Tucked discreetly into the aft fuselages of most aircraft, auxiliary power units (APUs) almost never get the attention lavished on their wing-mounted, thrust-producing cousins in the gas turbine market, but that changed on 4 June with the announcement that Boeing and Safran were teaming up to take on Honeywell and Pratt & Whitney Canada.
The planned entrance of the Boeing-Safran joint venture later this year shakes up a market that had only last year seemed to be in a long-term stasis. In 2017, Airbus offers P&WC's APS3200 and Honeywell's 131-9 APUs as options for the A320neo family, but Honeywell has consolidate its position as the sole supplier for all five single-aisle aircraft programmes over 130 seats, including the Boeing 737 Max, Bombardier CSeries, Comac C919 and Irkut MC-21.
The widebody market remains divided with a roughly even split of sole-source positions. P&WC APUs are standard on the Airbus A380, Boeing 787 and 747-8, while Honeywell owns the APU market for the A350 and 777.
As the Boeing-Safran team jumps into the market, many questions remain about how that competitive balance could change. Their joint statement announced plans to develop and build new APUs and service the power-generating machines made by themselves and other manufacturers.
But that's a bold strategy.
It's a little-known fact that in the early 1960s Boeing produced several hundred small turboshaft engines for an unmanned US Navy helicopter. But that’s Boeing's only experience in the gas turbine business.
Safran Aircraft Engines produces APUs for helicopters and business jets, but the parent company hasn't been involved in the APU market for large aircraft since Labinal exited the Auxiliary Power International Corporation (APIC) joint venture with Sundstrand in 1996.
Now, they're teaming up to take on two established players with decades of experience, a deep installed base of fielded aircraft and sole-source positions on all aircraft now in development or production.
"They're going against two extremely competitive, well-honed [suppliers]," says Kevin Michaels, managing director of the AeroDynamic Advisory. "This is a huge business to Honeywell. So it means a lot to them."
A 65% share of the APU production market for large commercial aircraft is held by Honeywell Aerospace. P&WC claims the remaining 35%, Michaels says.
Honeywell plans to protect its presence in the market, even if one of their two biggest customers has now moved to compete with them.
"Regarding [the 4 June] news from Boeing, we do not anticipate any impact to our position in the market, noting Honeywell has long-term production contracts in place with the original equipment manufacturers, including Boeing, and maintenance and service contracts with a vast number of aftermarket customers around the globe," Honeywell tells FlightGlobal.
Indeed, Honeywell sounded a similar note a year ago when Boeing launched a new avionics business, with plans to develop competitive alternatives for a range of potential systems. APUs are now added to a growing list of Boeing efforts to insert itself into competition with several of its largest suppliers. In addition to avionics, Boeing has launched internal production of actuators, nacelles and aircraft seats.
It's a strategy intended to put pressure on the company's biggest suppliers, as the entire supply chain fights to gain market share even as the commercial aircraft market continues a 14-year-long, uninterrupted expansion.
Although Boeing is committed to developing internal alternatives to traditional suppliers, some analysts remain sceptical about the long-term strategy. The current leadership of Boeing hasn't experienced a cyclical market downturn since 2004, says Richard Aboulafia, vice-president of analysis for the Teal Group. Decisions that may seem logical during a period of long-term expansion could still backfire if the market reverses.
"I'm a little concerned that Boeing might be a bit informed by an unusually long [growth] cycle. You can invest in anything you want up to and including a high level of vertical integration," Aboulafia explains. "The only thing you're doing is capturing more profit and revenue until things go south, in which case you're stuck with all that fixed cost... and you're taking a 40% revenue haircut."
[CORRECTION: Article is updated to reflect the fact that P&WC and Honeywell offer APUs for the A320 family.]