There are two teams within Boeing vying for the endorsement of the airframer's top leadership. One is advocating an all-new aircraft delivering 20% improvement in fuel burn and a 10% or greater improvement in cash operating costs. The other is working to further evolve the 737 with a new engine and a host of other improvements to yield a 10-15% gain in fuel burn, without requiring massive engineering changes to today's aircraft.
A comparatively low investment is required to achieve the first 10-15% of performance boost, but the fight against physics forces up the price of achieving the remainder.
"I'd be less than candid if I didn't say the leader in the clubhouse is the all-new airplane," said Boeing chief executive Jim McNerney.
But those inside the company describe the debate as being between those who want to build a new aircraft and those who want to make money.
The concern is that the size of the investment and the break in commonality from today's narrowbody could cost Boeing dearly in market share. It would allow current customers the opportunity to look to Airbus or Bombardier for their next jump in fuel burn reduction.
Massachusetts Institute of Technology and Oxford academic Dr Theodore Piepenbrock's exploration of this question shows that for every 20% improvement in fuel burn, there are diminishing returns in the marketplace and the investment required grows with each successive leap, a reality plainly acknowledged by Boeing's leadership.
Piepenbrock said that for mature industries such as aerospace, small steps that manage risk, investment and take advantage of product evolution - not revolution - not only gain market share, but reap the financial benefits.
For instance, the methodical and organic growth of Southwest Airlines, which used 737 generational commonality as its vehicle to grow, fits within this theory. In comparison, United Airlines would habitually make major - and expensive - changes to its fleet size and staffing to take advantage of the up- or down-swings in the market.
As United showed last decade, after a while the big leaps can be almost fatal.
Source: Flight International
