The battle between Airbus and Boeing is especially intense in the single-aisle market, for which more than new 20,000 aircraft are required over the next 20 years.
In the 100-210 seat market, examining the Big Two OEMs only, Airbus currently has roughly a 60% market share of the backlog for the A320ceo/neo. Boeing’s 737NG and 737 MAX has the rest. (China’s COMAC C919, Russia’s Irkut MS-21 and Bombardier’s CSeries, for purposes of this post, are excluded.)
Airbus scored a coup when it announced the long-expected order for more than 200 ceos and neos from LionAir, up to now an exclusive Boeing customer. This follows inroads into former exclusive Boeing customers, notably Norwegian Air Shuttle and American Airlines, each for large numbers. Boeing, to be sure, sold the 737 MAX to each of these carriers, but losing exclusivity is a blow to Boeing prestige.
Boeing scored with a large order for 737NGs from Ryanair, an exclusive Boeing customer. The quantity–174–is impressive but the cantankerous CEO of Ryanair, Michael O’Leary, wasn’t expected to do anything else. Although he publicly flirted with COMAC, nobody (including Boeing) took his tease seriously. Airbus won’t deal with him, having been played for a stalking horse in the past. That left Boeing. While all that truly counts is the revenue and backlog, Boeing would dearly like to pick off an Airbus customer (see below).
But O’Leary by-passed the 737 MAX. Vocal in his disdain for the MAX as not efficient enough, O’Leary prefers cheap prices to premium ones that accompany the MAX. That MAX continues to trail NEO by substantial numbers rankles. Boeing officials push the story that the MAX is more efficient and costs less than the NEO, which Airbus charges to be outright lies (see Pinocchio), but the numbers that matter most are the sales figures, and for this Airbus is the clear winner.
Boeing’s argues that its 737 is 8% more efficient on a per seat basis than the A320, and it doesn’t matter whether it is the NG vs the ceo or the MAX vs the NEO. The key difference, of course, is that the 737-800/8 nominally carriers 12 more passengers in two classes than the Airbus. Airbus argues that the delta is closer–about seven seats–but we think Boeing has the stronger point on this metric.
Airbus and Boeing, and Pratt & Whitney and CFM, engage in a war of words over the fan diameter of the NEO vs the MAX. Airbus and PW say the larger fan on the PW Geared Turbo Fan is more efficient than the somewhat smaller CFM on the NEO and the sharply smaller fan on the MAX. Boeing and CFM say the CFM LEAP-1B is optimized for the MAX and will produce equal, improved fuel consumption to the GTF. (Noticeably absent from the debate is CFM’s comparison of the NEO LEAP to the NEO GTF or the MAX LEAP. Airbus says the GTF is about 1.5% more fuel efficient than the NEO LEAP.)
For all the manufacturer rhetoric, customers tell us the A320ceo and 737-800 are within two percent of each other on operating costs, in favor of the -800; the 737-900ER is better than the A321ceo and the A319ceo is better than the 737-700. For the re-engined models, nobody pays attention to the A319neo or 737-7; the RE MAX and NEO maintain the status quo; and the A321neo is better than the 9 MAX.
Boeing hopes to flip easyJet, once a Boeing customer but in recent years exclusively Airbus. easyJet says if Boeing is sporty enough on pricing, it can win the current competition. We hear Boeing may well be sporty enough. Whether Airbus will be more sporty remains to be seen.
Good article. The missing piece is that Airbus brought the NEO to market well before Boeing brought the MAX. So I do not think pointing to backlog at this stage is a fair metric of the race. Boeing made up a lot of ground with MAX sales in 2012. That is likely to continue in 2013, although to a lesser degree as the low hanging fruit has been plucked.
Boeing as of late is too indecisive, too long in bringing the 787 on line and thus allowing airbus to sell many A330 frames that would have gone to the 787 order list. Also dragging their feet by at least 6 months in offering the 737MAX and now we wait for the 787-10 and 777-9X that airlines are waiting to order. These last 2 widebodies can be the bread and butter of the company but only if they move fast to offering these much wanted planes to market. The 777 has been a runaway success and now is the time to keep ahead of airbus with these 2 offerings.
There has been some movement; the A321 has grown into 236 seats. Airbus says the A320 can carry 180 (174 being more realistic IMO). That is a gab of 56 seats. Both the B737-8 and -9 fall nicely inbetween the A320 and A321 capacity wise. Important for low costs carriers striving to get close to 200 seats / 4 cabin attendants. So an advantage for Boeing here.
That said the A321 NEO with its new cabin flexibility and GTF’s seems hard to beat & the 6 most recent NEO orders show: http://en.wikipedia.org/wiki/List_of_Airbus_A320neo_family_orders
The GTF will be significant more quiet then the MAX’ LEAP. This a significant operational advantage in Western Europe (Easyjet) with its many noise restricted airports.
An engine fuelefficiency rule of thumb is, giving every else staying ~the same, within reasonable limits, sfc improves 0.5% with every additional inch of fan diameter. So the sfc difference between the LEAP MAX and LEAP NEO is about 4-5%. Similar to the CFM56-5 and -7.
