Boeing has brought forth a proposed new aircraft consistent with its view of a fragmented future industry. The 7E7 - a super-efficient mid-size widebody - has re-energised debate on what airlines want from their future aircraft

Three years ago, Boeing turned up at the Farnborough Air Show pitching the 747X, a proposed enlargement of its venerable jumbo. A year later at Paris, the 747X was off the shelf, having generated no orders and as little enthusiasm, but the company grabbed centre stage with its artistic rendering of the Sonic Cruiser, a futuristic craft that would zip passengers around the globe at close to supersonic speed. Sonic Cruiser has since joined the 747X on the cutting room floor, carriers having been unconvinced about the merits of paying for such speed enhancements. But Boeing is now back with another proposed product, the "7E7" - a twin-engine aircraft that aims to trade the Cruiser's speed for hyper-efficient operations.

Sceptics could be forgiven for labelling Boeing's widebody strategy as aimless, but this is not quite accurate. The vehicle for delivering its strategy has changed dramatically, but the company remains steadfastly committed to what underpins it: a belief that the demand for air services will continue to fragment. Continuing to believe this fragmentation will require smaller aircraft able to overfly hub airports and connect distant cities, Boeing's current bet on the shape of the future market is the 7E7.

The company is considering two sizes for the model, which it plans to have in active service by 2008, one with a three-class capacity of approximately 200 seats and one with 250.

Walt Gillette, vice-president for the 7E7 development programme, explains that the aircraft Boeing envisions will be able to fly between 12,950km (7,000 nm) and 15,725km at Mach 0.85-0.90 and - most importantly - feature significantly improved operating costs.


The manufacturer says technological advancements, such as aerodynamic and other design improvements, lower-weight composite materials and more efficient engines, will help the 7E7 burn 17% less fuel per passenger seat than the 767-300 and 20% less than the Airbus A330-200. Gillette says considerable savings also will accrue from the lower trip costs that the aircraft will bring airlines, largely through allowing them to connect cities non-stop, rather than having to offer costly, logistically complex and undesired connecting services.

Gillette says the 7E7 will bring big bonuses on the revenue side, too. Wide enough to carry LD3 containers, the new aircraft will be able to perform a cargo role that eluded the narrower 767, which first entered service in 1982. He further explains that the aircraft - "a middle of the market plane with big jet economics" - will be a critical tool in the network planner's kit.

Because it will have similar unit costs to big aircraft, he says, a long-haul carrier will be able to launch a route it might otherwise hesitate to serve with larger equipment, while also allowing it to fine tune the frequency-to-capacity ratio.

For its part, Airbus professes to not be terribly concerned with the competition's proposed alternative to the A330-200. Vice-president for marketing Colin Stuart says the "7E7-X", as he insists the not-yet-launched aircraft should be called, is by no means assured of producing the efficiency gains Boeing claims. Stuart says that, insofar as he can tell, most of the reduced fuel burn will accrue from engine improvements, something that could almost equally be applied to the A330, if not to quite the same degree as the 7E7, which will be designed in tandem with the new powerplants.

Fuelling the fire

What is more, Stuart casts serious doubts over his competitor's ability to determine current levels of fuel consumption, let alone those of an aircraft yet to leave the drawing board.

In keeping with the openly contemptuous nature of relations between the two manufacturers, he characterises Boeing's contention that the 767-300ER posts lower fuel burn per seat figures than the A330-200 as "simply stupid". According to the Toulouse-based manufacturer, the -200 uses 15% less fuel per seat than its Seattle counterpart.

Stuart similarly minces no words when asked if Airbus might contemplate accelerating an update to the A330-200 in response to the enthusiasm carriers have shown the 7E7. "Absolutely not," he says. "It only came into service in 1998, so it has a long way to go. Also, the benefits of commonality between the A320 family and the A330 and A340 are enormous, and we're not going to throw those away. We will continue to look at ways of developing the aircraft, but we're confident that with the A321 and A330-200, we have the aircraft to compete in this size range for the next 15 years."

Throwing the narrowbody A321 into the equation, Stuart questions Boeing's understanding of the market. He suggests that a 200-seat widebody is at once too big for domestic operations, and too small for an intercontinental role. He says domestic destinations are best served with regional aircraft such as the A321, while for international flying, around 250 seats is "a much more appropriate size for a starting nodule".

The debate on the shape of the new aircraft is not limited to the manufacturers. While most in the sector appear to agree that the market could use a new mid-range aircraft, aviation analysts too are split as to what form it should take.

The Airbus view that a 200-seat widebody is not the aircraft for intra-regional flying has plenty of backers, but the question of the appropriate size for the smallest intercontinental vehicle catalyses debate.

Richard Scheff, a consultant with the Airline Planning Group (APG) and formerly a route planner with Delta Air Lines, likens the probable use of the 7E7 to that of Boeing's popular 777.

He explains that Delta elected to deploy its 777s primarily on intercontinental routes, because doing otherwise would have been to "pay for capabilities we couldn't use". Such operations, other airline veterans add, also mean incurring the penalties inherent in big jet operations, such as longer turnaround times, gate restrictions, higher pay scales and larger landing charge bills.

Accordingly, most airline planners seem to believe that domestic USA or intra-European routes will largely remain the domain of the Boeing 737-900 and the A321, aircraft which offer a roughly similar number of seats at significantly lower operating and ownership costs.

One component of the 7E7 that is judged with unanimity is, not surprisingly, its enhanced efficiency of operation. British Airways manager for fleet planning Sean Farnan speaks for the industry when he expresses pleasure that Boeing elected to concentrate on a super-efficient aircraft rather than a super-fast one.

Even if the global economic situation were better, he says, BA would prefer an aircraft with guaranteed bottom-line impact - such as comes from lower costs - to one for which the impacts would be speculative, such as passengers willingness to pay more for shorter flight times.

