News from Bloomberg suggests that AerLingus is about to announce a decision to select the Airbus A321LR to replace its Boeing 757s. These 757s are primarily used to connect Ireland and US east coast cities. The Boeing 757 is a remarkable aircraft that enjoyed great popularity long after Boeing stopped making them. But the existing airframes are ageing and its obsolesce is a factor.
AerLingus has four 757s, and the report says the airline is looking at seven A321LRs. This might indicate a decision by AerLingus to increase its trans-Atlantic routes from Dublin. Are all going to fly west to the US? Perhaps, but perhaps not. The advantage of aircraft with long range is that they offer potential to be flexible and experiment with new markets. The following map shows markets that are within reach.
The map shows the ranges for the 757, A321LR and MAX8. We include the MAX8 because it will also be in the market, deployed by Norwegian. AerLingus is going to face competition from Norwegian and needs appropriate tools to respond. Norwegian has 100 MAX8s on order. Yes, 100. That must be alarming to legacy airlines serving the trans-Atlantic. The MAX8 seems to have the range to serve several markets along the North American east coast. Iceland Air is also buying MAXs to build its trans-Atlantic business.
We think AerLingus is responding to Norwegian; how long before the other legacies in the market do something? For the US carriers, obstruction by legal means is not a sustainable long term strategy. Even JetBlue is thinking about crossing the Atlantic by 2019, using the A321LR. If AerLingus rejoins oneworld, that adds pressure on SkyTeam and Star Alliance.
Airbus has said it sees a market for 1,000 A321LRs. Boeing has been less enamored with replacing the 757 suggesting its MAX9 can do the job. The market clearly disagrees and the A320neo outsells the MAX9. Norwegian, (a growing Boeing customer) converted 30 of its A320neo orders to A321LRs.
Airbus’ John Leahy thought the A321LR could replace 469 757 plus add another 500 (to get to the 1,000) in growth. Boeing’s Randy Tinseth dismissed this: “the thought of a 1,000 aircraft size market is frankly a little bit laughable.” Boeing has suggested the 757 north Atlantic market is worth 50 – 60 aircraft.
But it seems the reality is changing quickly. The charge is being led by Norwegian, an increasingly important Boeing customer. Norwegian has demonstrated the 787 is an exceptionally good market creator. Norwegian is likely to use the MAX8 in the same way – serving Providence RI from Dublin, cherry picking markets. The airline has also undertaken interesting new seasonal business between the US east coast and the French Caribbean. If this airline has identified the need for 30 A321LRs in addition to the MAX8s then something is up. The A321LR is an enabler in a way that the 757 once was. Norwegian will use its A321LRs to connect points on the map to move people from and to the US and Canada across Europe and beyond.
The north Atlantic is a start for long range small aircraft as the 757 has shown. The market apparently likes what it sees in the A321LR. IAG’s yet to be named LCC is going to probably use Barcelona the same way Norwegian will use Gatwick and Dublin. AerLingus out of Dublin adds to this mix.
Airbus has the first mover advantage and Boeing needs to respond, with an equivalent offering. This should be something bigger than the MAX but smaller and lighter than the 787-8. The pressure for Boeing’s MOM solution builds.