ANALYSIS: Is the passenger-carrying 767 really dead?

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Repeating a well-rehearsed ceremony, Boeing will within the next few days or weeks deliver the 1,062nd 767 since 1982, to Kazakhstan flag carrier Air Astana.

However, one fact makes this delivery ceremony stands out – even in Boeing’s nearly century-long history. The delivery of this 767-300ER completes – for now at least – the existing backlog of passenger-carrying versions of the aircraft, possibly ending an uninterrupted 32-year production run for passenger-carrying 767s in general, and a 26-year run for the small widebody’s most popular variant.

Although orders for the passenger version have run dry, the 767 backlog is still healthy generally. Boeing has 44 767-300 Freighters and four 767-2C commercial freighters in the order backlog. The latter are the first of potentially 179 improved 767 freighters to be modified into KC-46A Pegasus tankers for the US Air Force under the KC-X programme signed in 2011.

With no Boeing-built alternative available in the same segment for the foreseeable future, the market for 767 commercial and military freighters still has a future.

However, demand for the passenger-carrying variant is less clear. The Airbus A330’s arrival in 1997 hit the 767 hard, so Boeing launched the 787 to replace the passenger-carrying versions – including the less popular 767-400ER variant – in 2003. If Boeing’s original strategy had played out as envisioned and the 787 entered service on schedule in 2008, the 767-300ER may have ceased production already.

Airbus is still working out its strategy in the segment that the 767 and 787 occupies. The airframer is officially set on delivering the A350-800, but is also entertaining calls for a re-engined A330. The future of the 767 passenger variant is feasible only if Airbus remains locked on the A350-800 option, says Richard Aboulafia, vice-president of analysis at the Teal Group.

“If Airbus doesn’t re-engine the A330, then maybe [the passenger 767 has a future],” he says.

An A330neo would occupy shorter routes of 5,000nm (9,270km) or less in the passenger class – closer to the 767-300ER. “Then [the passenger 767] ends,” Aboulafia adds.

Since Air Astana announced its order for four 767-300ERs more than two years ago in March 2012, the aircraft has won no new orders.

There is a reason, however, that Boeing has no plans to especially highlight the delivery of the last 767-300ER in the current backlog: the manufacturer still believes there could be a future for the passenger-carrying variant.

The KC-X programme envisions deliveries of 179 KC-46As through to 2027 – if the USAF exercises each annual option in the contract. That keeps the production line open, even as Boeing plots how to fill an acknowledged gap in the market between the 737-900ER and the 787-8. This is the segment currently occupied by the 767-300ER, with 218 seats in a three-class configuration.

“The 767-300ER continues to serve the market niche between the 737-900ER and the 787-8,” says Boeing. “The 767 aircraft is the only Boeing product that addresses the freighter, passenger and tanker markets – making the possibilities for new 767 orders optimistic for decades to come.”

Boeing has dropped the slow-selling 767-400ER from its marketing strategy, but the 767-300ER is still on offer with a list price of $186 million.

A decade ago, Boeing ceased production of the 757-200, a narrowbody aircraft with 3,900nm range. Neither the 737-900ER in production or the 737-9 in development come within 300nm of the 757-200’s maximum range, leaving a hole in the market that is actively being considered by both Airbus and Boeing.

However, Boeing could struggle to make the 767-300ER a viable option as a gap filler for the 757-200 on transatlantic routes, even though no new aircraft is likely to arrive until at least 2022.

This is when the 777-8X is scheduled to enter service – the last of seven commercial aircraft now in Boeing’s developmental pipeline.

The lack of other options, however, still makes the 767-300ER an odd fit for a 757 replacement. Although the 767-300ER easily surpasses the range of the 757-200, it is also priced far beyond the price tag of the long-range narrowbody.

Boeing listed the price of the 757 at $65 million in 2002. A consumer price index inflation calculator raises that value to $85.4 million in current dollars – so airlines would have to be inclined to replace an aircraft with more than twice the list value of a new 757.

The 767-300ER list price has grown by one-fifth over the past five years, in real terms. The escalating cost of the aircraft has continued despite Boeing’s efforts to make a slower production rate more efficient.

In 2011, as Seattle delivered the 1,000th 767 aircraft to All Nippon Airways, the company also unveiled a new production line.

The 767 prompted Boeing to expand the Everett final assembly factory in the late 1970s. The 767 had been in the 40-24 assembly bay for more than 30 years, but was moved in 2011 to make room for the surge line on the 787 programme.

Boeing opened a new line for the 767 with two assembly positions in the 40-33 assembly bay, which faces the rear of the structure. The new location reduced the aircraft’s factory footprint by about 50%.

At the same time, Boeing started introducing upgrades to the 767 to accommodate USAF requirements. The 767-2C, offered as a commercial freighter, will feature 787-derived Rockwell Collins displays.

USAF officials, including former KC-X programme manager Lt Gen Christopher Bogdan, has linked FedEx as a future operator of the 767-2C variant, although the company is officially in the backlog as ordering the 767-300F.

As the KC-46A, the 767-2C is expected to achieve first flight later this year. The USAF tanker programme is another door-opening opportunity for the 767 production line, as it could be a decade or more before Boeing is ready to convert the 787 into a military aircraft. That is if its composite structure allows the kind of modifications required for special missions.

The 767 airframe has already entered service in a variety of roles. In addition to the KC-46A, the Japanese air force operates an airborne early warning and control aircraft based on the 767-200ER. The Italian air force uses a different modification of the same variant as an in-flight refuelling tanker.

“The 767 has a bright future in expanded applications, particularly for military use in tanker and command-and-control applications,” Boeing says.

The USAF attempted to assign a command-and-control role to the 767 about a decade ago. As part of the multisensor command-and-control aircraft (MC2A) programme, the Boeing KC-135-based E-8C joint surveillance target attack radar system (JSTARS) and E-3 AWACS fleet was to be replaced with a common fleet based on the 767-400ER.

The MC2A programme was later cancelled – although the requirement still remains. The USAF is pursuing a new strategy to replace the JSTARS fleet with a business jet-based platform. No replacement for the E-3A fleet is currently planned, but the 767 could still be a candidate for such a requirement.

That leaves the commercial market for the passenger version as the last marketing possibility for the 767 family.

Airbus plans to continue selling and building A330s long after the A350 enters service. However, the lifespan of the A330 could only approach the longevity of the 767 if Airbus decides to re-engine the widebody.