Boeing has halted its decline with the new 787 Dreamliner, whose bulging orderbook has forced Airbus into a hurried response
In 2003, when Boeing had a web contest to name its new aircraft, voters overwhelmingly favoured “Dreamliner” over “Global Cruiser”, “E-Liner”, and “Strato-Cruiser”. Lucky for Boeing Commercial Airplanes, the name evokes what the 787 has become: a dream aircraft, lifting the company out of what seemed to outsiders prolonged creative sluggishness.
Boeing had appeared to be drifting, sitting on the sidelines for an inordinately long period, watching as competitor Airbus increased its aircraft orders, deliveries and market share with new technology and products.
With the Dreamliner, Boeing came up with a new-technology aircraft that has generated excitement in the airline industry, capturing enough orders quickly enough that customers are complaining they cannot get the Dreamliner soon enough. “Our only disappointment is that Boeing will not be able to deliver us our first 787 aircraft until 2010,” says Robert Milton, chairman of ACE Aviation Holdings, parent of Air Canada. The airline last year placed firm orders for 14 Boeing 787s, and options and purchase rights for 46 more.
The 787 is an outgrowth of Boeing’s Sonic Cruiser programme to develop a new aircraft that would have gone 20% faster than existing aircraft while using about the same amount of fuel. The airlines, unusually prescient for a change, told Boeing they were looking for a mid-sized jet that would use 20% less fuel to go the same distance at the same speed.
The resulting 787 is a family of three aircraft – likely to grow soon to four – that will carry 210-330 passengers on routes between 6,500km (3,500nm) and 16,300km. The Dreamliner, which retains some of the Sonic Cruiser’s distinctive look, will use 20% less fuel than today’s aircraft of comparable size and provide a 10% reduction in cash seat-mile costs, 30% anticipated maintenance savings and up to 45% more cargo revenue space, according to Boeing.
The advances are being generated by the extensive use of lighter-weight composites, which will account for more than 50% of the aircraft structure; open systems electric architecture; new, more efficient engines being developed by Rolls-Royce and General Electric; and other embedded technologies. Appealing developments on the passenger side are a wider, more spacious cabin interior; windows that are 50% larger; higher cabin humidity and lower altitude pressure; large overhead baggage storage; and a wireless in-flight entertainment system.
First 787 deliveries are scheduled in mid-2008 to launch customer All Nippon Airways. Boeing says that it plans to deliver a total of 112 787s during 2008 and 2009.
As of mid-March, Boeing had 298 firm orders from 24 customers, with commitments for 88 aircraft from existing and four additional customers. These numbers do not include options and purchase rights, which are substantial.
Marty Bentrott, vice-president for 787 sales, marketing and in-service support, says Boeing has active proposals out to 30 customers for more than 500 aircraft. “From a market standpoint, I would characterise the Boeing 787 as the greatest programme launch in our history,” he says. “It’s pretty straightforward that overall demand in the marketplace is in excess of 1,000 aircraft.”
The 787 Dreamliner has generated so much interest, even with some established Airbus customers, that the European consortium had to abandon plans for an A330 twinjet derivative as a competitive response and instead had to develop a largely all-new aircraft to compete. After a number of iterations, the aircraft – now being billed as “the all-new Airbus A350 family” – will keep the A330 fuselage, but feature significantly more advanced materials in its construction, a new wing, the same new engines being developed for the 787, a wider cabin and bigger windows than its A330 predecessor.
The two-member A350 family will carry 253-300 passengers, in a typical three-class layout, on routes between 13,900km and 16,300km.
Airbus has firm orders for 94 A350s from eight customers and 91 commitments from five other customers. First deliveries are still scheduled by the end of 2010, says Dave Hansen, vice-president of airline marketing for Airbus North America, even with a slip in development schedule because of a recent decision to transfer some A380 cockpit technology to the A350.
