Opinion: Boeing’s Project Means Work For Airbus Strategists

Airbus aircraft at takeoff
Credit: P. Pigeyre/Airbus

Conventional wisdom had it that Boeing’s recent woes would keep it from being able to afford developing an all-new aircraft in the foreseeable future, even if it were strikingly necessary. But, as Aviation Week has reported, Boeing has begun talks with suppliers about a project built on its previous work for a new midmarket airplane, currently available technologies and an aggressive timetable (AW&ST Feb. 8-21, p. 12). This raises the very real prospect that the company may actually launch an aircraft in the not-too-distant future in spite of all the constraints.

It is worth looking at the long-term, strategic consequences of such a move—in other words, the game theory behind it. To start with the obvious: Boeing would not seriously pursue this if it did not deem it absolutely necessary to contain the already worrying loss of market share in the large-narrowbody segment, where the Airbus A321XLR is vastly outselling the 737-9 and 737-10. The project would also further lock in Boeing on its path toward continued use of current technologies in combination with sustainable aviation fuels, rather than the more radical approach Airbus is proposing. Boeing has to be convinced it can sell a conventional aircraft for many years as the industry pursues its environmental transformation.

Given what has transpired, Boeing appears to be planning an aircraft that is 10-20% larger than the A321XLR and has more range at 5,000 nm. In terms of range and size, it would be a modern replacement of the 757—production of which began in 1983 and ended in 2004 after 1,050 units had been built. With the proposed aircraft, Boeing is anticipating resumption of the trend toward fragmentation of long-haul routes, which accelerated before the novel coronavirus pandemic. This would come after a relatively brief refocus on hubs, as many airlines have retrenched from direct services during the crisis. Airbus has to have the same hopes for its A321XLR. Both can take comfort in the fact that those routes are not new: Continental Airlines famously deployed a large fleet of 757s on secondary North Atlantic markets when others focused on higher-demand routes and larger aircraft. 

Significantly, and unlike the 757, Boeing’s new aircraft is almost certainly going to be a widebody.

Game theory states that strategic moves should be targeted against an opponent’s weak spot. Obviously, the A321XLR is one of Airbus’ greatest strengths in terms of sales and positioning. Whether a new conventional widebody can really be much more efficient than a stretched narrowbody with state-of-the-art engines remains to be seen. Airbus can also probably look at further upgrades in due course, should they be needed.

Airbus’ biggest weakness is the A330neo. The aircraft is conceptually very similar to the first iteration of the A350 that Airbus pitched in the mid-2000s, after Boeing launched the 787. The concept was dropped quickly after negative customer feedback, but several years later the idea of a relatively cheap upgrade of the A330 resurfaced and morphed into the A330neo.

The A330neo is not selling well for several reasons. Many young and very cheap A330s are in service—Airbus probably produced too many in the boom years. Airlines that want more capacity in that category therefore have a big pool of used aircraft available that compete with the A330neo. Blue-chip carriers, with the exception of Delta Air Lines, have never really been interested in the aircraft. Airbus tried to place it with Emirates as part of the A380 order termination talks, but the airline unsurprisingly preferred the A350. Airbus is currently building the A330neo at a rate of around two aircraft per month.

With widebody demand likely to remain low for longer, the prospects are poor. And when demand is likely to pick up again, around 2025, Boeing may well be in the market with a cheaper, slightly smaller—and probably more efficient—widebody that will target routes for which the A330neo is too big and also compete directly with it on some others.

In that scenario, Airbus would have to take a hard look again at the lower end of its widebody portfolio—just as it has to define its path toward more sustainable aircraft in the narrowbody segment, where it is pitching the introduction of a small hydrogen-powered aircraft by 2035. Assuming that will still be the plan a few years from now, how will it combine with modernizing larger narrowbodies, for which hydrogen is not an option yet, not to mention tackling the renewed emerging competition from Boeing in the widebody field?

Airbus is in a comfortable position right now vis-a-vis Boeing, mainly because of the A320neo family and the A350. The company can take its time to decide next steps. But sooner or later it could be forced to solve a rather complex puzzle that is complicated by the upcoming technology transition. Whatever Airbus does will have to work in the long term.

Jens Flottau

Based in Frankfurt, Germany, Jens leads Aviation Week’s global commercial coverage. He covers program updates and developments at Airbus, and as a frequent long-haul traveler, he often writes in-depth airline profiles worldwide.

Comments

6 Comments
For a true market leader, a dithering competitor should be of no concern. Whatever the competitor does should have been covered in strategists' wargame exercises before. More so in a turtle race like commercial aerospace.
Question is, who is the leader and who is the follower?

What puzzles me is that people keep talking about electric or hydrogen-powered airliners by 2035 while Airbus clearly pointed out that they need to conduct fundamental research until 2025 *at least* just to figure out whether that's a valid option *at all*.
If Boeing was clever they would take out a blank sheet of paper and design a new narrow body aircraft. This machine would also have the computer and communications architecture for either "single pilot" or "pilot optional" operations.
Boeing needs to disrupt the game by changing the formula of tube and wings, that plays into AB's strength.....if not now, when?
Only if there's a new appropriate engine, with 20% advantage, will a clean sheet Boeing will succeed.

Otherwise, a 737-11 NEW(New Engine and Wing) will be the better alternative. With a re-engined 767 and clean sheet in the CSeries area.
Airbus is in a good position because of Boeing management complete incompetence.

For failed projects for Airbus we have the A380, A340, A330NEO and the A400 (which was done under the so called commercial offering)

The A350 while good, is not the 787 which sales wise is a roaring success (quality wise its a train wreck thanks to Boeing mis-mangement).

And a caution that a 737 OEM circa 1967 can be made to compete with a much newer A320 is nothing short of appalling (which is no longer a spring chicken either)

So lets look a Airbus environment of the EU. Much like the original US 13 colonies a structure that is ponderous and incompetent takign Airbus down the dead end Hydrogen path (forcing)

Boeing is at least looking for different in a A321 class wide body.

Single aisle to make waves they need TWB.

But you have to wonder if Boeing can get out of its own way. Right now the answer is no.
I am not an aviation’s expert, but I am surprised to see Boeing continuing with the idea to still develop a widebody to compete with the A321XLR. Is Boeing really understanding that the success of this plane is precisely tied to its main advantage, lower costs related to a narrow body... During the years needed to develop it, Airbus will have plenty of time to lower the price and/or modernize the A321 again, at a lower price for itself and its clients...