ANALYSIS: Airbus wins big with Japan Airlines order

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All eyes are now on All Nippon Airways (ANA) to see if it will make a similar Airbus A350 order after its rival Japan Airlines (JAL) dealt a blow to Boeing yesterday with its first ever Airbus order.

In a landmark deal for 31 A350s with options for an additional 25 of the type, JAL helped Airbus break into the Japanese market for widebodies which has long been dominated by Boeing. The firm order comprises 18 A350-900s and 13 of the larger -1000 variant.

Flightglobal’s Ascend Online Fleets database shows that Boeing has an 81% share of Japan’s 511 aircraft commercial jet fleet. Airbus is second with 11%, followed by Bombardier and Embraer with 4% each.

JAL, which has an all Boeing fleet, says the A350s will replace its ageing 777s. The Japanese flag-carrier was deciding between the A350 and the yet to be launched 777-X as replacement options, and had previously told Flightglobal Pro it was looking for a “package deal” from Boeing that could include 787-9s, -10s and 777-Xs.

“We have always chosen aircraft models without any preference for a specific aircraft manufacturer. We decided on the A350 as we determined it would contribute significantly to achieving the company’s goals,” says a JAL spokesman. He declined to say whether the carrier is still considering a 777-X order.

Boeing on its part says it respects JAL’s decision, although it is “disappointed” with the carrier’s selection.

“We have built a strong relationship with JAL over the last 50 years and we look to continue our partnership going forward,” it adds.

What is critical to Boeing now, is to not lose ANA to a similar A350 order. The majority of ANA's fleet consists of Boeing aircraft, although it has 18 A320s in operation.

ANA says it is studying both the A350 and 777-X as replacement options for its 777 fleet, and that a decision can be expected "soon".

A spokesman adds that the carrier needs up to 30 aircraft as replacements for the 777s being operated on international services. For the 777s used domestically, ANA could also consider the smaller 787-8 or -9, because of the shrinking Japanese market, he adds.

Analysts interviewed by Flightglobal Pro say the JAL order is a major setback for Boeing and can be attributed to the questionable management decisions the US airframer has made, although Airbus probably gave a good discount to the Japanese carrier.

“Delaying the 777-X and 787-10 launches were bad. Continuing the delays even after Cathay and IAG defected to the A350-1000 was another,” says Richard Aboulafia, vice-president for analysis at US-based Teal Group.

The delay in the launch of the 777-X and the earlier availability of the A350 give Airbus an advantage as carriers do not want to risk getting the 777 replacement years after their competitors, say analysts.

They add that delays in the 787 programme and reliability issues also likely had a part to play in JAL’s decision, as the airline saw first-hand the impact on its business. ANA and JAL are the world’s largest operators of the 787 with 23 and 11 of the type in their fleet respectively.

Boeing’s roots run deep in Japan and the influence of Japanese industrial participation in Boeing programmes such as the 767, 777 and 787 have played a role in JAL and ANA’s purchase decisions. With the JAL order, Airbus has also been quick to say it is looking for potential joint R&D efforts in Japan for future aircraft types.

Airlines are also increasingly choosing to have a mixture of Airbus and Boeing aircraft in their long-haul fleet to avoid putting all their eggs in one basket, a move that could benefit Airbus.

“JAL may also go with 777-X eventually, but at least it doesn’t have to worry about relying completely on Boeing. This dynamic will likely influence ANA too,” says Aboulafia. “I doubt there’s much Boeing could do at this point to keep them from buying at least a few A350s, but it might get them to split their order.”

The A350-900 began flight testing on 14 June and is due to be certified in time for deliveries to start by the end of 2014. JAL is expecting to start using the aircraft in 2019.

Flightglobal Ascend’s senior consultant Rob Morris, however, believes JAL’s decision will not have a significant impact on the success of the 777-X.

“I have no doubt that the 777-X will be a success [in the] longer term and I don’t think Boeing should be too concerned about its slightly later availability for service,” he says.