ICAO's new noise and CO2 regulations a miss!

The International Civil Aviation Organization’s (ICAO’s) Committee on Aviation Environmental Protection (CAEP) proudly tells us that they achieved agreements  for future CO2  and noise regulations. Nothing particular is said about the CO2 standards, although they were already heavily criticized by Dimitro Simos, author of the Aircraft Performance Software PIANO when a draft of the plan was outlined in mid 2012.

Narrowbody Review 2012

Slowly, but inevitably, the year 2012 is coming to an end. Here are some thoughts about the current situation of the narrowbody market:

Orders

 

Boeing now has not yet fulfilled its own prophecy and has “only” 969 firm orders for the B737MAX in its books (with 819 orders in 2012), shy only 31 from the goal to have 1,000 by the end of 2012 and I guess that there will be another order (or more) in December to fill that gap..

The Airbus vs. Boeing Ad-War

An „ad-war“ broke out, media says, when Airbus published an ad in several aerospace publications, accusing Boeing to lie when they compare performance of the B737MAX with the A320neo and the B747-8I with the A380.

A good summary can be found here. What I found amusing is that obviously the Pinocchio theme is a tit-for-tat response to spat over market share back in 1994...

One could see it a little bit differently: maybe the war was “broken” by Boeing when they began to publish their ads about B737MAX vs. A320neo and B747-8I vs. A380 performance?

But lets look at the facts:

Boeing always claimed that the B737-800NG has an 8% cost advantage versus the A320 an a per-seat basis and as the B737-800NG has a typical seating of 162 seats versus 150 seats in the A320 this means that the cost per flight are more or less equal, as the seat difference is exactly 8%.

Now Airbus claims that the A320neo needs 15% less fuel than the A320ceo. Boeing claims that the B737MAX needs 13% less fuel than the NG.

Let’s say fuel costs are 50% of overall (cash operating) costs.

Then the A320neo cost per flight is 92.5% of the A320ceo cost per flight (0.85*50% fuel costs + 50% other costs).

The B737MAX-8 cost per flight is 93.5% of the B737-800NG cost (0.87*50% fuel cost + 50% other costs).

So after reengining there is a slight advantage for the A320neo in terms of cost per flight.

On a per seat basis there is an advantage for the B737MAX-8 of 6.85%.

Of course, this is a very simplified view at the costs. Any change in maintenance costs of the airframe and the engines also play a role. But if you compare the LEAP-1A powered A320neo with the LEAP-1B powered B737MAX-8, the changes in engine maintenance costs should be comparable to the CFM56 powered A320ceo and B737-800NG.

The question is why Airbus and Boeing are “communicating” via ads? Airbus says that the Boeing ads might let “less sophisticated airlines” keep from talking to Airbus directly.

“Less sophisticated airlines”?

Of course, there are airlines which have a better aircraft performance analysis than other ones – the larger the airline, the better the capabilities, I guess. I know Lufthansa always does a very thorough analysis before buying any aircraft. Singapore Airlines also does very good work here as many others also. Air France probably as well does a good job here, although on the engine side thy seem to be always preferring a GE/CFM engine choice (if available), as the national player Snecma (Safran) is involved there.

But look at the recent comments from Estonian’s CEO about the CRJ900, calling the aircraft not competitive for markets with less than 80 seats (the CRJ900 has 88 seats at Estonian). So why, one could ask, did they choose an aircraft with more than 80 seats when they know they want to use it in markets with less than 80 seats?

Clearly, the department for aircraft performance analysis at Estonian – if there is one – lacks some competency, as well as all of the upper management, as they finally gave approval to buy the aircraft.

So Airbus in the end might have a point here in launching the counter-ad…

Lion Air vs. AirAsia

That just caught my eye: after AirAsia announced to buy Batavia Air, merges them with Indonesia AirAsia and thereby becomes a real competitor to Lion Air, now Lion Air (together with NADI) strikes back in AirAsia's home country.
Competition in Southeast Asia will get hard in the next few years. But the region is the one with the highest growth and everyone wants to get piece of the cake.
Will the new airline place a large narrowbody order? Or will they be fed from Lion Air's existing orderbook for B737-900ER/-MAX9? Next Tuesday could be interesting - and AirAsia already announced that they want to place an order for 50-100  more A320 (ceo I guess) at the Berlin Air Show (ILA), also next week.

