Making a Sausage

When Boeing Commercial Airplanes’ vice president of marketing visits to Tokyo Narita today, the scene has changed yet again.

“Now it is as far as you can see 787s,” Tinseth told Australian Aviation in an interview on the sidelines of the Singapore Airshow in early February.

“You’ve seen this decline in the average seats per departure, but the number of destinations has doubled. We are seeing the number of destinations increase because of the flexibility of these smaller aircraft.

“And by doing so they are taking demand that goes from places like LA to Narita and they are redistributing it in a different way.”

The development of the 787 was predicated on offering airlines an economic twin-engine aircraft with sufficient range to open up new long- and medium-haul routes, as well as an effective asset to increase frequencies on existing routes.

Boeing figures show some 170 new nonstop markets have started since the 787 started flying with launch customer All Nippon Airways of Japan in 2011 and Tinseth described this network development as “even more dramatic than we thought”.

The aerospace giant is hoping to achieve a similar result for airlines with its much-discussed but yet-to-be-launched new mid-market airplane (NMA).
“We are trying to take that dynamic, and recreate it to some extent in the middle of the market,” Tinseth said.

While details are thin on the ground, the study is focused on a two-aircraft family that would carry between 225-275 passengers anywhere from 4,500-5,000nm. It would be powered by an engine capable of producing 50,000lbs of thrust.

Entry into service was projected to occur in the 2024 to 2025 timeframe.

That puts the NMA, or 797 as some have labelled it, somewhere between Boeing’s largest narrowbody the 737 MAX 10, (3,215nm range with 230 passengers in a single-class layout), and its smallest widebody the 787-8 (7,355nm range with 242 passengers in a two-class configuration).

And Boeing’s initial estimates for the NMA suggest there might be a market for about 4,000 aircraft. Some aviation analysts, who might define the market differently, have put forward a number closer to 2,500.

The replacement of the 757 and 767s would no doubt be a key plank of the potential market for the aircraft.

However, Tinseth said Boeing has higher ambitions for the proposed NMA than just replacing those older models.

Rather, the NMA is slated to offer airlines the potential to open up or make profitable thousands of routes that cannot be served with single aisle aircraft or were being operated inefficiently with widebody equipment.

“On the NMA you have an airplane that is kind of alone,” Tinseth said.

“It’s an airplane that can disrupt and change and unlock the market so this is about changing airlines’ networks in ways that they can’t operate today.”

‘It’s an airplane that can disrupt and change.’

“It’s going to open up new markets we haven’t seen before like the 787.

“That’s the interesting thing about the airplane. It is also the challenge.”

Tinseth said Boeing was in discussions with the three major engine manufacturers – understood to be CFM/GE, Pratt & Whitney and Rolls-Royce – on the proposed 50,000lb thrust engine, adding that the trio was the only suppliers it was currently working with.

Boeing has sought the views of about 50 airlines and leasing companies around the world on what the aircraft should be designed for.

Tinseth declined to go into details of how diverse the range of opinions were, saying only that “those sides were coming together”.

“It’s a little bit like making sausage. It is not a process you want to see but at the end of the day the sausage tastes good,” Tinseth said.

“So you have to really figure out how you blend all of these requirements together.

“We have a very strong idea what it will have to do, how the airplane will have to come together, what kind of configuration, what kind of technologies.”

QANTAS EXCITED ABOUT NMA, BUT ALSO OPEN TO ALTERNATIVES

Qantas chief executive Alan Joyce is an enthusiastic backer of the project.

As far as Qantas is concerned, NMA looms as an ideal replacement for its A330 fleet on domestic routes, both on trans-continental services between Perth and the east coast, and to increase capacity on the main trunk routes out of the increasingly busy Sydney Airport.

Meanwhile, the proposed aircraft could also be deployed on some international routes.

“We are actually excited and I think a lot of carriers are about the potential for that aircraft,” Joyce told reporters at Qantas’s first half results briefing on February 22.

“It’s still a paper aircraft so Boeing have to define the spec of it, the weight of it, the performance and the price of it, but it looks like it’s being pitched as an aircraft that would work very well in the domestic market.

“It is a lighter aircraft than some of the widebody twin-aisles that we have today. It has a range that’s designed to fly transcontinental and maybe into South-East Asia.”

Joyce said the prospect of Sydney Airport being at capacity within the decade meant having larger aircraft would be the only way to expand.

“We’re now at the cap of 80 movements an hour, we’re full five hours every day already,” Joyce explained.

“By 2026, when this aircraft is proposed to be produced, the airport will probably be completely full so the way to grow is with bigger gauge aircraft.

“What’s also really exciting about it is Boeing are talking about being able to turn it around in the same time as a 737 which means we get really good domestic efficiency out of it.

“So if all that is achieved it’s looking like a very good aircraft in that space.”

Qantas is not putting all its eggs in the NMA basket though.

The airline group has orders for 99 Airbus A320neo family aircraft, which have been earmarked for its Jetstar low-cost carrier (LCC) unit.

And the first aircraft from that order will arrive in mid-2020, when Jetstar Australia and New Zealand begins accepting 18 A321neoLRs that have the range to fly to Bali from Melbourne (2,363nm) and Sydney (2,495mm).

The A321neoLR has a maximum takeoff weight of 97 tonnes and features optional extra fuel tanks to enable the aircraft to have a range of up to 4,000nm.

