Few new airliner births can have had such an agonisingly slow and controversial labour as that which has accompanied the launch of a new large aircraft. After almost a decade of market studies and design concepts, the technology is proven and the economics largely worked out. But the fundamental question remains as to whether and when the market will need an aircraft above 400 seats.
It is a debate close to the heart of Adam Brown, head of strategic planning at Airbus, not least because of the consortium's continuing ambitions to launch the A3XX family into service by 2005. His global market forecasts have consistently, and often uniquely, prophesied a buoyant demand for the very large aircraft - more than 1,300 units over the next 20 years. Such figures tower over those of other forecasters, but Brown remains convinced that his numbers are right.
At root, the debate comes down to the old question of frequency versus size. The argument runs that the industry has completed its latest cycle of increasing aircraft seat size, and that airlines will now seek to grow by adding more frequencies with existing aircraft. Boeing argues that demand will come, but not for another decade. Others have gone so far as to doubt the existence of a market at all.
Brown believes that the size/frequency equation is being misunderstood: "We see these two trends as complementary not competing." It is, he adds, a matter of segmentation. He concedes that frequencies will grow, encouraged by demand from lucrative business travellers for greater numbers of direct flights. These services will indeed require aircraft below 400 seats, and probably smaller than the 747-400. That, he says, was the launch case for Airbus's 300-seat ultra-long range A340-500.
Meanwhile, the demand at the other end of the scale is for ever-cheaper economy fares. Enter the 600-seat A3XX promising at least a 20% gain in unit costs. "It will be the big, low-cost, mass-transit, hub-to-hub people mover," says Brown, brushing aside early images of the aircraft as some kind of luxury hotel in the skies.
In short, the new large aircraft will perform a similar role to the 747 when it was first introduced three decades ago. Also like its predecessor the fleet will be concentrated among only a handful of carriers. Over half of the demand is expected to come from only 10 airlines at 10 congested hubs - including Tokyo Narita, London Heathrow and Singapore.
Market segmentation
Brown agrees that the end point of such a strategy could see long-haul business travellers effectively handled separately from the masses - a move which would seem to fit squarely with airline marketing goals.
Although it is not necessarily the official Airbus view, he adds that it is possible to extend the argument further, to envisage a supersonic aircraft of perhaps 20-50 seats taking the place of the first class cabin.
So why does Airbus see this segmentation when others do not? Brown believes that it has much to do with the way that Airbus compiles its forecast. It is built from a bottom-up analysis of the needs of around 270 carriers and some 18,000 flight sectors.
This approach, says Brown, produces very different results to studies based on initial assumptions about global demand. He reserves a special warning for the dangers of looking at world averages that give no real clue to how the market will segment.
Brown points to anomalies thrown up by other forecast methods, such as unrealistic assumptions about increase in utilisation or aircraft speed. The Airbus team calculated that one study would have required the world fleet to go supersonic to meet the predicted capacity growth with the forecast aircraft sizes. He concedes that the Airbus model is somewhat restrained on likely increases in aircraft productivity and speeds, being "more congestion sensitive than most".
But it also shows relatively modest annual traffic growth of around 5%. "Most other forecasts are much more optimistic," he says, adding that even the Asian crisis has failed to upset the model. "Our initial feeling was that the Asian crisis was going to be very severe but now, long-term, we think its a blip," he says. The outlook is for Asian traffic growth, though not necessarily yields, to be back on course by next year.
In the more immediate term the launch of the A3XX may well rest on the state of the Asian carriers - prime candidates to take the $200 million aircraft. Airbus says that it plans to go back to them at the end of the year.
Whether or not the airlines are yet ready to sign up, Brown believes that his model remains sound. "There may be some awful blunder in our forecasts that we have not spotted. But if there is then we haven't found it yet," he says.
Source: Airline Business
