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240-350 seat segment

The world is getting smaller
as increasing capabilities and
increasing range are linking
new cities and making new
routes. A trend towards
fragmentation means that
smaller aircraft are taking the
slack as the B747 is edged
onto the periphery. Covering
the market in which these
developments are most in
evidence, the 240-350-seat
segment promises an
exciting battle between
Airbus and Boeing. AF&AM
examines.

So long the leading aircraft in the 250-seat segment, significant numbers of B767s are coming up
to retirement from passenger operations.

Airlines are currently focussed on

keeping their heads above water,
E xciting times in the aviation
industry: The worst downturn in
living memory leading to a
period of substantial restructuring and
alignment; increasing liberalisation and
average size of aircraft flying
transatlantic routes has declined by 4.2
per cent between 1990 and 2001, from
279 seats to 232 seats per flight, and
frequencies using smaller aircraft have
but when demand does return, technological advances opening up new grown significantly. Latin America has
routes and markets; disagreement experienced a 2.4 per cent decline in
market dynamics will sit heavily between the two leading aircraft aircraft size. Even the Pacific, which
on confirmation or otherwise of manufacturers as to the fundamental Airbus maintains is the primary market
the B7E7 launch which will be future direction of the market; and a for the A380, has seen a 1.3 per cent
possible upset to the industry as decline in capacity - from 319 seats to
announced next year. Boeing faces its greatest challenges yet: 304 as it switches from B747s to B777
its reputation, and its future. and A340 aircraft.
Where Boeing and Airbus differ, of Nonetheless, Airbus firmly defends its
course, is on the degree of market strategy. “The reality,” says Colin Stuart,
fragmentation moving into the future. its vice president marketing, “is that the
Boeing, on one hand, believes that market world needs different aircraft for different
fragmentation will continue with extra jobs, and it is oversimplistic to portray the
demand accommodated by increases in situation as being either medium-sized
frequencies and direct routes. Airbus, its aircraft to fly point-to-point, or large
money firmly where its mouth is - or vice aircraft to fly non-stop between major
versa - with production of the A380, cities. The world’s airlines want both and
advocates the need for high capacity we cater for that with the medium-sized
aircraft catering to dense trunk routes. A330/A340 for point-to-point and the
As to who is right, the situation, says A380 for heavily-travelled routes between
Richard Aboulafia, managing director, major hubs. ”
Teal Group, is “a no-brainer”. The Certainly, the 129 orders so far placed for
evidence firmly favours Boeing. The the A380 suggest that there is a market for

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the performance it offers, and in dollar

terms at least, says Airbus, the aircraft will
represent the largest segment of the large
airliner market. But overall, growing
fragmentation and the demand for higher
frequencies between increasingly distant
city pairs means that the main area of focus
will be in the 240/340-seat segment,
currently served by B767s, A300s, A310s,
A330s, A340s and B777s. As some
indication of future demand, Randy
Baseler, VP marketing, Boeing says: “We
expect the forces driving North Atlantic
fragmentation will continue during the
next 20 years. We project that airplanes
ranging in size from B767s to B777s will
provide approximately 200 airport pairs
with new non-stop services by 2021.”
The 240-seat segment
Formerly the territory of Boeing, with the
B767, the 240-seat segment is today the In the absence of market competition, the A330-200 will profit from a
domain of Airbus, the younger, faster lucrative B767, A300 and A310 replacement market.
A330-200 having knocked the B767-300 operator of the aircraft is Emirates Airline
from its pedestal, “replacing it in the which operates 28, followed by Air France
absolute sense,” says Stuart, as well as operating 12 and SWISS operating 13.
clobbering the B767-400. Despite being a Ironically, it has been a very good vehicle
shrink of the larger A330-300 and for intra-Asia fragmentation - “precisely
therefore, strictly speaking, having the sort of thing that Airbus denies the
economics that should count against it, existence of”, says Aboulafia. Looking set
the A330-200 variant has been extremely to bring in the bucks for substantial time
popular - particularly with lessors. Of the yet, its backlog is currently 122.
147 aircraft currently in operation (from a Boeing desperately needs an aircraft with
total sales count of 269, according to which it can compete against the A330-
ACAS figures), over half - 77 - are in 200. Failure of the B767 to elicit any sales
service on operating lease. The largest of note in recent years, not to mention

