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Douglas has got its first MD-95 sales on the scoreboard with a launch order from no frills carrier ValuJet
Analysis – MDC Launches MD-95
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Mdc, Valujet Take A Deep Breath And Launch The Md-95
McDonnell Douglas, ValuJet and presumably Rolls-Royce and BMW last month took the latest gamble in this risky business of building and flying aeroplanes.
Between them they launched the MD-95, a 100 seat variation on the DC-9 theme that will now give dangerous competition to the 737-600, Fokker 100 and Avro RJ100 (the BAe 146-300 in fresh paint). ValuJet, a no-frills operator based on a fleet of secondhand DC-9s, agreed to buy 50 MD-95s and take options on 50 more. Douglas, and presumably the engine makers, agreed to sell the airliners for a rock bottom $US20 million or so per copy, just to get the model launched. The MD-95 is a shorter MD-90 with a maximum takeoff weight of 52 tonnes. Unusually, Douglas has changed engine, to the BMW Rolls-Royce BR715 with 21,000lb (94kN) thrust. Although a maker will always want to use the same engine for all variations of a fuselage, stretching thrust according to weight, it seems a derated version of the MD-90’s IAE V2500s would have been unjustifiably heavy. Asked whether it was a risk to launch the MD-95 with just one customer, MDC president Harry Stonecipher said: “It’s a risk I’m going to take.” And he made it clear that ValuJet had got a deep discount in launching the plane. “Other customers can’t expect the same deal,” he said. At first glance it does look risky. Based in Atlanta, ValuJet has come from nowhere, not reaching its second birthday until a few days after it placed the order. Recalling the mortality rate among US airlines, especially startups, ValuJet hardly seems to be an appropriate launch customer. Douglas has got its first MD-95 sales on the scoreboard with a launch order from no frills carrier ValuJet. Will it still be there when the first MD-95 is delivered in 1999? Yes, it probably will be, in some form or another. ValuJet is the airline many hoped that Compass would be: It has grown and grown and grown, driving its high cost competitors crazy in the process. It already has 35 DC-9-30s (one of the early series DC-9s with the low bypass P&W JT8D engines) and has another 12 aircraft coming, three of them MD-80s (the second wave of DC-9 developments, with higher bypass JT8D-200 series engines). ValuJet’s passenger traffic almost trebled in the September quarter while its load factor, said to be profitable at 50%, rose more than 10 points to 73%. Now, after months of playing Boeing, MDC and Airbus (with the A319) against each other, ValuJet has taken a big deep breath and ordered new and much more expensive aircraft. The costs involved here are interesting: $US5.5 million after hushkitting a DC-9-30 (that’s probably rising, though, as ValuJet scrounges the market), $US11-12 million for a second-hand MD-80 and a discounted $US20 million for each MD-95. At that purchase price, ValuJet says an MD-95’s costs are 7% lower than a DC-9-30’s. Overall costs, remember, include the usual crew, maintenance and fuel costs plus interest on the value of the plane. Now the interesting question is how the MD-95 will stack up against the Fokker 100, Avro RJ100 and Boeing 737-600. It does seem to have some advantages over all of them. The 108 seat 737-600 is much bigger at 64 tonnes MTOW, which makes it ill suited for the 100 seat market. That did not stop it from pinching the MD-95’s obvious launch customer, SAS, in March, but the fact remains that bigger planes use more aluminium and burn more fuel. The 737-600’s biggest advantage over the MD-95 would have to be commonality with a buyer’s existing squadron of 737s. The RJ100 (44 tonnes MTOW) suffers from having four engines 7000lb (31kN Lycoming LF507s), which must be costlier to run than the MD-95’s two latest generation BR715s. The economics of engine layouts work like this: Airliners have to have enough thrust to takeoff if one engine fails partway down the runway. On the back of the envelope, a four engine plane has to have 33% spare thrust, while a twin has 100% excess. So you have to install more thrust in a twin and, if thrust costs the same in whatever size packages you buy it, a twin’s powerplant purchase cost must be higher. But the running costs for the twin are much lower, because theoretically it has only half the moving parts. On the other hand, the RJ100 has a nice wide fuselage (for its class), big enough for six abreast but mostly using only five abreast, like the narrow MD-95. British Aerospace/Avro has also proven it can sell its RJ family lately: it sold 23 to Sabena in September and seven to Lufthansa in October and has had a bumper year. The Fokker 100 (46 tonne MTOW) has only two engines but the clear disadvantage compared to the MD-95 is that they are older technology. Rolls-Royce’s lineup in the 12 to 22,000lb (50kN to 100kN) range has progressed from the 1960s’ Spey to its refanned 1980s descendant, the Tay, and now to the BR715. The Fokker 100 has 15,100lb (67kN) Tays. That doesn’t mean Fokker can’t compete, but if the MD-95 can make it into an extended production run (and 50+50 is a good start) then the Douglas product must have a brighter long term future.
And While We’re In Atlanta …
The next big airliner order to watch is Delta’s requirement to replace its colossal fleet of 56 Lockheed L-1011 TriStars. The airline says it is looking at the 777 and A330. Interestingly, Delta is complaining about the old TriStars’ rising maintenance costs, not their fuel burn. Maybe fuel efficiency is not the driving force for fleet renewal it used to be. After all, fuel efficiency has improved only incrementally since the great leap forward of the early 1970s high bypass engines: the Pratt & Whitney JT9D, GE CF6 and the TriStar’s Rolls-Royce RB211.
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