Middle of the market

Hundreds of Airbus A321XLRs have been sold for the so-called ‘middle of the market’. With airlines decisively backing the European aircraft, Mark Broadbent questions where this leaves Boeing’s plans for an all-new alternative.

United Airlines placed a firm order for 50 Airbus A321XLRs on December 4, leading many to doubt the future viability of Boeing’s proposed New Midsize Airplane (NMA).
Airbus

United Airlines’ firm order late in 2019 for 50 Airbus A321XLRs capped an impressive few months for the new ultra-long-range version of the A321neo, which according to the company has now received more than 450 orders since its launch at the Paris Air Show last June.

United was the second of America’s ‘big three’ to purchase the aircraft following American Airlines, which has also ordered 50. These commitments, together with orders from many other carriers worldwide, represent an emphatic vote of confidence in the new model.

They also pose a wider question: is Boeing’s New Midsize Airplane (NMA) concept dead? Early in 2019, Boeing’s then-president and CEO, Dennis Muilenburg, said a final launch decision would be made in 2020. However, with the 737 MAX crisis engulfing the company, the NMA remains in limbo.

More than 1,000 757s were produced between 1981 and 2004. Despite this, Boeing has yet to launch a suitable successor for the ageing type.
AirTeamImages.com/Bob Robinson

The 757 conundrum

The ‘middle of the market’ refers to airliners with around 200 to 280 seats and a range of 4,000-5,000nm (7,408-9,260km). It basically describes aircraft sized between smaller single-aisle jets, such as the A220, A320 and 737, and the larger twin-aisle A330, A350, 777 and 787 widebodies.

The Boeing 757 is the classic mid-market aircraft. Despite entering service with Eastern Air Lines back in 1983, hundreds remain in use. The big three US majors – United, American and Delta Air Lines – each operate substantial fleets. At the turn of this year Delta had 128, United 74 and American 34.

So many 757s remain operational simply because the type is still very useful. It is ideally suited to the most popular routes between large hubs where passenger demand makes it prudent to provide more seats than an A320 or 737.

Its mix of midsize capacity (typically 200-250 seats) and 3,900nm (6,400km) range also enables airlines to cost ef ectively operate so-called ‘thin’ intercontinental services. These are the medium-to-long-haul connections between large hubs and smaller secondary airports that would either be challenging to serve profitably or totally unviable with a bigger aircraft. Examples are the transatlantic services to Europe from the US east coast.

The US majors operate both domestic trunk routes and ‘thin’ transatlantic services with their 757s. American, for instance, currently flies the type on routes such as New York Newark-Los Angeles and Charlotte-Boston, and this year it will put it on new transatlantic flights from Philadelphia to Keflavík and Casablanca.

Similarly, Delta’s domestic 757 routes currently include Salt Lake City-Phoenix and Atlanta-Palm Springs, and from May 2020 the airline will open new connections from Boston to Manchester and London Gatwick with the jet. United flies 757s domestically from New York Newark and Washington Dulles; this carrier will also start new daily Newark-Porto and Dulles-Edinburgh flights with the type this year.

Away from these carriers, 757s are crucial too for smaller operators. Most notably, Icelandair’s growth in recent years, connecting European and North American points via Reykjavík, has been driven largely by its 25-strong 757 fleet. UK leisure airlines Jet2.com and TUI Airways both continue to use the aircraft (Jet2 has ten, TUI eight), while Germany’s Condor operates 15 examples of the larger 757-300. The type enables these carriers to add capacity on key short-haul routes with high passenger numbers during the peak summer season and to serve longer-haul destinations.

The 757’s use in all these ways attests to the type’s suitability for mid-market tasks. There is nothing quite like it. Although the 737 MAX 10 and baseline A321neo offer similar seat capacity, they have less range, while the smallest variants of the 787 and A330 offer more capacity than is needed for mid-market missions.

The Boeing 757 remains popular with several European leisure airlines. TUI Airways uses eight examples on connections from Manchester, Birmingham and London/Gatwick.
Martin Needham

New midsize generation

This factor, together with the 757’s increasing age – the last new-build example was delivered in November 2005 and the average in-service jet is typically 20-22 years old according to data from Airfleets – meant inevitable questions about what could replace it.

To address the gap, in 2016 Airbus launched the A321LR, offering 4,000nm (7,408km) range compared with the standard A321neo’s 3,500nm (6,500km). The increased capability came from activating three auxiliary centre fuel tanks and introducing a higher 213,848lb (97,000kg) maximum take-off weight (MTOW).

Airbus launched the even longer-range A321XLR model in June 2019. This variant will have 4,700nm (8,400km) range, 15% more than the A321LR, and typically seat between 180 and 220 passengers in a two-class layout, with the manufacturer’s Airspace cabin as standard. A prototype will likely be rolled out next year, ahead of certification and service entry in 2023.