Expected Airbus Order from China

As german chancellor Angela Merkel visits China this week, it is expected that China will order up to 100 Airbus narrowbodies. Looking at the delivery rate to chinese airlines and the backlog that chinese airlines have with Airbus, an order for 100 aircraft is not too much, even if the bulk of these would be for the ceo version. If I counted correctly there were 125 deliveries of A320 family aircraft between January 2011 and July 2012. The current backlog of chinese airlines is 186 aircraft - at the current delivery rate this is good for about 28 months. At the end of 2014 all the backlog would be gone.
There are an additional 42 orders from lessor ICBC and a MoU for 36 aircraft from CALC though, but these aircraft could also be placed outside China.  At best (here: when all aircraft are placed with chinese airlines) the backlog would be Zero at the end of 2015, just when the neo enters service but probably a long time before delivery slots would be available (although some chinese airlines or lessors may have reserved a limited number of slots in advance).
But before the A320neo will be available in larger numbers for chinese airlines (probably then coming from the chinese Airbus factory in Tianjin), Airbus can sell a bunch of ceo aircraft to chinese airlines meanwhile, thereby utilize also the Tianjin factory until the ramp up of the neo provides for a smooth transition there.

What is the situation at Boeing? There were 77 deliveries to chinese airlines from January 2011 until the end of July, a much slower pace than at Airbus. There are 212 open orders from China for the B737NG, good for 53 months of supply at the current delivery rate. This takes us into 2017 but well before the targeted MAX EIS and any open delivery slot for the reengined version of the B737. So another order for the B737NG from China is almost inevitable as well to satisfy the growing chinese aviation market.

A little unknown in the context of narrowbody aircraft supply to chinese airlines is the C919 and when this aircraft will enter into airline service. I do not know anybody who firmly believes that this aircraft will be on time (meaning a 2016 EIS). I would deem a 2018 EIS as a success, an even later date not to be a real surprise. And I would not expect a sudden ramp up to meet a significant part of the demand from chinese airlines.

The other unknown: the chinese economic activity. We are just seeing a considerable slowdown here. Highspeed Rail is another factor which could slow the growth in aviation. Boeing denied that possibility in their Current Market Outlook, but used numbers from 2009 in their presentation. Words from chinese airline managers sound different.

The chinese market is important for both Airbus and Boeing - 20% of all Airbus narrowbodies were delivered to China since January 2011 and 12.5% of all B737NG's went there. So a slowdown of economic activity in China is also of great risk for both manufacturers, in particular for Airbus.

UPDATE: About 30 minutes after I posted this entry, China Southern reported slumping profit due to the economic slowdown.

Narrowbody Market Shift

AirInsight last week published a report about the narrowbody market, especially about the 100-149 seat segment. What they found is that - in their opinion - the failure of aircraft in this segment was due to either weak OEM's (and I guess that this means that the OEM was undercapitalized) or due to the fact that the aircraft were no clean sheet designs optimized for that market segments but rather derivatives of (mostly) larger planes. As such a "shrink", an airplane carries a lot of weight that is not needed for it's role. For example the wings are too large and heavy, as they were designed for the original and larger aircraft.
The only aircraft that is currently in production and is a point design is the EMB190/195 family - where the EMB195 seems to be a bit underpowered in terms of takeoff length at MTOW, but the thrust is OK for typically flown routes below 1000nm.

COC and DOC Part IV

Over at Leeham News where is a heated debate (once more) over if the A320(neo) or the B737(MAX) is the more efficient aircraft. As both aircraft were ordered and are flown in thousands both aircraft obviously cater their respective users - besides there are quite a few airlines operating both aircraft.
I tried to lay out how looking at DOC's or COC's or looking at costs per flight or per seat influences such a comparison in an earlier post.
Let's have another look at it. DOC or Direct Operating Costs are comprised of

A320 vs. B737-800 Fuel Burn

There is the never-ending "war of words" between Airbus and Boeing of which aircraft is the more fuel efficient one, and, since the launch of the A320neo, if the A320neo would be more fuel efficient and if yes, by what margin. Further complicating, Boeing meanwhile claims, that it's yet-to-be-named reengined B737 would have the same advantage in terms of fuel efficiency as the current generations of these two narrowbodies have. And as even Boeing does not seem to know how the exact configuration of the reengined B737 looks like, this claim seems (at least) a little bit premature.
As I tried to lay out in an earlier posting, much depends on what you want to compare:  fuel burn per trip of fuel burn per passenger.
The official documents provided by the manufacturers

Boeing B737 whatever...???

