0841881News from Icelandair announces the retirement of two old 757s and the bringing back of the 767.  It has been ten years since the 767 last flew for the airline.

The airline plans to acquire two 767-300ERs and they will be used between London and JFK over Keflavik from April.

If one looks at the airline’s route network, the planned 737MAXs on order cannot deliver the payload or the range for a number of destinations.  Icelandair is one of those airlines for whom the 757 was and remains ideal.  The 767 offers the extra payload and range to reach destinations beyond the reach of the MAX.

The 767 offers the airline a lot of commonality for pilots.  As the airline up-gauges, consider that it is staying loyal to Boeing.  One might have thought it would lease the 787 rather than go back to the 767.  But the 787 is probably too complex to only have two in the fleet.  Plus it has way too much range for the network requirements. The mantra about airlines being risk averse stands.

Next consider that the airline has not gone for the close to 757 performance A321. Again this might be to stay withing a narrow range of its pilot training and experience – avoiding risk.   Switching the fleet to Airbus would be disruptive for the airline but very popular in Toulouse.

What this decision tells us that Icelandair is one of those airlines for whom the MoM is an issue.  It needs an aircraft with economics that work on long thin routes and also shorter but thicker routes. The 757 is excellent for this sort of work. Which is why it has been so popular in the US.

At 260 seats the airline’s 767s will be at the high end in terms of capacity. Boeing has described the current ideal MoM as having 20% more capacity than the 757 plus 25% more range.  For Icelandair it looks like an ideal MoM would have 250 seats and 6,000NM range.  This is outside Boeing’s MoM box.

This demonstrates just how hard it is to define the MoM. Boeing has to look at every airline’s requirements and then define the sweet spot.  All the while it is doing this, Airbus disrupts prospects with a compelling mix of A321 and A330s.  No matter what Boeing comes up with, Airbus likely has a simpler (and annoyingly cheaper) short term option.

Boeing is up for the challenge, of that we are certain.  Loyal customers like Icelandair must be comforting and its MAX orders prove their loyalty.  But how long before even the most loyal customer can’t wait to replace aging and increasingly expensive 757s?

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