The next year

The next year is ahead of us and after 2010 ended on a high note with the launch of the A320NEO, 2011 can be expected to be once again a very interesting year for aviation.
With oil prices again rising towards $100 a barrel, one could expect orders to be shifted to aircraft with lower fuelburn, especially the Bombardier CSeries and the A320NEO. Maybe the first orders for the -NEO will be announced in January, as Scott Hamilton predicts.
Maybe we see some orders for the CSeries complete until the end of January, when the financial year of Bombardier ends.
If there is indeed a flush of orders for those aircraft, we should hear something out of Seattle (aka Chicago) regarding the future of the B737 soon. Southwest seems to prefer a reengining as they do not believe that Boeing will be able to pull out a successor around 2020.
Embraer is also about to decide what to do with their EJets and whether they should develop an aircraft that is larger and can compete with the CS300 (at least).

My personal winner of the last two years, regardless of a lack of big orders, is the CSeries:
1. The CS100 and the CS300 will be the most efficient aircraft in their categories.
2. The A319NEO cannot really compete with the CS300 and is only of interest for airlines that operate the whole A320 today.
3. A reengined B737-700 could not compete with the CS300 as well.
4. If Embraer decides to develop a larger aircraft to compete with the CS300, it will be years out.
5. The successor families of the A320n and the B737 will probably start at today's A320 and B737-800 size - there won't be equivalents to the A319 and the B737-700 in my view.

Have a nice 2011!


Is the NEO a threat for the CSeries?

AirInsight published a very detailed report about the CSeries this week. The main question to be answered was, if, after Airbus announced the A320NEO, there would be still a business case for the Bombardier CSeries. Not to my surprise (because of own studies), the answer was: Yes!
The only really big threat for the CSeries, according to the report, would be pricing-power from Airbus and Boeing, which could choose to give away A319NEO and 737-700W (or maybe also a 737-700NEO???) with losses just to protect their market.
There is an additional short piece at AirInsight detailing that threat here.
So how deep has a discount to be to be attractive?
Let's start with the price of the aircraft: let's start with the 41% that Airbus has to give according to the AirInsight article to match a 25% discount by Bombardier.
The AirInsight report comes to the conclusion that for a 500nm mission the CS300 will be $716 lower in costs and $444 lower than a A319NEO. I do not fully agree with the number of seats the report puts down for the various aircraft, so I will not discuss the differences in seat-costs here. Just assume a given flight with a given number of passengers (at or below the maximum of the smallest of the three aircraft), no matter what aircraft you fly.
For an airline, to get a better deal over the full life of the aircraft one should not only take into account the purchase price of the aircraft but the overall costs including operation and maintenance of the aircraft.
Assume there a seven flights per day on 320 days per year (allowing for maintenance) for 10 years - that makes 22,400 flights.
So the difference in operating costs between a CS300 and a 737-700W for these 10 years would be about $16 million, about $9.5 million against the A319NEO.
A big portion of the difference in operating costs is fuel burn - and if the price of fuel goes up ($2.25/gallon was assumed in the study), the operating cost difference goes up as well.
So there would be another big discount  needed to make up for those difference in operating costs. If Airbus and Boeing are willing to make these discounts remains to be seen, but I doubt it - although Airbus once made such discounts for the A340-600 to sell it against the B777-300ER.


NEO is out!

The time of the "unknown unknowns" is over! Airbus just this morning officially announced that starting in Spring 2016 the new "NEO" version of the A320 family can be delivered to the customers. Airlines (and others who can afford) then have the choice between four engines with the CFM LEAP-X and the PW1100G being the new choices - I guess this is a "first time" in aviation history; although not a really important one, as my guess would be that there will be only a few who will opt for the old engines (CFM56 and V2500).
Airbus claims that the NEO versions, which will also feature the sharklets, will have a 15% advantage in fuel burn versus today's aircraft. To explain, why it is only 15%, although CFM and PW both talk about a 15% SFC advantage for their engines (vs. CFM56 and V2500) and Airbus said that the sharklets lead to a fuel burn reduction up to 3.5%, we have to remember:
  • that the new engines will be heavier than the old ones,
  • will have a larger fan diameter, thus produce more drag
  • there will be additional weight in the wings and pylons to accommodate the heavier engines
These three points are taking something away from the 15% SFC (uninstalled) advantage +3.5% fuel burn advantage, leading to (approximately) 15% fuel burn reduction.

Now - as Airbus came forward today: what is the rest of the (aviation) world doing?

A320NEO - picture taken from the Airbus website


The most important question of course is, what the other "big one" will do:
My guess is that this is hinging on what the two most important customers for the B737, Southwest and Ryanair, will have to say.
In the last weeks both airlines talked up the reengining, saying that "doing" nothing" would be no option. A new 737 would of course be the solution they prefer, but Southwest was skeptical, that Boeing would be able to deliver a 737 successor in the 2020 timeframe.
And the 737 is not the only battlefield for Boeing. The 777 has to be (at least) updated and this should be done in the same timeframe as the A350-1000 comes to market - whenever this will be. Probably this will not happen exactly in 2015. If Airbus decides to please Emirates they might opt to alter the -1000 design to a -1100ER, meaning that the airplane gets larger and gets a little bit more range. But the thrust has to rise into the 100klbf range then, and I doubt that the core of the Trent XWB would not be capable of that. As suggested that would open the door for a GE90 variant - an article in Aviation Week suggested that it would just be a downrated version of today's GE90-115B, but the SFC would not meet the requirements, so there would be some technology infusion from GEnx required. But the same engine then could be used by Boeing for their 777 update/successor.
So the path regarding the 777 seems more obvious than that on the 737. At the last quarterly call Boeing kind of negated the possibility to do both programmes at the same time. The question is: what will be first:
  • If the 737 is first, Boeing's only choice would be to do a reengining - which would be more costly (if a significant fuel burn saving should be achieved) than for Airbus. A clean-sheet design would not be that much better than the A320NEO (as they would have to work with the same engine technology) to justify the $10billion+ investment.
  • If the 777 is first, they will probably loose some market share to Airbus in the narrowbody market for a couple of years.


As we all know, also Embraer is thinking, along other options, about reengining their EJet-Family. With Airbus launching the NEO this option becomes more likely. Bombardier eating into their market with the CS100, Sukhoi having a low cost option with the Superjet and Airbus with a A319NEO having an aircraft with probably not much higher trip costs but more seats than the E195 would make a reengining (maybe with the CSeries GTF?) a good option as I explained earlier.


Well, Bombardier was leasing the pack with the CSeries. Without the CSeries, there would not be -NEO launch today (or anytime soon). The A319NEO will eat into the CS300 cake. Question is if Bombardier can react to it and if yes: how?
Could they stretch the CS300 a little bit to reach in between the A319 and the A320. Could they launch a CS500 that would maybe come to market in 2016? And if yes, would they use the same engine (PW1524G) and the same wing, thus compromising range, but optimizing trip and seat costs for typically flown trips around 1000nm. Or can they even hang the same engine under the (strengthened) wing without enlarging the main landing gear?

Bottom line: the first "unknown unknowns" is away - but now there are many others out there...good for us bloggers!