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A question of choice

Engines Review

Airline Business reviews the latest trends in the aero-engine market, including Boeing's decision to sign a single-source deal on its long-awaited long-range 777X and transatlantic battles over noise. Plus, analysis of the current state of orders, deliveries and market share for the main manufacturers.

CAROLE SHIFRIN WASHINGTON DC Boeing expects a formal launch of its 777X programme within the few months, but its decision to equip the new, longer-range model exclusively with General Electric GE90 powerplants is reverberating throughout the airline industry.

Few doubt that Boeing will go forward with its 777X programme, adding two longer-range versions to its twinjet family. But some potential airline buyers are unhappy with Boeing's decision to make General Electric the exclusive supplier of engines.

Boeing's proposals for the aircraft are uncontroversial. It will add significant extra range to its 777-200ER and heavier -300 types, in the process allowing them to compete head-on with the new long-range Airbus A340-500/600 variants. The 777-200X would have a reach of 16,340km (8,830nm), close to 2,000km more than the existing model, while its heavier counterpart moves up to 13,390km (see box). That requires a substantial increase in maximum take-off weight and bigger engines, which for the first time will take thrust beyond 100,000lb (445kN). Boeing has decided that this task will go to GE's GE90-115B.

Yet many of Boeing's target customers operate 777s with competing engines from Pratt & Whitney or Rolls-Royce in the shape of the PW4000 or Trent 800. Of the 450 or so firm orders for the type, only around 27% have GE90s, giving GE the smallest market share of the three powerplant manufacturers. Neither is the GE90 on any of the heavier 777-300s (see data on page 62).

John Roundhill, Boeing's vice-president of product strategy and development, says plans are in hand to combat airline aversion to ordering derivatives with different engines than on their current 777 fleet. Boeing and GE have begun offering the 777X with what he calls "comprehensive integrated performance guarantees", rather than separate guarantees for airframe and engine. The strategy was set after Boeing sought input from the airlines about its plan for a single engine supplier.

To attract customers, GE is offering a wider range of maintenance service packages than ever, including a full-service "maintenance cost per hour of flying" option. That aims to allow airlines which do not operate the GE90 to select GE as the maintenance provider for the new engines.

Airline doubts

Not all airlines are convinced. "We don't want and can't live with two flavours of very large engines," says Robert Baker, vice-chairman of American Airlines and previously executive vice-president of operations, citing the high costs of tooling, spare parts and training necessary to maintain each engine type. The carrier operates eleven 777-200ERs, powered by Trent engines, and has 26 more on firm order, with 14 to be delivered this year.

Approached by Boeing and GE on the 777X, Baker told them that to sell the combination to American, they must put together a proposal that would make it "financially indifferent" whether they added the GE90 or stayed with the Trent, which he describes as "marvellous".

American is not in the market for the 777X and would not consider being a launch customer, Baker says, but will "probably want a few of them" eventually, for routes such as Chicago and Dallas/Fort Worth to Hong Kong and beyond. There are simply "not that many markets" where the very long-range aircraft make sense, he adds.

Many 777 operators were unhappy about Boeing's sole-source engine decision, announced last summer, with some customers more vocal than others. British Airways, a long-time Boeing user and the launch customer for the GE90 on the original 777s, but a convert to R-R for its more recent orders, and Cathay Pacific Airways, a 777 customer which uses R-R engines on most of its aircraft, were among the dissenters.

Rod Muddle, BA's general manager of strategic planning, says: "In principle, British Airways is disappointed that Boeing decided on a single engine type for the 777-200X and -300X because an engine competition can add value for airlines." He notes that the choice of three engine types on the original 777 models contributed significantly to Boeing's success in winning BA's initial order in 1991. At the time, the competing A340 was offered with only one engine type.

Muddle says BA is not interested in the 777X because it has no immediate requirement for the aircraft. "We don't need the size of the 777-300X or the range of the 777-200X," he says. BA recently put into service its newest 777-200ERs, powered by Trent engines with 95,000lb thrust, a model expected to cover most of the long-haul routes the airline wants to fly.

