As technology advances, it changes the way the world connects, driving down the cost of air travel and offering aircraft with greater range and capabilities than their predecessors. The Boeing 787 and Airbus A350 are fast becoming mainstays of the global long haul fleet, and are gradually being deployed in developing new market opportunities. In short haul, the A320neo and 737 MAX narrowbodies have entered service and are already making their mark, opening up not just new routes, but allowing new operating models into entrenched markets.
When Boeing started selling the 787 in the early 2000s, the aircraft was described as a ‘hub buster’. Boeing argued that with carbon composites, a smaller and lighter aircraft could offer the combination of efficiency and range to bypass traditional transfer points. The aircraft would give airlines, and their passengers, the option to fly directly where they wanted.
Boeing’s argument and aircraft concept stood in opposition to Airbus’ concept for the A380, based on a forecast that air travel would be concentrated into ever larger ‘aviation mega cities’. Airbus argued that very large aircraft would be needed as a ‘congestion buster’ to overcome inevitable infrastructure shortages, capacity shortfalls and delays at these hubs.
Neither argument proved entirely correct, but airlines preferred the 787 to the A380, forcing Airbus to develop its own mid-sized composite widebody in the A350. As these new generation mid-sized widebodies entered service, it was anticipated that airlines would usher in a new wave of point-to-point routes, particularly ‘long, thin’ routes made viable by the range and cost advantages these aircraft offered.
Initially route selections failed to meet expectations. This was mainly because the first buyers were primarily network airlines. The early 787 operators, such as All Nippon Airways, Japan Airlines, Ethiopian Airlines and Air India, were all tied to hubs and complicated networks and global alliance partnerships.
They proved mostly interested in using the 787 as a capacity multiplier. The early wave of A350 operators were even more restricted. New A350 operators included Qatar Airways, Singapore Airlines and Cathay Pacific, all of which are tied to a single, geographically specific hub.
New routes have been pioneered with the 787 and A350, but overwhelmingly as extra spokes from existing major hubs. In total, the 787 operates on more than 700 routes, but only 130 (around 18%) of these are new city pairs, concentrated mostly in North America, China and Europe.
In the past 18 months, airlines have started to accelerate their deployment of the 787 into new markets, using the aircraft to launch nearly 75 new city pairs, but all bar a handful of these have been hub to secondary operations.
A few carriers are beginning to experiment with their new widebodies to offer true point-to-point and long-range seasonal routes. Australian LCC Jetstar has opened a route from Australia’s Gold Coast (Coolangatta) to Wuhan, Central China’s most populous city. UK holiday carrier Thomson Airways is starting to experiment, using the 787 to operate from secondary points in the UK to the Caribbean, with routes including Doncaster Sheffield-Montego Bay, Manchester-Oranjestad and Manchester-Puerto Vallarta.
Next generation widebodies are starting to change the way airlines are thinking about ultra-long haul services. With the larger, longer range and more efficient 787-9 entering service and an ultralong range version of the A350 announced, airlines are looking at using these aircraft to renew old routes and develop new ones. Perhaps the most striking of these new opportunities is Qantas’ plans to operate Perth-London service, the first nonstop route between Australia and Europe. Singapore Airlines is also thinking about ultra-long haul, becoming the launch customer for the A350ULR.
Extra range and efficiency may not be quite as critical in short haul as they are for long haul aircraft, but more efficient aircraft are also promising to transform the narrowbody market. Boeing’s 737 NG and Airbus’ A320 families have long been the workhorses of global aviation, but their capabilities have restricted them to short haul markets. The average stage length of a 737-800 is little better than 1400km, and just under 1300km for the A320, and only a little over 1% of routes for either are more than 4000km.
Airbus and Boeing have both introduced updated replacements for their narrowbodies, the A320neo and 737 MAX. These offer 15% to 20% lower fuel burn and up to 400nm to 500nm in extra range compared to their predecessors. The extra efficiency and range of these narrowbodies are catalysts for change, opening up not only hundreds of potential city pairs but also making existing major markets to new competition.
One of the key opportunities is the trans Atlantic market. The North Atlantic represents a major untapped opportunity for LCCs. According to IATA, it is the world’s most profitable major international traffic flow, and also the world’s largest premium travel market. LCCs operate better than a third of all air travel on either side of the North Atlantic, yet their share trans Atlantic seat capacity is less than 5%. Updated narrowbodies offer LCCs enough range to operate between the US East Coast and Europe, without the complication and expense of introducing widebodies into their fleet.
Manufacturers are already taking the potential for disruption via narrowbody even further. Airbus is developing the A321neoLR, offering the capability to fly around 200 passengers up to 4000nm when it enters service in 2019. This will effectively replicate most of the capabilities of the ageing Boeing 757, but with a fuel burn reduction of 25%, or better.
Boeing is contemplating its own competitive response, likely in the form of its ‘New Mid-sized Aircraft’. The manufacturer is closing in on a firm design concept of 220 to 270 seats, and range approaching 5000nm, placing it neatly into the gap in Boeing’s portfolio between the 737 MAX and the 787-8. The aircraft will likely be a ‘hybrid’ oval cross section, offering a widebody style 2-3-2 seating arrangement with similar economics to a narrowbody.
Meanwhile it is clear that the new technology is revolutionising the way routes are flown, in much the same way as the introduction of very long haul widebodies supported the transformative global initiatives of the Gulf carriers over the past 20 years.
This article was adapted from a feature that appears in the latest issue of Airline Leader – the strategy journal for airline CEOs. Visit Airline Leader to find out more.