Both Airbus and Boeing have similar views of the size of the market for their new jets and their own market share. Boeing estimates a total market of about 3,500 aircraft over a 20-year period, and also expects to sell about half. Airbus estimates the market at about 3,300 over the same period, and also expects a 50% market share.
Despite Boeing’s head start, and its greater number of firm orders to date, Airbus officials are confident the A350 will prove a formidable competitor for the 787. Barry Eccleston, president of Airbus North America, says Airbus is happy about how things are going. “Boeing really came back very strong last year, and we’re happy with that,” he says. “We like the thought that there’s strong competition out there; it helps us and Boeing build better airplanes.”
But he and Hansen note that orders for competing aircraft ebb and flow, and come in small and large numbers. “It’s a marathon, not a sprint,” Eccleston says. He says that a comparison of 787 orders from the time of commercial launch with A350 orders from commercial launch show Airbus won more orders than the 787 at an equivalent time. “But in terms of buying one, we’re in the same time-scale – 2011,” he says.
Bentrott acknowledges that the bulk of 2008 and 2009 787 delivery positions are spoken for, with firm orders and contracts in place. In addition, almost all aircraft to be delivered in 2010 are accounted for, with some demand spilling into 2011. “If someone was to come to us for an airplane, we would most likely offer 2012 positions,” he says.
Because Boeing quotes specific delivery positions to customers when making proposals, however, it is possible some orders being firmed up will fall into those earlier years. If an airline accepts a proposal based on certain delivery positions and provides a refundable deposit, those positions are held until a firm contract is in place or the customer decides it does not want to proceed.
Qantas Airways recently succeeded in acquiring four 787 deliveries in 2008, part of a proposed 45-strong order, when another customer let some positions lapse.
So far, there are three versions of the Boeing 787:
■ The baseline 787-8 model, chosen by most customers to date, would seat 210-250 passengers—typically 223 in three classes on routes of 15,700km. It will be the first to be certificated and put into service.
■ The slightly bigger 787-9, with a 6m (20ft) fuselage extension, can carry 250-290 passengers on routes of up to 16,300kn. It is scheduled for entry into service in late 2010.
■ The 787-3 variant is a shorter-range version, with clipped wings and added winglets, that will carry 290-330 passengers and is designed especially for high-density Asian markets. Typically, it can carry 298 passengers in two classes, 6,500km and is scheduled for entry into service in 2010. Both ANA and Japan Airlines have ordered this version, as well as the 787-8.
Although Boeing’s passenger numbers assume eight-abreast seating in economy, using the 787’s wider cabin to offer passengers wider seats, a majority of 787 customers have shown a preference for nine-abreast seating. Bentrott says that would provide a comfort level equivalent to today’s 747-400 economy-class configuration. “In the end, it’s the airline that decides on its business model,” he says.
He notes that Qantas, which is acquiring 787s for its mainline operations and those of Jetstar International, its planned long-haul, low-cost subsidiary, might choose nine-abreast seating for Jetstar and eight-abreast seating for its mainline services. “It’s nice to have that flexibility.” The nine-abreast seating would in fact provide even better seat-kilometre projections, he adds, “assuming they can fill the seats”.
Emirates, which has been a strong customer for both Airbus and Boeing, is pushing Boeing to build a fourth, larger version of the 787, the -10, and it is likely to happen. Mike Bair, Boeing’s general manager 787 programme, says the -10 would seat about “300, plus or minus 10”, if it goes forward. The idea would be to keep to the same gross weight as the stretched 787-9 and provide a range of 13,000-13,900km. Deliveries could begin about 2012. Will it happen? Emirates is “extremely interested” in the -10, Bair jokes: “I have bruises to prove it.”
Boeing is undergoing the typical market validation process, Bentrott says. “As part of ongoing development activity, we engage with customers,” he says. “We try to get a feel from Emirates’ standpoint and from the broader market what would be the requirements for a -10.” A decision to go forward would be made when Boeing is assured there is a global market and when it feels it has the right aircraft to fill that need.