The first A321neoLR (or A321LR for short) completed its first flight on January 31, commencing a 100-hour flight test program. Certification from the European Aviation Safety Agency (EASA) and US Federal Aviation Administration (FAA) is forecast to occur in the second quarter of calendar 2018, with entry into service before the end of the year.

How those A321neoLR’s perform might shape Qantas’s thinking of what it does when it comes time to renew its fleet of Boeing 737-800 narrowbodies that operate domestically, across the Tasman and on select other international routes.

Joyce described the A321neoLR as a “very good aircraft”.

“We want a competitive dynamic to make a decision about what the need is for the long term replacement of the domestic Qantas fleet is,” Joyce said.
“If Boeing decide to produce this aircraft we’ll have alternatives and very competitive alternatives so that will be very exciting for us.”

Industry estimates suggested Airbus’ A321neo was outselling the 737 MAX 9 by a factor of five to one, figures which prompted Boeing to respond with the MAX 10, which is scheduled to enter service in 2020.

Airbus has been keen to point out its Airbus A321neoLR narrowbody, which has been receiving a steady stream of new orders of late, had the potential to be that 757 replacement, particularly for trans-Atlantic routes.

Asked if Airbus had any interest in an engine with 50,000lbs of thrust – which is likely to be the type of powerplant needed for the NMA – Airbus executive vice president and chief of sales, marketing and contracts Eric Schulz said “potentially maybe”.

“It is certainly not something that I have in mind today to say yes absolutely it will go on that airplane to replace that,” Schulz said during a media briefing at the Singapore Airshow.

“As you know the engine thrust is one thing, it goes into an integration on an aircraft, it takes many, many things with it, nacelles, pylons, all kinds of stuff to change and replace.

“Today the least I can say is that I have no personal vision or visibility of the need for Airbus to have an engine on that thrust range.”

Tinseth said those at Airbus “don’t get it” when it comes to Boeing’s NMA.

“They don’t understand what we are trying to do,” Tinseth said.

“They are not talking to the network and fleet planners of the airlines that can really reinvent the way that they can compete.

‘The fleet planners can’t help themselves, they get so excited.’
Randy Tinseth

“I think this airplane could truly disrupt the industry.”

VIRGIN AUSTRALIA, WITH ITS 737 MAX COMING, CAUTIOUS ON NMA

Qantas’s local rival Virgin Australia is a Boeing 737 MAX customer, with an order for 40 of the next generation narrowbody.

First delivery was expected at the end of calendar 2019. Virgin Australia has not specified which variants of the MAX it has ordered “for competitive reasons”.

Virgin Australia chief executive John Borghetti was more circumspect when asked whether his airline had any interest in the proposed NMA.

“We will look at everything,” Borghetti told reporters during Virgin Australia’s 2017/18 first half results presentation on February 28.

“The one thing that is for sure is that the 737 will absolutely be the backbone of the domestic fleet, or the short-haul fleet if you will, for the group for many, many years to come.”

In this part of the world, Air Niugini and Fiji Airways are both also a Boeing 737 MAX customers.

There has been an enthusiastic reception to the proposed NMA from a number of airlines around the world.

Lufthansa chief executive Carsten Spohr said the German flag carrier is looking at the proposed aircraft.

“It’s too early, but we are in talks,” Spohr said in early March, according to Reuters.

“They are talking to all major airlines.”

Even Delta Air Lines, not known for purchasing latest generation aircraft and no friend of Boeing following the recent trade dispute over the Bombardier CSeries, expressed interest in the NMA as a potential replacement for its fleet of Boeing 757s and 767s.

“You’re going to see us participate in Boeing’s middle-of-the-market campaign,” Delta Air Lines chief executive Ed Bastian said in February, Bloomberg reported.

“I hope that we’re going to be a launch customer on that program as well.”

Figures from aviation thinktank CAPA – Centre for Aviation indicated the US trio of American Airlines, Delta and United currently had some 390 Boeing 757s and 767s in their fleets.

Further, those aircraft were close to 20 years old.

“As fuel and maintenance costs rise on those aircraft those three airlines will put pressure on Boeing to firm its commitment to design a jet to fill the space between the 737 narrrowbody family and its 787 widebodies.”

“Airlines have been urging Boeing for quite some time to improve its offerings for small twin aisle replacements, and their voices are only growing louder.”

FLEET PLANNERS EXCITED

Tinseth said his team of 25 people at Boeing with network and fleet planning expertise had received plenty of positive feedback about the proposed aircraft.

“I’ve gone into a number of airlines with the NMA and listened to them. The fleet planners can’t help themselves, they get so excited,” Tinseth said.

“Where you get the real excitement is when my network and fleet team connects with their network and fleet team and then they start to take a look at networks and what it can do and how they can do this and how they can disrupt.

“It’s going to be pretty exciting.”

Industry watchers say Boeing could formally launch of the NMA later in 2018.

For now, work at Boeing’s NMA program office that was formally established in 2017 to look at the development of the aircraft continues, while discussions with airlines and their network and fleet planners is ongoing.

“Can you build an airplane at a cost that justifies this price in the market? And that’s where a lot of our time and attention is being spent right now,” Tinseth said.

“So get the technologies right, get the configuration right and then figure out can you be profitable at it.”

“I’m a marketing guy so what I am trying to do is figure out the value the product brings in the market and then I turn it over to the engineers and the program people they calculate the price they can build it at. It all has to come together in order to make the business case work.”