There has been considerable discussion in recent days regarding the potential for re-engining and re-introducing the Boeing 757, which first entered service in 1982, into the marketplace.  While from a fuel burn standpoint, a new engine may make sense, from a technology perspective, the aircraft, even with a new engine, would be far behind its stablemate, the Boeing 787.

Despite the rocky introduction of the Boeing 787, its new technology provides a distinct advantage in fuel burn and maintenance costs vis-à-vis its predecessors, and as the 787 ages, we will need to rethink old rules of thumb about increasing aircraft maintenance costs with aircraft age.  If we focus on technology and maintenance costs, it becomes quite clear that re-engining a 1982 aircraft doesn’t make much sense.

The following chart from Boeing illustrates the difference over time in maintenance cost between the 757’s contemporary, the 767, which was developed simultaneously using similar technologies, and the 787.  It is quite clear that the new technologies in the 787 have considerable benefits in maintenance.Chart 3A 30% difference in airframe maintenance costs by year 12, and a growing gap thereafter illustrates the ground-breaking technologies introduced on the 787.  That difference corresponds to a reduction of 5% of cash operating costs for the 787 for maintenance alone.  (By comparison, a 5% difference in Cash Operating Cost is projected as the difference between the re-engined 737MAX and 737NG.)

Of course, pioneers get the arrows, and the 787 had its share of teething difficulties with its advanced electrical systems, including the Lithium-Ion battery issues that grounded the fleet shortly after introduction.  Since the initial difficulties have now stabilized, its performance has improved, and the benefits are being enjoyed by operators.

Technologies Impacting Maintenance

Composites, manufacturing processes, fiber optics, advanced electronic systems, on-board monitoring systems and LED lighting all contribute to the dramatic maintenance cost reductions for a new technology aircraft.  Taken together, they contribute to longer in-service life and stretched maintenance checks when compared with older models, resulting in lower costs as shown in another Boeing illustration.

Chart1

Composites impact maintenance cost because they are more durable, are not susceptible to fatigue, and do not corrode.  Combining this with lighter weight, the ability to shape the material into non-traditional shapes, and the fact that they are better suited to certain loads, provides a distinctive advantage.  In addition, the ability to manufacture the fuselage barrel in a series of one piece assemblies minimizes joints and inspection points.  In addition, the composite construction enables ultrasonic testing of the fuselage crown without having to remove ceilings or insulation, saving considerable time.  While composite materials are more expensive than aluminum, they can pay for themselves in fuel savings through lower weight and through lower maintenance costs.

One of the major differences between the 787 and older aircraft is that the pneumatic bleed air system from the engine has been eliminated, being replaced with electronics.   This means that several of the on-board systems that formerly relied on heavy pneumatic equipment on board have been replaced with lighter and more easily maintained electronic components.  Cabin pressurization, hydraulic demand pumps, wing deicing systems, engine start and nitrogen generation that were traditionally pneumatic systems have been converted to electronics.  In addition, wheel brakes, stabilizer trim, and multiple spoilers have been converted to electronic operation.

Fly-by-wire systems are used throughout the aircraft, replacing hydraulic cables and actuators with fiber optic bundles and electronics.  The 787 has more than one mile of fiber optic cables on board.

On-board monitoring systems have a significant impact on maintenance cost, both from preventive early warning of a potential impending failure, but also for routine maintenance.  On the 787, many fasteners have electronic measurements of torque, that can be read electronically rather than checking each fastener manually with a torque wrench, saving labor hours.

The 757-767 era did not offer advanced maintenance management, and the 787 has taken the technology up a level from the 777 that pioneered such systems at Boeing, as shown in the Boeing table below.Chart 4The Bottom Line

Clearly, new technology aircraft have a significant advantage over existing technology aircraft when it comes to maintenance and operating costs.  As an airline, if I had a choice, I’d opt for new technology over existing technology any day, assuming that the OEM prices to the point of economic indifference.

The 757 re-engining decision all comes down to competition in the marketplace.  Airbus, with its A321neo and A321LR, is aiming at replacing the remaining 757s in operation, and these aircraft are outselling the 737-900ER and 737-9MAX by a wide margin.  Unless Boeing comes up with a 757 replacement in the near term, it is likely to lose those existing customers to Airbus for the next 25 years.

Of course, Boeing would love to replace the 737 and 757 families with an all new high technology narrow-body aircraft, but the experience with the 787 shows that this requires heavy development costs, particularly if it once again “pushes the envelope” of technology.  Airbus has demonstrated with A320neo and A330neo that re-engining an existing successful program is viable, and will generate orders if better technology is not available, or if fleet commonality is a concern. The Boeing MAX program achieves the same thing.

But Boeing has a viable option on the shelf that could replace the 757 – namely, revisiting plans for its shorter-range 787-3 that was dropped when the 787 began to have difficulties.  This would be a great 757 replacement — it should offer better operating economics, flexibility in terms of cabin layout, and similar size, with between 170 to 250 seats in a range of 2,3, and even 4 class options.  The 757 replacement issue is more complicated than just replacing that sized aircraft.  There are other issues to consider: range, capacity, cost and selling price to mention a few.  Should this replacement be one aircraft or a family?  What would be the timing on EIS?  Indeed, what do airlines need?

Given these issues – and we are certain there are others –  Boeing faces no easy decision.  Which is precisely why we think the 787 design provides such a good alternative. Boeing understands the aircraft very well now.  With a limit in resources and a “no more moonshots” mindset, the 787 probably offers the lowest risk and most manageable cost solution.

The market has been talking about two options, should Boeing develop a new large narrow-body, or re-engine the 757, with significantly lower benefits and lower development costs.  Recent proclamations from Seattle indicate that Boeing will not consider “moonshots” as it is just recovering from the $30 billion spent on the 787 and still needs to complete the 777X scheduled for introduction in 2020.  Which is why a third option, the 787-3, might be their best alternative.  With two assembly lines, 787 production could be stepped up.  And customers would obtain a much more capable and sophisticated aircraft.  Moreover if Airbus thinks there are 1,000 possible orders for the A321LR, offering a much more capable 787-3 will likely crimp Airbus’ opportunity considerably.

Airbus forced Boeing’s hand when it offered the A320neo to American Airlines, and Boeing was forced to respond with the 737MAX.  Airbus‘ announcement of the A321LR has placed Boeing in a position to respond again, if they want to compete for that segment.  Bear in mind long range 757 operations probably only utilize 60 aircraft at present. If Boeing were to reintroduce the 787-3, it could turn the tables on Airbus, as the 787-3 would be a far better, more capable, 757 replacement.

In an oligopoly, the two major players could either play leapfrog, or match each other using the lowest capital cost possible.  Game theory suggests that, in the absence of other competition, the latter is more profitable.  Boeing could introduce the 787-3 by removing fuel tanks and other weight, optimizing the aircraft for a 4,500NM range rather than the 7,850NM range of the 787-8.   A 787-3 would eclipse the A321LR, and be a much better long term asset for customers.  Bringing back a 757 is simply  irrational. The market has moved; the 737-8MAX 200 already does much of what the 757 does.  The 787-3 would be a paradigm shift in capabilities and ensure Boeing customers stay withing the fold.

It is a myth that airlines only want narrow-bodies for short and medium-haul operations.  Even Airbus acknowledges this with its A330R – another aircraft that would be impacted a 787-3.  The real need is for a cost-effective, reliable aircraft with state of the art technology – something that operates for the next 25 years without being outdated in a decade.  Bringing back the 787-3 could provide Boeing with a competitive edge quite quickly – certainly by 2019.

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