Airbus has a head start in long-distance market


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Airbus has a head start in long-distance market


The Airbus A380 "whaleJet" does not pose as much of a threat to Boeing as the company's critics say, even though it will supplant Boeing's 747 as the queen of the skies in a couple of years, according to noted aviation expert Michael Boyd.

Rather, it is the new Airbus A340-500 that represents the bigger threat to Boeing, according to Boyd, president of Boyd Group Aviation Systems Research in Evergreen, Colo.

The new Airbus plane, which entered service with Emirates Airlines in October, can fly farther than any other jetliner, making possible non-stop ultra-long-range routes to city pairs nearly half way around the world from each other.

Boeing won't have a plane in service that can match or beat the performance of the Airbus A340-500 for another two years, but already the two jet makers are locked in a fierce market battle -- one that is likely to intensify this year. Boeing is generally considered to have had the upper hand until now with its popular 777 matched against the Airbus A340. But the next couple of years will see whether Airbus can maintain its head start advantage with the A340-500, as well as a bigger but shorter-range version called the A340-600.

"If it works out as Airbus expects, it could be a major chink in Boeing's armor, opening new potential for Airbus to get into the U.S. 747-400 or 777 operators," Boyd wrote, referring to the A340-500 in the Boyd Group quarterly report.

Late yesterday, Singapore Airlines began operating an A340-500 on the longest non-stop route ever attempted by a commercial jetliner with passengers -- from Los Angeles to Singapore, a distance of more than 9,000 miles. Fighting headwinds, the flight from LAX to Singapore's Changi airport is scheduled to take 18 hours and 20 minutes, about two and half hours more than the return flight to Los Angeles.

Curiously, though, this new non-stop Singapore Airlines flight on an Airbus A340-500 may actually help spur Boeing sales.

After the airline industry's worst-ever downturn the past couple of years, the market is beginning to gradually come back, said Rob Faye, regional director for product marketing in Boeing Commercial Airplanes.

"We see people opening up the long-range market like Singapore and Emirates," he said. "And the momentum is going to start building when you have this new Singapore service. You will see more airlines that had been thinking about it say, 'this is now a reality.' So some momentum is going to build, probably over this year and early next year."

"You will see some significant sales for our 777-200LR," Faye predicted. But he acknowledged the Airbus head start has given it an early boost. "In the short run, they do have an advantage. They will get some sales. The problem with that is the airlines are probably buying the wrong airplane for them."

Boeing certainly isn't conceding anything to Airbus.

The two-engine 777-300ER, which will compete against the four-engine A340-600 that has been in service for about two years, is wrapping up a yearlong flight test program, with performance even better than expected, according to Boeing. The first 777-300ER (for extended range) will be delivered to Air France -- the international carrier in Airbus's backyard -- in April.

But Boeing's answer to the newer four-engine A340-500 is the two-engine 777-200LR, which will have even more range than the Airbus jet. Only 50 percent of the engineering design work on the 777-200LR has been completed, however, and the plane is not expected to enter service until early 2006.

In the meantime, Airbus has won some high-profile early order battles.

Airbus lists 20 firm orders for the A340-500, although two of those are from bankrupt Air Canada. That's 15 more orders than Boeing has won for its 777-200LR (the LR stands for longer range). Boeing has only two firm customers for the plane. EVA Air in Taiwan has ordered three planes and Pakistan International Airlines has placed two orders.

Boeing is hoping recent performance of the 777-300ER during flight testing will lead to orders for both the 777-300ER and 777-200LR.

The range of the 365-passenger 777-300ER has been improved since the program was announced in 2000. It is now out to 8,861 miles (7,700 nautical miles). The maximum take-off weight has also gone up. And fuel performance is 1.5 percent better than expected.

Boeing says the range and payload improvements should spill over into the 777-200LR and provide a marketing boost. The 301-passenger 777-200LR will have a maximum range of about 10,587 miles. The A340-500, which Airbus maintains can carry up to 313 passengers in three classes, has a range of about 9,782 miles.

Airbus isn't standing still, though. It is already developing an extended range A340-600 high-gross-weight version, with the launch orders provided by Emirates and Qatar Airways at last year's Paris Air Show. Emirates has ordered 18 of this newer model, which will be able to fly about 750 miles farther than the current A340-600, or carry more payload. The A340-600 and 777-300ER are capable of making non-stop flights of 14 hours or more.

Boeing's current 777 family has had great success since the first plane entered service with United in 1995, but industry analysts are unsure whether the 777-300ER and the 777-200LR will be as successful against the A340-500 and A340-600.

"Anyone without a 777 is either not a global player or Lufthansa," said Richard Aboulafia, senior aviation analyst with the Teal Group, an industry consulting firm. But Boeing and Airbus are more likely to split the market with their respective new longer-range planes, he said.

