The Current Airbus vs Boeing Slow-Motion Battle

When Boeing closed its 757 production line in 2004, and orders for the 767 dried up, it was left with a gap in its product range between the largest 737 and the smallest 787.  (Ignore the number sequencing – in terms of size, the current lineup runs from 737 to 787 to 777 to 747.)

Airbus has less of a gap between its largest A321 and smallest A330, although its latest small A330 is not selling well, suggesting that while it may have a ‘paper plane’ to offer, it currently lacks a realistic product the market actually wants.

For a while, it suited both airplane manufacturers to pretend the gap in their respective model lines did not exist.  We wrote about this gap as far back as February 2015, and even then, more than ten years after the 757 was discontinued, the gap was obvious, while Boeing simply sat on its hands and hoped no-one would notice.  Other commentators have written about it even earlier, such as this article in 2014 that reported that Boeing might be making a decision ‘sooner than expected’.  So much for that prediction!

In truth, neither company is keen to invest $5 – $10 billion in developing an entirely new airplane, and so for a while, an unspoken truce of sort existed, with both manufacturers doing nothing to directly address the gap in their model ranges, hoping the other company wouldn’t start development of a new plane and force them to respond.

This is far from a new strategy.  We saw a similar thing happen with the long-delayed action by Boeing on how to refresh its aged 737 model range, and eventually Airbus took the first move there – not by developing an entirely new plane, but by updating its current A320 range, mainly with new engines and a few other minor tweaks, creating what it called its A320-neo, which it announced in December 2010.

The Airbus initiative trapped Boeing into a no-win situation of its own making – either to come up with a rushed inadequate similar tweak to a very old airframe, or to design a totally new plane and have no solution in the market for an extended time.  This quandary saw Boeing freeze in a fit of indecision for an inexplicably long time, losing many hundreds of airplane sales in the process, before finally announcing a similar re-engined approach to its 737 in August 2011.

Boeing’s slowness to respond cost it dearly.  In 2011, Airbus sold 1226 neo version A320s, while Boeing sold 150 of what it called its MAX series 737.  Even four years later, Airbus still had a strong sales lead – 3621 neo sales compared to 2663 MAX sales.

We discuss this earlier fascinating high stakes slow-motion strategy in our earlier articles :

• Airbus Fires the First Shot in the New 737/A320 War  (Introduction to a separate four part series)
• Boeing ‘Leadership’ – “We’ll wait 6-10 months and see what Airbus does”
• Airbus New A320 outsells Boeing Old 737, 3 to 1
• Airbus Adds More Pressure to Boeing – And Boeing’s Response?
• Boeing probably delays still further any announcement about a 737 successor

The present situation sees Airbus with the probably more successful gap-bridging product, its A321neoLR, so Boeing is feeling more pressure to come up with a new airplane.  Boeing forecasts a market for up to 4,000 airplane sales into this capability gap over the next 20 years, other observers suggest the market size might be a more moderate 2,500 planes.

Very much like was the case with the 737/A320 model refresh, not only are both companies happy to do nothing for as long as possible, each company is also hesitating to be the first to announce a new plane.

There may be an advantage to be first with a new plane.  There very clearly was for Airbus, but remember it also had an extraordinary 8 1/2 months during which Boeing had no response at all.  Similarly, in the earlier 787 vs A350 match, Boeing enjoyed an even longer term advantage over Airbus.  But it is also possible that the other company can respond to the announcement of a new plane by designing an alternate plane to be slightly different/better than the first announced plane (although neither the second to market A350 nor the second to market 737MAX show any significant advantages over the first to market 787 and A320-neo planes).  This adds further to the ‘safer to do nothing’ freeze on the part of both companies.

Boeing – currently the loser in the present situation – has however been becoming more and more public in its statements that it will probably be announcing an entirely new airplane model, currently designated as the “NMA” (New Midsize Aircraft) and almost certainly to be named the 797 when it is finally and formally released to the market.

The Gap in the Market

Currently, the largest Boeing single-aisle plane is the new 737MAX 10 which was finally confirmed in terms of specifications in February this year.  It will carry 188 passengers in a typical two cabin configuration, or up to 230 in a single class, and can fly 3700 miles (perhaps a bit too short for most trans-Atlantic flights).

The smallest twin-aisle plane is the 787-8, which can carry 242 passengers in a typical two cabin configuration or up to 359 in a high density single class, with an 8500 mile range (a bit too far for a potential new plane).

So Boeing’s gap, such as it may be, revolves around ranges from 3500 – 8500 miles and passenger counts (in a two cabin configuration) from 188 – 242.

As for Airbus, its largest single-aisle plane is the new A321neoLR, carrying 206 passengers in a two class cabin, and can fly up to 4600 miles.  Its smallest twin-aisle plane is the A330-800neo, carrying 257 passengers in two classes or up to 406 in a single class, with a range of up to 8600 miles.

Airbus accordingly has a gap of between 206-257 passengers, and range gap between 4600-8600 miles.

