Midsize matters

COMMERCIAL MIDSIZE AIRLINERS

New aircraft developments in the midsize airliner market are possible in 2019. Mark Broadbent reports

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The Boeing 757 is the archetypal midsize airliner, and the increasing age of these and other types is focusing attention on the mid-market area.
EstevezR/AirTeamImages

For years, new Boeing and Airbus airliner developments have focused either on narrowbody aircraft in the 737/A320 class or on widebody aircraft like 787s, 777s, A330s and A350s.

Right now, though, product planning and design teams at both companies have their attention on a different area: the ‘middle of the market’ for aircraft sized between the single-aisles and the larger twin-aisle widebodies.

Boeing has for some years been assessing the business case for a new product in this area with its New Midmarket Airplane (NMA) studies and 2019 could see the company launch a brandnew airliner – already dubbed the ‘797’ by industry observers, though not by Boeing itself – specifically tailored to the segment.

Meanwhile, Airbus is considering further developments of the A321neo to counter a potential new Boeing product in the market, with the company’s commercial aircraft chief recently saying it will firm up its midsize plans this year.

What is a midsize jet?

Broadly speaking the middle of the market refers to airliners with between 220 to 300 seats and around 4,000-5,000 nautical miles (7,408-9,260km) range.

Aircraft in this category are used for different missions. They support network airlines’ growth by providing capacity on trunk routes between hubs, where passenger demand makes it prudent to provide more seats than a smaller single-aisle. Coast-tocoast routes in the United States served by Delta, United and American and routes in Asia-Pacific are examples.

Midsize airliners are also used by some network airlines to serve ‘thin’ intercontinental routes, the services from large hubs to secondary airports where passenger demand characteristics mean it would be challenging to fill a larger widebody, making it more economical to use a slightly smaller jet.

The Boeing 757 is the archetypal midmarket airliner. Delta, American and United are the type’s key operators, with Delta having 127 examples, American 34 and United 77, as of December 2018. These carriers each fly 757s both on high-demand transcontinental routes such as New York JFK-Los Angeles as well as thin transatlantic connections like New York Newark-Manchester (United), Chicago-Dublin (American) and New York JFK-Reykjavik (Delta).

The 757’s stablemate, the 767, which typically seats 216-261 passengers depending on the variant and an operator’s seat layout, is also used on mid-market missions. Again, the US majors operate substantial 767 fleets: Delta having 79, United 52 and American 24, as of December 2018.

The evolution of airliner product ranges over the years and the airline industry’s incessant focus on right-sizing (putting in the right number of seats for a route according to market demand) means mid-market missions are also operated by the smallest variants of larger widebodies, the 787-8 and A330-200, and the A321 and 737 single-aisles.

To give some examples, the low-cost longhaul carriers Norwegian International and WestJet both employ 737-800s on services from the United States’ eastern seaboard to destinations in the UK and Ireland, British Airways uses 787-8s on thin intercontinental routes from Heathrow (such as Baltimore, Cairo, Montreal and Toronto), and Norwegian is planning on using A321s on transatlantic services when it receives them from 2019.

Market needs

However, the largest single-aisles and smallest twin-aisles are not primarily intended for the middle of the market and, with the stock of in-service midsize types getting older, a requirement for new aircraft pointdesigned for the category is clear.

According to a white paper by the consultancy ICF, in-service 757s in 2017 had an average age of 22.9 years (October 2019 will mark 15 years since the last 757 left Boeing’s production line). There are also 767s and A330-200s delivered in the 1990s and early 2000s which are moving into the timeframe for replacement.

Lower fuel prices in the past two or three years compared to earlier this decade have possibly checked the urgency for re-fleeting with newer, better-performing aircraft, with operators judging it is more cost-efiective to keep slightly older equipment, whose capital costs have been amortised, than to invest in something new.

