The ultra-competitive narrowbody market is being commanded by low-fare airline deals, with Airbus and Boeing focusing on refinements of their A320 and 737 families rather than major overhauls
Apart from a handful of relatively small deals, the main shoppers for narrowbody aircraft over the past 18 months have all been low-fare carriers. In January it was Boeing's turn to celebrate, gaining 10 firm 737-800 orders plus 40 options from Australia's Virgin Blue, while just days later Ryanair signed for 22 737-800s and placed options for 78 more. Ryanair now has 125 firm 737-800 orders and a similar number of options.
A few months before, it had been the turn of Airbus to crow, having won its first large European low-fare customer as easyJet chose the A319 over the 737, ordering 120 of the type, with another 120 on option. For both manufacturers, as is evident in their order backlogs and in their promotional strategies, the low-cost carrier market is a key battleground for their narrowbody families.
Ubiquitous 737
To date it has been the 737 - led by Southwest Airlines, which has 375 of the type in service and 115 on order - that has dominated. It took the arrival of JetBlue Airways in early 2000 to give Airbus its first large low-fare A320 operator, with Frontier Airlines following suit. Both manufacturers can state compelling cases for their products and are prepared to go further than ever before not only on price but on performance guarantees.
Although easyJet declined to reveal the large discount it won on its A319 order, it has said Airbus will guarantee that the introduction of the aircraft will be no more expensive in the first two years of operation than the 737-700. An Airbus-backed maintenance programme also means that the cost of servicing the aircraft will be no higher than the 737. "At Airbus, we pride ourselves in putting together a package that is useful to our customers - we are as innovative on the contractual side as we are on the product side," boasts Stuart Mann, director of A320 product marketing.
Getting the maintenance burden under control is critical to keeping operating costs low. Boeing and Southwest have long worked closely on the 737 to ensure its fleet can achieve maximum availability. A similarly special relationship is developing between the manufacturer and Ryanair. For instance, Boeing is helping the carrier to build up its new maintenance base in Scotland, and providing support services as Ryanair takes delivery of new 737s, says Eric Hild, sales director responsible for UK and Ireland.
With the spotlight brighter than ever on operating costs, it will need a remarkable cost improvement to make carriers push for new versions of the 737NG next generation or the A320 family. A 10% step change in operating costs would be the order of magnitude required, says Dan Mooney, vice-president of product development at Boeing.
The engine manufacturers are working hard on developing technology that can deliver improvements in fuel burn to contribute to such a target. Both International Aero Engines and CFM International are eager for news of a narrowbody development programme, and plan to have suitable engine designs ready towards the end of this decade. But for now there appears little impetus from the market to encourage them.
Today, carriers like Ryanair appear content with the current offering. "At the moment we are very happy [with the 737], it is perfect for our low-fares model," says Sinead Finn, sales and marketing manager at Ryanair.
That sentiment is echoed by the manufacturers. Marlin Dailey, Boeing vice-president sales Europe, says: "Clearly there is not a compelling reason for us or Airbus to focus on replacing aircraft from the single-aisle family. It is years away before we really start looking at any alternatives." Stuart Mann of Airbus agrees: "We are not seeing a need at this time for a major step change."
Like for like
The Airbus position is that if Boeing launched a new narrowbody family to replace the 737, with features like fly-by-wire technology, as on the A320, and significantly enhanced operating costs, it would of course respond. For Boeing the 737NG is simply too young to contemplate a replacement. The aircraft only entered service in late 1997 and the earliest models are only a quarter of the way through their typical in-service lifespan of 20-25 years, says Chris Kettering, product marketing manager at Boeing.
But did Boeing miss out by not incorporating fly-by-wire systems or widening the fuselage of the 737 when it had the chance? The 737NG is based on the original 1960s era cross-section. "I thank Boeing every day for that," says Airbus's Mann. The A320 has a seven inch width advantage over the 737 allowing either wider seats or a wider aisle.
Boeing counters that the 737NG is almost an entirely new design over the 737 Classic, with a family concept that saw new body lengths being introduced every six months. "I don't see it as a 1960s design. I look at it as a 1990s design that is the best in its class," says Mooney. "Fly-by-wire is not an issue, particularly in this part of the market. The most important things are durability, to have minimum turn times and reliability," he says. "We could have addressed fly-by-wire but chose not to. Technology should be about adding value, and I don't feel at a technology disadvantage in this market."
Mann believes that fly-by-wire technology is justified on the A320 giving cost savings in maintenance and improved fault finding, and most importantly offering pilots a common system right across the Airbus family. "Having this consistency across fleets gives airlines a lot of benefits," he says.
While this argument is unlikely to be settled any time soon, both manufacturers are bringing in technology upgrades where it makes sense. Boeing, for example, has just certified several flightdeck enhancements which are available on new build aircraft and on a retrofit basis into existing ones. At Airbus the new cabin data management system developed for the A340-600 is being flight tested on the A318, and will be fitted to all A320 family aircraft from year end.
The A318 has suffered order cancellations, for example American Airlines cancelled the TWA order it inherited after its purchase of the St Louis-based carrier, while several customers have switched to other A320 family members because of the 30-month slippage in the development of Pratt & Whitney's PW6000, one of the two choices of engine for the aircraft. The CFM56-5B will be the first powerplant for the A318 to enter service, taking over this role after the PW6000's problems. Despite these troubles, the A318 will become a "very solid family member", believes Mann. Today it has booked 84 orders.
At 100-117 seats, the A318 is the smallest aircraft in the A320 family and is likely to be the last. But there will be configuration changes to suit customers. At the request of easyJet, Airbus is working on extra overwing exits for the 150-seat A319 that will enable the airline to squeeze in another row of six seats.
EasyJet has also indicated it would like the option of an A320 with two more seat rows to give the aircraft 192 seats in a one-class configuration - 18 more seats than the standard A320. However, Airbus is not going to launch another family member in between the A320 and A321, says Mann.
717 studies
Boeing's direct competitor to the A318, the 106-117-seat 717-200, has also found orders relatively hard to come by. At year-end the 717 order total stood at 153 aircraft. In response to interest from customers, and in particular the largest and highly enthusiastic 717 operator AirTranAirways, Boeing is studying the creation of a family with a stretched and longer-range version.
The proposed 717-300 has 20-22 more seats than the -200 and would give AirTran the ability to fly US transcontinental services. Meanwhile, AirTran is leasing two A320s for these routes allowing it to trial the aircraft before deciding on a longer-range type. If the interest is there, Boeing may seek approval to launch the 717 stretch by mid-year.
To round off the 737 Next Generation family, Boeing says it is on the verge of launching its long-awaited 737-900X, a higher capacity and longer range version of the 177-189 seat -900. Through aerodynamic improvements, and without increasing the thrust of the engines, the -900X has increased maximum take-off weight compared to the -900, and with an extra door offers carriers the ability to fit in another 15 seats in a one-class layout, says Mooney. It will only take one customer for this "virtual stretch" of the -900 to make sense, he notes, and Boeing hopes that this will occur this year. n
REPORT BY MARK PILLING IN LONDON
Source: Airline Business