Designed for maximum commonality with the A321LR and the other A320neo family variants, the A321XLR will have a higher MTOW of 222,666lb (101,000kg) and a permanent rear centre tank (RCT) carrying 2,837 imp gal (12,900 lit) of fuel. A modified inboard wing flap configuration and structural strengthening of the centre fuselage and landing gear will enable higher take-off speeds, preserving the same performance and engine thrust requirements as the standard A321neo.

Airbus claims the A321XLR will use 30% less fuel per seat than what it calls “previous-generation competitor aircraft” in the midsize category (namely the 757). The company adds: “The new optimised RCT holds more fuel than several optional additional centre tanks did previously, while taking up less space in the cargo hold, thus freeing up underfloor volume for additional cargo and baggage on long-range routes.”

Airbus believes the variant is ideal both for directly replacing older and less ef icient midsize equipment and giving airlines an opportunity to open new routes that would have been unprofitable using the 757.

The manufacturer says: “Airlines will be able to operate a lower-cost singleaisle aircraft on longer and less heavily travelled routes – many of which can now only be served by larger and less ef icient widebody aircraft.

“This will enable operators to open new worldwide routes, such as India to Europe or China to Australia, as well as further extending the family’s non-stop reach on direct transatlantic flights between continental Europe and the Americas.”

Airbus says the A321XLR will have suf icient range to fly city pairs, such as London-Delhi, Miami-London, New York-Rome, Miami-Santiago, HawaiiHouston, Tokyo-Sydney, Reykjavik-Dubai and Auckland-Hawaii.

Airbus states the A321XLR will of er “30% lower fuel burn per seat than previous-generation competitor aircraft.” JetBlue has chosen the airliner to begin transatlantic services.
Airbus

Striking a chord

The market has been quick to take to these new models. Arkia Israeli Airlines put the A321LR into service in December 2018, with Air Transat, Aer Lingus, Air Astana, Azores Airlines and TAP Air Portugal all following suit.

However, it is the A321XLR that has really proved popular. At the variant’s launch in Paris last June, Airbus racked up almost 250 orders, including big buys from American (50 aircraft), Indigo Partners (50) and Qantas (36).

It is likely that American will use its examples on cross-country flights from its key hubs in Los Angeles and Phoenix, as well as for transatlantic flights from Philadelphia and New York. Indigo Partners is expected to allocate its aircraft between low-cost carriers Wizz Air, Frontier Airlines, Mexico’s Volaris and JetSMART in South America. It has yet to be confirmed if any of the aircraft on order will be allocated to the Canadian ultra-low-cost airline due to be established in partnership with Enerjet.

The second half of 2019 saw Airbus notch up further A321XLR orders including the 50 aircraft from United, which, like American, plans to use the type on both transcontinental and some transatlantic services.

As Andrew Nocella, United’s executive vice president and chief commercial officer, commented: “The A321XLR is an ideal one-for-one replacement for the older, less-efficient aircraft currently operating between some of the most vital cities in our intercontinental network. In addition to strengthening our ability to fly more efficiently, the A321XLR opens potential new destinations to further develop our route network.”

Other A321XLR orders have been placed by AirAsia X (30) and Air Arabia (20), while JetBlue converted 13 existing A321neo orders to the A321XLR. The type seems ideally suited to the carrier’s plans to start transatlantic services from Boston and New York, which it hopes to launch in 2021.

Finding a replacement for the 757 and 767 is a top priority for Delta Air Lines. The Atlantabased giant has a combined fleet of 204 examples with an average age of 22.4 years.
Delta Air Lines

NMA concept

Might Airbus’ success with the A321LR/A321XLR have torpedoed Boeing’s hopes in the middle of the market?

The American manufacturer began studying a New Midsize Airplane (NMA) in around 2014. At the 2017 Paris Airshow, the company gave a presentation highlighting its thinking on the concept.

The potential new aircraft would be a twin-aisle design, Boeing said, featuring “next generation turbofan engines” an all-new wing, a hybrid fuselage cross-section, extensive use of carbon fibre composites and a digital cockpit architecture.

The company later revealed it had held discussions with more than 50 customers about the NMA concept. Executives at key customers, such as Air Lease Corporation, Delta and United, all went public at various points in 2017/18 expressing their hopes the company would press ahead with developing the aircraft. “Call it a 797,” said Steven Udvar-Házy, the president of Air Lease Corporation (Boeing itself has not adopted this moniker, instead sticking resolutely to NMA).

Despite this enthusiasm, a formal launch has repeatedly slipped. When it presented on the NMA in 2017, Boeing said it intended to decide in 2019 whether it would offer the aircraft to market, ahead of a planned 2025 service entry date.

Boeing was cautious as it weighed whether to approve the multibilliondollar investment required for the programme. In early 2019, Muilenburg said the company was taking its time as it was thinking through the production system for the jet, and how it would dovetail the aircraft’s development with its other programmes, such as the 777X.

