Plane Wars

The New York Times reports that delivery of the Airbus A380 is going to be delayed by a further year. This is after an announcement some months ago that the largest commercial airliner ever built, was going to be delayed by as much as a year. This puts the A380 a full 2 years behind schedule and the first few airlines who ordered these $300Million monsters are feeling a bit peeved to say the least.

When Airbus first announced the 380, there was much crowing in Toulouse, the headquarters of EADS, the parent company of Airbus, that they had surpassed Boeing as the pre-eminent manufacturer of large commercial aircraft in the world. They outsold Boeing and shipped more planes than Boeing in 2005 and now had shown off the A380, a plane larger than Boeing's 747, at the Farnborough Air Show in the UK. They were the Masters of the Universe!! A combination of spectacular Gallic Engineering and European Unity (parts for the Airbus are manufactured in 6 European countries) had succeeded in showing the lazy Americans the door.

Boeing meanwhile was reeling from internal scandals ranging from the then-CEO writing x-rated emails to his head of Human Resources, to promising a Director level job to the head of procurement at the Defense Department. Undoubtedly Boeing, having gone through the acquisition and digestion of McDonnell-Douglas, the only other manufacturer of large commercial aircraft in the US, had become complacent and overconfident.

However, Boeing's retort when Airbus announced the A380 was that the world of airline travel had changed. People didn't want to travel to big hubs in major cities from smaller cities so that they could then get on enormous planes the size of small planets and travel to another large city. Boeing's bet was that people would prefer longer range planes that were smaller, making it possible for them to fly directly between city-pairs.

If you think that's sophistry, consider this: If you live in the Greater Denver area as I do, the only direct non-stop international flights out of here (other than to Canada and Mexico) are to London (British Airways) and Frankfurt (Lufthansa). For all other international flights you have to fly to a hub like Chicago, Newark, Washington Dulles, Atlanta, San Francisco or LA and then get on another plane. Would I like to fly non-stop from Denver to Honolulu or Amsterdam? Absolutely! Is there enough traffic to justify direct flights? Again, absolutely!

Enter the new Boeing 787 Dreamliner. It's designed to do exactly that - to connect city-pairs in a cost effective way so that airlines can make money in their capital intensive, fossil-fuel dependant, terrorism-prone business, by offering passengers more choices. And it uses existing airport facilities, and doesn't require the building of massive new terminals like the A380 does.

While Boeing's bet on the 787's city-pair concept seems to be paying off - Boeing has 315 firm orders for the 787 as Aug 20th -the A380 has only 168 firm orders , and that's the most optimistic estimate. According to EADS, Airbus needs another 150 orders to just break even on the program.

But there are those airlines that absolutely need the ability to move approximately 500 people a pop, on a massive globe-girdling aircraft, without worrying about city-pairs. That's because they don't have two cities in their countries. Singapore Airlines and Emirates Airline, both big customers of the A380 come to mind. Qantas, another 380 customer has 2 cities - just about. Let's face it: other than Sydney and Melbourne there are no cities in Australia that have the terminal capability or the traffic to justify a monster the size of the 380.

And for these airlines, Boeing has the new 747-8. A new take on an established theme, the reconstituted 747 with a new wing profile and the next generation of GE and Rolls-Royce engines, is quieter, more fuel efficient and vastly cheaper than the 380 and costs 6% less per seat-mile to operate than the 380, while carrying only 46 fewer passengers. And it will operate out of more than 200 airports in the world that can accommodate the 747 today vs. only 22 airports in the world today that can accommodate the 380. As of the end of September Boeing had 41 firm orders for the 747-8.

With the recently announced delays in the delivery of the A380, Emirates and Singapore Airlines are looking at switching at least part of their A380 orders to the 747-8. So expect the 380 number to go down and the 747-8 numbers to go up, to say nothing of the 787 Dreamliner.

So who's crowing now?


Boeing
Airbus
A380
747-8