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If airlines buy now, will they pay later?
Aging metal jets need replacing, but lighter plastic models are in works that may soon render them second-rate
STEVE HARRISON
[email protected]
If airlines buy now,
will they pay later? Aging metal jets need replacing, but lighter plastic models are in works that may soon render them second-rate Steve Harrison
Ever bought a personal computer, only to see a faster, better model released a month later?
US Airways and other airlines are in a similar situation. They need hundreds of new single-aisle planes to replace older, less fuel-efficient aircraft, but they worry their new planes will become obsolete overnight.
The reason is the Boeing 787, a wide-body plane that analysts say will revolutionize the economics of flying. The Boeing 787, known as the Dreamliner, is being built with lighter-weight composite plastics, allowing it to fly farther, faster -- and using less fuel -- than metal aircraft. The plane also will have passenger-friendly improvements, such as bigger windows and higher cabin humidity.
The airline industry assumes that Chicago-based Boeing -- and perhaps other airplane manufacturers -- will soon extend this technology to smaller, single-aisle aircraft, such as the venerable Boeing 737.
The question: When?
Airlines are worried that if they buy a traditional metal plane today, it could be yesterday's technology quickly.
"If I'm stuck with a metal airplane and my competition has composite, that will put me at a 15 percent cost disadvantage," said airline consultant Mike Boyd of the Boyd Aviation Group in Evergreen, Colo.
US Airways, whose largest hub is in Charlotte, wants to replace its aging Boeing 737 300 and 400 series jets, which were first flown by airlines in the mid 1980s. The decision is crucial for the airline, because 737s do much of its medium-range flying, and they are 96 of the airline's 357 mainline aircraft.
The airline said it would initially replace 60 in the next year or two, with the rest of the older 737s to be phased out later.
"For all of the airlines this is an important factor," said US Airways Chief Financial Officer Derek Kerr. "When will Boeing make the decision to go with a new plane? If you order something today, you could have an inferior plane that isn't competitive."
The airline is studying a number of options.
Should it go ahead and buy planes with current technology from Boeing or its competitor Airbus? Or should it hold tight and wait for something better?
Another possibility: The airline could pay more for a short-term lease of metal aircraft, giving it flexibility to dump the planes if composites become available.
"Once we get our own internal analysis (on the urgency of the airline's replacement needs), we'll hammer the manufacturers on when this will happen," Kerr said.
Boeing has said it wants to build a new 737 with Dreamliner technology -- analysts have dubbed it the 737-P, for plastic -- but it hasn't announced a timetable.
The airline must make sure a composite 737 would be at least 20 percent more efficient than its current model to justify production costs.
"It's very difficult to make the Boeing 737 even more efficient," said Boeing spokeswoman Sandra Angers.
Boeing announced the 787 Dreamliner in 2004 as rival Airbus was basking in the initial success of the Airbus A380, the double-decker jumbo jet that could seat as many as 800 in an all-coach configuration. The A380 is being built with conventional materials.
Boeing is taking a different approach. Instead of a building a massive plane that could ferry large numbers of people between congested airports, Boeing bet on the 787, a long-range, twin-engined plane that can fly between 210 and 330 passengers, depending on how it is configured.
When built, the 787 will be more aerodynamic than a traditional jet, including larger wings that curve upward. Its engines are designed to use less fuel. But most importantly, more than half of the plane will be built from composite plastic.
That means it will use less fuel than conventional aluminum planes. As oil prices have hovered around $60 and $70 a barrel, Boeing's bet on fuel economy appears to be a smart decision.
For passenger comfort, Boeing has said the Dreamliner will have larger windows that are 19 inches tall and can be dimmed by pressing a button. It will have larger in-cabin luggage bins and more humidity in the cabin, making passengers feel less fatigued after long flights.
The 787 should make its first flight at the end of 2007 and go into commercial service in 2008.