BA is known for its rigorous examination of its airframe/engine options and desire to maximise shareholder value. Its two competitions for 777 orders fall into that category. When it launched the GE90 with its 777-200 order in 1991, BA also sold its engine overhaul facilities in Wales to GE.

When deciding on aircraft and engines, the UK carrier first conducts a technical evaluation to determine if all the options meet acceptable standards. The emphasis is on whether they can do the job, rather than which one is "the best". After that, it looks to the financial issues to determine what is the best package overall. This is the way it conducted its 1998 competition for follow-on 777 orders. "Any of the three engines could have done the mission," says a BA source. "The economic value of the whole package won it for R-R. That's the beauty of competition."

United Airlines, which was a launch customer for the PW4000-powered 777 and is Boeing's biggest customer for the family, with 61 firm orders, did not publicly discuss its reaction. But it announced soon after that it would order nine more P&W-powered 777s in place of seven 747-400s.

An industry observer says there was a degree of frustration at United, but the company remains cautious, knowing it cannot change the decision. He also notes that United and other carriers have been urging Boeing to move to "standard aircraft" for some time as a way of reducing their cost. "The 777Xis a standard aircraft. It just doesn't happen to be the one they want," he adds.

Even if the 777X programme is successful, the sole-source deal has left some customers frustrated. Boeing argues that it chose the GE90 as the best engine for the 777X programme after its own rigorous competition. But as one airline executive says: "Our response is we'd rather run our own competition." He adds the suspicion that Boeing decided to take the benefits of the engine choice competition for itself rather than let it accrue to the customer. Also, by eliminating a choice of engines, the company saved the costs of certifying more than one of them, he points out.

Neither Boeing nor GE will give details about the contribution the engine manufacturer agreed to make to Boeing's 777X development programme to secure its sole-source position, but it has been described as significant. This is in addition to the estimated $500 million that GE will spend to develop the GE90-115B that will power the new models. Some speculate that another factor in GE's decision to go all out on the programme could be GE chairman Jack Welch's desire to try to recoup the company's $1 billion-plus initial investment in the GE90 and vindicate its original decision to develop an all-new engine.

Although GE and P&W supported Boeing's plan for a sole-source engine supplier - and insisted on exclusivity because of the limited size of the market for very-long-range aircraft - R-R is smarting over the decision. "We were disappointed not to be offered," says John Cheffins, managing director, airlines, for R-R. "We expected that there would be two engines on the aircraft. We were able to make a business case to do the programme-without having to have an exclusive position." He adds that Boeing appeared concerned that if it chose R-R, the Trent would have become the de facto engine on the aircraft since its share of recent orders has accelerated.

R-R also disagrees with Boeing's characterisation of the three engines that were in contention for the 777X programme. Boeing's Roundhill maintains that the GE90-115B is a derivative of the brand-new GE90, introduced four years ago on the 777, while the engines that R-R and P&W were offering were "new".

Cheffins begs to differ. All the engines required a larger fan diameter so parts would not be interchangeable anyway, he says, adding that the GE engine also requires a reconfigured core "which is a new engine by any other name". In contrast, he says, the Trent core remains the same. "The Trent 8115 was more of a derivative than any of the competing products," he says.

Although R-R has ended work on the proposed 8115, it continues work on the 104,000lb-thrust 8104 engine as a technology demonstrator and expects to feed improvements back into other Trents. The Trent 8104, expected at one time to power follow-on 777s, has been run to 110,000lb thrust several times.

While complaining about Boeing's decision to equip the 777X solely with the GE90, R-R is the only engine maker providing the engines for the competing A340-500/600s, taking over from CFM International on the original types. Although the arrangement with Airbus is called a "privileged partnership" that will enable other engines to be offered at some point - and not an "exclusivity" agreement - R-R chairman Sir Ralph Robins admits it will "be a while before somebody else powers" the aircraft. The new, stretched A340s have attracted over 60 firm orders from nine customers to date, one of the reasons Boeing wants to launch its competing programme.