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From a total of 850 A300/A310 sales, in the

region of 260 A300s and 160 A310s remain
in passenger operation. While the A330-
200 has been a successful B767
replacement, it has not been as good a
match for the A300-600, its wings and
engine not best suited to the short-to-
medium routes that are the domain of the
A300-600. Plans for a possible Airbus
replacement for the A300-600, designated
the A330-500 and smaller than the A330-
200, were shelved in favour of funding
being chanelled into the A380. Airbus
consequently proclaimed the A330-200 as
the replacement model.
Although focus has moved increasingly
to the more modern A330-200 (while
offering more capacity than required,
the A330-200 does offer greater range
which will have seduced a lot of
operators) — the A330-200 does not
quite make the grade in all markets:
The A300-600 continues to remain “the
best possible Chinese trunkliner ever”,
The B777-200. An ultra long-range variant, the B777-200LR, is due to enter the market in 2006.
says Aboulafia and consequently, many
of the China/Asian carriers in
closure of the B757 production line, will particular, such as Japan Airline
leave the whole 200-seat segment wide Systems (22), China Northern Airlines
open for the taking — and there is much (12), China Eastern Airlines (10) and
for the taking: On top of general growth Korean Air (10), are resolutely
sales, the 240-seat segment will also offer maintaining the A300-600 in their fleets
a lucrative replacement market. While in the hope of a more suitable
the majority of DC-10s and L-1011s have replacement model. The 2001 order by
already been replaced, B767s, A300s and JAS for a further three brand new
A310s are only now coming up to 20 A300-600s and the purchase last year
years of age and will be phased out of the by Lufthansa of a used A300-600 to add
passenger market. In the absence of to its 12-strong A300-600 fleet are
competition from Boeing, replacement further indication of the requirement
orders will fall to Airbus by default. for a more suitable match, which Boeing
is anxious to capitalise on.
The replacement market Not surprisingly, it is into this segment
In excess of 900 B767s have been that Boeing is pitching its latest long-
delivered since the aircraft entered the range offering. Certainly on paper it is
market in 1982. Indisputably popular in very impressive. Seating between 200 and
its time, the aircraft has built up a wide 250 passengers the aircraft will totally
customer base of just over 90 operators. outclass the competition, offering cutting-
But with entry of the A330-200, orders edge technology, increased comfort, the
for the aircraft have considerably slowed cockpit (and some) of the B777, enhanced
down. Tellingly, all 37 (originally 48) of freighter capabilities, an 8,300nm range,
the most recent variant, the B767-400ER, and a 10-15 per cent reduction in
have now been delivered with attention operating economics compared with the
shifting increasingly to the A330-200. most efficient models today. There is no
The funding for a technological update, question that the aircraft would be the
the B767-400ERX, that could well have right model for an increasingly cost-
saved the B767 and thus Boeing its conscious, fragmenting, range and
market share, were scuppered in 2001 in flexibility-focussed market.
favour of the Sonic Cruiser. The civil Airlines are currently focussed on
backlog today for the B767 stands at 24. keeping their heads above water, but

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when demand does return, market

dynamics in the segment will sit heavily
on confirmation or otherwise of the
B7E7 launch which will be announced
next year. While Boeing expects a few
extra orders for the B767 to be placed
by pre-existing customers, entry of the
B7E7 into the market will effectively
signify the end of the B767 in civil
service, although a few extra years
might be squeezed out with some minor
upgrades being incorporated into the
aircraft. Importantly, it will cause
significant problems for Airbus in
gaining new customers for the A330-
200 if it achieves the boasted 10-15 per
cent performance improvement on
current market products.
But there are serious question marks
hanging over funding for the B7E7,
despite its obvious theoretical success.
Failure to launch the aircraft, on top of
the demise of the Sonic Cruiser concept,
will be more than a loss of face for
Boeing. Not only will Airbus be without The A340-500, the most range capable aircraft currently in the market, was delivered
competition in the segment, but Boeing’s to launch customer Emirates Airline this year.
production line will be reduced to the orders to date of which 401 have been
B777 and B737, and its market share to 30 delivered to 31 operators. It is the long-
per cent. But doubts are reducing haul aircraft of choice, according to
somewhat. Aboulafia has reviewed his Baseler, with more than four and a half
opinion of a 51 per cent chance of Boeing times the frequencies of the A340 on
launching the product to 65 per cent “in the transpacific. The aircraft has been
view of the noise Boeing is making about instrumental in developing
it”. Certainly, he says, designing an fragmentation of the North Pacific
aircraft with the performance of the B7E7 market enabling direct services between "Boeing’s engineering capabilities
will be a hard task, but if the aircraft does cities such as Hong Kong or Beijing and are second to none.You have to
make the quantum leap from drawing eastern North American cities. Further
board concept to flesh and blood, it will planned new routes will operate take a leap of faith with that."
deliver. “Boeing’s engineering capabilities between previously ignored cities such —Richard Aboulafia,director,
are second to none. You have to take a as Guangzhou in China and Fukuoka Teal Group.
leap of faith with that.” and Nagoya in Japan flying directly to
New York. As some measure of the
The 300-350-seat segment aircraft’s success, Baseler says that
If Airbus is leading the market in the “even with a slow economy and the
200-seat market, the B777 leads in the aftermath of September 11, service
300-seat market. Designed to serve the continues to grow on the Pacific. In
US transcontinental, Europe-Middle August 2003, there were five Asian
East and intra-Asian markets, and able airlines (China Southern, Korean,
to fly transatlantic from mid-continent Asiana, All Nippon Airways and
gateways in Europe and America, the Singapore Airlines) and three US
B777 has proved phenomenally popular airlines (United, American and
with a total order book currently sitting Continental) operating an average of 48
at 622 according to ACAS figures, of daily flights on North Pacific routes
which 451 have been delivered, leaving with B777 equipment up from 36 in
a backlog of 171. There are a further 2002.”
215 options. Both the A330-300 and A340-300, have
Of these, the 301-seater B777-200 suffered as a result of being up against the
accounts for the larger share — 500 B777-200. In the 11 years since it has been