The current version of the 737 is the 737 New Generation, which refers to the 600, 700, 800 and 900 series of the jet. Boeing says those planes have operating costs 5 percent to 10 percent lower than the 737 300 and 400 series, which US Airways is trying to replace.
The shape of the 737 dates back to the 1960s, though the company has updated the engines, wings and avionics.
Airline consultant Robert Mann said rumors are flying about the 737-P.
"There has been a lot of talk that Southwest is already in talks with Boeing," Mann said. "They are their biggest buyer."
Financially struggling American carriers haven't expanded their mainline fleets this decade, but they do need to replace aging aircraft. Mann points to American Airlines, which has more than 300 gas-guzzling MD-80s, and Northwest, which has more than 50 DC-9s -- some of which are more than 30 years old -- as prime candidates for the new plane.
"The pressure is building at all American airlines for single-aisle replacements," Mann said. "Some will be replaced with smaller aircraft, but not all. (With a new plane) you'll see 20 percent more efficiency in an industry where a 5 percent profit margin is elusive."
Boyd said Boeing's success with the Dreamliner has a downside. Because airlines are excited about the new fuel-efficient technology, their hesitancy to buy metal planes could hurt sales of the 737, the biggest-selling commercial jet ever.
"The 787 is replacing a dying line (the 767)," Boyd said. "The 737 is their cash cow. And the minute they announce the 737-P, no one will want metal."
Airbus is building a competitor to the 787, known as the A350. The new model has been criticized by airlines as not efficient enough, and the European company is trying to increase the use of composites in the plane.
Boyd said companies such as Bombardier and Embraer, a Brazilian manufacturer, that have had success building small regional jets wouldn't be cannibalizing their own market if they could develop a composite 150-seat jet.
Bombardier, a Canadian firm, had announced plans to develop a jet with more than 100 seats, though not out of composites. That project -- known as the C-series -- has been delayed, though spokesman Marc Halloran said work is ongoing.
Passenger-friendly Features Expected to Come With New Technology
Aging metal jets need replacing, but lighter plastic models are in works that may soon render them second-rate
STEVE HARRISON
[email protected]
If airlines buy now,
will they pay later? Aging metal jets need replacing, but lighter plastic models are in works that may soon render them second-rate Steve Harrison
Ever bought a personal computer, only to see a faster, better model released a month later?
US Airways and other airlines are in a similar situation. They need hundreds of new single-aisle planes to replace older, less fuel-efficient aircraft, but they worry their new planes will become obsolete overnight.
The reason is the Boeing 787, a wide-body plane that analysts say will revolutionize the economics of flying. The Boeing 787, known as the Dreamliner, is being built with lighter-weight composite plastics, allowing it to fly farther, faster -- and using less fuel -- than metal aircraft. The plane also will have passenger-friendly improvements, such as bigger windows and higher cabin humidity.
The airline industry assumes that Chicago-based Boeing -- and perhaps other airplane manufacturers -- will soon extend this technology to smaller, single-aisle aircraft, such as the venerable Boeing 737.
The question: When?
Airlines are worried that if they buy a traditional metal plane today, it could be yesterday's technology quickly.
"If I'm stuck with a metal airplane and my competition has composite, that will put me at a 15 percent cost disadvantage," said airline consultant Mike Boyd of the Boyd Aviation Group in Evergreen, Colo.
US Airways, whose largest hub is in Charlotte, wants to replace its aging Boeing 737 300 and 400 series jets, which were first flown by airlines in the mid 1980s. The decision is crucial for the airline, because 737s do much of its medium-range flying, and they are 96 of the airline's 357 mainline aircraft.
The airline said it would initially replace 60 in the next year or two, with the rest of the older 737s to be phased out later.
"For all of the airlines this is an important factor," said US Airways Chief Financial Officer Derek Kerr. "When will Boeing make the decision to go with a new plane? If you order something today, you could have an inferior plane that isn't competitive."