I pledged to not write another part of the "...successor" story, so I named it differently. Scott Hamilton once again broke the news: Boeing is now leaning towards reengining. If that would really happen, this would be what John Leahy always expected (and so did I).
If we recap all what has been said before it becomes clear, why a reengining would be the best possible action for Boeing. Of course, a new airplane could be better by about 10% in operating costs, but at what cost and risk for Boeing? Just look at another story published yesterday by Scott Hamilton about the latest round in B787 delivery delays! It will take a few years for Boeing to get in a position where they earn some money with the B787. And with the refined A350-1000 Boeing might now feel the pressure to do something with the B777 earlier than planned before. The Y3(B777 successor) was currently planned around 2025, but with the A350-1000 arriving in 2017/2018, that could move to somewhere around 2020. That moves the Y1 (B737 successor) to the second half of the 2020's - and meanwhile, say in 2017 a reengined B737 could appear. Capital requirements for that, if true what Hamilton writes, should be in the same $1-1.5bn range as the A320neo program - probably a little less than Airbus's costs, as we can assume  that we will only see one engine on the B737RE - a LEAP-2B, how I would call it for now: with a smaller, scaled down core, a fan with the maximum possible diameter to fit under the wing without nose gear extension.
The technical risk is minimal, compared to the risk of a new airplane a la B787. Additionally, Boeing will see if the LEAP engine will work as anticipated when entering service on the A320neo.

A350-1000 with more range - implications for B737 successor?

Scott Hamilton just came out with this story: the A350-1000 will get more range (500nm) and a more powerful Trent XWB engine (+5000lbf).
A quick calculation revealed that 500nm more range need about 12.3t more MTOW. About 10 tonnes are for the extra fuel burned to cover the extra 500nm, about 2 tonnes needs the structure to carry the heavier aircraft, the balance goes for fuel reserves, as these are calculated in dependence of the actual flown range.
Thrust-to-weight ratio thus will be largely unchanged, runway performance probably a little bit worse, if the wing is unchanged. Compared to the B777-300ER, the wing is not heavily loaded, so I do not believe Airbus will enlarge the wing.
Scott writes that even the 8500nm will not meet Emirates desire of being able to fly Dubai - Los Angeles nonstop. The great circle distance for DXB-LAX is about 7250nm, so there is a 17% range margin. But is this enough to counter strong headwinds. A quick calculation shows that 17% of Ma0.85 (cruising speed of the A350) are equal to about 83nm/hr, meaning that if the average headwind on the route is higher than 83 knots, a technical stop would be necessary. I do not the average wind speed on the route over the north pole, but I could imagine that average wind speeds of 83knots and more ar possible.
The calculation also confirms that Emirates second desire - to add more pax - cannot be part of the change in the A350-1000 specification. So I wonder what is the rationality behind these changes? The 777-300ER has slightly less than the 8000nm of the "old" -1000 configuration, the 500 extra miles is good for a couple of extra city pairs, but does that justify the pain? The pain is probably bigger for RR than for Airbus, as these 5000lbf more of thrust will very likely mean that the whole core has to be changed, which means a lot of investment.
The main reason for that change might be to prevent Boeing from concentrating on the B737 successor. Airbus might hope that Boeing now feels more pressure on the B777-300ER and to concentrate R&D resources here and "only" to re-engine to B737 as Airbus always predicted.
And Airbus is apparently not alone: the recent Bernstein Research Note also suggests that Boeing should re-engine. Richard Aboulafia, VP of Teal Group, also thinks that a B737RE is the best answer to the A32XNEO, as one can reread in the AirInsight Paris Airshow Discussion transcript.
I guess we can expect the official Airbus announcement on Saturday, June 18th at the press briefing.
One is for sure - this years Paris Air Show is getting more and more interesting.

