Fires the First Shot in the New A320/737 War with Boeing -
part 1 of 4
Airbus reluctantly initiates a very high
An illustration of the
new Airbus A320neo (in Air New Zealand livery).
Part 1 of
a series on the needed evolution of the Airbus/Boeing
A320/737 aircraft. Click the links at the bottom to read
through the other three articles in the series.
Sometimes something is so good
you don't want to change it, for fear of upsetting things.
That has definitely been the
case for Airbus and Boeing with their A320 and 737 families of
planes. A lazy duopoly between the two companies has
resulted in their most strategically important planes also being
their most overlooked planes.
But all that is - at last -
about to change. Please read through this four part series
for a fascinating look at what hasn't happened and why, and what
must now happen, and why.
Airbus and Boeing find
themselves in a highest possible stakes quandary at present.
Forget Boeing's mess with the 787 (and less discussed but also
messy, the 747-8) and forget Airbus’ problems with the A380 and
its far from completed A350.
The key to both company's
future success rests not on these futuristic planes, but on
their ‘bread and butter’ workhorse 737 and A320 families.
Let’s first understand the vital importance of these planes to
the two manufacturers, then look at the present problems
associated with them, then at the options open for the future.
The Importance of the 737/A320
These two families of planes
outsell, by a huge margin, all the other planes made by Airbus
The starkest indication of
the vital importance of these planes to Airbus and Boeing is to
look at the actual sales numbers.
New Orders in 2010
So far this year (through
mid December), Airbus has taken net new orders for 294 A320
series planes. All other airplane types (A330, A340, A380
and A350) represented only 160 orders.
Boeing has reported 447 net
new orders for its 737 family, and a mere 46 orders for all its
other airplane types (747, 767, 777 and 787).
Planes Delivered in 2010
If you prefer to look at
deliveries, Airbus has delivered 360 of its A320 family and 101
other planes so far this year.
Boeing has delivered 343 of
the 737 family and 77 other planes.
While the A320 and 737 are
the least expensive of the range of planes offered by both
Boeing and Airbus, it should be abundantly clear that they are
also the hugely largest part of both company’s manufacturing
Further, airlines sometimes
like to stick to a given family of airplanes, so selling an
airline on one type of plane helps sell them on other types of
planes. And because of the ongoing contact a manufacturer
has with an airline once it gets any type of plane into the
fleet and can deal with the airline as a customer rather than an
arm's length prospect, success with one type of plane often
helps the manufacturer to sell its other planes to an airline
The easiest plane to sell
any airline is the least expensive plane - the A320/737.
Getting sales of this plane to a new airline customer gives the
successful manufacturer a strategic advantage into the future.
The Growing Problems with the
A320 and 737
Both planes are the oldest
series of planes offered by either manufacturer.
The 737 is much older than
the A320. The 737 first flew in 1967, and embodied much
from the earlier 707 design dating back to the mid 1950s.
The first A320 took to the
skies in 1988.
Both planes have evolved
over time (particularly the longer lived 737) and are very
different to the first models of each, but their underlying
design is still fundamentally the same.
The two planes have uneasily
co-existed in the market for over twenty years now, and it is
hard to say with any authority which is the better plane.
The A320 is a little wider, giving a barely perceptible (but
still welcome) increase in width to each passenger, but the 737
might be slightly more fuel efficient. Some airlines have
become enthusiastic evangelists for one series of plane, and
others are equally convinced the other is by far the better.
Everyone has been sort of
happy with the current planes. From the point of view of
Boeing and Airbus, the families of plane are currently
comfortably matched – both companies can look upon their series
of planes as being, at worst, ‘competitive’ with the other
company’s alternate series, and at best, being somewhat
superior. And, no matter whether competitive or superior,
the planes are massively profitable for both companies, and
present with no engineering problems or challenges, and are well
understood (and well loved) in the marketplace. Neither
company could exist without the foundation of sales,
manufacturing, market penetration, and everything else which
they enjoy from the A320 and 737 families.
The airlines are becoming
slightly less content. Although preserving the status quo
works well for them too, and spares them the need to consider
capital-intensive upgrades of their fleet to match competing
airlines (if a new better alternative to the 737/A320 were to
appear), there is a growing awareness by the airlines that these
planes – which are, of course, equally a staple underpinning to
their fleets, just as they are to Airbus and Boeing – are no
longer state of the art.
Airlines Start to Pressure For
The airlines have seen the
promise of new efficiencies from new design and construction
technologies, and from new engines too. Having suffered
from a very bad year in 2008 when oil prices almost reached
$150/barrel before collapsing down to $30, and now seeing oil
steadily climbing again at a more sustainable rate, up past the
$90/barrel point with no sign of any slowing, the airlines find
themselves in a situation similar to what office managers find
themselves with photocopiers.
If you’ve ever owned a
photocopier, you’ll know that competing companies will call on
you from time to time, as well the rep for the company you
bought your current copier from. They’ll offer you a newer
better photocopier. It will have more capabilities, and
produce better quality copies faster and more reliably.
And – most important of all – the cost per copy will be reduced,
and the salesman will show you how the new copier will pretty
much pay for itself due to the saving you’ll make on every copy
we run outweighing the amortized capital cost of buying the new
Now think airplanes.
Except, in this case, the airlines are starting to notice that
no salesman is calling on them offering them a ‘better’ plane –
for example a plane that can carry more passengers, more
freight, travel more quickly, go longer distances, and – here’s
the big one – cost less per mile to operate.
Just as we can often justify
a new photocopier because of the savings in the copies, so too
can airlines sometimes justify new planes by savings in their
operating costs. Furthermore, the more that the cost of
jet fuel climbs, the quicker such paybacks become, and the more
imperative it is for airlines to have the most fuel efficient
So the airlines are starting
to apply pressure on both manufacturers, asking them to come up
with a new replacement to the current airplane families.
They know that new technologies could make for much more
efficient planes, and they want these planes.
This is part 1 of a
series on the needed evolution of the Airbus/Boeing A320/737
aircraft. Please see also the other parts of this series :
The vital importance - and growing
problems - of the A320 and 737 families of airplanes
2. Why Airbus and Boeing
don't want to - but must - update their aging airplane series
3. Engine issues and what
Airbus and Boeing could do
4. Boeing's big problems
If you liked this, you might also enjoy our multi-part series 'Where
is Boeing Going'.
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24 Dec 2010, last update
28 May 2011
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