The airline is studying a number of options.
Should it go ahead and buy planes with current technology from Boeing or its competitor Airbus? Or should it hold tight and wait for something better?
Another possibility: The airline could pay more for a short-term lease of metal aircraft, giving it flexibility to dump the planes if composites become available.
"Once we get our own internal analysis (on the urgency of the airline's replacement needs), we'll hammer the manufacturers on when this will happen," Kerr said.
Boeing has said it wants to build a new 737 with Dreamliner technology -- analysts have dubbed it the 737-P, for plastic -- but it hasn't announced a timetable.
The airline must make sure a composite 737 would be at least 20 percent more efficient than its current model to justify production costs.
"It's very difficult to make the Boeing 737 even more efficient," said Boeing spokeswoman Sandra Angers.
Boeing announced the 787 Dreamliner in 2004 as rival Airbus was basking in the initial success of the Airbus A380, the double-decker jumbo jet that could seat as many as 800 in an all-coach configuration. The A380 is being built with conventional materials.
Boeing is taking a different approach. Instead of a building a massive plane that could ferry large numbers of people between congested airports, Boeing bet on the 787, a long-range, twin-engined plane that can fly between 210 and 330 passengers, depending on how it is configured.
When built, the 787 will be more aerodynamic than a traditional jet, including larger wings that curve upward. Its engines are designed to use less fuel. But most importantly, more than half of the plane will be built from composite plastic.
That means it will use less fuel than conventional aluminum planes. As oil prices have hovered around $60 and $70 a barrel, Boeing's bet on fuel economy appears to be a smart decision.
For passenger comfort, Boeing has said the Dreamliner will have larger windows that are 19 inches tall and can be dimmed by pressing a button. It will have larger in-cabin luggage bins and more humidity in the cabin, making passengers feel less fatigued after long flights.
The 787 should make its first flight at the end of 2007 and go into commercial service in 2008.
The current version of the 737 is the 737 New Generation, which refers to the 600, 700, 800 and 900 series of the jet. Boeing says those planes have operating costs 5 percent to 10 percent lower than the 737 300 and 400 series, which US Airways is trying to replace.
The shape of the 737 dates back to the 1960s, though the company has updated the engines, wings and avionics.
Airline consultant Robert Mann said rumors are flying about the 737-P.
"There has been a lot of talk that Southwest is already in talks with Boeing," Mann said. "They are their biggest buyer."
Financially struggling American carriers haven't expanded their mainline fleets this decade, but they do need to replace aging aircraft. Mann points to American Airlines, which has more than 300 gas-guzzling MD-80s, and Northwest, which has more than 50 DC-9s -- some of which are more than 30 years old -- as prime candidates for the new plane.
"The pressure is building at all American airlines for single-aisle replacements," Mann said. "Some will be replaced with smaller aircraft, but not all. (With a new plane) you'll see 20 percent more efficiency in an industry where a 5 percent profit margin is elusive."
Boyd said Boeing's success with the Dreamliner has a downside. Because airlines are excited about the new fuel-efficient technology, their hesitancy to buy metal planes could hurt sales of the 737, the biggest-selling commercial jet ever.
"The 787 is replacing a dying line (the 767)," Boyd said. "The 737 is their cash cow. And the minute they announce the 737-P, no one will want metal."
Airbus is building a competitor to the 787, known as the A350. The new model has been criticized by airlines as not efficient enough, and the European company is trying to increase the use of composites in the plane.
Boyd said companies such as Bombardier and Embraer, a Brazilian manufacturer, that have had success building small regional jets wouldn't be cannibalizing their own market if they could develop a composite 150-seat jet.
Bombardier, a Canadian firm, had announced plans to develop a jet with more than 100 seats, though not out of composites. That project -- known as the C-series -- has been delayed, though spokesman Marc Halloran said work is ongoing.
Passenger-friendly Features Expected to Come With New Technology