A320 deliveries ahead of NEO

There is a lot of speculation if deliveries of the "classic" A320 will fall in 2014-2015 in anticipation of the A320NEO. Both Boeing and Airbus meanwhile are talking about accelerating deliveries - Airbus is thinking about up to 44 aircraft a month, up from the current rate of 36 and the planned rate of 40 for next year. Boeing will also increase it's output rate of the B737 line to 40 per month.
One could argue that in the case of Airbus the rate hike will only last a year, before airlines will start to negotiate conversions for deliveries close to the NEO EIS from the "Classic" to the NEO. One argument that can be heard is that deliveries of the B737 Classic plummeted from 218 in 1992 to just 76 in 1996 - but the 737NG entered airline service in 1998 and in 1997 deliveries increased again. Please read this article from 1997. Even CFMI was suprised by the large number of orders for the CFM56-3, the engine of the 737 Classic.
I think tthe ups and down in aircraft production are more related to the world economy than to the appearance of new aircraft. If the economy is thriving, aircaft deliveries will do so, too - with a time delay of one or two years as the manufacturers and suppliers cannot ramp up and down their production in days.
You can see the relationship in the chart I put together. It shows narrowbody deliveries from Boeing (B737 family) and Airbus (A320, family; sorry, I did not implement the B717 nor the B757). Then I looked up the world GDP growth rates. What you can see is that dips in deliveries always come after the GDP growth has had a low.
1. Through 1991 and 1993 world GDP growth was flat at 2%. Deliveries subsequently fell from around 350 to less than 150 in 1995 and 1996. GDP growth recovered starting in 1994 and stayed reached a high of almost 5% in 2000 with a small dent in 1998 due to the asian crisis. Deliveries soared to around 550 per year between 1999 and 2001. The boom came to a sudden stop due to 9/11.
2. In 2001 the internet bubble burst from 2000 reached the ecomomy. The economic crisis was sharpened by 9/11, leading to a lack of new orders for aircraft (apart from Ryanir). Deliveries fell back to a low of around 400 in 2003 before bouncing back, as the global economy recovered starting in 2003 with growth rates exceeding 5% in 2006.

Many "experts" thought that as a consequence to the financial and economic crisis starting with the Lehman Brothers bankruptcy aircraft deliveries would have to fall at least as dramatically as after 9/11. But this time  neither Airbus nor Boeing were forced to cut delivery rates of their narrowbody families. The reason is that, different than during the 90's of early 2000's, the emerging economies, especially in Asia are now a much more powerful part of the global economy and air traffic was growing in these countries even in 2008 and 2009.

It will depend on the world economy if delivery rates for the A320 Classic will dramatically fall in 2014 and 2015. But as in Asia air traffic is still growing and will do so for many years, I believe that even a small dip in the world GDP growth would not harm the A320 Classic deliveries too much. There are too many carriers like Tiger Airways, Jetstar, AirAsia, who need aircraft badly to satisfy demand.

Boeing 737 successor Part III

We still have to wait about 3 months until we probably hear from Boeing what their plan is regarding the future of the B737. But if you read what the Boeing CFO this week said at the JP Morgan Aviation, Transportation and Defense Conference in New York, one has to question why Boeing should develop a new airplane at all.
If Boeing believes what their CFO James Bell told the audience, Airbus just closes today's gap between the A320 and the B737-800 with the introduction of the NEO. So why then doing something at all? If both big players are on-par, they could go on and share 50% of the market each - at least above the 150 seat level, where Bombardier reportedly will not offer a CS500 (and the announcement of collaboration with COMAC sheds some light on this) and Irkut and COMAC will have a long way to be a player in the the market.
So where is the incentive for Boeing to spend some $10 billion on a new aircraft with all the technical risk involved, but still staying with a conventional tube-and-wing design and the risk that Airbus will follow a few years later leapfrogging the 797 with an unconventional, radical new design.
The low-risk and low-cost solution would be what Airbus says Boeing will do: follow with a re-engined B737 and let the engine maker(s) pay for most of the cost, as now does Airbus (Udvar-Hazy made some comments about this at the ISTAT).
There are just two things that could lead Boeing to design a new aircraft:

1. Their statement that the re-engining only closes the gap is not true and in reality the NEO's are far better in costs then the NG's. The steadily rising oil price is in favor of the NEO cash operating costs right now and there is probably nobody out there who will predict oil at below $80/barrel in the future. But a re-engining could close that gap - maybe not entirely, but close enough, so that by "adjusting" the purchase price (see A340-600) for the aircraft should be good enough to sell the aircraft.
2. The basic design of the 737, namely the narrow cabin is too old to be attractive for airlines in the future. This is somehow contrasted by the good response to the Sky interior just introduced for the B737NG.

Bottom line: I am not convinced that Boeing will show the world a B797 in Paris - at least not this year...

