November 5, 2014

A look at commercial passenger jet airliners: Strategic considerations

This paper is a bird’s eye view of jet airliners. In it, we propose to look at this market from the vantage point of the Constructal Law, and try to refresh our understanding of the market positioning of existing and future aircrafts and aircraft families, as well as the global commercial flight system.

Entrenched Champions #

While Airbus and Boeing are engaged in a fierce competition in this space, they effectively form a duopoly that has been on-going since the nineties. But new contenders may be on their way.

The following figure shows all current Airbus and Boeing commercial airplane families—as well as their up-and-coming competitors in the shorter range, A320/B737 segment.

And as the Constructal Law predicts, commercial airliners sit tightly on a straight line of the graph.

The x-axis shows the aircrafts’ volume, which is an indicator of the number of passengers or cargo capacity, for freight versions. The y-axis shows the maximum take-off weight of the aircrafts, which is proportional to range, engine mass, and fuel weight as shown by Bejan et al.

Families #

Three main segments stand out in the figure above—or, to be more precise, two segments and one point.

On the bottom left of the graph, we have the short-to-medium range, narrow-body aircrafts such as the Boeing 737 and the Airbus A320. In the middle of the graph, we can see the medium-to-long range, wide-body aircrafts such as the A330, B787, A350, B777, and B747. And on the top right of the graph, there is the double-deck superjumbo A380.

Misfits? #

The Airbus A340, shown as blue X-es on the graph above, stands out. From a Constructal stand point, it does not look as adapted as the other aircrafts beacuse it is less adjusted to the diagonal line—it may be less fit. This is especially the case for the A340-500 and A340-600 types.

These aircrafts have a relatively high take-off weight compared to their volume, most probably due to their four-engine configuration. As for the A340-200 and A340-300, they seem to compete too closely with Airbus’s own A330.

Perhaps Airbus should consider stopping the production of the entire A340 family?

The Boeing 777 family, shown as green diamonds on the graph above, is not very streamlined either. Maybe Boeing ought to consider pruning it by stopping the production of the 777-200, 777-200LR, and 777-300?

Potential for disruption? #

And lastly, the Boeing 767–shown as small grey crosses on the graph above–lies alone in its space. At first look, it may seem that Airbus is slow to retaliate with a comparable product, leaving the whole market to Boeing. However, because of the hub-and-spoke system which requires small and big aircrafts–with very little in between–there really is not much place on the market for the 767.

And Boeing seems to have considered cancelling the family, as per the comments of Randy Baseler, Boeing’s Vice President of Marketing in 2006, illustrated hereunder.

In the same manner, what may at first look like an open market between the Boeing 747 and the Airbus A380 is nothing more than a consequence of the hub-and-spoke system. A hypothetical new aircraft that lays midway between the 747 and A380 will not necessarily be a runaway success.

New Contenders #

The first graph above shows another interesting fact. The short-to-medium range, narrow-body aircraft segment that so far has been dominated by the Airbus A320 and the Boeing 737 families, is becoming more and more crowded.

With the arrival of Embraer’s E195 (Brazil), Bombardier’s CSeries (Canada), Comac’s C919 (China), and Irkut’s MS21 (Russia), Airbus and Boeing may have new direct competitors to worry about in the near future—in addition to just one another.

The historic duopoly that we currently take for granted may be coming to an end.

Hub and Spoke #

Let us now go back to the hub-and-spoke organisation of the worldwide passenger jet transportation system. The two figures hereunder show the range coverage of the A350 and A320—from a common take-off point on the equator.

Airplanes are part of a major organism: the world’s commercial flight system. This organism is composed, and is constantly evolving towards, a “few large and many small” aircrafts and airports. In effect, such a configuration optimizes the flow of the system: Passengers and merchandise flow better, with less resistance, through the hub-and-spoke model, as compared to the point-to-point transit model.

In a hub-and-spoke system, larger airports are located next to high density destinations, forming large nodes or hubs which are served by the longer travel routes. And smaller airports are located around smaller destinations—forming smaller nodes which are connected by shorter routes, or spokes, to the nearest hubs.

In such a system, a long range aircraft such as the A350 transports passengers between Singapore and Paris—two international hubs. And smaller aircrafts such as the A320 are used to transport passengers to their final destination, from Paris to Marseille in this example. In fact, you would be hard pressed to find a direct flight between Singapore and Marseille.

Under such a configuration, less routes are needed to connect all destinations, and more airplanes fly at a fuller capacity—large, long-range aircrafts like the A350 fly many passengers from one hub to another, and small, shorter-range aircrafts like the A320 fly fewer passengers along the spokes.

But, taken to the extreme and without any overlaps, the hub-and-spoke system can become very fragile, because each hub effectively forms a bottleneck and any interruption in the operations of one hub can bring a large portion of the worldwide travel system to a halt.

It can also be less flexible, with difficulties to handle occasional peaks in demand–such as in holiday seasons–without oversizing the airports or restricting the flow. And this may explain the huge variance of ticket prices in different seasons, for the same route.

So although travel times are longer for passengers going from one small city to another–like Marseille to St. Louis,–the overall passenger flow is more optimized in the hub-and-spoke organization than in a point-to-point organization. However, a pure hub-and-spoke system can be very fragile: a social movement, volcano eruption, or major-airport shutdown can render a large part of the system dysfunctional.

What’s with the A380? #

The Airbus A380’s range is illustrated on the figure above. Even though it flies longer routes than its smaller A350 brother, the A380 does not necessarily cover that much more land—and thereby it does not cover that many more cities and airports.

At first look, the A380 may seem like one family too many, since smaller aircrafts such as the A350 or the Boeing 747 already cover a considerable portion of the globe with their flight range.

So did Airbus commit a strategic error by developing and building the A380? And will the market ever be ready for the superjumbo?

We would like to propose that the A380 has its rightful place in the global commercial flight system. The superjumbo is a future-proof aircraft.

In fact, range is not the full story. With its considerably larger capacity, the A380 is well-positioned for a future of ubiquitous air travel. If the past tendency of increased air travel is confirmed, then larger aircrafts–such as the A380–will be needed in order to keep the travel flow optimized.

The world’s commercial flight organism will keep evolving, and the A380 is Airbus’s bet on a very plausible evolution of this organism.

But will events unfold in favor of Airbus’s strategy? Only time can tell…

Author: E. Dib #

References #

A. Bejan, J. P. Zane, Design in Nature: How the Constructal Law Governs Evolution in Biology, Physics, Technology, and Social Organization
A. Bejan, J. D. Charles, S. Lorente, The Evolution of Airplanes
R. Baseler, Future tense
B. Carey, AIN Online, Airbus Launches Re-engined A330 As A330neo
N. N. Taleb, Antifragile: Things That Gain from Disorder
World Bank, Air transport, passengers carried