Long-range appeal

Although many perceive the 777X models as aircraft designed to appeal to Asian carriers, Roundhill says Boeing is targeting carriers from all over the world, emphasising a range of appropriate missions for the aircraft. The -300X would be suitable for such routes as Amsterdam or Rome to Los Angeles and Rome-Chicago, where a carrier needs substantial capacity but not quite as much as a 747-400, he says. It also would be suited for flights between European capitals and Tokyo or routes such as Frankfurt-Singapore. The -200X is pitched at very long-range routes such as Los Angeles-Singapore, Dallas/Fort Worth-Sydney and New York-Kuala Lumpur.

Although Boeing will not discuss its threshold numbers for launch, airline officials say the aircraft maker is looking for about three customers and between 30 and 40 aircraft. "It depends on the situation at the time. Our guess is that we would have enough customers to launch the aircraft in three to six months," Roundhill says. The 777-300X, seen as a 747-100 and -200 replacement, is being projected as the first model, with the -200X to follow in four to six months.

Roundhill dismisses airline concerns that Boeing would eliminate the current-model 777s, forcing future customers to use the GE90-powered aircraft. Existing models are expected to account for two-thirds of all 777 sales, he says. "We are not going to standardise on the 777-200X and -300X. It's simple economics," he says. Because Boeing prices its aircraft based on capability, carriers will not want to pay for capability they do not need. "To get the range for the new models, you have a higher gross weight," he says. "If you don't need to fly that range, you don't need the extra cost."

Boeing believes there is a market for between 500 and 600 of these aircraft over the next 20 years, but Roundhill acknowledges that a lot depends on how much fragmentation occurs in the Pacific. If carriers look to increase aircraft size rather than expand frequency and add destinations, then fewer 777X aircraft would be sold.

There is another variable. American's Baker says the opening of additional air routes could affect carrier needs for longer-range aircraft. Although the 777-200ER can operate to Tokyo and China from the USA, it cannot make it to Hong Kong and beyond in the winter, a factor that makes the -200X desirable for some. But if relations with the Russians lead to the opening of air routes further west of those being operated, that could change too. The use of the Polar 4 route, for instance, would cut about 40min of journey time to Hong Kong. Saving that time and the associated fuel would allow the -200ER to fly to Hong Kong in the winter, he notes. "As those routes further west are made available to us, the issue of the range is less important," he says.

Design takes shape

Boeing hosted a meeting of 14 airlines in Seattle in December to finalise the aircraft configurations. "The aircraft's taken shape," Roundhill says, adding that a programme team is in place to make sure first delivery can be achieved in September 2003.

Meanwhile, development of the GE90-115B is proceeding, building on technologies GE has been developing for the GE90-94B, such as redesigned compressor blades. With 94,000lb of thrust, that engine is set to go into service later this year on the 777-200ER.

Among the carriers being courted by the Boeing/GE team are All Nippon Airways (ANA) and Japan Airlines (JAL), which operate P&W-powered 777s. Each thinks it does not need the 777X, but presumably could be swayed by other factors or possibly induced to substitute the new models for other Boeing aircraft on order. ANA operates 18 777s and expects to take three more 777-200ERs by April 2001. There follows a two-year hiatus before it begins taking delivery of nine more, which were originally meant to arrive during that period. ANA will put a -200ER into service on its Chicago-Tokyo route for the first time this summer, but does not expect to need longer-range models in the foreseeable future. JAL uses its 777s exclusively on domestic routes and says that the long-range option is simply not an issue.

Other potential customers operating GE90-powered 777s include Air France, Continental Airlines and China Southern Airlines, which operates a 777-200ER between Guangzhou and Los Angeles. For these operators, at least, the new GE90 is a natural choice.

Boeing 777X planned specifications
  Units 777-200ER 777-200X 777-300 777-300X
Seating* 3-class 305 301 368 359
Range* km 14,400 16,340 10,545 13,390
Engines

GE

P&W

R-R

GE90

PW4000

Trent 800

GE90-115B

-

-

GE90

PW4000

Trent 800

GE90-115B

-

-
Thrust 000lb 90-98 110 90-98 115
Note: *Seating and range are estimates with typical three class configuration. 777X planned maximum takeoff weight is 340,000kg (750,000lb) and wing span 64.9m (213ft)

 

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