When Boeing announced in early 2000 that it would launch development of the new longer-range versions of the 777, it estimated the market for the 777-300ER and 777-200LR to be about 500 planes.

It did not break down the market further, but the bulk of orders will go to the 777-300ER and A340-600. That's because the A340-500 and 777-200LR are competing in a niche market.

As the range of planes increases beyond about 9,200 miles, there are few city pairs of any consequence to be connected.

"We are just about there," Boeing's Faye said when asked how much range more beyond the 777-200LR is really needed.

"Once past where we are now (10,587 miles with the 777-200LR), you are getting into a market that is so thin in terms of city pairs that are significant enough to handle the kind of traffic you would need for the airplane that it may not make sense."

As one of Boeing's marketing leaders, Faye can instantly provide a wealth of charts with facts showing why the two Boeing planes are superior to the two from Airbus. Airbus marketing people, of course, have just as much data supporting the superiority of their planes.

Emirates Airlines provides a good case study of the relative merits of the four jets from Boeing and Airbus, at least from the perspective of one important customer.

At the Paris Air Show in 2003, Emirates placed firm orders for the 18 A340-600 higher gross weight planes and ordered additional A340-500s -- it now has 10 on order. Emirates also leased 26 777-300ER jets from International Lease Finance Corp. and from General Electric Capital Services.

Emirates President Tim Clark, in an interview, said he and others at Emirates carefully weighed the Boeing and Airbus planes before deciding to buy from Airbus.

The airline already operates the basic 777-300 and "loves" the airplane, Clark said.

"It's a mean machine. It has transformed our economics," Clark said. "On routes that have been a bit marginal, as soon as the 777 hits we go immediately to profits. It's a beautiful airplane."

The 777 has many advantages, he added. It flies faster than the Airbus plane, has a wider fuselage and the interior is popular with passengers.

But when it came down to buying planes last year, Emirates went with Airbus.

"In a nutshell, the Boeing planes were more expensive," Clark said. At the time, sales had slowed for the 777-300ER and the two leasing companies needed to find customers for their planes.

They made Emirates a super deal on leasing the 26 777-300ERs, Clark said.

"Boeing really has to sort itself out and bring that cost of ownership down for us," Clark said.

The A340-500 has a list price of from $185 million to $189.8 million. The 777-200LR has a list price ranging from $188 million to $213.5 million.

But list prices mean little. Airlines are able to negotiate steep discounts of as much as 30 percent or more from the manufacturers.

Boeing is well aware that it continues to lose important campaigns to Airbus because it can't beat its rival on pricing.

So the company's commercial airplanes business is transforming itself from an airplane maker into one that does final assembly. That's the model for the new 7E7. Suppliers will build the pieces, and bear the higher labor costs and overhead.

The end objective for Boeing is being able to sell planes for less and beat Airbus.

Emirates was looking for planes that could perform well on routes in its network of from 12 to 14 hours, and on the ultra-long-range routes of from 16 to 19 hours.

The new higher gross weight A340-4600 is better suited for the 14-hour routes, Clark said, with the 777-300ER to be used on the 12-hour routes in the Emirates structure.

The A340-500 will be used on those longest routes, such as Dubai to Los Angeles, a flight of just over 16 hours.

With its slightly higher speed, the 777-200LR could make the trip from Dubai to Los Angeles about 40 minutes faster, Clark said. But he is not sure that Emirates will be a customer for the Boeing plane.

All the advantages that Boeing argues for its 777-200LR over the A340-500, such as lower maintenance costs along with better range and payload capability, are "negated by the cost of ownership," Clark said.

"It was not just price but the whole range of benefits that came with the Airbus package," Clark said, referring to last year's huge order at the Paris Air Show. "We tried our best to persuade Boeing, to make them understand that when your competitor is seducing you with a range of benefits for an order this size, why wouldn't they (Boeing ) do that. But Boeing had to draw a line in the sand. ...

"Their plane (the 777-200LR) will be a great machine. But they have to address pricing issues."


P-I aerospace reporter James Wallace is on a Singapore Airlines flight that left Los Angeles for Singapore at 8 p.m. Tuesday -- the longest non-stop flight ever of a commercial jetliner carrying passengers. Read his account of this 18.5-hour journey in Thursday's P-I, followed Friday by his report on the critical safety factor for these ultra-long-range flights -- pilot fatigue
I don't know about you guys but I don't see a 16 hour flight as a benefit.....I think it sucks!!!
Better then an eight hour flight, changing aircraft, and then a nine hour flight. Ever flown an A340 or 777? It takes forever to board/deboard those things.
I would rather have an opportunity to get out and get something descent to eat in the terminal....walk around a bit.

But that's just me