There is more about that here:
Part I
Part II
Part IV

Boeing 737 successor

Reportedly, Boeing focuses on a replacement of the B737 rather than doing something with the B777 in the nearer future. Mike Bair, who leads the B737RS studies at Boeing, said in the interview with Bloomberg, that "Six or nine months ago, we were leaning toward a bigger airplane sooner" - meaning that Boeing did not expect Airbus to launch the A320NEO and now finds itself captured between Bombardier on the low-end side of the single-aisle market and Airbus trying to steal traditional B737 customers. So they have to react, but reading carefully the Bloomberg interview and also the latest blog entries from Flightblogger Jon Ostrower makes me believe that they are not really sure what to do. Basically, they have two choices:

• A 6 abreast family sized from 149 seats (to please Southwest Airlines in particular) to around 200 seats. That would mean, that todays -700 would grow a little bit, todays -800 and -900 could stay in cabin lenght were they are today. For sure, cabin diameter has to increase to "speed loading and unloading, with either a wider aisle or possibly two aisles".
• That brings us to the second option: a 7 abreast in 2-3-2 configuration with two aisles. That configuration would make it very hard to please Southwest with a 149 seater. The aircraft's fuselage would be heavy in comparison with a 6 abreast aircraft, as the extra aisle takes extra space you have to buid around. Then the 149 seater would have 22 seat rows, compared to 23 rows of the  -700 with 137 seats in Southwest configuration today. It would not only look like a "Mini Guppy" (see below), but the problem is that in case of "one engine out" the stabilizer has a small moment arm and thus has to have a relatively large area, comprising weight for the larger family members, which does not need the large stab. Vice versa is the case with the wing: to get exceptable runway performance and range for the largest family member (runway performance is today's weak point of the -900ER), the wing has to be sized accordingly, which means extra weight for the smallest member. Of course that's a problem of today's B737 and A320 families, too. But with the CSeries entering the market, which is optimized around 135 seats and trans-con range, there is an alternative available which does not have to make this heavy compromises.

Another question Boeing and the engine manufacturers have to answer (first for themselves) is: what are the improvements in SFC for an engine with an EIS 2010 compared to EIS 2013 (CSeries) or EIS 2016 (A320NEO, C919, MS-21).
Boeing today dismisses the NEO as the 15% fuel burn improvement would be not enough. Remember: fuel is about 40% of Direct Operating Costs (DOC), even for narrowbodies (the numbers in Jon Ostrowers interview with Mike Bair seem to be too low) and it could rise even further. Historically, SFC gets down by 0.5-1% per year. So the best we can expect for a EIS 2020 engine is 4% better than the NEO engines will be - and they could be upgraded as the V2500 and the CFM56 were upgraded several times in their life.
So where could the big advantage in DOC come from?

• Aircraft weight: the new aircraft will benefit from new and lighter materials. If you read the interview, it will probably not be a plastic aircraft but a will get a Al-Li fuselage, like the CSeries.
• Plastic wing with smaller wing area (compared to today's B737) with higher aspect ratio: that leads to lower drag, lower weight and better aerodynamics
• The first two bullets both lead to a lower thrust requirement, directly leading to lower fuel burn.
• Maintenance costs of the aircraft: as the B737 today is the airline's darling when it comes to maintenance costs I can't see where this could get dramatically better
• Maintenance costs of the engines: as these engines will (most probably) be enhanced versions of the LEAP-X and the GTF or something similar from RR (Advantage 2 or 3), the difference in maintenance costs to the NEO engines would be small if at all. They could be even higher, as one way to improve SFC would be to raise OPR and therefore core temperatures.

Conclusion: there will be an cost advantage of the 737RS/797 compared to the NEO: of course. But will it be a step change? I can't see it today. And there are alternatives like the Bombardier CSeries and maybe another 5 abreast model from Embraer - they will decide what to do after Boeing announces their final plans - what could happen in June according to Bair. So in the second half of the year, we should have an announcement from Brasil...watch out!

This is how a 130 seater in a 2-3-2 seat configuration would look like...



Meanwhile there are three more blog entries about the possible 737 successor:
Part II
Part III
Part IV