Stated in these terms, the gaps are not obvious.  It is easier to grasp when graphed showing each plane’s range and passenger capacity.  Hence the chart below, which shows a surprisingly clear clustering of shorter range/smaller planes – the narrow body 737/A320 series planes in the lower left, and the longer range/larger planes in the top right, and a huge gap between them.  It is this empty area stretching up to the top right part of the narrow bodies (with the A321 the model at the furthest end of this cluster) and the bottom left part of the wide bodies (with the 787-8 at the furthest left and then with two A330 models slightly to the right and also going down and to the right) being the planes closest to matching this gap currently.

Not only is there a clearly apparent and substantial gap, but the gap has Airbus solutions at both ends with Boeing a step back.  Hence there is more pressure on Boeing to do something to address its product range weakness than there is for Airbus to take the initiative.

The two X’s on the chart indicate possible configurations that Boeing is expected to announce for its NMA/797.

This chart also shows the outlying nature of the A380, way off to the right of the chart.  The two closest to it are the 777X-9 and the moribund 747-8, with further evidence of the impracticality of the 747-8 being shown by the close match of passengers/range between it and the 777X-9.

Purists would note that this two-dimensional chart omits other relevant considerations such as freight, operating cost per mile, and other factors, but these other issues are not quite as directly pressing.  Purists would also note that seat counts are very rough measures and embody massive assumptions within them, and we agree on all these points, but the gap clearly exists, even if the exact shape and extent of it can be debated.

Designing the New Plane

Boeing’s quandary – and secondarily, also for Airbus too – is how to design the plane in terms of dimensions, capacities, and range.  It seems increasingly likely that this plane will be a wide-body rather than narrow body plane – ie, it will have two aisles rather than one, and probably 2-3-2 seating rather than 3-3 seating.  This means it will vaguely resemble the wide-body 767 (which also had 2-3-2 seating in coach) rather than the narrow-body 757 (with 3-3 seating and a single aisle).

From a passenger point of view, two aisles and 2-3-2 seating is much nicer than 3-3 and one aisle – with the peculiar preference by most airlines and airports to only board and deplane through the forward door, it obviously takes a very long time for a full plane load of passengers to get on or off a single aisle plane, and much less time for the same number of passengers to do the same on a plane with two aisles.

A wider plane does have extra air resistance, making it slightly more expensive to fly per mile.  Air resistance is more influenced by cross-sectional area than airplane length, so a plane can be made longer at no penalty to its drag, but making it wider does impact on the drag and its fuel efficiency.  But offsetting that is the faster turnaround time at airports due to the two aisles, and also, in an interesting sign of the times, the ability to more efficiently serve passengers using two aisles rather than one.

You might wonder – since when have the airlines cared about providing fast efficient service of food and drinks to their passengers?  The answer is ‘since they started selling them for a profit, rather than giving these items away for free’.

Another challenge is how much freight capacity the plane should have.  American airlines seem to want a plane that can carry about 5 tons of freight, but Asian carriers are expressing a preference for 10 tons of freight.  It will be very hard to come up with a plane that can meet both these requirements, and perhaps whichever freight approach Boeing chooses to go, Airbus might then go in the other direction.

Range is another hard to exactly identify parameter.  As a reference, the plane probably should be capable of flying across the Atlantic, which means a range in excess of 3500 miles (New York to London) and possibly as much as 6000 or more miles (Los Angeles to Frankfurt).  But with planes, more range isn’t necessarily better than less range.  More range equates to more weight to hold more fuel, and that increases the cost per mile to fly the plane.

One Model – or Two?

Both Boeing and Airbus are keen to keep the number of different airframe designs to the smallest number possible.  But there is such a broad gap in capabilities one almost wonders – and some industry commentators have speculated – that perhaps the best approach is to launch two new model planes rather than try to make a single model plane cover a lot of different combinations of range/load.

This is, after all, essentially what Boeing did when it almost simultaneously launched the 757 and 767, giving them compatible cockpits to make it easier to train pilots to fly both planes.

We don’t expect to see this, because probably there is not enough marketplace demand to support two new families of planes.  Even if Boeing is correct with its hope to sell 4,000 of such planes, it is likely Airbus will get half that number, meaning 2,000 each, and if that then needs to be split between two families of airplane model, that reduces down to 1,000 for each family, and probably split over two or three versions.

That is probably too small a number – to put it another way, a $10 billion development cost and 1,000 sales means that $10 million of each airplane’s selling price goes into amortizing the development costs of the plane.  Boeing has sold 1,962 777 planes and 1,294 787 planes so far, so clearly it expects to be able to sell 2,000 or more planes as a requirement for a new model.

Timings

Boeing says it expects to be in a position to start accepting orders for the new plane early next year, and hopes to have the plane entering into service in 2026.

As for Airbus, no-one knows what its response may be – a totally new plane or an extension of either (or both) its A320 and A330 model lines; probably they are waiting to see what Boeing does and meantime are quite content with the status quo.

The Danger for Us as Passengers

A twin aisle plane seating seven passengers per row is very space inefficient compared to a single aisle plane seating six passengers.

How long would it be before an airline decided that instead of reasonable width aisles and fair width seats, they’ll cut back on both and make the plane eight seats across, with narrower seats and aisles, scoring an instant almost 15% boost in seat numbers and profit per flight?