Arkia Israel Airlines received the maiden Airbus A321LR on November 14, 2018.
Airbus

The subsequent crisis that has enveloped Boeing after the Ethiopian Airlines and Lion Air 737 MAX disasters, as well as issues on other programmes including the 777X and KC-46, has inevitably meant the NMA has slipped down the agenda, as corporate decision-making and engineering resources are focused elsewhere.

This bigger picture aside, as industry commentator Richard Aboulafia, vice-president analysis at the Teal Group consultancy, observed writing for Forbes in December 2019: “It’s very hard to compete with a single-aisle like the A321 using a twin-aisle like [the] NMA, as twin-aisles generally have higher per-seat operating costs and manufacturing costs.”

Whatever the precise reasons, Boeing has not yet launched the NMA. Might this inaction have given Airbus the upper hand? Aboulafia believes so, as he said in the article, the American company now “has a serious disadvantage in the middle market” segment given the A321LR/XLR’s success.

The analyst feels despite the European aircraft’s popularity Boeing, “can’t afford to declare defeat and walk away” He said: “Mid-market demand will grow, particularly as the range of new midsize jets improves with better engine technology and other enhancements.”

Airliners have a natural lifecycle and, as they age, operating and maintenance costs rise. This creates demand for replacements with better operating costs and ef iciency. With the midsize equipment like the 757s, 767s and A330-200s delivered in the 1990s and early 2000s getting longer in the tooth, it is likely there will be higher demand for new midsize jets, which could provide further opportunity in the market.

Additionally, the structural shift in the industry towards more direct flights between city pairs (these grew in number from 11,000 in 2000 to 22,000 in 2018 according to International Air Transport Association data), and the growth of there could be sustained demand for aircraft sized in the 200- to 280-seat mid-market area.

Indeed, both manufactures predict solid growth in the segment long-term. Boeing’s current commercial market outlook estimates 4,000-5,000 midsize aircraft over 25 years, and Airbus’ 2019 global market forecast envisages demand for 5,370 jets out to 2038 in what it calls the ‘medium’ airliner category.

A successor to the Boeing 737 Next Generation and 757 was understood to be under development in 2006, but was later postponed to 2011, before being shelved after Airbus launched the A320neo. These designs were filed as part of a patent application in November 2011.
Via US Patents and Trademarks Of ice

Which way to go?

Something else to consider about Boeing’s response in the mid-market area is the manufacturer reportedly studying a Future Small Airplane (FSA) that will one day succeed the 737.

Boeing has been investigating a new single-aisle jet for years – some reports say it was apparently an option passed over back in 2011 in favour of launching the re-engined MAX – and, as the A321LR/XLR’s sales success shows, there is demand for a long-range single-aisle that can fulfil mid-market roles.

Aboulafia feels Boeing pursuing the middle of the market with a large variant of a clean-sheet FSA “might be the best way for Boeing to contest this segment” This might not be the only option under consideration, however: last year FlightGlobal reported Boeing was studying re-engining the 767 with General Electric GEnx turbofans. When AIR International asked Boeing for comment on the 767 re-engine, a company spokesperson told us they had no additional information.

The 787 has an impressive order book, but many airlines view the jet as being too large for their needs.
Boeing

Whether Boeing’s mid-market response turns out to be a 767 re-engine or an all-new product (either as part of a new FSA family or as a standalone NMA), Aboulafia believes the financial fallout from the MAX crisis means, “it’s just as likely that Boeing does nothing new for the next few years”.

The potential continued stasis could have wider implications. He wrote: “What was a 50-50 [market share] story could easily turn into a 40% scenario for Boeing (Airbus’ overall single-aisle market share has already reached 60%). This shift would have big implications for Boeing suppliers, and the entire aviation industry.”

The mid-market segment’s twists and turns will continue to be closely watched: it could play a crucial role in the larger contest between Airbus and Boeing.

 

Mid-market moves:

  • 2005: Last Boeing 757 delivered
  • 2006: Boeing begins developing the Y1 to replace the Boeing 737 NG and 757-200/300. Y1 was shelved in 2011 in favour of the 737 MAX.
  • 2014/15: Boeing begins New Midsize Airplane (NMA) concept studies
  • 2016: Airbus launches A321LR as a 757 replacement.
  • Early 2017: Customers confirm they have been presented with an NMA concept. Air Lease Corporation Chief Executive Steven Udvar-Házy said: “Call it a 797.”
  • June 2017: Boeing speaks about possible NMA technologies at the Paris Airshow.
  • Spring 2018: Delta Air Lines reveals it had preliminary discussions with Boeing about an NMA order.
  • 2018: A321LR enters service with Arkia Israeli Airlines.
  • January 2019: Boeing confirms to investors that it will delay an NMA launch decision to 2020.
  • June 2019: Airbus launches A321XLR at the Paris Airshow December 2019: Airbus says it has more than 450 orders and commitments for the A321XLR, although not all customers are disclosed.