As aircraft get older, however, operating and maintenance costs inevitably rise. With older 757s, 767s and A330s all reaching retirement age at the same time, together with the ever-present possibility of a hike in fuel prices, it is highly likely commercial aircraft asset owners will in the coming years want newer mid-market types which offer meaningful reductions in operating costs.

The manufacturers certainly envisage large upcoming demand in the midsize market. Boeing told AIR International there is an “addressable market of between 4,000 and 5,000 aircraft” in the category, covering replacements for in-service jets and additional aircraft to capture growth. Airbus’ latest annual Global Market Forecast (GMF) predicts a market for 5,480 aircraft out to 2037 in what it calls the ‘medium’ category of airliners, which it defines as 230-300 seats and 5,000 nautical miles (9,260km) range.

Low-cost long-haul airlines could offer growth potential for midsize aircraft. These carriers have grown in number in recent years, serving routes between secondary destinations and/or routes from secondary points to a large hub, and, in the transatlantic market at least, opening city pairings never operated before.

With these markets sensitive to fluctuations in demand, low-cost long-haul operators typically want equipment with long range but not an excessive seat count and the manufacturers will be aware of the potential for midsize aircraft offered by low-cost long-haul. In its GMF, for example, Airbus says 70% of low-cost long-haul routes beyond 2,500 nautical miles range (4,630km) are either in the Asia-Pacific region or across the Atlantic. The company says this concentration “suggests there is still opportunity to grow this model”.

Boeing NMA or Boeing 797

How Airbus and Boeing address the midmarket area is set to be one of the most interesting commercial aircraft industry issues in the coming years because each company has a different approach to the segment. Boeing began working on its NMA study a few years ago. The NMA has been widely referred to as the 797 by analysts and airline executives (Air Lease Corporation Chief Executive Steven Udvar-Házy said in 2017, “call it a 797”, when discussing a potential new midsize Boeing jet).

Boeing itself does not do so, referring simply to the NMA. Overall the company hasn’t revealed much detail about its studies, although at the last Paris Air Show in 2017 during a presentation about aircraft development programmes the company showed a slide that said if it did decide to develop an NMA it was targeting 2025 as an entry-into-service date.

A Boeing spokesperson told AIR International: “If we go with that aircraft, it will carry between 220 to 270 passengers with a range of up to 5,000 nautical miles [9,260km]. We’re looking to provide twin-aisle comfort with single-aisle operating costs.”

In the 2017 presentation at Paris, the slide about the NMA study identified features of a baseline configuration for the potential new aircraft: what was termed a “fifthgeneration” wing, a hybrid fuselage crosssection, a new-generation turbofan engine, extensive use of carbon fibre composites and digital architecture.

This suggests any NMA will likely draw from technologies already developed for its immediate predecessors in Boeing’s new aircraft development pipeline, the 787 and 777X. Asked about this, Boeing told AIR International late in 2018: “We don’t see the next new aircraft, if we do middle of the market, as being a ‘technology push’ aircraft. There is significant technology reuse on things like composites manufacturing and we would be more focused on manufacturing transformation for the NMA.

“We think about a disciplined roll-out of innovation. We’re thinking through how to design and architect an aircraft so that it’s not only eddcient to build and produce, but it’s also eficient to support, maintain and upgrade over time and that really creates value for customers.”

Will Boeing take the leap and go with an all-new jet? Many analysts think so: there has been widespread speculation among industry observers in recent months that an NMA could be launched at the next Paris show in June 2019.

Boeing told AIR International: “We are diligently working our business case and we will make the decision when that is completed, while protecting our 2025 entry into service date. We expect to make a launch decision in 2019.”

Boeing will be aware many airlines are keen to see an NMA, with executives from significant potential customers such as Delta, United and Alaska Airlines all expressing interest in the last couple of years.

Boeing added: “We have been listening carefully to customer needs and inputs. We continue to have discussions with more than 60 operators around the world, working on both the business case and technology solutions.”

