Page 60 - AA 2018_11

MIDDLE-OF-THE-MARKET

market size and demand? What new airframer is keen to sell more (indeed,
operators could establish themselves at this point it’s practically ‘any’) re-
in less constrained airports in the engined A330-800neo aircraft.
ASEAN region, creating hub networks From Boeing, it’s the 737 MAX 10
spanning the equator? and the 787 Dreamliner, and while
Right now, airlines are rather in the the former has lower acquisition and
position of Goldilocks: a narrowbody operating costs than the A321neo,
may be too small and too short- the latter is more expensive than an
ranged, a widebody may be too big A330-200.
and inefficient over shorter distances, The problem for both airframers
but there’s nothing just right. is that the narrowbody is not enough
But with more efficient engines for aircraft, and the widebody is too much
narrowbodies (enter the 737 MAX aircraft. Looking objectively, however,
and the A320neo), with the cost of the gap between them is greater for
acquisition and operation of existing Boeing than it is for Airbus, which
widebodies becoming more efficient offers more capable narrowbodies and
(cue the A330ceo, A330neo and 787), a less expensive widebody.
as well as the efficiencies of operating The market was not convinced by
fewer fleet types, there’s certainly an Boeing’s offering of the 737 MAX 9
argument that the middle of the market to compete with the A321neo, which will come back to us and say: ‘we’re
is being squeezed from either side. outsold the Boeing jet by around ‘The problem going to be up-converting and we’re
So, why not just use a 767 or A330? five to one before the launch of the going to, instead of getting delivered
Largely, that’s what airlines do. But stretched, but lower range, MAX 10. for both an A320, go for an A321.”
these jets are sometimes too much A key aspect to note when Looking to the line at present, “we
aircraft for a route, both in terms of considering the size of the market airframers are seeing today already in terms of
capacity and range, given that the is that the eventual numbers for the the amount or the percentage of A321
smaller A330, the -200 version, has larger versions of both narrowbody is that the going 20, 30 per cent,” Toro-Prieto
a range of some 7,300nm, and the aircraft are somewhat underestimated says. “I think that in the coming
767-300ER reaches nearly 6,000nm as the result of the way aeroplanes are narrowbody years we’re going to get towards this
– significantly more than required, paid for. Pre-delivery payments are objective that was mentioned months
which is not efficient. And in efficiency calculated on the basis of the delivery is not enough ago, when John Leahy [Airbus’s
terms, the 767 and older A330s do price, which is naturally lower for an former sales supremo] was still
not have the cost advantages of newer A320 or 737 MAX 8 than an A321LR aircraft, and around, when he was saying ‘ideally
aircraft. or a 737 MAX 10. at some moment in the future I would
As passenger demand expands Airframers, however, love to deliver the widebody expect to see a 50 per cent production
too, and especially in areas where it the larger aircraft, since they cost rate.’ We are not there yet, and we will
outpaces the possibility of airport more yet take up the same amount of is too much.’ need to see from the industrial point of
construction, there is natural upward space on the assembly line. Airlines view what we will need to do to adapt
pressure on aircraft size. There is therefore almost always have an that. But with the current demand and
upward size pressure too, from slot option to upgauge their orders, pretty as the airlines look to bigger models,
restrictions. much at any time before assembly what we’re seeing is a higher interest
An airline flying a smaller 757 or begins, but the initial orders are for towards the A321.”
A321 across the Atlantic to London the smaller jets, with conversions On the Boeing side, in pure
Heathrow is likely not making the coming afterwards – as seen this passenger size terms, the MAX 9 and
best use of those seven-figure LHR August with Virgin Australia’s MAX 10 are certainly valuable and
slot prices. It’s a similar story at other MAX 10 announcement. useful aircraft, and will serve well on
congested airports around the world, In terms of the percentage transcontinental US and Australian
like Hong Kong, Beijing, Tokyo of A321neos being ordered and routes, as well as shorter-range flights.
Haneda, and so on. produced, says Airbus’s Joaquin They are lighter than their A320
This both pushes smaller Toro-Prieto, “we know that we are family equivalents, but do not have the
narrowbody operators to fly larger on the way up. In some ways it’s same range or runway performance
versions, making an argument for complicated to say. The reason for that – the MAX 9 maxes out at 3,550nm
a middle-of-market aircraft, and is because a lot of the airlines, when and the 10 at 3,300nm, which
pushes the middle-of-market demand they’re ordering aircraft from us – and hampers their attack of the middle-of-
upwards as well, making an argument that’s the case for a lot of lessors – they the-market from the narrowbody end.
that the middle-of-the-market could will decide to order the smaller variant To simplify to perhaps an extreme, the
use an A330 or 787. A320 because in terms of pre-delivery greatest issue for the MAX serving the
payments and early payments, the MOM is the lack of ground clearance
Spoiler alert: Airbus’s and Boeing’s aircraft tag price is lower than an A321.” on the 737 for newer, larger, more
starting point is based on their Since these pre-delivery payments efficient turbofan engines.
existing aircraft are calculated on the price of the Airbus rather ate Boeing’s lunch
As of the time of writing, the offering variant ordered, Toro-Prieto says, with the A321neo as a result, which
at the narrowbody end from Airbus is “they will be advancing less money at has an official 4,000nm range for 206
the A321neo and its extra-fuel-tanks the beginning. Then later on, since we passengers in its A321LR version,
variant, the A321LR. At the widebody provide flexibility to change between nearly 100nm of official range more
end, it’s the Airbus A330, particularly A320 to A321neos, when we offer than the 757-200 it is intended to
the -200 version, although the them those conversion windows they replace in the world’s fleet.

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