Re: 757-300?

From:         h andrew chuang <chuang_hsin@ae.ge.com>
Date:         06 Apr 93 04:59:29 PDT
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I think the 757-100/-300 issue has dragged on for too long, and I promise
this will be my last posting on the 757.

In article <airliners.1993.291@ohare.Chicago.COM> Karl Swartz <kls@ohare.Chicago.COM> writes:

>>Just as an example, Singapore Airlines chose to replace its very
>>young 757 fleet (~ 5-year old and only 4 planes) with the A310 a few
>>years ago.  If the 757 really has a significant cost advantage, that
>>would not have happened!
>
>There's more to cost than just operating cost.  Singapore already had
>the A310 (six A310-222s delivered about the same time as the 757s) in
>its fleet so the additional A310s (A310-324) which appear to have
>replaced the 757 could also represent fleet simplification, with what
>may be for them a more versatile aircraft coming out the winner.  Of

Actually, the old -222 replaced the 757, not the new -324.  And definitely,
fleet standardization was the major reason that SIA retired its 757 fleet,
but what I was trying to point out was that if the 757 had a !!SIGNIFICANT!!
cost advantage, then the retirement would not have happened.  Especially,
when considering that SIA's 757's were mainly used on S'pore-Kuala Lumpur
shuttle service, and S'pore-Penang service that have little cargo traffic,
hence, the larger, wide-body A310 doesn't seem to make a lot of sense.  
(Note: earlier, Karl suggested that the proposed 757-300 should have a cost
advantage over the 767-200, but I just don't beleive that the 757-300 will
have a significant cost advantage to justify Boeing to build an airplane to
cut into its own 767 market.) 

(Just something aside, Karl mentioned in another posting that most carriers
use fully depreciated planes for shuttle services, obviously that's not the
case in Singapore and Malaysia.  Malaysia uses relatively new 737's and
(old) A300's on the shuttle service.  But their shuttle flights are more like 
regular scheduled flights.)

>course Airbus may have sweetened the deal too, especially since they
>were trying to win an A340 *after* Singapore had signed for the MD-11.

NO!  The decision for the fleet replacement was made years before SIA
replaced its MD-11 order with the A340 order.  However, I definitely believe
that Airbus had done something "big" to win SIA's A340 order.  Ironically,
MD lost SIA's order because of MD-11's performance shortfall, but it seems
that the A340 has a significant performance shortfall, too!

>If size of market is your criteria then you must consider the 747 a
>dismal failure -- ten years after first delivery only about 400 had
>been delivered, versus over 500 for the 757 at the same point.

Yes and no.  The 747 was a disaster when it first came out.  It was too big,
especially for the US market, and the original JT9D-3A engines had a dismal
reliability.  However, the market caught on very soon.  Moreover, a 747 has
a MUCH LARGER profit margin than a 757.  I remember reading somewhere that
for a program to be profitable, the manufaturer has to recover its
development cost within ten years.  The 747 definitely met the criteria, the
757 probably barely met that criteria.  It is widely known in the industry 
that the 747 program has been subsidizing the 757/767 programs.

>bet Boeing's profits from the 757 prorgam are ahead, probably well
>ahead, of those from the 767.

I am not saying the 767 is a hugh success, but the 767 did a lot more than the
757 to recover the development costs for Boeing in the early years WHEN IT
REALLY COUNTED.  (Simple economics: ten dollars in 1980 worth a lot more than
ten dollars in 1990, and the costs that are not recovered will incur further
interests that become additional costs.)  Moreover, the 767 program was
strategically important for Boeing, because the 767 was fairly successful in
blocking out Airbus' A300/A310 from the North American market.  Without the
767, Airbus could possibly be the number one airframe manufacturer, that
would be a terrible blow for Boeing as well as the US economy since Boeing is
the number one exporter of the U.S.

