Southwest VP: 2020 is too long to wait for a new airplane

Southwest Airlines Boeing 737-700 N951WN

A top vice president at Boeing’s biggest narrowbody customer, Southwest Airlines, says the end of the decade is “too long to wait” for an all-new airplane to replace its 737 Classics, but giving the US airframer an idea of what it wants will have to wait as the carrier turns its attention to merging with Atlanta-based AirTran Airways.

“We’ve got fleet of 200 airplanes out there at some point we’re going to have to do something with and we can’t wait until 2020,” says Southwest Airlines vice president operations coordination center, Jeff Martin in regard to the carrier’s aging block of 737-300s and -500s.

Martin spoke to ATI on the sidelines of the Air Transport World’s Eco-Aviation conference in Washington, DC.

Boeing has said it plans to provide additional clarity at June’s Paris air show on whether it plans to proceed with development of a mid-decade re-engining of the 737 or proceed with an all-new aircraft with an entry into service pegged for 2019 or 2020, though direct input from Southwest, suggests Martin, may not yet available until next 2012 at the earliest.

With its recently completed acquisition of AirTran, Southwest is turning its attention to integrating the two carriers, a departure from its historical methodical organic growth, which includes – for the first time – seeing if it can operate multiple types in its history with the introduction of the Boeing 717 along side its 737s. 

Martin says the AirTran acquisition has “changed our whole philosophy” now that Southwest has jumped to a multiple fleets, which “perks up everybody’s ears” eliminating the sole barrier to entry for manufacturers other than Boeing to sell aircraft to the carrier.

“We’re going to manage multiple fleets, but what we’re really going to look at is who can bring us 25% efficiency,” he says, adding that a re-engined 737 Next Generation aircraft won’t deliver that benefit over Southwest’s 737 Classics, despite a willingness to look at that option.

“We’ve squeezed the turnip, there’s nothing left in the NG. It now goes back to the airframe and the engine. We’ll look at re-engining, but we’re waiting for someone to tell us what [Boeing is] going to do,” says Martin of the incremental improvement it has sought through technology updates to its 737s, including having installed winglets on 80% its 737 fleet.

“Once we get through AirTran we’ve got another year’s work I think then we’ll come up and start looking around and determine what we’re going to do,” he says of selecting a new narrowbody. “Right now, it’s all hands on deck for the integration, but we know we’ve got a subfleet of airplanes that we need to address and that’s the classics and there’s 200 of them.”

If Boeing does move forward with an all-new narrowbody to replace the venerable 737 at the end of the decade, it aims to offer 20% improvement in fuel efficiency and 10% better cash operating costs over today’s 737-700 offering.

The challenge to the airframer already believes it can deliver 15% fuel burn improvement with a new engine and a modest investment, but the cost of advancing fuel efficiency an additional 5% places the development cost skyrocketing with an all-new jet.

Technology Opens The Door
Southwest’s $175 million investment to move from round dial displays on the 737-700 flight deck displays to the primary flight display/navigation display (PFD/ND) arrangement for precision navigation has also allowed the low-cost carrier to expand its search beyond Boeing for an aircraft to replace the 122-seat 737-500 and 137-seat 737-300.

“From what I had told [CEO Gary Kelly] the automation changes that we’re making on the flight deck and going PFD/ND opens up any fleet type we want. Not just Boeing, but we understand all cockpits look like this now,” says Martin. “We had placed ourselves on an island flying round dials without automation, so this will provide us benefit when we go into the marketplace.

“We won’t have to go to someone and say “can you re-program the software to make this look like a [737-200], oh can you disconnect the auto throttles and VNAV we don’t use all those things.” People would have laughed at us.”

Though despite this “level playing field” for the Bombardier CSeries arriving in late 2013, Airbus A320neo first delivering in October 2015 and potentially even an offering from Embraer, the strong relationship with Boeing, adds Martin, is well intact.

Adding, the need to replace its aging fleet of 737 Classics combined with Boeing’s timing for a new narrowbody may be incompatible for Southwest, but that has not disqualified its sole aircraft vendor for the past four decades from the competition.

“We’ll give them a shot just like everybody else, main thing is as any partner you have to communicate with them exactly what you want. Not sure we have on our side have fully defined that for them.”

Exactly what Southwest wants in a new Boeing narrowbody aircraft will also be guided by the 2012 introduction of the larger 737-800 into the airline’s fleet, a boost of 40 seats over its 737-700. The first 737-800 equipped for extended operations (ETOPS) is set to be delivered to the carrier in March 2012.

