787 Dreamliner puts Boeing aloft

Boeing said its net orders for commercial airplanes reached a record high of 1,002 in 2005, nearly quadruple the 272 of 2004.

jib.awards.298.vote (photo credit: )
(photo credit: )
When El Al announced plans to buy new aircraft last year, the eyes of the aviation world fell on the airline to see which of the two manufacturing giants, Boeing or Airbus, it would choose. In a not so surprising move, El Al maintained its all Boeing fleet and signed a $246 million deal with the company in October. El Al was not alone in going Boeing last year, as all indications show the Chicago-based company outsold its French rival in 2005 for the first time in five years. "Boeing had not introduced new products to the market for a long time and was steadily losing market share to Airbus," said Philip Finnegan, Director of corporate analysis at the Teal Group. "Last year, Boeing regained its share and was again the leader in orders." Boeing said its net orders for commercial airplanes reached a record high of 1,002 in 2005, nearly quadruple the 272 of 2004. Airbus is scheduled to release its year-end figures on January 17. Airbus spokesman David Velupillai said however, there would not be a big difference between the two companies. Regardless of who outsold who, the turnaround at Boeing is largely due to the success of its 787 Dreamliner program billed as a "super efficient, all new plane" that caters to the long haul market. The focus at Airbus for the last few years has been on the launch of its super jumbo A380, which is due for its first delivery at the end of the year. Right plane at the right time "The 787 is the right plane at the right time and proved Boeing's commitment to the market," said Finnegan. "More importantly, the product is cost effective and airlines are attracted to its good economics." The 787 Dreamliner family consists of three aircraft including the 787-8, which will carry 210 to 250 passengers on routes of 14,800 to 15,700 kilometers, the 787-9 with its 250 to 290 passengers at distances of 15,900 to 16,300 km, and the 787-3 which will accommodate 290 to 330 passengers and be optimized for routes of 5,550 to 6,500 km. Boeing said the planes will use 20 percent less fuel than any similarly sized airplane and will fly at speeds of Mach 0.85, similar to today's fastest wide bodies. Also, in the technological sphere, the company claims to have broken new ground, with the majority of the planes' primary structure, including the fuselage and wings, being made of composite materials. By increasing the humidity in the interior, the 787 will have a cabin pressure of 6,000 feet instead of 8,000 feet. Other innovations include a 50% larger window, with a dimming component that will replace the shutters and a more spacious entrance area. "In doing our research for the Dreamliner, we realized that people were bored with what they were getting in aviation," said Claus Brauer, director of passenger revenue and satisfaction at Boeing. "When you look at the interior of planes today, a lot has been done to take away from the one universally appealing experience that it was supposed to provide - flying." For isolated markets like Tel Aviv, the company argues that the 787 will provide the perfect fit. "The 787 is perfect for the Israeli market," said Boeing V-P Business Strategy and Marketing Nicole Piasecki in an interview last year. "Given El Al's need to fly non-stop, long-distance destinations, the Dreamliner was built to provide exactly that." Philosophical differences Airbus and Boeing's focal points have been monumental and could be seen as indicative of where each sees future growth points in the market. "It's really a question of philosophy," said analyst Finnegan. "The A380 is designed to cater for the hub and spoke system of travel, while 787 clearly shows Boeing's belief in point-to-point travel." A focus Boeing makes no effort to hide. "We don't dismiss the future of hubs at all, and believe that the market will have a strong combination of both," said Marty Bentrott, VP sales for Boeing's 787 program. "We believe though that the real growth point will be in point to point travel." Airbus' Velupillai, meanwhile, says it is a misconception that Airbus is focused on the growth of hub traffic. "If you look at our fleet it shows our capability of flying city to city," he said. "We believe there will be equal growth in both markets." A spoke in the hub The hub and spoke system makes use of central airports as connection points for passengers traveling to further destinations, advocating that airlines are better able to fill seats by flying the popular destinations more frequently. Point-to-point travel endorses that airlines will opt to bypass those hubs and whenever possible fly more direct routes, because passengers want to arrive at their final destination on the quickest route. The philosophy behind the A380 is that it will carry more passengers per flight and, therefore, relieve congestion at the major hub airports. Historically, however, it's been Boeing that has dominated the super size airplane market since its launch of the 747 program in the 1960s, and for years the wide body 747-400 has been the only plane that could seat over 400 passengers in a 3-class configuration. Velupillai explained that Airbus had a gap in its product line, with only the 380 seater A340-600 edging on the 747 market. The A380 with its 555 seats, he said, fills that void. Competition Meanwhile, Boeing has launched new aircraft to compete with the A380 and Airbus has done the same to compete with the 787. In November, Boeing revealed its new 450 seater 747-8 model, slated to begin passenger service in September 2009. Airbus, meanwhile, officially launched its A350 project in October 2005 to service the non stop-market and is expected to make its entry into service in 2010. Sales figures for the various aircraft may express airlines' pull towards point- to-point flying. Since the commercial launch of the A350 in October 2004, Airbus has sold 172 orders to 13 customers. Boeing has received 354 orders from 26 customers, in what Bentrott said has been the company's most successful launch to date. In a loose comparison, Airbus has had 159 orders from 16 customers for the A380 since its commercial launch, while 2005 orders for Boeing's 747 stood at 43. "Airbus was initially skeptical of the 787, but its A350 is a direct answer to it," said the Teal Group's Finnegan. "The success of the Dreamliner gives more credence to point-to-point travel [as a growth stimulus for the travel industry.]" As for El Al, with rumors circulating that it is still in the market for new aircraft, speculation will continue as to whether the carrier will choose to stick with Boeing and buy the critically acclaimed 787 or decide to diversify its fleet with an Airbus purchase. The writer recently was a guest of Boeing at its Seattle facility.