The Trend For Long, Thin Routes Accelerates
A trend among airlines of phasing out four-engine widebody aircraft in favor of smaller, more fuel-efficient two-engine aircraft, including even narrowbodies, has accelerated.
With business travel and long-haul international flying expected to be the slowest to recover from the pandemic, airlines are looking to utilize lower-capacity aircraft to operate long-haul routes, and many are permanently parking their Airbus A380s and Boeing 747s. The new star among next-generation “long-haul” aircraft is the Airbus A321XLR, which will offer a range of 4,700 nm, the longest range ever for a single-aisle aircraft.
Assembly of the first flight-test A321XLR has just started, with the aim of deliveries commencing in the second half of 2023. The orderbook for the A321XLR is robust, with more than 20 customers—ranging from lessors to mainline airlines to LCCs—ordering 450 of the type in total. The aircraft is expected to open new route possibilities for airlines in much the same way the Boeing 787 widebody made new city pairs possible a decade ago.
For example, Chilean ultra-LCC JetSMART has ordered 12 A321XLRs and envisions placing the aircraft on routes from major South American cities—such as Santiago de Chile, Buenos Aires and Lima—to destinations including Cancun, Mexico; Havana, Cuba; and Miami, Florida.
“The A321XLR will allow us to bring the ultra-low-cost model to mid-range routes in the region,” JetSMART CEO Estuardo Ortiz told ATW. “We believe we can run those aircraft with a substantially lower cost than our competition and that will introduce lower pricing [for flight tickets]. Many of those markets in the Caribbean are very, very attractive for price stimulation.”
He added: “The A321XLR opens up a whole new ballgame for us on markets that I believe go really well with the ULCC model. People say, well, how can you expect passengers to sit for so long in a narrowbody? And I say, I’m not targeting the business traveler who is used to business-class in a widebody. I’m targeting the guy who is used to traveling 30 hours by bus and who will be thrilled to travel for seven hours in a narrowbody aircraft to go to Miami. I’m not targeting the passenger who already travels to the Caribbean. Many people, millions in South America, had never thought they could travel to destinations such as Miami and Cuba.”
Airbus is not stretching its A321LR or modifying the aircraft’s Pratt & Whitney GTF engines—it is adding range but keeping the same ceiling on passenger load (around 220). The XLR’s added 700 nm in range over the LR is made possible by an extra fuel tank in the rear center of the aircraft. It is a telling sign of where the marketplace stands that airlines are enamored with an aircraft that allows for carrying more fuel, but not more passengers.
Airbus has said that airlines operating the A321XLR will be able to fly “long, thin routes” such as India to Europe or China to Australia, or transatlantic routes beyond the traditional hub-to-hub flights. Among the US-based routes, Airbus envisions the A321XLR on routes such as New York JFK-Hamburg, Washington Dulles-Lima, Orlando-Santiago de Chile, Chicago O’Hare-Milan, Houston Intercontinental-Reykjavik, Boston-Casablanca, JFK-Rome and Miami-London.
New York-based JetBlue Airways, which has just taken delivery of its first A321LR to be used on New York JFK-London flights, has said it will use the XLR to fly nonstop from New York to continental European destinations such as Madrid.
The pandemic has driven both Airbus and Boeing to slash production on their popular twin-engine widebodies. Airlines are still ordering them, but in smaller numbers. Lufthansa, for example, in early May placed an order for five A350-900s and five 787-9s. As a result, Airbus has cut monthly production for the A350 from 10 to under five aircraft per month, while Boeing has lowered 787 production from 14 aircraft per month to just five per month.
Airbus CEO Guillaume Faury said he expects the widebody market to be weak for the foreseeable future, with no increases in production rates in sight.
Much as Boeing beat Airbus to the punch with the 787 versus the A350—Airbus initially bet on the super jumbo A380, which had limited sales success and which airlines are retiring fast—Airbus looks to have a huge advantage over Boeing with the A321XLR, which many airlines view as a replacement for the 757.