The combined issues of range and size cause more debate. Some in the community think that both the 200- and 250-seat aircraft will meet with an enthusiastic airline reception. George Hamlin, senior vice-president with the consultancy Global Aviation Associates, says that the smaller aircraft could allow Singapore Airlines to meet its twin goals of flying to the USA while maintaining high yields.

Others are less sure there will be a market for a widebody in the 200-seat range. APG's Scheff warns that the smaller aircraft might bring low operating costs to the table, but would also bring high lost-revenue costs. "An airline will have to ask itself how much revenue is being spilled by the smaller capacity of the aircraft," he says.

Magic number

This disagreement is mirrored among the carriers themselves. An international route planner with a US major says that for longer-range flying, 200 seats does not bring sufficient revenue potential to get a planner excited. "It's too small. I think 300 is the magic number where carriers begin to get interested," he says.

BA's Farnan takes the opposite view, saying that Boeing hit the nail on the head with both sizes. He allows that the larger concept may be a bit more exciting, but says that BA would find plenty of valuable uses for the smaller aircraft, too. Specifically, he says the carrier contemplates using aircraft of that size to serve strategic routes that do not quite work with a 777 or with 767 costs; to add an off-peak frequency in key markets; and for destinations too far away to be reached with today's aircraft.

Interestingly, Singapore Aircraft Leasing Enterprise feels the most significant market for the proposed aircraft is in the 200-seat range, because, while the A330-200 has already captured a sizeable proportion of the demand for aircraft of around 250 seats, there is no widebody replacement for the smaller versions of the 767 or the A310.

Most, however, while feeling that the larger of the two aircraft is the better bet, and even seeing where one with more than 250 seats might make sense, also recognise that producing anything bigger would put Boeing in the untenable position of competing with the pick of its own litter.

Philip Scruggs, vice-president for marketing at the International Lease Finance Corporation (ILFC), for example, says that the size issue is a conundrum, but that Boeing is unlikely to cannibalise sales of the 300-seat 777-200.

The range increases on their own do not appear to have created a lot of excitement, as most see little realistic application of the added distance capabilities which Boeing plans for the 7E7. APG's Scheff explains that on the transatlantic routes to and from the USA, over 90% of all passengers fly less than 5,200nm. He says that range is more important on the transpacific routes - where only 45% of passengers fly less than that distance - but that those routes are generally dense enough to justify larger aircraft.

The value of range

Scheff adds that the 7E7's range will give carriers that fly over both oceans, like United and American Airlines, a high degree of equipment and crew flexibility, which can be tremendously useful. However, he says, that ability to fly long routes is not all that valuable in itself. "Look at the A340-500: fewer seats and higher costs. It only makes sense on the relatively small number of routes that the A340-300 can't reach. An airline won't want to pay for range unless it has a serious need for it," he says.

Boeing says it realises that only a few carriers would be able to use the long-distance capabilities of the 7E7, but that these attributes will translate into other benefits for carriers with conventional range needs. Gillette explains that with 250 passengers and some cargo, the aircraft will be able to fly 14,000km, but that most carriers will only need 60-80% of that range. Trading payload for fuel, he says, most airlines will use the 7E7 to cover routes of about 10,200km with full passenger and cargo loads.

In any case, he says, nothing is written in stone with the aircraft, which remains very much on the drawing board. Continuing the process started with its hugely consultative 777 "working together" development programme, Boeing will design the aircraft in accordance with the wishes of its customers.

Gillette says that the input offered by the airlines will play a significant role in the aircraft's final shape, affecting everything from seat count to range. Even the layout of the flightdeck will only be determined after the carriers have explained their preferences. The company is debating whether to make the cockpit common with the 777 or to take advantage of the new technologies that have emerged since that aircraft entered service in 1994.

Boeing believes the timing of the offering combined with the 7E7's unique attributes will make it a big seller, and forecasts a long-term market for 2-3,000 aircraft. But from a market condition viewpoint, there is little doubt that this is not the best time to be discussing new programmes.

As one financial planner with a US-based major says: "I cannot conceive of committing to a major capital expenditure at this point. With carriers trying to get out of leases and with so many used aircraft selling for so little - 747s can be had for $300,000 a month and 767s are a dime a dozen - ordering new widebodies is not likely to happen here any time soon."

Brighter days?

That said, he is quick to say that that the situation could - and hopefully will - be completely different by the time Boeing starts signing up customers, to say nothing of when the aircraft is actually ready for service. He also notes that conditions are markedly different for potential customers in Asia and Europe, where the airlines' economic climate is not nearly so dire. Supporting the latter point is the statement by Farnan at BA that the present is an ideal time to start talking about this type of aircraft.

In any case, perhaps more important than the point in the economic cycle is the competitive market timing, and here, also, the jury is split. ILFC's Scruggs thinks the 7E7 may be coming to market too late. He says that the 7E7 would have been a natural replacement for the 767, of which there are almost 900 in service, but that a lot of those customers - for years offered no alternative - have already elected to switch teams and order the A330.

Conversely, Hamlin from Global Aviation believes that the timing may be perfect. He sees that the A330 came along just as the 767-300 had swallowed the lion's share of the market. Now that 767 replacements are being budgeted, he believes the 7E7 could well take most of them, and if the cost advantages are as advertised, it could well entice carriers out of the A330 fold.

Either way, there is no denying the stakes for Boeing are huge, and, with five years between now and the planned entry into service, there is much to do in Seattle. Stuart of Airbus - who, after the trials of the A380 launch process, no doubt enjoys the opportunity to express rather than listen to such sentiments - speaks for many in the airline industry, when he says "it is for Boeing to make the play - to make the aircraft stick in the market place".

Source: Airline Business