The LEAP engine being optimized for the MAX has probably to do with the fan shrink and relocation of engine accessories in the flattened 737 cowling, just like on the CFM56-7.
Can someone help me out here?
The article claims to be about the 100-210 seat market but then goes on to say that customers don’t “pay attention to the A319neo or 737-7”. So this means we are actually ignoring everything below 150 seats in the next generation of aircraft.
So why are customers not interested in the 319neo/737-7? Is there not really a market for 100-150 seat aircraft – thus explaining the lack of interest?
Or do these aircraft, despite re-engining, just not provide attractive economics?
The answer would seem to have big implications for the Cseries.
Our view is that neither the 737-7 nor the A319neo, being quite heavy for what they are, are economically viable any more even with the new engines. The A319neo is roughly 12,000 lbs heavier than the CS300 (that’s about equal to 68 passengers). The 737-7 empty weight isn’t definitive but it should be at least 10,000 lbs heavier than CSeries.
Airbus sold 45 A319neos to date. Boeing hasn’t booked a single order for the 737-7 Max. We’re beginning to doubt that it will build this model at all. Only Southwest Airlines so far has identified the prospect of selecting the 7 MAX as part of its MAX order. Sub-type is a TBD for Southwest. Nearly all orders are for the MAX 8 and WN told us at the time it was by-passing the 7 MAX, though it reserved the right to switch.
CSeries has 180 firm and conditional orders and almost the same number of commitments.
With the small % difference between the competing offerings of Airbus & Boeing one wonders whether the focus should be more on saving money on operations and increaseing profits through marketing.
And I mean operations and marketing on behalf of the carriers.
If “neither the 737-7 nor the A319neo […] are economically viable any more”, I’m wondering what will be happening to that size segment. Airbus has delivered over 1300 A319’s up until now.
Is everyone thinking about ordering the CSeries and just waiting for real performance numbers? If so, could Bombardier really supply that demand at all?
Or is upsizing the answer, meaning the smaller models will mostly be replaced by A320-Neo or 737-8?
One interesting point to note about the A321-NEO is the increased range about the CEO. This seems to be an additional selling point, especially in the US.
Bombardier and Embraer will “own” the 100-149 seat segment, with some minor sales by Airbus, maybe Boeing, perhaps Suhkoi and Mitsubishi with +100 derivatives of SSJ100 and MRJ 90. Airbus believes there is a market demand of >4100 over 20 years. Boeing’s number is >5000. BBD says >6500. EMB doesn’t break out this segment (it looks at 90-125 seats).
What does ‘CEO’ mean in this sentence above? ‘One interesting point to note about the A321-NEO is the increased range about the CEO. ‘
“CEO” is “Current Engine Option” (as opposed to neo, “New Engine Option”). In other words, the A320 family that’s been in production since inception.
In that sense maybe the A320 has advantage being optimized for 150 seats contrary to the 2 rows longer 737-8. Boeing claims the 737-8 per seat costs are lower, not the trip costs..
For a while it was my conspiracy theory Airbus would wait for the “point of no return” for the 737MAX before launching an optimized 200 seater, inbetween 737-8 and -9.
http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA320NEOPlusFamily.jpg
Ok, each 50 seats you need one more flight attendent to be legal. So 150 or 200 seems a sweet sport in terms of minimum crew size.
But when looking at easyjet, their A319s are configured with 156 seats. So that sweet spot seems not to be that an important factor at all.
Adding a A320-stretch variant in between the A320 and A321 may help carriers to rightsize aircrafts to demand. But on the other hand, if the trip cost delta is not large enough it’s better to fly the larger plane with low load factors and sell the additional seats at premium prices in peak time. According to wikipedia (DE) the delta in fuel usage per hour is only 7%. A free seet next to you is a popular perk in some frequent flyer programs, some airlines even sell that feature.
Looking at the order book I’m not convinced there’s a problem at all for airbus.
I think the time frame for such a stretch has already passed. Improving market chances of the A319 against the CSeries and the A380 against the B777-9 should be more important mid term. And later may be too late, meaning just before introduction of the clean sheet successor programm.
Capacity wise Airbus may still hold a trump card in reserve. They recently introduced a new galley option on the A321-NEO freeing up space for 5 additional seats.
I’m wondering if it’s possible to introduce that on the A320 and A319, too. Or is it already available thanks to earlier pressure by easyjet and friends?
Adding 5 seats to the 156 of the A319 would be an improvement of 3,2% in capacity.
Leeham, do you have any numbers from your airline sources how large the efficency/cost per seat count gap is between A319 NEO and CS100/CS300?
You wrote the 737 has an 8% advantage in per seat costs over the A320, 2% in overall operating costs. Look at the order book, airbus still maintained a 50% market share.
So I would not count the A319 NEO dead just yet. If Airbus doesnt make the mistake in underestimating the new market entrants, there is a strong incentive for them to compete.
There is still time to add additional improvements to the A319NEO and going for an all out price war in the A319 segment is still a possibility. If they can manage to wreck the prospects of the Cseries and bombardier concentrates on other market segments again, even giving away frames with zero profit may pay off big time in the long term in terms of market share and profits.
