger, longer- range versions were in the pipeline, Boeing's new found fidelity for GE presents a dilemma. Are P&W operators such as United or R-R customers such as American and Cathay Pacific expected to switch to GE?
Boeing and GE might argue that none of three proposed 777X powerplants had much in common with any of the existing 777 engines other than in name.
Airlines, on the other hand, have already spent heavily on engine supporting infrastructure, which in the case of Cathay and American have involved new joint venture Trent overhaul and repair businesses. It is unclear what any of the more than 20 PW4000 and Trent 800-powered 777 operators can do beyond the large number of strongly worded letters already dispatched to Boeing Commercial Airplanes.
The ultimate sanction open to an airline is to vote with its feet and march in the direction of Toulouse. Undoubtedly, a long-term R-R loyalist, such as perhaps Cathay Pacific, may exercise this option and switch to Trent 500-powered A340-500/600s. Boeing will be betting that some of its staunch customers such as Delta and American will put airframe continuity ahead of engine considerations. The incentive will be particularly strong for those carriers that have already extracted advantageous pricing in return for exclusive Boeing purchases.
Boeing risks not only alienating some airlines, but perhaps one or more engine suppliers. One consequence of GE 777X exclusivity could be a closer R-R/P&W relationship with Airbus and more aggressive A340/A330 engine pricing.
Source: Flight International