Boeing, still mired in the aftermath of the 737 MAX grounding, has shelved plans for the so-called New Midmarket Airplane (NMA), but it will have to come up with an answer to the A321XLR. American Airlines and United Airlines are XLR customers, but Delta Air Lines is still obtainable for Boeing if it can offer a viable alternative. Boeing has started sounding out suppliers for provisional requests for information on an all-new aircraft believed to be called the -5X. It is targeting the 250-275-seat size category in a two-class, twin-aisle configuration. The aircraft would likely have a range of up to 5,000 nm. The prospective aircraft, then, would be slightly larger than the XLR in terms of seating capacity with about 300 nm more in range.
An A321-sized competitor is “pretty much in the right space with respect to where next development efforts lean,” Boeing president and CEO Dave Calhoun told analysts. “We are really progressing well on our engineering and manufacturing technology development, so that we’re ready when that moment comes to offer a really differentiated product.”
The new aircraft Boeing is considering appears to follow along the lines of the shelved NMA concept. Key NMA program elements that remain germane to an XLR competitor include an overriding focus on a twin-aisle design, capable of 5,000 nm routes, that could be developed for single-aisle production costs. Program timing has, however, completely changed because of the pandemic. The “revised NMA” appears to be aiming for entry-into-service in the late 2020s, pending a potential program go-ahead in 2022 or 2023. That would place the aircraft years behind the XLR, which is expected to enter service in late 2023 and be widely deployed in airline fleets by 2025.
Away from hubs
Trends seen during the pandemic are, in many ways, a hyper-charged version of trends evidenced before COVID-19 rocked the airline industry. Airlines and passengers in the last decade have become more reliant on point-to-point long-haul flying and less dependent on hub-to-hub flying. In a report, McKinsey and Co. noted that the volume of connecting passengers fell 81% compared to pre-pandemic levels, while nonstop passenger volumes dropped by 61%.
“The share of connecting traffic at the global level has been falling in recent years, save for select intercontinental flows, which had been largely stable or growing before the crisis,” the McKinsey report states. “This shrinking share can be attributed to the growth of point-to-point carriers, with low-cost carriers seeing a particularly significant increase in their market share.”
McKinsey analysts do not expect the hub system to disappear, but a number of trends make more point-to-point long-haul flying attractive for airlines.
These include aircraft such as the Airbus A321XLR and Boeing 787 being used on “thinner, intercontinental city pairs nonstop,” the McKinsey analysis states. “Touted as potential hub destroyers, the role these aircraft play may be accelerated by COVID-19, which is bringing forward the retirement of very large widebody aircraft designed for hub operations, such as A380s and 747s.”
McKinsey points out that 65% of active and ordered A321LRs/XLRs are going to airlines that favor point-to-point flying over a hub system.
Another trend that has accelerated is a passenger preference for nonstop routes rather than connecting itineraries. Flying has become more complicated and flying on two or three different aircraft on a journey is even less desirable now for passengers than before the pandemic.
“Airlines will need to rethink pricing to fill nonstop flights, potentially reducing the nonstop premium and thereby undercutting demand for connecting flights operating on the same route,” the McKinsey analysts explain.
According to McKinsey, other factors favoring point-to-point flying post-pandemic are environmental concerns (passengers will perceive they are causing fewer carbon emissions by flying aboard just one, fuel-efficient aircraft), congestion at hubs and the inconvenience of tight connection times at hubs.
A key airline to watch, in terms of extending the reach of narrowbody service, is JetBlue, which has a reputation for quality service at highly competitive fares. The airline has revealed an all-new premium cabin, with private mini-suites, for its transatlantic launch.
“The delivery of our new A321LR sets the stage for a new era at JetBlue in which we now have an aircraft allowing us to stretch our wings and become a true global carrier offering flights beyond the Americas for the first time ever,” CEO Robin Hayes said on the carrier taking delivery of its first A321LR. “The A321LR platform—offering the range of a widebody but with the economics of a single-aisle aircraft—is the right size for us and will allow us to effectively compete between the US and London.”
–Guy Norris contributed to this report.