Big Twin Competition (was Re: Boeing/MDC merger)

From:         Andrew Chuang <chuanga@iia2.org>
Date:         17 Dec 95 14:06:22 
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In article <49iu4b$i5v@kragar.kei.com>, (M.Denker) (101326.2470@compuserve.com)
wrote:

> I don't belive that Boeing and MDC go together.

Whether the merger will take place or not is speculative at this time.

> Anyway, Airbus Industrie is ready to compete against both of them.

IMHO, even if the merger takes place it will not affect significantly the
competition between Boeing and Airbus.

> Airbus offers the most advanced technology

Airbus tends to use newer technologies sooner than its competitors.  The
reason is simple: being a late-comer in the field, it has to use newer
technologies to set itself apart from the competition.  Nevertheless, it
involves more risk, too.  Furthermore, newer does not necessarily means
it's better.

> and Boeing's Triple-Seven will suffer from the repositioning of
> the A 330 in the late nineties.

Do you really know what you are talking about?!  Look at it carefully and
you'll know that in the A330/B777 competition Boeing is not suffering,
it's Airbus which is suffering.  According to Flight International, in
1990 (when the industry was in a much rosier time), Airbus predicted that
there would be 1408 deliveries of big twins (i.e., the A330 and the B777)
between 1990 and 2005.  Airbus boldly forecasted that only 550 of the 1408
would be the B777, the rest would be the A330.  With less than 120 A330s on
order, I seriously doubt Airbus can come close to its predicted 858 A330
deliveries by 2005.  OTOH, Boeing with 230 B777 orders to date will likely
exceed Airbus' "expectation".  Furthermore, since the launch of the B777,
Airbus has received less A330 orders than cancellations.

Also ask yourself why Airbus shelved the stretched A330-400 program but
instead launch the shortened A330-200?  The answer is simple: Airbus is
avoiding direct competition with the B777.  (However, Boeing is not
avoiding the competition.  In addition to the ultra-long-range B777-100X
that is on the verge to be launched, Boeing is also mulling to launch a
low gross weight -100X which will directly compete with the A330-200.)
Airbus will have a hard time selling the A330-200 in Asia because it's
too small.  Despite Airbus' claim of 9% lower direct operating cost than
the B767-300ER, Airbus will also have a hard time selling the new plane
in the US, because most US carriers already have plently of B767-300ERs
in their fleet.  Furthermore, all the B767-300ERs in service today are
too young to be replaced.  I don't expect the A330-200 to do well outside
of Europe and the Middle East.  (Well, unless Airbus can convince AA to
go with the A330/340 instead of the B777.)

IMHO, Airbus has seriously mis-planned its A330/340 program, especially
the A330.  The A330-300 is small for Asia and large for the US.
(Currently, US has the largest market for air travel, and in the next ten
to fifteen years, Asia will be the largest.  Thus, if an aircraft does not
cater the needs of one these two markets, then there will not be much
future for the aircraft.)  The A330 base design was optimized for the
- -300 size.  The proposed stretched A330-400 could not compete with the
B777-300 because the A330-400 would have significantly shorter range.
Now, the new A330-200 will effectively be competing with its sibling, the
A340-200.  The range difference between the two aircraft is less than
1,000 nm.  The A340 is actually doing better than Airbus expected.  In the
1990 forecast that I mentioned earlier, Airbus expected to sell 342 A340s
between 1990 and 2005.  However, for the A340, Airbus picked an engine (the
CFM56-5C) that had little room to grow.  If Airbus wants to launch the
stretched A340-400, it will need a brand new engine.  Can you imagine an
airline operating a family of A330/340 and has to maintain at least three
different engine types?  At this time, it seems that only CFM International
is really committed to develop an engine for the proposed A340-400X.  Pratt
& Whitney is offering an existing engine, the PW2000, but I don't think
that's a serious offer.  If Airbus does put the PW2000 on the new
derivative, then one must ask why Airbus did not put the PW2000 on the
original A340 in the first place.


> Moreover, Airbus' short-haul family is complete with the A 319.

The A319/320/321 is a versatile family of aircraft.  Nevertheless,
the A319 and the A321 both have yet to establish a respectable customer
base.

> Boeing still offers its slow 737 (in ATC often
> calles "AIRWAY BLOCKERS").

I believe the 737-600/700/800 are faster than the -300/400/500.  For
short-haul flights, the speed difference does not translate into a
lot of difference in flight time.  Hence, I don't think it's a significant
marketing disadvantage for Boeing or advantage for Airbus.  After all,
since the launch of the third-generation B737, Boeing has received more
B737 orders than Airbus has received orders for the A320 series of
aircraft.

BTW, in an unsubstantiated report, it was quoted that Boeing claimed the
B777 could save as much as an hour of flight time than the A340 on a
long-haul flight.

--
H Andrew Chuang   chuanga@iia2.org