“A380 against the B777-9 should be more important mid term.”
People seem to believe the 777-9 turned the 777 in some sort of new VLA because Boeing says it is 407 seats. In reality it a 2.6m/ 2-3 row stretch on top of the 777-300ER, approx. 27 seats. No where close to an A380 (with apples to apples high density cabin specs) It’s simply 40% bigger. Boeing Marketing communication has an easy job..
Re A321 NEO, Airbus know their market position & price accordingly.
http://www.airbus.com/presscentre/corporate-information/key-documents/?eID=dam_frontend_push&docID=14849
The A321 is way bigger and expensive to operate then the A320. For airlines replacing 20+ year old A320 the A321NEO is a big (7 meters/ €€€) step up. IMO Airbus lacks a real 200 seater. Easyjet, Jetblue and Ryanair told them so..
For the first time ever, I agree with keesje. The A380 and 777-9X are not even close to being in the same class. Now, I do believe that the 777-9X should be very close to the A380’s seat costs when it comes out, but it is still a much smaller plane. That said… combine low seat costs, very large cargo capability, and much reduced market risk due to its smaller size; and the 777-9X may well take orders away from the A380, but its primary competitor is the A350-1000. That plane is the target the -9X is taking aim at. Should be fun to watch…
As for the 737 vs 320 competition, no one has mentioned the higher dispatch reliability the Boeing offers. There is no way to know at this point if the MAX will maintain this advantage over the NEO, but I would not want to be one of the early customers trying to maintain the first generation of GTF engines. A reasonable person would conclude that there will be substantial growing pains associated with that new technology.
“As for the 737 vs 320 competition, no one has mentioned the higher dispatch reliability the Boeing offers. ”
I don’t think Boeing can offer dispatch reliability. It has little to do with the aircraft, although Boeing loves to suggest so. Perception Management in Marketing land. It has more to do with your aircraft maintenance organisation/ contracts, parts availability at out stations, reserve aircaft availability etc. all depending on the specifics of your network operation (frequencies, cycles, stage lenghts, etc.)
http://www.answers.com/topic/dispatch-reliability
Of course! Why didn’t I think of that? So silly of me to assume that one aircraft may, on the whole, be more reliable than another. That would be impossible.
I suppose Jaguars are more reliable cars than Hondas too, but you cannot prove it one way or another because each is maintained differently. Are you kidding me? Your words seem more like marketing babble than the real world comparison between NG/CEO dispatch reliabilities does.
Are you saying that Boeing operators do a better job maintaining their aircraft than Airbus operators do? That in itself sounds more like good marketing for Boeing than any reliability figures ever could. Of course you can’t prove it, which seems to be a trend for you.
And the GTF? Does anyone actually believe, as a first generation new technology, it will enter service smoothly? I look forward to this being a revolutionary engine design, but if anyone thinks all those moving parts are not going to have serious issues early on, they have not been around new airplanes/engines very long.
Why do you suppose that P&W has not brought GTF technology to wide body engines? It is not a slam dunk. There will be problems. ETOPs certification should be a ways off until the technology has a chance to prove itself.
A380 vs B777-9 is interesting.
Airbus sales was quoted “It takes an A380 to compete with an A380”. I interpret it that way that current large aircrafts are not efficient enough to compete on cost per seat basis against the much larger capacity of the A380, which has current generation technology.
I’ve read somewhere cost per seat count will be comparable between A350 and A380-800. Boing will have to make cost per seat basis of the the 777-9 comparable too, to compete effectively. Result: The efficiency advantage of the A380 will be lost. It will be an even playing field (again).
There was quite some argument in the past that the A380-800 is too much airplane, the demand is not there yet and its a high risk buying such a large and expensive airplane. Don’t forget it can be deployed only to a limited selection of airports with A380 facilities.
B777-9 may be the lower risk alternative to survive down turns and recessions, the next lower sized aircraft with more flexibility.
Excellent post nofly! Don’t forget the revenue cargo volume on the 350 and 9X will be almost twice that of the 380. This matters for some carriers, especially those in the Asia Pacific region. Don’t let inaccurate payload numbers tell you that space is useless. It’s not. I see long haul 77W bellies fill up all the time leaving HKG for both North America and Europe.
Scratch, thats an interesting statement. Some posters on airliners net claim the 777 is payload restricted on certain routes which voids any belly cargo volume advantage over the A380. Would be interesting so see a comparison of real world numbers in a payload diagram over the aircrafts range.
I’m would guess those 777 posters are not referencing the -300ER, or perhaps the seat density is higher on theirs. My experience is the -300ER w/ 300 seats.
Re the A320 family: there is an interview in the “Hamburger Abendblatt” (german only) witzh the boss of airbus germany.
Airbus will showcase the “Space-Flex-Concept” at Aircraft Interiors Expo, they claim to free up space for 3 additional seats through a redesign of galley and lavatories. That option is available for the A320 family, so i guess for all models.
http://mobil.abendblatt.de/hamburg/article115057427/Airbus-Rekord-Fast-5000-Flugzeuge-bestellt.html