The Paris Airshow just wrapped up, and as usual, the various manufacturers jockeyed for some large orders. Virtually all orders that are announced at Paris and Farnborough are in place before the airshows, but the airlines and the manufacturers use the events to make a big splash, and this year was no different.
In the U.S. market, United announced an order for 100 new 737s and four new 777s. There was some hand-wringing over the UAL deal, because Scott Kirby, late of America West/USAirways/American, is known to be an Airbus guy, and there were rumors that UAL was going to announce a larger order of A320s and A321neos. So what happened?
Buying an airplane is a major decision for any airline, and for a global carrier like UAL or Delta or American, the narrow-body fleets are the backbone that support the global system. There are three major cost considerations. The first is the actual unit price. As with cars, this is negotiated. Nobody pays sticker price. However, this price is significant nevertheless, and it becomes the starting point for everything else moving forward.
The second major cost consideration is the operating cost for the airplane. This covers everything from fuel to scheduled maintenance to crew costs, and it also takes into account warranties on the airplane as a whole or on the various parts. Somewhere in every airline, there is a bean counter who has broken down to the penny the actual cost of each airplane under consideration, taking into account more variables than most of us can imagine.
The final cost to consider is the long-term cost, which includes the cost of integrating the airplane into the current fleet—especially if it’s a new piece of equipment or represents a departure from the current norm.
In the case of UAL, the bulk of the domestic fleet is the 737. The A320/321 fleet is much smaller and much older. Bringing in new Airbuses would have led to a dramatic increase in training for pilots, and would have negated much of the advantage of the larger 737 fleet, which operates from Saigon to the Caribbean, and from Alaska to Central South America. There will be a high parts commonality between the 737s in use and the new MAX versions on order. Both are known quantities, and both Boeing and Airbus no doubt made compelling pitches to UAL. If everything was truly equal, it may have been as simple as “Buy American.” But it’s almost never that simple.
Delta, on the other hand, will be introducing a new narrow-body soon when it takes delivery of the Bombardier C-Series. Taking on a new aircraft type is not without risk, as United learned a few years ago with the battery problems on the 787. New airplanes are frequently slowed by unexpected bugs, and the C-Series is not likely to be any different. Further, everything about the program is new: new parts, a new engine, new simulators, and new training programs for pilots, flight attendants, mechanics, dispatchers, and gate agents. A new airplane is expensive, and it takes time for the return on the investment to pay off. With luck it does. Today, UAL is ecstatic with what the 787 has been able to do, and the markets it has opened.
New airplanes are critical to get right, as the decision is one that will affect airlines and their passengers for decades.—Chip Wright