Airbus and Boeing may famously disagree over the size of the market for an aircraft above 400 seats, but, curiously, the long-range forecasts on which that dispute hangs are notable as much for their fundamental similarities as their outward differences.
Both manufacturers, for example, see regional jets making huge strides in the market. Both predict Asia will boast the highest growth rate of scheduled air service, and both believe that single-aisle aircraft deliveries will outpace sales of all other sizes. Most significantly, the two companies predict almost identical levels of passenger traffic growth. Boeing reckons on around 4.8% over the next 20 years, while Airbus backs a figure of 4.9%. Where their paths diverge is over how that growth will be attained.
Airbus predicts that factors related to airport congestion and continued growth of trunk routes will constrain other growth options and help drive demand for larger aircraft. For its part, Boeing believes continued government deregulation and aircraft improvements will allow for enhanced service to secondary cities, catalysing demand for intermediate-sized twin aisle aircraft. This vision sees world traffic gains being driven chiefly by frequency additions.
Consequently, although the two respective annual traffic projections are within a percentage point of each other, their predictions on the size of the global aircraft fleet are miles apart. The enhanced aircraft size argument of Airbus sees the world's airlines needing just over 19,000 aircraft in 20 years. Boeing's twenty-year vision of a deregulated world featuring smaller planes flying to new cities will require a whopping 28,558 aircraft. Even allowing for differences in the scope and style of the forecasts these are big differences. However, those numbers are no longer news. What is interesting for industry watchers are their underlying assumptions.
What is a passenger?
Listening to Randy Baseler, Boeing's vice president for marketing and to Adam Brown, his counterpart at Airbus, one could infer that the root difference is a fundamental disagreement as to the nature of the passenger. Baseler states that today's air traveller wants one thing above all else - ready access to nonstop flights. He presents the USA-Asia market as evidence. Two-thirds of all airline customers in that market, he says, are bound for destinations other than Japan, yet 80% of all transpacific flights currently stop there. This is, he says, "a real disconnect with what passengers want".
Boeing believes, however, that looser regulations, more polar routes and extended aircraft range will afford passengers the nonstop service they crave. Baseler contends that in 20 years, over 40% of flights from the USA to Asia will be served by derivatives of the 777 and A340. With these smaller aircraft, airlines will be able to open point-to-point service on new city pairs, such as Atlanta-Seoul and Dallas-Nagoya. Boeing uses such market fragmentation to explain the low need it forecasts - 330 deliveries - for very large aircraft.
Airbus regards the passenger differently. As viewed in Toulouse, the typical air traveller is first and foremost concerned with price. Brown explains that as air travel evolves, it is most often undertaken for personal reasons by people who will "go to considerable inconvenience for the sake of a lower fare". This condition, he contends, applies to business and leisure travellers alike. It follows, states the Airbus argument, that the best way to capture these price-sensitive passengers is to offer lower fares.
Therefore, utilising an aircraft that, through greater capacity and newer technology, lowers unit seat costs by 20% will allow for such market share-winning price reductions. For these reasons, Airbus predicts that over the next couple of decades there is room for delivery of some 1,235 A3XX aircraft.
The contrasting fleet forecasts of the two companies also reveal strikingly different perceptions as to what is best for the airline industry. Boeing's smaller-aircraft/point-to-point service argument is consistent with the strategies pursued by airlines aiming to keep yields high. Airbus and its larger aircraft appear to flout current industry wisdom, which contends that seat capacity and ticket price enjoy an inverse relationship.
Boeing had unveiled its forecast at the Farnborough air show in July, a good month ahead of Airbus. And it appears that Brown had put that time to use preparing a categorical rebuttal to his rival's claims. Brown even found time to make a few cracks about its style. "Unlike our competitor, I'm not going to talk about the fall of the Berlin Wall. I'm just a humble forecaster and I'll try to stay focused on the essentials."
The sequence meant Boeing's forecast could only hypothesise that the new large aircraft would not assist in the fight against airport congestion, using the logic that it would require more feeder flights to keep load factors high. In contrast, Airbus' forecast was able to quote customers saying the new model would help unclog airports - Air France and Emirates both cite congestion relief as a major rationale for their A3XX orders.