“We haven’t told [Boeing] what size we would want yet, we haven’t defined that yet,” says Martin. “So, in their defense it’s pretty hard when the customer says well “we think we want this many seats, we think we want that many”. Well I don’t blame them, how do you design to that? So it goes back to that, we’ll know more after we have the -800 in service for a while.”

24 Responses to Southwest VP: 2020 is too long to wait for a new airplane

  1. Phil May 6, 2011 at 5:48 pm #

    “which includes – for the first time – seeing if it can operate multiple types for the first time in its history”

    I’m not sure that’s accurate – After the Muse acquisition, Southwest operated MD-80s for a while, and before that, there were a couple 727s in the WN fleet.

  2. Gustiewing May 6, 2011 at 6:25 pm #

    What about 2015? That’s when the A320 NEO is scheduled to enter service. With fuel savings of up to 15% plus additional range of up to 900 km. or 2 tonnes of extra payload. In my book that’s right on the money.

  3. Scott Hamilton May 6, 2011 at 6:29 pm #

    Phil:
    Southwest did not actually operate Muse Air; this remained on a separate certificate right through the shut down of Muse/TranStar.

    Scott Hamilton
    former Director of Corporate Affairs
    Muse Air Corp.

  4. Peter May 6, 2011 at 6:43 pm #

    While that’s true about the leased People Express 727s, the DC-9 and MD-81/82s were operated on Muse’s certificate as subsidiary TranStar and were never really integrated into the Southwest fleet.

    The 727 in the late 70s was a trial run used in relation to an antitrust trial involving Braniff. The six leased from People Express were a short-term stopgap to open service to California while they acquired 737s to take over these routes.

    Southwest taking on DC-9 grandchildren as long-term fleet additions is a pretty big change for them.

  5. V V May 6, 2011 at 7:08 pm #

    They have just bought Air Tran, haven’t they?

  6. TRAPPERPK May 6, 2011 at 8:54 pm #

    SWA airlines is thinking like a customer in a shoe store. Whats on sale is not what I want, what I want can’t wait 8 years down the road because by then the party will be over. I know what I want when I see it, So could Boeing put some new designs out for me to try on. Oh you mean it takes more time than I have and money Boeing doesn’t have to make a perfect fit in our fluid and dynamic business model. So this is what I want, a better aircraft than what my competitors are buying that flies cheaper, farther with more passengers and cost lest to maintain. Did I say I want it now even though I don’t exactly know what our needs are going to be!

    Boeing’s 787-3 was scrubbed and sounds like SWA should try that one on for size.

  7. Tom Bower May 7, 2011 at 9:17 am #

    It does not appear that Boeing will be offering a new aircraft in Southwest’s preferred size range in the next ten years.

    If I were Southwest Airlines, I would be in deep discussions with Bombardier on a CS500 model which seats 149 passengers at a 32″ pitch and has a minimum range of 2,200 NM. An order of several hundred CS500′s could be used to replace Southwest’s fleet of B-717′s, B737-300′s and B737-500′s over the next ten years. I believe the CS500 would be a good match to Southwest’s route system.

    Boeing may eventually offer a 150 to 200 seat airliner to replace Southwest’s B737-700′s and B-737-800′s aircraft after 2025.

  8. Larry May 7, 2011 at 1:22 pm #

    737-400adv, the wing of the NG, and an engine with a new core and ovoid fan exhaust. Still cheaper and simpler than an all new design. Cabin luggage closets for more carry-on stowage.

  9. Johan May 8, 2011 at 12:36 am #

    I think the comment about SWA thinking like a customer in a shoe store is right on.

    They also think that like a shoe, Boeing has some technology up their sleeve which they’ve been keeping a secret from everyone because, you know, designing airplanes is like poker, right? You can’t show your whole hand, only feint and bluff and use body language.

    BS. Both Boeing and Airbus are tapped and the only game for the next decade is the LEAP-X and the new PW engines. They also are wayyyyyy too conservative in fuselage design, for both operational (higher cost to design and manufacture a more aerodynamically efficient body) and a psychological (we’ve been doing this for nearly 70 years now, why change? and, thinking airline pilots will refuse to fly them ‘who wants to fly a beast like that’ or that customers will shun it) reasons. There’s also the reasons that airports today are designed for hot dogs, not flying wings.