AirAsia eyes A320NEO

News broke yesterday that AirAsia's CEO Tony Fernandes held talks with Airbus COO John Leahy and CEO Tom Enders about a mass purchase of the A320NEO. According to Fernandes the order would be similar in size to the existing order for 175 A320, so expect something like a firm order for 100 and a further 50 options or so to be announced soon. Maybe together with the also "pre-announced" order for more A330's, maybe firmed during the Paris Air Show in June.
If you look at AirAsia and the other two carriers which came forward to order or to sign an LoI for the NEO, it becomes clear who are the prime targets for Airbus when the A320NEO was launched: the fast-growing LCC's in Asia (IndiGo, AirAsia, Tiger) and elsewhere (Virgin America in this case). A few years back the prime targets would have been on different continents - this is a clear sign of how the world has changed in the last decade.
Why are these large LCC's attractive (potential) customers)? They already have (or will have in 2016) large fleets - adding another subtype (in case of the NEO it's "just" another engine) in an equal large scale does not produce a lot of headaches. And by being one of the launch customers for one of the NEO engines, they can bet on getting good deals not only regarding the purchase price of the engines but also for aftermarket packages. Remember IndiGo was the launch customer for the V2500Select.
Even Ryanair, at least in public, talks about adding another type to their B737-800 fleet, altough that might be just chatter get better pricing from Boeing. Southwest though, already having different types of the B737 in their fleet and adding the B717 with the purchase (merger) of airtran can be expected to have a closer look to diversifying the fleet more, but this would, if at all, point more in the direction of the CS300 (or a CS500) to replace the B737-300 and later -700.
So expect to see more big orders for the A320NEO from LCC's - but not only from LCC's...

Boeing's very ambitious plans

A lot of media articles are out there today covering what Boeing CEO McNerney told the audience at the Cowen and Co. conference: "We're gonna do a new airplane that will go beyond the capability of what the [A320]NEO can do." (Flightblogger has all the quotes)
Well, once Boeing really does a new airplane (in the A320/B737 category), it has to be better than the NEO for sure - otherwise there would be no reason to do it anyway.
But he went further on and said that the B787-10 would be a good replacement for the A330. No argument against that...then he also said, that Boeing is studying upgrades for the B777 (which is not new), but that these are targeted for after an EIS for the B737 replacement, which would be around 2020. In the meantime Boeing could do the 787-10.

??? Please what ???

After the more than three year late 787-8 Boeing should concentrate on delivering the B787-8, developing and the delivering the 787-9 before talking about three(!) new or at least heavily upgraded aircraft. Boeing lost too much credibility since the roll-out of the 787.

Interestingly Teal Group VP Aboulafia forecasted this week that Boeing would have to react against the NEO with a re-engined 737. And also Scott Hamilton reports that studies for the re-engining did not stop.
So by now nothing is certain - despite doing the B787-10, then B737RS and then 777up, it could also be 737RE, then 777up and then, if at all, the 787-10. I don't see an urgent need for the B787-10 anyway, as the 787-9 would pretty much do the job of the A330-300. The 787-10 would probably need a new undercarriage, more thrust than the Trent1000 and the GEnx are capable today and customer needs are diverging in terms of payload and range - a problem that reportedly also faces Airbus with the A350-1000.
I would be very interested to hear what major customers like Southwest are thinking about these ambitious plans...

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.

The "order battle"

Today Airbus did their yearly press conference to review the past year. The media does get over-hyped days before it and writes about the "order battle" between Airbus and Boeing and speculates about who won the "order race" - as if it would matter if one or the other got a few more orders than the other. For years now the number of orders are close at the end of the year, showing that there is some kind of natural balance in the civil aircraft duopoly. If there were not a balance, there would not be a duopoly.
That brings us to the future, there were will be no more a duopoly: Bombardier will  be the first to break into the territory with the CSeries - I still believe we will see one or two orders until the BBD financial year ends at January 31.
Then the next one could be Embraer, if they decide to build an aircraft similar in size  to the CSeries - or probably a little bit larger to undercut seat mile costs.
The chinese will take a little bit longer to make a difference, I think. Even if they would be able to bring their C919 to market in 2016 - and I doubt that - it would be limited either in numbers, as initial production numbers will be low in comparison to the A320(NEO) and B737 and geographically as I do not think that western operators will take that aircraft until reliability is proven and an acceptable maintenance network is in place.
The russian MS-21 will face the same problems - EIS in 2016 is an amitious goal and Irkut will have to work hard to sell aircraft outside the russian area of  influence. I wonder to whom the first firm customer, Crecom Burj, a new leasing company in Indonesia, will lease their 50 aircraft. Reportedly they want to serve the whole southeast asia market...
So at least in the narrowbody segment there is an end of the duopoly in sight. For the widebody sector the end is far further out. One day the chinese will do a C929 or C939 or whatever it will be called, but I would expect they will go through a second round with their C919 first, trying to make it really competitive to the (then) established products from Airbus, Boeing, Bombardier and Embraer.