Similarly, Airbus systematically refuted Boeing's predictions that fragmentation of the vital transpacific and Europe-Asia markets would necessitate enlarged fleets of 777-size aircraft by illustrating the concentrated nature of destinations in the Far East. Since several Asian countries have 10% or more of their populations concentrated in a single city, Brown reasons that there are fewer opportunities for service to secondary points. This does harm to Boeing's projected need for over 4,600 new intermediate twin-aisle aircraft.
Not-so-large aircraft?
Perhaps, in the end, more important than Brown's dismantling of the Boeing case was something Airbus senior commercial vice president John Leahy added during the market forecast presentation: the A3XX will have only a third more seats than the 747-400. For all the hype surrounding its "wonders of the world" television spots and its "XXL" billboard at Farnborough, the point made most often by Airbus executives when not in the glare of the cameras is that the aircraft is not going to be that much larger than Boeing's biggest product.
Indeed, Airbus executives privately say that, while they are riding the free publicity generated by the A3XX - their self-styled "Flagship of the 21st Century" - for all its worth, the number of seats in each aircraft will be highly variable and up to the carriers themselves. They also explain that, while the company has used the A3XX's size and grandeur to generate excitement among airline executives, in the end, the difference between it and what it is replacing will be much less than is assumed. Different theories abound to explain this fact.
Leahy explains the limited capacity differential is born of Airbus wanting to avoid putting so many seats in the aircraft that its vaunted flight-enhancing details would be lost. That is probably true: Edmund Greenslet, veteran airline fleet forecaster and on the record as saying Airbus will ship 500 of its A3XX in its first 10 years of production, predicts that superior passenger perception will join seat-cost savings in fueling the aircraft's popularity with carriers.
Probably also true is that this measured leap forward is taken with an understanding of the effect too much capacity could have on carrier profitability. For an airline that installs large first- and business-class cabins, the difference in seats could be less than 100. Airbus undoubtedly relates this message during sales calls to yield-conscious airline executives, placing less emphasis on the lower fares its cost saving features and acres of seats will reportedly spawn.
In fact, some insiders believe that, ultimately, Airbus may be planning to follow its traditional strategy of building a "family" of aircraft around its über-jumbo. Such a move would mean that the aircraft's next iteration well could be in the same capacity neighbourhood as the 747-400. One thing in the very large aircraft morass is certain: were Airbus to follow up an A3XX launch with a smaller version, there would be for the first time competition in the high-margin 400- to 450-seat aircraft market. For Boeing, such a development would represent raised stakes indeed.
| Airbus passenger aircraft delivery distribution | ||||||||
| New deliveries 2000-2019 | In-service fleet | |||||||
|
Seat Category |
$ bn |
percent |
units |
percent | 1999 units percent | 2019 units percent | ||
| 70-85 | 8 | 0.7% | 692 | 4.7% | 254 | 2.5% | 628 | 3.3% |
| 100-175 | 327 | 26.9% | 7,570 | 51.6% | 7,333 | 70.9% | 10,621 | 55.4% |
| 210 - 250 | 281 | 23.1% | 3,046 | 20.8% | 1,168 | 11.3% | 3,668 | 19.1% |
| 300 - 450 | 319 | 26.2% | 2,118 | 14.4% | 1,558 | 15.1% | 3,021 | 15.8% |
| >400 | 282 | 23.1% | 1,235 | 8.4% | 36 | 0.3% | 1,235 | 6.4% |
| Total | 1,218 | 100% | 14,661 | 100% | 10,349 | 100% | 19,173 | 100% |
| Boeing passenger aircraft delivery distribution* | ||||||||
| New deliveries 2000-2019 | In-service fleet | |||||||
| Seat Category | $ bn | percent | units | percent | 1999 units percent | 2019 units percent | ||
| Smaller-RJS | 90 | 6% | 4,237 | 19% | 957 | 7% | 4,763 | 15% |
| Single-aisle | 600 | 40% | 12,265 | 55% | 9,159 | 67% | 18,100 | 57% |
| Intermediate | 615 | 41% | 4,683 | 21% | 2,597 | 19% | 6,986 | 22% |
| 747 or Larger | 195 | 13% | 1,115 | 5% | 957 | 7% | 1,905 | 6% |
| Total | 1,500 | 100% | 14,661 | 100% | 13,670 | 100% | 31,755 | 100% |
| Note: *Figures are approximate. Intermediate = Intermediate twin aisle | ||||||||
Source: Airline Business
