Expectations, emotions and economy: 'Dreamliner' finally delivered

Why the new 787 might mean 'make or break' for Boeing

'Good things come to those who wait' – that’s one possible way the Boeing Company executives might comment on the first delivery of their new Boeing 787. The aircraft was finally be handed over to the launch customer All Nippon Airways (Japan) in a ceremony at the Boeing final assembly line in Everett, in the US state of Washington, on September 26 2011.

Boeing’s customers surely proved patient to accept years of waiting for their multi-million dollar purchases. Initially, the aircraft was announced in 2003, at which stage Boeing had just canceled the 'Sonic Cruiser' project due to the recent aviation crisis. Their new jet was still called 7E7 when officially launched in April 2004, with All Nippon Airway’s firm order of 50 examples of the family. It was to be delivered to its first customers in the second quarter of 2008. We know now that it took a little longer – but was it worth the wait, both for Boeing and its customers? After the official premiere with the roll-out in Everett on July 08 2007 (a well matched date!), chief test pilot Mike Carriker himself also had to be patient: until December 15 2009 when he and his colleague Randy Neville could finally take the Boeing 787, dubbed 'Dreamliner' by popular vote, to its preferred environment – the air. In the meantime, Boeing had been forced to reschedule the maiden flight six times. Many factors had contributed to the repeated rescheduling process such as, most importantly, continuous problems with supplier companies from all over the world.

Other factors accounting for the delays were a machinists’ strike in 2008 and the necessity to reinforce an area of the side-of body section of the aircraft. Unfortunately for Boeing, their problems were far from over when the aircraft had finally been taken to the sky for the first time. In fact, two more delays were announced: one due to the unavailability of an engine that was needed for the final phases of the flight tests in 2010, and the other due to an electrical onboard fire that had occurred during a test flight in November 2010. This latter incident had forced Boeing to temporarily suspend the flight test program altogether. As a result, both company and customers were faced with an updated first delivery date in the third quarter of 2011.

The hope that the Dreamliner will live up to its promising name would have nurtured the numerous other customers who had signed contracts for the Boeing 787 family, consisting of the 787-8 to be delivered next week and a stretched version, named 787-9, that will not enter service before 2013. So a fair bit of patience is still required from them. Surprisingly enough though, almost all airlines stuck to their orders. Qantas’ cancelation and suspension of a total of 30 787s was not a reaction to the repeated delays of the program but proved necessary in the light of the dramatically changed aviation environment, according to CEO Alan Joyce.

No doubt most airlines have negotiated compensation for the delayed deliveries. And although this has surely cost Boeing a huge amount of money, the company can still feel pretty pleased with itself, being able to present some quite impressive numbers: 55 customers around the world and more than 800 firm orders to date have made the new twinjet one of the most successful programs in civil aviation history – even before the first aircraft has been delivered.

Apart from a more streamlined nose, the aircraft might be mistaken for a Boeing 767 by the untrained eye – so what makes its concept so successful?

Firstly, it is beyond doubt a – or maybe the most innovative aircraft we have seen in the last decades. As Boeing proudly states on their webpage, half of the aircraft is made of composites and only 20% of aluminium. The result is a significantly lower weight and therefore, they say, about 20% less fuel consumption compared to other aircraft of comparable size – these days, the main cost factor in aviation business – and consequentially a reduction in CO2 emissions. This fuel efficiency represents a quantum leap from, e.g., the Boeing 767 which is the very aircraft that the new Dreamliner will replace in the fleets of many airlines.

Secondly, its 'medium' size adds to its popularity amongst carriers: similar to the Boeing 767 in seating capacity (210-250 and 250-290 seats for 787-8 and 787-9, respectively) and with a range of 7650 to 8500 nautical miles, Boeing’s new twinjet seems most suited for long distance routes that do not quite have the passenger volume to fill up larger aircraft such as Boeing 747/777 or Airbus A380. In other words, it will satisfy a demand that commenced as early as 25 years ago and that has not stopped since: the increase of long distance connections from and to smaller airports.

So what are the benefits in flying 'medium' sized planes? Well, the airlines avoid paying high fees at large airports for new slots (if they can get slots in the first place) and can offer flights that suit their passenger needs much better. And the passengers avoid the trouble that is inevitably associated with the major hubs these days, for instance high parking fees, crowded terminals, long queues at the check-in counters to name just a few.

The continuing tendency to connect smaller airports with each other is another reason for the Dreamliner’s success: the market has been waiting for a new long-distance middle-sized aircraft. The first model of the Boeing 767 flew as early as September 1981. This 'evergreen' has been modified several times with the latest version, the 767-400 ER, entering service in 2000. It is still popular amongst airlines and airliners: more than 800 767s are flying around the globe, and the 1000th Boeing 767 was delivered earlier this year (interestingly, to no other than All Nippon Airways!). All the same, however, older models need to be replaced. An aircraft family also suitable for those routes is the slightly larger Airbus A330/340 with, depending on the model, higher passenger capacity. Airbus launched these planes in 1987 and they took up service in 1993. Since then though, engines have become more reliable and the restrictions for twinjets have been released more and more – sealing the fate of the four-engine powered and therefore heavier and less fuel efficient Airbus A340. The twin-engine A330, on the other hand, is still selling: Airbus currently has 298 orders for the two passenger variants (-200 and -300) in its books and a very recent order of 15 Airbus A330-300 by Singapore Airlines underlines this model’s popularity. Nevertheless, older aircraft of this model too need to be replaced at some stage.

