CSeries impact

Last year I wrote an entry about what the Bombardier CSeries meant for aircraft development. Meanwhile Airbus announced the A320NEO programme on Dec 1st, 2010 and announced first customers. I expect more to come forward in the next weeks and months - by the time the Paris Air Show ends, Airbus could have 500+ orders (or at least MoU-like commitments) for the A320NEO in the books.
If you read how Southwest is now pushing Boeing to clarify it's plans for the B737, you can clearly see how the decision by Bombardier to lauch the CSeries affected the whole development cycle:
Virgin America, the launch customer of the A320NEO, looked very seriously to buy the CS300 - it was only when Airbus came forward with the NEO that Virgin decided to stay with Airbus. So, very clearly: without the CSeries there would not be a NEO to buy!
Boeing has to and will react - until lately I was not convinced that they would do a 737 successor. My thoughts were, like John Leahy, that they would announce a reengining of the 737 soon after a launch of the NEO. In the meantime I am a little bit more convinced that they could announce a new narrowbody. Scott Hamilton recently argued why. If Boeing is right to think that the A350-1000 will enter airline service not before 2019 is on another piece of paper - but if they are convinced, it would make sense to do the narrowbody first - well, if it is a narrowbody! It could also be the long-discussed small widebody, starting at around the capacity of todays 737-800 and going up to the capacity of the 757-300. They would leave the 150 seater market to Airbus and possibly Bombardier (CS500?) and maybe Embraer, but they would have another big market for themselves.
At the EADS press conference CEO Louis Gallois thought loudly about a tie-up between OEM's, as the market place gets increasingly crowded during the next decade. There were speculations then that Airbus could partner with Embraer and Boeing with Bombardier - I could also see some cooperations with the japanese Heavies, as I wrote earlier. All this will not happen this year, but the possibility - and good reasons - are there for it that it will happen sometime.

Southwest, airtran and the 737-800

Addison Schonland from airinsight has this interesting piece about Southwest and airtran and what an order for the 737-800 could mean. He is absolutely right I think: to understand the rationality behind it you have to take a deeper look into the economics of the 737-800 and it’s competitor, the A320.

Say (just for simpliciy), the operating costs of the 737-800 and the A320 are equal (inreality it depends from airline to airline, route to route etc., see also Fuel burn and operating costs) . Then, because the 737-800 is a little bit larger than the A320 (a fair comparison has 162 seats for the 737 and 150 for the A320), the operating costs per seat are lower for the 737-800 by 8%.

The reengining of the A320 will drive costs down by roughly 15% (per the better SFC, the skarklets, the lower maintenance costs of the engine and whatever Airbus might do besides that).

Now the A320 has an advantage: 15% per flight, but considerably less on a per seat basis. This kind of explains why Boeing (at least officially) thinks they can forego the reengining and work with incremental improvements instead to match the A320 costs on a per seat basis.

But as fuel costs will rise in the future (who is so optimistic to think they will stay where they are or even go down?), the advantage of the A320NEO will be harder to match. And as I explained in  A320NEO vs. B737NG+, lower noise fees in Europe and elsewhere will add to the –NEO’s advantage. So it is not yet clear, that Boeing will not do a reengining of the. Lately, Boeing hinted that a decision will only be taken in 2011, so they might wait for the acceptance of the NEO and what Airbus will build into that upgrade besides the new engines.

Ad the Economist wrote last week, the decision at Airbus to go-ahead with the reengining is due tomorrow – then the last call is with the EADS as the owner of Airbus. They have to give the green light. If it is given, we can expect Airbus to market the NEO in the middle of October. Expect orders – or conversions from existing orders – to roll in soon!