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Thursday, May 25, 2017

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Boeing's Sure Bet


I was thrilled when Boeing moved its corporate headquarters to my hometown of Chicago.  However, many in the area freaked out, thinking that Boeing had seen its best days, and was in decline versus the Airbus Eurogovernmental-subsidized juggernaut.  Boeingís great civil air achievements seemed to be in the past.  707, 727, 747, 767.  All planes designed in the 1960ís and 1970ís.  The SST was a non-starter, and the 747 was showing extreme age.  The 777 seemed a step back from the glory of 747.  Airbus, on the other hand, began work on A380, a massive aircraft capable of carrying between 550 and 700 passengers.  The idea of such a "superjumbo" jet attracted huge media interest.  Boeing, on the other hand, quietly began work on a project named 7E7.

The 7E7 is now known as the 787.  It is about the same size as the aging 767, but because of massive technological advances, will use at least 20% less fuel.  It will fly 250-280 people 3,500 nautical miles, making it perfect for domestic air service.  It does this while also increasing cargo space. The A380, on the other hand, is so big that many airports will require the aircraft to use two jetways, and hence two gates, in order to board and deplane.  Cargo space is comparable to 747.  That means twice the gate fees, and two gates inoperative while this huge plane is serviced and unloaded and reloaded, and no lucrative cargo space to offset costs.


"Since September 11, air travel is solely about price competition.  There is no longer any cachet to travelling to Europe aboard Concorde, hence itís grounded."


Since September 11, air travel is solely about price competition.  There is no longer any cachet to travelling to Europe aboard Concorde, hence itís grounded.  There is no cachet to A380; itís a massive cattle car.  Itís suitable only for international flights; the two-gate restriction is the only way one can deplane in less than 45 minutes.  So, even if an airline can convince an airport to allow A380 to use one gate, youíll be boarding and deboarding forever, and tying up that gate for at least twice as long as a 787.    A380 is also heavy and risks buckling tarmac tunnels, like the one connecting the "B" and "C" gates at Chicagoís United terminal.  OíHare Airport wonít even be able to land one until late 2007.  Therefore, itís no real surprise that the Baltimore Sun is now reporting less-than-enthusiastic airline interest in A380.

Boeing is dealing with increased interest in 787 as it comes closer to completion.  I predict that interest in the 787 will rise dramaticaly as the MD-80, 757 and 767 fleets age and must be replaced.  That massive economy boost, combined with the added cargo space on passenger flights, will get airlines on board by reducing one of their laregest operating costs.  787 is also supposed to be a more comfortable plane in which to fly, with nicer seats, bigger windows, better climate control and built-in Internet.

Itís nice to see American ingenuity trumping massive governmental subsidies.  787 is destined to make Boeing the leader in civil aviation once again.  Kudos to a great Chicago company!