Battle for the skies Competing in a booming market

Boeing 777X - credit Boeing

BATTLE FOR THE SKIES

The rivalry between Airbus and Boeing is as fierce as ever as they compete in a fast-growing market. Murdo Morrison, Editor, Flight International, reports.

There is little love lost between the world’s two manufacturers of large passenger aircraft. Europe’s Airbus and the USA’s Boeing are building huge backlogs stretching into the 2020s as demand for their products soars. This is thanks to emerging middle classes in markets like China, Latin America and South East Asia, flying for the first time, but also to airlines in their traditional backyards of Europe and North America, refreshing fleets after more than a decade of retrenchment. In terms of orders, their market shares dip and flip, but have remained at roughly 50/50 over recent years, with Airbus edging it in narrowbodies; Boeing in larger, twin-aisle aircraft.

However, forget notions of a cosy duopoly; rivalry between the two beasts of aerospace remains intense. In the single-aisle sector, Toulouse and Seattle have directly competing products. Each abandoned proposals for all-new narrowbodies to replace their best-selling A320 and 737 families a few years back. Instead, they opted to re-engine, with their repowered types due in service in 2015 and 2017 respectively: Boeing stuck with its incumbent engine supplier, CFM International, which has designed a successor to its CFM56 – the LEAP – promising 15 per cent fuel savings over the current 737; Airbus is offering a choice of the LEAP or a geared turbofan from Pratt & Whitney for its A320neo.

In twin-aisle aircraft – a smaller but more lucrative segment for the airframers – the dynamics are different. The two airframers have gone down divergent paths – and each vociferously claims their plan is right. Boeing’s line-up is based around two families of aircraft – the recently-introduced 787 Dreamliner, with three variants catering for 210 to 335 passengers, and the larger 777, which carries 310 to around 400 passengers. The 777-300ER is already the airplane of choice of most longhaul airlines and Boeing launched its successor – the 777X – at last November’s Dubai air show, with a flurry of orders from the big Gulf airlines and others.

Seattle’s strategy appears to be working at the other end of the widebody spectrum too. After a difficult gestation – with entry into service delayed by two years because of problems resulting from an overstretched supply chain, and a grounding following a series of battery fires early last year – the all-composite Dreamliner is ramping up production. At July’s Farnborough air show, Boeing presented the 787-9 stretch variant, which has just gone into service with Air New Zealand. A further stretch, the -10, will follow into service in 2016. The only slow-seller in Boeing’s portfolio is the 747-

8, the latest version of its venerable jumbo, which is essentially marketed as a freighter.

Airbus, by contrast, has struggled in widebodies since the turn of the century. Its 550seat A380 – the largest passenger aircraft ever – has not sold as Airbus had hoped since its launch over a decade ago. The manufacturer envisaged it as a hub-connector, transporting the maximum number of passengers from one large city to another. However, while orders have inched over the 300 mark, considered to represent break even on Airbus’s investment, only Emirates has bought the superjumbo in any sort of volume. And while the smaller A330 has performed well for Airbus over two decades, production of its fuel-thirsty, four-engined sibling, the A340, came to an end in 2011.

In 2006, Airbus was forced to abandon plans to introduce a re-engined successor to its A330, called the A350. Instead it went back the drawing board and launched the larger A350 XWB (extra wide body). Its three variants were intended to compete directly with the 787 and – with its largest -1000 variant catering for around 370 passengers – provide a rival for the 777 too. However, the programme was dealt a major blow in June when Emirates cancelled an order for 70 A350s. There are still 742 commitments for the family, but it is set to lose one of its members: the A350-800 ‘shrink’ never gathered much momentum and Airbus looks certain to bin it.

Instead, at Farnborough, Airbus announced a re-engined version of its A330, powered exclusively by a new variant of Rolls-Royce’s Trent family. Boeing predictably rubbished the move, claiming its rival was resorting to reheating a product rejected in 2006. For Airbus, however, the A330neo, as it has been named, has got off to great start. Airframers rarely sell at list price and Airbus’s secret weapon is that it can offer the new A330 – whose initial investment has been essentially amortised – at a substantial discount against the 787. For existing A330 customers seeking fuel savings, but unwilling to absorb the additional training and maintenance costs of switching marques, this has advantages.

Earlier this year, John Leahy – an American who has been the European company’s top salesman for two decades – dismissed his competitor’s widebody line-up as a ‘dog’s breakfast’ because it had so many products to address different segments of the market. That argument now looks tenuous, given that Toulouse will be offering five types across three families – the A330neo, A350 XWB and A380. What the latest move has shown, however, is that – just as with the A320neo and the 737 Max – re-engining a successful airframe, with the engine maker taking on much of the investment, can be a highly effective strategy in an era of high fuel prices.