But coming back to the Dreamliner and talking about Australia: when will we see the Boeing 787 with the famous flying kangaroo on its tail? Of the 50 787s the Qantas Group has ordered, the first 15 examples (787-8) are scheduled to be delivered in 2013 and will be operated by Jetstar. In 2015/16, Qantas will receive 35 of the slightly longer model 787-9 while holding options for another 50 Dreamliners. Virgin Australia will continue to operate variants of the Boeing 737 and the A330 for the longer distances within Australia. Not surprisingly, Air New Zealand has signed 8 firm orders for the Dreamliner and holds options for additional aircraft – being an airline that flies most and foremost long distances but does not have such a big market as to fill larger aircraft. Air New Zealand is a long-standing Boeing customer and will even be the launch customer for the 787-9.

For Boeing, the 787 is far more than just a new aircraft. In the last 20 years, the company has lost a lot of ground with its European rival Airbus constantly delivering more aircraft to customers per year since 2003 than Boeing. After almost 40 years in which Boeing’s Jumbo Jet was the 'queen of the sky', the A380 was successfully introduced (despite being heavily delayed) such that Airbus now offers the biggest civil airliner.

Airbus received orders for 234 A380 of which 54 have been delivered to date – compared to only 114 examples of the new Jumbo Jet, the Boeing 747-8, sold to date. Airlines seem particularly skeptical of the passenger variant of this latest development of the Jumbo Jet, making up less than a third of orders, while the majority of purchases were for the freighter. Even airlines that once operated big 747-400 fleets have not purchased the 747-8. For example, Qantas: once relying exclusively on the Boeing 747 for their super distance flights around the world, they have not shown any interest in this type’s latest advancement but instead operate ten Airbus A380 with orders for another ten. This does not mean that Qantas has abandoned Boeing altogether: they will have up to 100 787s flying by the end of this decade. A similar approach has been pursued by Singapore Airlines: once the largest operator of the Boeing 747-400, they now operate 69 Boeing 777s with more to come and an order in for the Dreamliner as well.

The 787 might therefore be key for Boeing to maintain a major role in the civil aviation market and not to fall markedly behind Airbus. A number of traditional Boeing customers that did not order many of their aircraft in the last few years have re-vitalised their relationship with Boeing and will soon operate large 787 fleets.

The battle between the two companies seems to be lost for Boeing in the large aircraft segment, although Airbus predicts a much larger market size for this aircraft segment than Boeing. In the small, single aisle aircraft range, Boeing’s 737 family can still, despite increasing difficulties, keep up with the Airbus product range (A318-321). However, Boeing has suffered in the competition: American Airlines, so far a very loyal Boeing customer, has just decided to renew its short-distance fleet and to purchase 460 new narrow body airliners of which 260 will be collected from the Airbus final assembly lines in Toulouse (France) and Hamburg (Germany), but only 200 will be delivered by Boeing. Lufthansa, once the launch customer for the Boeing 737-100 and the biggest Boeing customer outside of the United States, has totally committed itself to the A320 family. The latest models of the Boeing 737 have not been ordered, and the remaining 737s (-300 and -500, i.e., older versions that were delivered in the 1980s and 1990s) are currently being phased out.

Hence, the Dreamliner is Boeing’s chance to get ahead of its rival in at least one aircraft segment.

Not surprisingly, however, Airbus is far from leaving this terrain to its US rival without a fight. It launched the A350 in 2005 and re-launched it in 2007 with the intention to have the different versions of the plane airborne in 2013-2017. This new Airbus whose fuselage also contains a higher percentage of composites than other Airbus planes is a threat for Boeing and its 787: Airbus has received orders for more than 500 examples! And with a higher seating capacity (250-350 seats) and three different versions, the threat is a serious one. Altogether more than 1300 orders for Boeing 787 and Airbus A350 reveal the enormous size of this segment of the civil aviation market. The fierce competition within this segment was underlined by the readiness of Airbus to spend a lot of money to redesign the A350 – thereby accepting a delay of several years – after potential customers had rejected the first proposal; otherwise, their new aircraft might already be flying.

If the Boeing 787 can live up to its manufacturer’s promises, the Boeing company might be able to gain the lead in this market segment. Just as we know that they used to be ahead of Airbus in other segments and have lost this advance, they know this too. One market Boeing can still claim a comfortable lead in is the big cargo aircraft. The Boeing 747-400, MD11, and Boeing 777 currently dominate the market. Customers have ordered twice as many Boeing 777 freighters than A330, and Boeing already has 78 orders for the 747-8 freighter of which the first two examples are about to be delivered to launch customer Cargolux.

We can be certain though that supremacy in the freight segment alone would not suffice to meet Boeing’s own expectations. That is why the Dreamliner is their focus, and it is has to be successful because otherwise, Boeing could fall far behind Airbus and might struggle to close the gap in the future. The Boeing company’s 100th birthday in 2016 would then be a bittersweet one.

27 September 2011