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WILL BOEING’S MID-MARKET AIRCRAFT SPUR NEW BUSINESS MODELS?
written by Jordan Chong June 27, 2018 – Australian Aviation
In 2017, Boeing formally established a program office for its new mid-market aircraft (NMA) that some have labeled the 797.
The study into the much-discussed but yet‑to‑be‑officially-launched NMA was 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 50,000lb of thrust.
Entry into service is projected to occur in the 2024 to 2025 timeframe.
The airframer’s initial estimates for the NMA suggested 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.
Boeing Commercial Airplanes senior managing director for marketing analysis and sales support Darren Hulst said one of the common themes that had emerged in discussions with airline customers so far about the proposed NMA was the size of the aircraft.
The differences of opinion centred around the aircraft’s potential range and capacity.
“Airlines are looking for something that is bigger than a single aisle aircraft by 10 to 30% and smaller than the widebodies of today,” Hulst told media on the sidelines of the recent International Air Transport Association (IATA) annual general meeting in Sydney on June 3.
“Where there is some difference in desire from customers, from airlines, is some airlines want it for the size, some airlines want it for range.
“They want it to be able to fly 5,000 miles, to be able to fly these medium distances where widebodies have too much capability today and too much cost and the single aisles run out of capability in terms of range.
“Some airlines are focused on the revenue in terms of getting more capacity into routes whether that is short-, medium- or long-haul.”
Hulst said the proposed NMA had the potential to create new business models and airline networks in the way aircraft such as the 777 and 787 (or indeed the 747 if one goes further back in history) did.
For example, a low-cost carrier could expand into widebody operations without having to acquire long-haul aircraft.
Or a big network carrier could choose to add capacity on short-haul or medium-haul routes at slot-constrained airports through upgauging to larger equipment.
There was also the opportunity to open up new point-to-point markets to so-called secondary cities with an aircraft best able to match capacity with demand in those markets.
“What’s interesting to us is how many different ways airlines can see a use for an airplane in that space,” Hulst said.
“I think our imagination might not be strong enough to figure out what else could be done with an airplane in that space.”
As far as Qantas is concerned, NMA looms as an ideal replacement for its A330 fleet on domestic routes, both on transcontinental services between Perth and the east coast, and to increase capacity on the main trunk routes out of the increasingly busy Sydney Airport.
“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,” Qantas Group chief executive Alan Joyce said in February.
“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 trans-continental and maybe into South-East Asia.”
Other airlines too have given the proposed aircraft the thumbs up.
“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, according to Bloomberg.
“I hope that we’re going to be a launch customer on that program as well.”
The NMA could be just right for the Qantas domestic fleet, slotting between the 737-800 and A330/787.
By contrast, Qantas’s local rival Virgin Australia was more circumspect when asked about the NMA in February.
“We will look at everything,” CEO John Borghetti told reporters during the airline’s results presentation.
“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.”
Hulst said the NMA had the potential to play a “key role in the growth and evolution” of the networks of carriers in this part of the world.
“Specifically in Australia, New Zealand, I think it is a really compelling, kind of interesting opportunity,” Hulst said.
“You have sort of the medium-haul routes, like a transcontinental Australia, trans-Tasman type airplane, also with the range capability to fly as far as somewhere like Japan, into and beyond places like Singapore and secondary markets in South East Asia.
“It becomes a really compelling opportunity from both the size and in terms of efficiency and capability.
Further, Hulst said there would be significant per trip and per seat cost advantages to having an aircraft designed for these medium-haul routes compared with existing aircraft.
“Today’s widebodies like the 787, even the A330, those airplanes are designed to fly 6,000, 7,000, 8,000 nautical miles, which means they have structure, it means they have got weight in the aircraft to enable them to fly that far.
“If you optimize an airplane to fly the medium ranges, so like a 3,000-5,000-mile mission, which is enough to get you into Japan, get you into East Asia, you’ll have significant cost savings as well as the fact that it would be designed smaller than those aircraft in terms of seat capacity.
“So you are talking about double-digit cost savings relative to those current widebodies.”
While the world waits for the official launch of the program, Boeing continues its discussions with airline customers and the technical work on the design of the aircraft.
Respected analysis website Leeham News and Comment said on June 25 Boeing was not expected to launch the NMA program at the upcoming Farnborough International Airshow, which starts on July 16.
There are also conversations being had with the key engine manufacturers on the design of a likely 50,000lb thrust powerplant.
And despite the likes of Pratt & Whitney, Rolls-Royce and CFM having well-documented issues with engines on types such as the Airbus A320neo, Boeing 737 MAX and Boeing 787, Hulst said these were unlikely to present any significant challenges for launching the NMA program.
“There is interest from engine suppliers to make an engine in this space,” Hulst said.