    They can get 15% out of airframes if they think outside the bun. They can tack on an additional 10% out of engines today. Bingo, you got your airplane.

  10. Patrick May 8, 2011 at 8:25 am #

    Doesn’t a 787-3 still have an inherent fuel burn penalty over a plane designed from the ground up as a 3000nm aircraft. I understand the penalty is reduced with the new wing.

    Other than that, specific to Southwest, it seems like the 787-3 would be more logical than a 797.

  11. Aero Ninja May 9, 2011 at 8:00 am #

    Personally I think Southwest just told Boeing to pull their fingers out of their nether regions and get on with it. Despite someone’s shoe store metaphor rant, they were quite clear in saying they could not (would not?) wait until 2020 to start replacing 200 of their fleet. They also said when they would be ready to look at what they need.

    Boeing is no better or worse in communicating their intentions and timeframes. They plan on having some sort of clarity to their re-engine vs new design scenario and they have suggested if it is a new design, it would be ready by about 2020.

    Lets see which one of the two has released the most accurate information. I know whom I think that will be.

    Boeing knows what part of said fleet needs to be replaced and they have been given a rough time frame to come up with something to fit that. Even though Southwest is one of Boeing’s biggest, if not their biggest narrowbody customer, Boeing cannot bet a whole program in hoping to get an order from them alone. i.e. They need to see what the market wants/needs, not just one or two customers.

    I find hysterical responses to this statement to be unproductive. It is fortunate that Boeing itself will (publicly) respond to this statement in a much more diplomatic and productive matter.

  12. keesje May 9, 2011 at 8:17 am #

    I think the 787-3 would be twice too heavy & fly with a huge, empty cargo bay. Boeing accepted it was a bad idea some time ago.

  13. Krasy May 9, 2011 at 9:23 am #

    “New Plane Phobia” caused by 787 could turn Boeing into an overly conservative company. With so many problems and no planes to sell, Airbus is a dazed oponent, best time for Boeing to send out consequtive punches—737 re-engine, 797, 787-10, 777NG–before it recovers.

  14. Layman May 10, 2011 at 4:38 am #

    Perhaps some blue skies thinking should be done here. Boeing should consider building A320NEO’s under licence from 2015 onwards. It would be low risk and very little additional cost and at the same time, hold some of their customers. This will give Boeing breathing space to develop a clean sheet design of a family of planes from 140 to 220 passengers with a 22% plus saving, ready for 2021.

  15. Jameson T. May 10, 2011 at 6:29 am #

    Krasy said:
    “With so many problems and no planes to sell, Airbus is a dazed opponent”.
    I think you get the companies names wrong.
    Boeing is the one with many problems, no 787s or new narrowbodies to sell and more than dazed after the ongoing 787 mess.

  16. Larry May 10, 2011 at 12:06 pm #

    Say the first 113 out of 137 seats on a 737-300 cover costs and the next 24 seats are profit. Build a 149 seater and there is a 50% improvement in profit. Not to mention that the new plane will burn less fuel.
    The 340-200 and 767-200 were obsoleted because a slight stretch is basically free money waiting to be had. Airbus could stretch the 380 and the seat cost would eat into the 773ER market.
    Right-sizing the plane seems like the easiest gains out there.

  17. Gustiewing May 10, 2011 at 6:32 pm #

    Boeing’s management decisions, corporate culture and lack of technical oversight over the last 10 years or so has left this company in a quandary (at least as far as the single aisle market is concerned). Reading some of the comments in this forum, which vary from the wildly optimistic to the downright ridiculous, it’s clear many are in denial about the real and present challenges Boeing faces:
    1. Come with a timely/credible challenge to the Airbus A320 NEO
    2. Deliver on the promises made to the USAF on the KC 45A on time and on budget (It’s already started to dilute the initial offering)
    3. Achieve 787 EIS this September
    Much is at stake and I believe it’s time for Boeing to go back to basics, a principled approach of honest business practices both within and with their clients and focus on engineering quality rather than profit per se.

  18. Smokerr May 11, 2011 at 12:07 am #

    Me, I was lost half the time in what was blubbered out.

    Boeing must be even more lost.

    Absolutely amazing, if that guy is in charge of buying shoes, SW is in big trouble.

    Want in one hand……

    And the A320 NEO is booked until……. Wait a year and it will be booked till 2020. And that gets you???????

    Boeing just needs to get on with its new jet and then things will fall in line. NEO will be old school, all the buzz will be the new jet, re-engine is not exciting, new birds are.

