Re: Long-distance direct flights

Date:         31 Mar 2001 16:43:20 
From:         JF Mezei <jfmezei.spamnot@videotron.ca>
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Janne Salonen wrote:
> Boeing's thesis is that A380-sized aircraft do not have sufficient market,
> relying on megahubs and connecting feeder flights, and that direct traffic
> between city pairs using smaller average aircraft size (B777, A330-A340)
> is going to win market share.

This was the same Boeing that attempted to sell/launch a stretched version of
the 747 to compete against the A380. So, one must balance that theory with the
fact that for Boeing which already has a 747, the financial situation (capital
availability, financing) are just not available in the USA for such a risky
endeavour so Boeing is in fact prevented from doing a A380 project. So it is
in Boeing's interest to find ways to downplay the importance of a A380 in the
industry. In other words, a certain proportion of the "777 will take over the
world" theory is spin.

Already, when you look at sales, the 767 doesn't seem to be doing so well,
while the A330 and 777 are doing OK. Could that be a the start of a trend
towards larger planes ? Is the era of the 767 starting to fade ? (for
trans-oceanic flights)

Another aspect to look at is that of mergers.  When two airlines merge, they
will be combining traffic onto the same services on the same routes. So there
would be pressure to use larger planes.

If fuel prices remain high, it may also force airlines to review their
strategies and perhaps combine long thin routes back into fatter trunk routes.

Another aspect to consider. While it is true that there has been fragmentation
in the markets, one has to wonder if the process of fragmenting may not be
complete now. If so (or if it will happen shortly), once the fragmentation is
done (or airports/routes/slots saturated), any growth will have to be
accomodated with larger planes.

Right now, there are a handfull of routes where the A380 has been identified
as being viable. And there are a handful of airlines that bought the A380 for
glory/image and potential future.

However, every study seems to predict a doubling of passengers in the not too
distant future. When you look at existing high density routes, you can't just
double the number of flights to accomodate the growth. AA cannot double its
New-York/London capacity by doubling its number of 767 flights, nor can it
puyt the extra flights at scheduled times that are useless to passengers.

So while Podunk may get its 767 to London, New York will still need its
service to London and growth is more likely to happen in the NYC-London route
than in the thin marginal Podunk-London route.

> aircraft. And a cargo version of Boeing's 747X seems to be the closest to
> market.

Has Boeing launched any of the stretched 747 versions ? Airbus has launched
the cargo version of the A380 for FedEx.

> It seems that A380s will have a market, although it might take some while
> until Airbus sells enough planes to cover development costs. Perhaps it
> wouldn't be surprising if Boeing at some point tries to leapfrog A380 and
> offers a still bigger plane.

No, I do not think so. Boeing has tried with its 747-stretch and didn't
generate enough interest. And the structure of financing in the USA/wall
street is unlikely to change to allow Boeing to take such a large long-term
risk. The market for the large plane isn't large enough for two competitors.
Airbus was lucky because it was allowed to take just a large long term risk.

In the very long term, Airbus will sell enough of these planes. But in a term
where normal financing applies, I doubt that they will sell the 250 planes
needed for break-even.  Personally, if Airbus sells 50 planes after the first
one has flown commercially, I think that the A380 will be a philosophical
success. (so roughly a total of 110).

> One interesting alternative could in time be provided by airships, once
> they can establish themselves.

Ironic that airships would be the perfect solution to transpoprt A380 fuselage
parts between france and germany, but they seem intent on using trucks/barges