The likelihood of business travel demand weakening permanently could lead Boeing to tweak the design of whatever jet it develops next.
That is according to aerospace analyst Kevin Michaels, who thinks the pandemic could lead Boeing to develop a smaller aircraft than previously planned.
Boeing is widely expected to launch development of a new jet in the coming years, though exactly when remains unclear.
Also unclear is the capacity of that aircraft: Boeing could potentially launch a 737 replacement, or — and perhaps viewed as more likely — it could move forward with a slightly larger jet: a “mid-market” aircraft, like a modernised 757.
Of course, Boeing’s design parameters will reflect its expectations about air travel demand – a future that Covid-19 has clouded.
Though leisure travel has rebounded nicely on domestic and short-haul routes, business travel has not. When that high-profit sector will fully return, if ever, is up for debate. US airlines have predicted a protracted rebound.
But Michaels, managing partner of consultancy AeroDynamic Advisory, suspects business travel might never again resemble the pre-Covid normal.
“I, for one, think it will change forever,” he says on 9 February, speaking during the Pacific Northwest Aerospace Alliance annual meeting in Lynnwood, Washington.
Specifically, Michaels thinks some “intra-organisational travel” – meaning employees travelling to meet with colleagues who work for the same company – will never fully return. That segment accounts for 30% of business travel, he says.
The result could be a future with “10 to 15% fewer business travellers”, Michaels says. (He does expect another business-travel segment – that composed of people travelling to meet with clients – will fully recover.)
If Michaels is right, what might that mean for Boeing’s next jet?
Until 2020, Boeing had been widely expected to launch development of a mid-market jet with some 250 to 270 seats – the 757 replacement, to compete against Airbus’s A321neo. Boeing shelved the project in early 2020 amid the 737 Max crisis, though analysts still widely expect Boeing’s next jet will be something similar.
But perhaps the specifications will change in response to the altered state of business travel.
“Maybe it’s not 270 seats, but 200-250 seats, with a smaller premium cabin,” says Michaels.
Regardless, Boeing had better act soon, says Richard Aboulafia, managing director at AeroDynamic.
He says Boeing, due to inaction, is now losing massive share of the narrowbody market to Airbus’s popular A321neo.
“Something has to happen this year,” Aboulafia says of Boeing’s next jet development. “And if it doesn’t, then the market share situation just gets much worse.”
If Boeing does not respond, Aboulafia expects Airbus will hold 70% share of the single-aisle aircraft market within 12 years, and then as much as 75%.
At that point Boeing, might be cooked.
“It just becomes a question of time before someone replaces Boeing in… 20 or 30 years,” he says.