IndiGo launches the A320NEO

Well, here he is: IndiGo, the first customer for the A320NEO. A massive 150 aircraft order means a good start for the programme. Expect more big orders to come soon...
Coincidentally, Scott Hamilton talked about the prediction by Buckingham Research that Boeing will come out with two new models to replace the B717, B737 and B757 by 2018 and will launch this effort officially by late 2011 or 2012.
While Scott (or Buckingham) does not go into details, I guess this would be a single aisle aircraft for the reüplacement of the B717 and the lower end of the B737 and the "New Light Twin", which was briefly mentioned by Scott at the end of last year for the upper end of the B737 and the B757.
While it would be a good strategy in principle to replace three aircraft (families) with two new ones, I doubt that it will be that fast. How good can these aircraft be - or, in other words, how much better than the NEO? Engines for a 2018 EIS can only be slightly better than for the NEO with EIS 2016. And both CFM and PW have their hands full with developing the engines for the C919 and NEO (CFM) as well as the MRJ, CSeries, MS21 and NEO (PW). So one should not expect a completely new engine by the two manufacturers by 2018 but just minor improvements, which could also be sold to Airbus. And I do not expect RR to catch up in the 30k engine market by then - they lost the NEO competition and they have their hands full with their Trent programmes.
So the advantage has to come from the airframe. As of today, it is not clear if the A320/B737 successors will be build from carbonfibres. Bombardier opted for AlLi, apparently for good reasons.
To be clear, a new aircraft frame  by Boeing by 2018 would of course be better than the A320 frame, there would be 30 years between them. But would it be enough? - I doubt it!
The other question of course: does Boeing have the money to do it and the backing from their shareholders? Developing two aircraft takes a lot of ressources - manpower and money. If they do it, I expect the japanese to take over large parts of the responsibility for the smaller aircraft.
Another fascinating year in aviation just started!

The Chinese "Threat"

At the Zhuhai Airshow COMAC presented first customers for their C919, aimed to be a competitor to the A320 and B737 narrowbody families.

COMAC said that there are now “up to 100 orders” – a closer look shows that 50 of these orders are firm orders the rest are options.

The four big airlines in China – Air China, China Eastern, China Southern and Hainan Airlines – all ordered the C919. The first three all ordered “up to 20”, probably meaning that 10 for each airline are firm orders and 10 are options.

GECAS is another launch customer – for 5 firm orders and another 5 options. This is not a big surprise, as GECAS is also a customer for the much-delayed ARJ21-700 and GE delivers the engines for both aircraft (as part of the CFM consortium in the case of the C919).

The last launch customer is CDB (China Development Bank) – also not a big surprise, as CDB wants to play a big role in aircraft leasing in the future and signed MoU’s with all civil aircraft manufacturers recently. An anticipated order for the Bombardier CSeries is still in the pipeline and will most probably not being made public during the Zhuhai Airshow, as Scott Hamilton assumed recently.

So the C919 got their first customers – fine! But do we see a threat for Airbus and Boeing here? Not really for the next 10-15 years to come, I would say. Let’s have a look at the numbers for outstanding firm orders from the Chinese airlines that now ordered the C919.

Airbus

Airline	A319	A320	A321	Sum
Air China		28	14	42
China Eastern	5	26	5	36
China Southern		25		25
Hainan	5	26		31
Sum	10	105	19	131

These are the numbers as in the Airbus O&D table from October 31, 2010.

We have to add the order the 50 A320 aircraft which was signed early November.

So the total is 181 open orders.

Boeing

Airline	B737-700	B737-800	B737-900ER	Sum
Air China		50		50
China Southern	25	30		55
Sum	25	80		105

Additionally, there are 46 open orders from other Chinese airlines for the B737 family for a total of 151 open orders.

This is a total of 332 open orders for Airbus and Boeing narrowbodies.

Let’s have a look at the actual aircraft and the (small set of) date given to the media by COMAC at the Airshow (Flightglobals headline was “Comac releases C919 specifications”, which was a little bit exaggerated) and compare it to the A320.

	C919	A320
Span	35.8m	34.1m
Length	38.9m	37.6m
Cabin width	3.90m	3.70m

Efficiency is driven largely by two values: aircraft (empty) weight and engine SFC. Another important factor Is the wing efficiency, expressed in L/D (lift-to-drag ratio).

The thrust needed to power the aircraft in level flight is mass*(L/D).

From press releases it is known that the LEAP-X1C for the C919 is designed for a thrust of 30klbf. The 1.3m shorter A320 has a thrust rating of 27klbf, the engines on the 5.6m longer A321 produce 33klbf of thrust at takeoff.