    Keeping in mind Airbus is way behind Boeing in overall efficiency (fuel burn and operating costs), and the NEO barely catches them up to what Boeing has on the books, and they will keep improving the 737 right till it stops making them.

  19. Krasy May 11, 2011 at 6:04 am #

    Who buys A380 when there is 747-8i which is cheaper, fills up seats easier, burns less fuel, departs more frequently and goes to more airports? Who buys A340 that still thinks oil is a dollar a barrel? A330 when there is 787-8; A350 when there are 787-9,10 and 777NG? A320 when there is 737NG as well as A320NEO (2015) and 737NEO and 797? There are loyal customers but there are no airplanes to sell.

  20. Krasy May 11, 2011 at 11:57 am #

    Loyal customers need to move cargos. “Sorry,” said Airbus “we don’t make trucks. Try Boeing”.

  21. Eric May 11, 2011 at 3:11 pm #

    SWA is almost certainly headed towards a mixed fleet. In a sense, they are there already with the B717s. Disregarding that however, SW operates on the smaller end of the 737 / 320 sizes with -700s now. Yes, they have ordered the -800, but the lion’s share of the flying is going to continue to be done by smaller aircraft. The new Boeing offering is going to cater to 140 seats plus. That means the smaller versions (if offered) are likely to be heavier than an aircraft designed for 100-120 seats. Note the limited success of the 737-600 and A318.

    As such, I see SWA ordering the new C series to replace the classic 737s (and perhaps the 717s as well) and biding time for a future offering from Boeing. They need to see how well larger aircraft are going to perform in the network. They will continue to operate 737s for a long time, and can continue to acquire them in any size required. An Airbus Neo order does very little to solve the long term fleet questions at SWA. It would only serve to complicate the fleet while failing to address the near term requirements.

  22. Tom Bower May 12, 2011 at 2:37 pm #

    I like Larry’s idea from above. If Boeing does not plan to re-engine the B737NG and only make incremental improvements, then I suggest a B-737-750 model.

    Take the B-737-700 airframe and stretch the fuselage by 66″ (5.5′) and thus add two new seat rows. Thus in the Southwest configuration, it would go from 137 seats to 149 seats. This seating configuration only requires three flight attendants – no more than a B-737-700.

    This should enable the airline to realize a revenue gain of up to 8.76% from the 12 extra seats, while the fuel burn may only increase 3 or 4%. Since the crew costs and maintenace costs should be almost the same as the B-737-700, the total operating costs should only increase by 2%. The seat mile cost of the B-737-750 should be about 5 to 6% lower than a B-737-700.

    A 5 to 6% improvement in seat mile costs by a simple 66″ stretch of the fuselage will permit the new B-737-750 to better compete with the A-320 NEO.

    I think the B-737-800 and B-737-900ER have already reached design optimization and could not benefit from a small fuselage stretch.

  23. Frequent Traveller May 14, 2011 at 5:21 am #

    SWA needs to improve YIELDS, not so much in the first place to reduce sfc, doc, smc. With the purchase of AirTran, they’re moving in the right direction, increasing the size of their overall operations. To further increase revenue, they could opt sine die for CS-300 or CS-500 Thompson-staggered skinny cushion high density, with a capacity of respectively 162/168? pax or 180/186? pax (subject to prior enhancement of the CS Series Emergency Exits, and subject to demonstrated emergency evacuation in 90 seconds); alternatively they could order – also sine die – the H39QR (737NG-900 rebuilt to (1+3+1) HQR concept of TwinAisleFeeders) : with room in the cabin centrebin for 250 rollerbags, if charged for by SWA that would give 35 $ x 250, or the same revenue as for 35 extra passenger paying 250 $ for their tickets, so what you gave up in seating capacity you get back in ancillaries, with the extra productivity/24h on top from the significantly quicker ground rotations : SWA if coached for a relook to enter into the right shop will find the right shoe on the shelf : Gary just needs to OPEN HIS EYES !

  24. 1&1=2 April 8, 2013 at 2:06 am #

    If they are really looking for a 20%-25% fuelburn improvement over the 737 classics before 2020 the Airbus NEO is the only option available.

    And in particular the PW GTF birds that are going to have the better SFC and with the most opportunity for improvement further down the road.

    Will they make the big jump and order Airbus?

    I think it will largely depend on whether the competition orders them also and starts putting pressure on their margins.