RichardAboulafia.com 

:: July 2011 Letter ::

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Dear Fellow Gas Turbine Engine Enthusiasts,

For great design, it’s tough to beat the Jaguar E-Type. Its beautiful (and suggestive) shape makes it one of the most-loved cars in history, with excellent performance to match. Yet there’s a disconnect between form and function on this ‘60’s style icon. Its remarkable body has almost nothing to do with the car’s performance. “The E-type's styling didn't contribute much to the performance. It was aerodynamically quite slick, but the car was more about acceleration and handling, thanks mostly to the engine,” according to J.J. Gertler, Congressional Research Service aircraft guy and (in a rare example of industry crossover) a respected car expert.

The E-Type provided my big takeaway from this year’s Paris Air Show. Airframers are discovering that they really aren’t in the driver’s seat after all. The engine guys are. Today’s airframe innovations may sound impressive, but as with the E-Type, aircraft performance improvements depend largely on the engines. Airbus, Boeing, and Bombardier found out in different ways that we’re living in an engine-centric world.

If Boeing hasn’t learned this lesson, it needs to. Airbus ramped up its A320 Neo shock and awe sales campaign at Paris, scoring 700 firm orders and MOUs, taking total Neo commitments to over 1,000 planes. (According to J.J., when Jaguar later re-engined the E-Type, they created something as compelling as the Neo.) For most of the week, Boeing could reassure itself that most of these were for the usual Airbus single aisle suspects – emerging market and low-cost carriers, and lessors buying on spec with other people’s money. But as the show ended, it transpired that American was looking at an Airbus order. Over the past few weeks, this has become an RfP for up to 280 narrowbodies, with one option being a split between A320 classics and Neos.

If AMR goes Airbus, much changes overnight. All the US majors are saddled with hundreds of older single aisles. If fuel stays high, and AMR can start pricing fares based on operating aircraft with new generation engines, everyone might need to respond. Margins in the airline business are razor thin, and being caught with JT8Ds and $100/bbl fuel is potentially disastrous if you’re up against a competitor with Leap-Xs or PurePowers. Already Delta is looking at a similar-sized single aisle order later this year.

Boeing is under the gun to respond, fast. Supporters of a new Boeing jet tout all kinds of new airframe technology. Out-of-autoclave composites! Fly-by-light! Morphing wings! LED-lit passenger cupcake holders! All kinds of technology that won’t be ready this decade. Unless Boeing adapts an engine-centric strategy, each US carrier RfP will be met with two responses. One will be from a guy with new engines. The other will be from a guy without them. Any guesses on who wins? The big takeaway from Paris: assuming it’s technically feasible, Boeing should offer a 737 Neo, fast.

Bombardier got a similar lesson at Paris. Superficially, the CSeries did okay – there were 30 firm orders, which beat last Farnborough’s slow-mo train wreck, when they got exactly nothing. But outweighing those orders was a Republic order for 40 A319Neos. Bombardier quickly pointed out that Republic reaffirmed its commitment to the CSeries (it’s the biggest customer, with 40 CS300s). However, any airline that actually winds up operating both A319Neos AND CS300s is managed by lunatics.

The new single aisle engines, PurePower and Leap-X, are the primary enablers behind the new single-aisle products. The CSeries may be all new, with innovative technologies and advanced materials. The A319 may be decades older, with 1980s technology and a mostly metal airframe. That doesn’t matter. The new engines are what customers want. An aggressive Airbus finance package is all that it takes to obviate any CSeries operating cost advantage. Bombardier needs to learn that in this engine-centric world, it needs to be a lot more aggressive about finance, pricing, and other sales terms. Welcome to commodity pricing.

Of the three Paris lesson-learners, Airbus seemed closest to absorbing the reality of an engine-driven industry. For years, they’ve maintained the dubious fiction that they could dictate A350XWB performance for three variants, and that the engine guys would make it happen. In 2006, they announced three versions spanning 250-350 seats, all with very long range and the same engine. “There’s, y’know, a single engine type that will do all that, right?” they seemed to be thinking, almost as an afterthought. At Paris they finally responded to airlines pointing out this was nonsense, re-launching the A350XWB-1000 with what’s basically a new Trent. Rolls-Royce exacted a price, of course: exclusivity for the -1000. There’s a two year delay too, but again, at least Airbus has learned today’s world is run by engines.

The airframers’ predicament is understandable. They needed to believe (or at least they needed to tell investors) that they could be the ones to get better pricing power through innovation. Building an airframe without radical innovation leads to commodity pricing, which they want to avoid. To look at it another way, the 787’s superior performance (we don’t know how superior) relative to current jets will depend very heavily on the engines. Composites and a more electric architecture may help (or not), but the only thing we know for certain is that the engines will be better. A re-engined 767 might have gotten much of the way there, with a lot less cost and risk. Airbus might also find that an A330Neo has its charms too. Similarly, on the subject of Boeing’s response to the A350XWB-1000, all this time the world has focused on a new composite airframe to replace the 777-300ER, or perhaps a new composite wing for the 777. At the show, GE announced that it was working on a GE9X as a GE90 follow-on. That may be the only 777-X enabler Boeing really needs.

It’s not just airframer self-importance that leads the industry to neglect the importance of engines and subsystems. How many aircraft fans spend hours looking at planes and talking about them online? Thousands. How many engine fans spend hours looking at engines and talking about them online? Twelve. Subsystems aren’t sexy. And how else do you explain that orgy of foolish hysteria about China’s J-20 “stealth fighter” a few months back? Nobody cared to scratch beneath the surface and ask tough questions about the building blocks underneath the skin. They just saw something that reminded them of a cool-looking model kit and felt dutifully terrified.

It’s exactly the same in the car world. How many people remember Emma Peel’s E-Type in The Avengers (tinyurl.com/5ul2nea)? Thousands. How many remember the 4200cc overhead valve twin-cam six-cylinder engine that powered it? Twelve.

Back in the aero world, Teal’s July Aircraft binder updates include the Military Transport Overview, the 747, Hawker 800/4000, C-27J, EC 145/UH-72, UH-60, SH/MH-60, F-4, F-5, UH-1/Bell 412, and a new airliner inventories appendix. Have a great month.

Yours, ‘Til Bypass Ratios Become Infinite,
Richard Aboulafia
 

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  ~  Last updated on January 08, 2006