Weight is not given by COMAC, but the span gives a good indication of the weight. Assumed that the aspect ratio of the C919 wing is not that different from a A320 or B737 wing, the wing area is at least the same as the wing of A320. Wing loading at takeoff (takeoff mass/wing area) is - together with the takeoff thrust – the driving factor for the takeoff length. The C919 is designed with hot-and-high airports in Western China in mind, so wing loading should not be far beyond the A320.

L/D could of course be a little bit better, as the A320 wing design is well over twenty years old.

Given all that we can preclude that the C919 won’t have a large weight advantage against the A320. The main driver for efficiency will be the engine. No doubt that the LEAP-X1C will be far better in SFC than the V2500 and the CFM56-5B on the A320. But what if Airbus does the –NEO? And what if the LEAP-X1C is not the “real” LEAP, as discussed here and elsewhere?

Conclusion: for me, the C919 is not a big deal for the next ten to fifteen years – at least technically. If China decides one day that chinese airlines have to buy nothing but Chinese, then it’s a different story – and confined to the Chinese market and close allies.

By then the Chinese aircraft market could very well cool down, as high speed rail eats into air travel wherever a rail line opens.

Update:
There is a good artice on the Aviation Week Website detailing the C919 orders. It's a little bit different than originally reported by Flight International...

ISTAT takeaways

The NEO question

The 17th european ISTAT conference is over – more than 550 people joined the event. For me it was my first ISTAT conference and a very special experience, as I am en engineer and at this conference I learned to see the aviation industry from a bankers, lessors and an appraisers perspective. And this perspective is very different – money (sometimes sadly) rules the world, as we all know.

And when I as an engineer and environmentally conscious guy of course would like to see a new engine on the current narrowbody families, the folks who live from buying, selling and financing aircraft are not really enthusiastic about it.

They fear that their current assets loose their value once the –NEO versions (or how ever they would be called) come to market.

But is that really the case, I wonder? There are 4,349 A320 family aircraft in operation as of September 30, according to the Airbus O&D spreadsheet, 3,411 B737NG were delivered by September 2010 (and just a few of them are out of service). There will be approximately 4,000 more A320/B737’s delivered by late 2015, when a reengined model could enter service.

These reengined aircraft will not hit the second-hand market for, say, another 10 years, at least not in greater numbers. So why on earth should there be a big hit on residual values for the not-NEO narrowbody aircraft? I don’t get it – but a I am just an engineer…;-)

One of the biggest opponent at the conference was the self-described “godfather of aircraft leasing” S. Udvar-Hazy, who described his role in the aviation industry as to ensure that the aircraft manufacturers don’t become like car manufacturers and bring a new model to market every four years or so. He also played down the benefits of the reengining: 15% fuel burn improvement would relate to 5% DOC improvements, given that fuel costs relate to about one third of direct operating costs. In my mind fuel costs will account for more than one third in the foreseeable future with oil prices just again climbing north of $80/barrel and the IEA raising the oil demand forecast.

But SUH further downplays the benefits when referring to John Leahy, who would like to raise list prices for the NEO’s by $7-8m, what it half of the benefit over 20 years operating a NEO aircraft. So, SUH says, the benefit is just 2-3%, which could be further eroded by higher costs for training maintenance personnel and lost commonality.

The environmental benefit he calls as PR benefit for the outside world. Tell that your neighbors living next to an airport: I am sure that an aircraft that is roughly 5dB (per measuring point) less noisy is more than just PR for them – it would be a benefit in quality of life! And as I explained earlier it can also be worth a few percentage points in COC, at least in Europe.

But then I find another inconsistency in SUH’s argumentation: if the new engine would be worth only 2% in DOC, why should the older aircraft loose their value. I can understand that they would loose value, if the newer aircraft is way better, but not when the difference is so small.

Lufthansa’s fleet chief Nico Buchholz on Monday called the improvements for the –NEO sufficient. On Tuesday he kind of backed away a little bit, saying that he would like to see a new aircraft, but would consider taking the second best option if the best one is not available.

CSeries

SUH was asked what he thinks about the CSeries, as at the Farnborough Airshow he ordered almost every aircraft but the CSeries. His message was clear (at least to me): the money he got from investors has to work, i.e. to make money. So he cannot place an order for an aircraft he gets four or five years later and only then can earn money through leasing rates. So we can expect an order for the CSeries once the aircraft is in production and available delivery slots are not too far away.