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Aviation History
1983
1983 - 1924.PDF
AIR TRANSPORT Why BCal chose the Airbus A320 LONDON Why did British Caledonian Airways choose to buy the Airbus Industrie A320 rather than competitors the Boeing 737-300 and McDonnell Douglas DC-9-90? BCal chairman Sir Adam Thomson: "It was the total package". It seems that the 737-300 was exactly the right size for the market which BCal fore sees; the DC-9-90 (available in 1986 for those who order it) was too small; the DC-9 Super 80 was not among the final three aircraft under consid eration; and the A320 was slightly larger than required for BCal's predicted market in delivery year 1988. The "total package" which impressed BCal is complex. Purchase cost is obviously the first consideration, and BCal benefits here from getting a "launch customer" deal. The seven A320s will cost a total of $240 million-about $34 million each — and this cost is the exact figure which BCal will pay in 1988/89 when the aircraft are delivered (three A320s in spring 1988, four in 1989). Airbus and BCal have agreed on a certain inflation rate to come up with the $240 million figure for 1988/89, and if inflation turns out to be a certain amount different than the plan then the amount paid will be adjusted. A fixed sterling/dollar rate has also been agreed. The sum does not include any spares. Boeing gives the price of the 737-300 as being $22 million to $24 million in 1983 dollars, and MDC says that the price of its DC-9 Super 80 is in the region of $20 million to $21 million in today's money. Boeing believes that the major reason why BCal chose the A320 is that the price is unbeatable, and that Airbus is desperate to attract launch customers with low prices. Airbus certainly needed a non-French airline to order the A320. Neither would it have done the aircraft's sales image any good if state airlines British Airways or Lufthansa had ordered it. BCal is totally independent and cannot afford to order an aeroplane which will not be a 1076 British Caledonian placed orders for seven A320s and options on three profitmaker in its network, so Airbus is delighted with this sale. But the aircraft is not firmly launched yet, and will not be until preferably it gets another significant indepen dent (non-Airbus Industrie- connected) order, and until the German and British Governments agree to make the development loans requested by Airbus partners MBB and British Aerospace. The latter decisions should be made by this year's end. Airbus general manager Roger Beteille says that if the deci sion was his personally the BCal order would be enough for him to make the launch decision now, since he is con fident that further orders will be placed in the near future. Beteille says that the A320 would be built by the remain ing partners even if BAe were to duck out for lack of the requested government loan. BCal remarks that if the A320 were not ready in time then it is no great problem because it can buy one of the competing aircraft-like the 737-300. But Sir Adam says he is convinced that the A320 will go ahead — "If they don't build Thisis the Airbus version of direct operating cost comparisons. BCalfound it basically true, but was not quite so generous on the A320's advantages Relative DOC per seat 24% 12% 4% 11% A320 757-200 737-300 Super 82 737-200 this aircraft they will never build another one". Apart from price the A320 advantages which BCal has calculated in its exhaustive investigations are as follows: a low break-even load factor; the best direct operating cost per seat in its operations; the lowest sector operating cost per seat; and the cheapest available tonne/km. Mick Sidebotham, BCal's operations director and project director for the new aircraft decision, tells Flight that the A320 does not work out cheapest to run in every, category, but it does in most. For example, direct operating cost per seat on BCal services is 6| per cent better than that of the 737-300, he says. Sidebotham explains that although the A320 is slightly bigger than BCal's calculation of the perfect size for its requirements, the fact that it has the lowest break-even load factor of the competitors negates this apparent disad vantage. And if the airline's "conservative" estimates of traffic expansion over the next five years are overly conservative, then BCal gets a bonus from the larger type. All the BCal executives speak enthusiastically about FLIGHT International, 22 October 1983
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