[a lot of discussions on 757's failure/success deleted]

The real failure is that Boeing did not come up with the right design to
replace the 727 in the late 70's.  Fortunately, the 737 derivatives saved
Boeing from losing the 727 customers.  Nonetheless, to have a complete family
                                                    ^^^^^^^^^^^^^^^^^^^^^^^^^
of airplanes, Boeing needs the 757 now.  Also, it was fortunate that Boeing
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
had some successful programs to sustain the 757/767 programs in the early
years.  If the 757 program were Lockheed's, it would probably have the same
fate as the L1011, and not lasted long enough to see the flurries of 757
orders in the late 80's and early 90's.

>>from engine manufacturers' standpoint (IMHO), PW2000 would need a lot more
>>757 sales to make business sense, because PW2000 has only one commerical
>>application (and the military application is not doing that well, either)!
>
>What's the military app?  The C-17?

Yes, the Air Force uses the F-117 designation for the PW2000.

>By that metric perhaps you're right.  But what about the 720?

Well, the 720 is really a derivative, and development cost was minimal
compared to the 757's.  Otherwise, both the 720 and 747SP were much bigger
flops than the 757.

>Interesting observation.  The 737-300 has certainly replaced a lot of
>727-100s.  I'm not sure how well the 737 has fared in replacing the
>727-200 though.

Aren't most of the 727-200 (at least the Advanced model) still flying?
And the 737 may be too out-of-date to replace the newer 727's when they are
ready to be retired.  The 7J7 would probably be a good candidate for 
replacing both the 727 and 737, but the program was cancelled because it used
an expensive and unproven engine technology (GE's UnDucted Fan, and
P&W/Garrett's Propfan [? sorry, I forgot what it was called]) in which the
airlines were not very interested.  It seems all the discussions on the net
always lead back to the need for Boeing to have a 727/"757-100"/7J7-sized
airplane.  I really wonder what is the reason why Boeing is not talking about
such a plane, are we missing something?  The only thing that comes close to
it is the 737-600, but does it make sense to continue the production of a
mid-60's plane into the next century?

>Without looking up numbers I'd suspect Delta and later American and
>United have really driven the 757, perhaps even accounting for the
>majority of 757 orders.  Delta's 727s were pretty new, while the other

Unfortunately, the 757 is doing well only among US airlines of which most are
losing big-time money.  British Airways is the only significant and profitable
757 airline customer outside the US.  Also, it is practically not used by any
of the booming East Asian airlines other than Air China, Shanghai, Royal
Brunei, and Royal Nepal, and none of them has a sizable 757 fleet.
(Nonetheless, narrow body airplanes simply are not widely used on the Asian
side of the Pacific Rim.)  Arguably, the 767 has a better customer base
worldwide than the 757.  (But I also have to point out that the 727 was not
very successful outside the U.S.  I guess the 727 and 757 were designed
mostly for the US market.)

>have to agree that a lot of 757 orders were for fleet expansion and
>not for 727 replacement.  (Actually United's first 30 757 were for
>replacement, but of the DC-8-71 and not the 727.)

That's exactly one of my points.  Although, the 757 has created a new
market which is only becoming sizable in the recent years, it definitely did
not replace the 727 that Boeing had originally planned.

I just wonder, if the 737/CFM combination came a few years earlier, would
Boeing still build the 757 AT THAT TIME?  IMHO, if weren't for the commonality
between the 757 and 767, Boeing would have been better off launching the 757
around mid-80's.

By the way, on the subject of ordering engines before ordering airframes:

In an earlier posting, I pointed out that AA ordered the PW2000 before
ordering the 757 and later cancelled the order.  Interestingly, someone just
digged out some old information on AA's 1988 order of up to 200 CF6-80C2/80E
engines before ordering any airplanes.  Luckily for GE, AA has not cancelled
that order, yet! :-)

I will refrain from making any more comments on the 757, but before I do
that, I want to make a very personal comment.  When I was a kid, I always
liked the shapes of all the Boeing jets and hated the "blunt-nose" Douglas
planes (DC-8/DC-9).  When I first saw the 757, I was wondering why Boeing
designed a "blunt-nose" airplane as ugly as the DC-8.  Perhaps, the real
reason that I consider the 757 being the least successful Boeing jet is
because subconsciously I just don't like the airplane!  :-)
Coincidentally, the 757 is the only Boeing jet that I have never flown in!

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