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currently in the market,” says Stuart,

the A340-500 will better meet the
demands of a fragmenting, point to
point-orientated marketplace than any
aircraft currently in operation. For the
first time, city pairs such as Los Angeles
and New York to Dubai are attainable.
Emirates Airline, the launch customer
of the A340-500, will be using the
aircraft to open up new markets, such
as Dubai/New York with the A340-600
taking on these routes when demand is
established. To date, 23 A340-500s and
77 A340-600s have been sold.
To what extent the A340-500/-600 will
impinge on the success of the B777-200
remains open though. While the A340s
offer the best range today, the extended
range B777-200LR will enter the market in
2006 (delayed from 2004), offering a
greater range (9,280nm range) on top of
the strong reputation and following it has
built up over its 13 years in operation.
True, its delayed entry to the marketplace
will give Airbus a certain advantage; but
Speed, weight and quad-engine economics have counted against the A340-300 in its battle against
the fact remains that the B777 will be a
the B777-200.
hard act to beat. It is operated already by
on the market, the A330-300 has almost every airline of repute, though
performed relatively disappointingly, so far Lufthansa and Qantas are two notable
achieving 186 orders of which 123 are in exceptions. The commonality card stressed
operation with 22 carriers. Finding itself by Airbus has not been as successful in
relegated to doomed carriers such as TWA the longhaul market as it has in the
But the fact remains that the and Air Inter as airlines have taken on the domestic, and despite the Airbus assertion
B777-200, with NorthWest looking set to that a four-engined configuration is better
B777 will be a hard act to beat.It take some A330s (both -200 and -300 for “ultra-longhaul” aircraft, offering
is operated already by almost variants) and last year’s Cathay order, the better economics, better EROPS, better hot
every airline of repute,although indications are of better times ahead. and high capabilities and greater
Counting against the A340-300 - which flexibility, quad-engine economics will
Lufthansa and Qantas are two has achieved 216 orders to date of remain an issue.
notable exceptions. which 195 are in operation with 28 As of yet, though, what the future holds
carriers — have been its speed, its is anyone’s guess. The B7E7 could still
weight, the fact that it is relatively slow end up another also-ran from the Boeing
to climb, and its quad-engine stable; the A340-500/-600 has not had its
economics. On top of this, it is being pedigree properly tested yet in the
hamstrung by its own side: the A340- market place; and the B777LR has not
300 doesn’t offer the same range/payload even entered the market. It could yet be
capabilities of the A330-300, “so in cases that the quad-engined A340 does emerge
where commonality is an issue, or you the winner in an increasingly demanding
don’t want all the B777 can offer, an market and on increasingly demanding
A330-300 is not a bad idea,” says routes. To date though, the A330-200 has
Aboulafia. Nor, he says, does Airbus been the only real Airbus success story
have anything to match the B777-200ER in the 200/300-seat segment while all 10
in terms of sheer customer appeal. of the Boeing aircraft brought to market
However, with the A340-500 and -600, have been successes in every segment in
Airbus has corrected the speed issues of which they have operated. “What the
the earlier two variants. Able to fly 313 question is, though” says Aboulafia, “is
passengers 8,650nm - “notionally whether Boeing will fund the continuity
1,000nm more than any other aircraft of such a legacy?” ◆

12 Airline Fleet & Asset Management - November/December 2003