Regional aircraft

While Airbus and Boeing dominate in widebodies and narrowbodies, Bombardier wants to break into the market with its 110- to 145-seat CSeries. However, the programme has been beset with problems – the latest being a failure of a version of Pratt & Whitney’s geared turbofan PW1000G during flight testing. It meant the aircraft could not appear at Farnborough, a huge marketing opportunity for a new product. With Airbus and Boeing both opting to reengine rather than develop new single-aisle aircraft, the Canadian company’s boast is that it is the only purpose-built modern aircraft on the market. With firm orders at just over 200 aircraft, the market seems unconvinced.

Other manufacturers have largely shunned the narrowbody market, opting instead to focus on the so-called ‘regional’ segment of under 100 seats, abandoned by the likes of Fokker, Saab and BAE Systems (formerly British Aerospace) over a decade ago. Showing most promise in this area is Bombardier’s arch-rival, Brazilian manufacturer Embraer, which is revamping its top-selling E-Jet family as the E2, again powered by a variant of the near-ubiquitous P&W geared turbofan. After launching the programme at the Paris air show last year, Embraer picked up more commitments at Farnborough.

Japan’s Mitsubishi and Russia’s Sukhoi – partnering with Alenia Aermacchi of Italy – have also entered the regional market. While the Mitsubishi Regional Jet has yet to fly, the Sukhoi Superjet 100 has been in service for three years, mainly with airlines in Russia and the former Soviet Union, but also with Mexican low-cost carrier Interjet.

A350 XWB leaving Farnborough - credit Airbus

The Superjet, which uses western technology including engines partly-designed in France, is one of two programmes Russia’s aerospace holding company United Aircraft hopes will revitalise the country’s flagging industry. The other is the narrowbody Irkut MC-21, a successor to ageing Soviet era types, scheduled to fly next year.

China too is getting in on the game, although both its Comac C919 narrowbody and ARJ21 regional jet are behind their original schedule. Of the two, the C919, powered by the CFM LEAP, looks closer to reality, with first flight slated for next year. Although the high entry barriers of getting into the airliner market have been difficult to surmount – even for China – the swelling domestic market should ensure the eventual success of its programmes and industry. The importance of doing business in the country has led to Airbus and Embraer, among others, setting up final production lines there, and both the C919 and ARJ21 use Western technology extensively.

All the orders for airliners have raised fears of an orders bubble. Airbus and Boeing plan to raise monthly production of their narrowbodies from 42 each to 48 and 49 by the end of the decade. Given that just a few years ago, their respective output was in the 20s, this is unprecedented. Worries have been prompted by huge purchases by young airlines in Asian countries such as Indonesia that are launching hundreds of short-haul services. Most experts, however, feel that – short of a catastrophe in the world economy – projected GDP rate increases into the 2020s can sustain current demand.

Uncertain future for defence

Defence is where the aerospace industry is finding it tough. An engine fire stopped the F-35 joint strike fighter making its UK debut at Farnborough, an embarrassment for manufacturer Lockheed Martin. Britain’s industry is a major participant in the programme, and the vertical take-off and landing version will serve on the country’s new aircraft carriers. With home-customer production of the continent’s two main fighter programmes – the four-country Eurofighter Typhoon and the Dassault Rafale – due to run out in the next few years, both manufacturers are looking to exports to keep production lines going. The Middle East and Asia offer the most promise.

Airbus Group – parent of the commercial airliner maker and formerly known as EADS – earlier this year merged its defence and space units as a result of slowing military spending. It and its European counterparts, BAE Systems, Dassault and Italy’s Finmeccanica, are relying on future government spending to design an unmanned combat aircraft to replace the current generation of fighters in the 2030s or 2040s. Projects are underway, but there is no guarantee of them becoming funded programmes in the next decade or so. Governments face the dilemma of balancing the need to cut budgets and retaining the expertise and business to keep domestic defence industries intact.

For Europe’s aerospace the saviour is the commercial sector, with Airbus and Boeing’s suppliers benefiting from their success. By the end of this decade, Airbus’s plant in Broughton, north Wales will be producing almost 100 wings a month, each a highlycomplex piece of engineering. GKN in Bristol makes many of the composite structures that go into them. In turn, dozens of SMEs design and build sub-systems and components, a pattern replicated in clusters all over the continent from Toulouse to Munich, Seville to southern Italy. Thanks to millions getting the flying bug, aerospace will remain one of Europe’s most important knowledge industries for decades to come. n