Airbus approach

While Boeing works on its NMA study, Airbus says it already has the mid-market covered. Strong sales of the A321neo in recent years (2,280 examples sold by January 2019 according to Airbus figures) provide a basis for this view, and indeed some operators such as Delta have substituted 757s for A321s on transcontinental and thin intercontinental services.

”We’re expecting Airbus to go after the middle market, using the A321neo as a platform.”

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Arkia Israeli Airlines was first to introduce the A321LR with 4X-AGH (msn 8517). Further developments of the A321 to add payload and range are possible, Airbus says.
4x6zk-moni shafir/AirTeamImages

Airbus says the combination of the A321neo and the A330-800, the shorterfuselage A330neo variant currently undergoing flight testing and due for certification in 2019, provides a combined payload and range solution for midmarket needs. The European company said in a recent presentation that any potential Boeing NMA “will be squeezed” by its latest A321LR subvariant (240 seats and 4,000 nautical miles/7,408km range) and the A330-800 (257 seats and 7,200 nautical miles/13,334km range), which it believes together provide a “proven partnership” of ediciency, performance and low financial risk.

Some of the network airlines so prized by the manufacturers have indeed ordered both types. Delta, for example, uses 65 A321s and 42 A330s and it has ordered 100 more A321neos and 35 A330-900s (the latter will directly replace midsize 767-300ERs). Meanwhile, Aer Lingus will use the combination to enhance its presence on transatlantic routes, expanding its long-haul fleet by 2023 with three A330-300s and 17 A321LRs (the first three A321LRs will be introduced in 2019), the new jets replacing the carrier’s remaining 757s.

Looking ahead

Not all observers think Airbus perfectly caters for the mid-market, however. The ICF consultancy believes the A330/ A321 combination doesn’t quite match the segment’s specific needs, telling AIR International: “Airbus does not have the market covered with current offerings [A321neo/A330-800]. Optimal payload/range capability is 220 to 270 passengers flying 4,500nm. Neither of the Airbus offerings can do this without compromise.”

In its white paper, ICF explains this ‘compromise’ a little more. It says singleaisles and smaller twin-aisles are at the limits of their design and says any further variants of these aircraft from either manufacturer intended for the segment will need “carefully integrated new wings and engines, as well as major modifications to the airframe and landing gear to meet capability requirements” in the mid-market area.

Airbus clearly recognises this; in November 2018 the company’s Commercial Aircraft President Guillaume Faury confirmed Airbus is studying further development of the A321LR and that it will make decisions in 2019 about how to proceed.

There is speculation Airbus might launch an A321XLR variant with further maximum take-offweight and range improvements, and the analysts at the Teal Group consultancy think there could be further development of the aircraft with what they term an A322neo.

A paper from the group says: “We’re expecting Airbus to go after the middle market, using the A321neo platform. Bigger engines, composite wings, and a fuselage stretch are all possibilities.”

The group adds: “We’re expecting this larger A322neo to arrive around 2025,” which of course would put it directly head-tohead with an NMA should Boeing decide to proceed.

The ICF analysis notes whatever course of action the manufacturers take, “significant consideration must be given to both acquisition costs and operating costs. For commercial success, operating costs – primarily fuel, crew and maintenance costs – must be significantly less than that of current widebodies. In fact, uncompetitive operating and capital costs were the reason that aircraft such as the 787-3 and A330 Regional types [two recent manufacturer attempts to address the middle of the market segment] were largely unsuccessful.”

The ICF analysis also contends that any modifications to an existing platform to produce a new variant, “will narrow the cost gap between a new clean-sheet design and a stretch design”. In other words, although further developments of an existing product could appear more cost-efiective than producing a cleansheet design, that doesn’t necessarily mean the resulting aircraft will be significantly cheaper enough to convince investors to stick with the tried-and-trusted rather than go with something new.

These, and many other financial, industrial, product development and marketing considerations, will be among the myriad issues under consideration by the manufacturers right now as they prepare their next mid-market moves.