If Boeing goes ahead with a fourth variant, Bentrott has no qualms about its potential to impinge on orders for the 777. From an airline point of view, it would be part of a natural evolution of a product cycle, he notes. Would the airline want to continue to buy 777-200ERs or move to a more capable -10 with lower economic operating costs? “When you think about the 2012-13 timeframe, the 200ERs delivered in 1995 or 1996 are starting to be at the end of the product life cycle,” he says.
Airbus certainly expects its A350 to compete not just with the 787 but also the 777-200ER. The larger of the two A350s – the -900 – has room for the same number of passengers as the 777-200ER, Eccleston says, but the benefits of new materials and engines produce substantially lower empty weight and cash operating costs per seat. It also will be quieter, operating within more stringent requirements at London Heathrow airport, for instance. The 777-200ER has more range than the -900, “but only 200nm more,” Hansen adds, “and if the airline doesn’t need the range, it doesn’t matter.”
The A350 faces a similar quandary to Boeing’s potential 787-10 because it offers new twin-engine competition to the four-engine, long-haul aircraft it already offers. The A350-800 will carry 253 passengers in a typical three-class layout up to 16,300km, while the A350-900, with a fuselage stretch of almost 6.4m, can accommodate 300 passengers in a three-class configuration on flights of up to 13,900km.
Available about six months after the -800, the -900 basically carries the same number of passengers the same distance as the Airbus four-engine A340-300 and its range is the same as the A340-600, though with fewer seats. The A340-500’s range is similar to the -800, but it can carry 60 more passengers. “We consider the 350 to be part of the long-range family,” Eccleston says, but adds that the longer-range 340s have capabilities other aircraft will not have. Still, sales have not been brisk for the four-engine models, and Eccleston concedes high fuel prices have had an impact.
Although Airbus and Boeing have signed some important customers, there are many others still studying their options. Besides Emirates, key decisions are yet to be made by Singapore Airlines, Cathay Pacific Airways, Lufthansa, Air France and KLM, British Airways, Aeroflot and others.
Boeing has attracted a number of important sales from Airbus operators which were considered potential A350 purchasers, including Northwest Airlines. The carrier, which operates 15 Airbus A330s and 148 Airbus A320-family aircraft, became the North American launch customer of the 787 with an order for 18 of the model.
Another big blow to Airbus came from Air Canada, whose order for 787s, along with 18 Boeing 777s, was part of a widebody renewal plan. The new aircraft, which could number as many as 96 if Air Canada exercises all its options and rights, will replace not just 65 Boeing 767s, but also its fleet of four-engine Airbus long-haul aircraft – 10 A340-300s and two A340-500s – and eight A330-300 twinjets.
According to Milton, the two new types are the right size for the Canadian market. He says the A350, with a maximum take-off weight (MTOW) of 245,000kg (540,100lb), was too heavy. In contrast, the Boeing 787-8’s MTOW is 215,000kg.
“Our analysis pointed to overwhelmingly attractive economics,” Milton says. “We have estimated the fuel burn and maintenance cost savings alone on the 787 to be approximately 30% versus the 767s they will replace.” In a high fuel price environment, “the savings on these two line items alone will be more than twice incremental ownership costs in acquiring these aircraft”, he adds.
Qantas too, which operates A330s, opted instead for the 787 for both itself and its Jetstar subsidiary. The first four 787-8s will be delivered to Jetstar in 2008 to be used on point-to-point routes between Australia and Asian and Pacific cities. Qantas and Jetstar aircraft will be split between the 787-8 (up to 300 seats in Jetstar’s low-cost configuration) and 787-9 (up to 350 seats).
“With our unique geographic challenges, we need all the advantages we can take to compete effectively against some of the industry’s toughest,” says Qantas chief executive Geoff Dixon. The 787 family will be used for new or increased services to 15 destinations and others which it cannot currently serve profitably, he adds. ■
CAROLE SHIFRIN / WASHINGTON