Airlines will be forced to aim at long and thin routes

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A trend among airlines of phasing out four-engine widebody aircraft in favour of smaller, more fuel-efficient two-engine aircraft, including even narrow bodies, has accelerated.

With business travel and long-haul international flying expected to be the slowest to recover from the pandemic, airlines are looking to utilise lower-capacity aircraft to operate long-haul routes, and many are permanently parking their Airbus A380s and Boeing 747s. The new star among next-generation “long-haul” aircraft is the Airbus A321XLR, which will offer a range of 4,700 nm, the longest range ever for a single-aisle aircraft.

Assembly of the first flight-test A321XLR has just started, with the aim of deliveries commencing in the second half of 2023. The order book for the A321XLR is robust, with more than 20 customers—ranging from lessors to mainline airlines to LCCs—ordering 450 of the type in total. The aircraft is expected to open new route possibilities for airlines in much the same way the Boeing 787 widebody made new city pairs possible when it was launched.

Airbus is not stretching its A321LR or modifying the aircraft’s Pratt & Whitney GTF engines—it is adding range but keeping the same ceiling on passenger load (around 220). The XLR’s added 700 nautical miles in range over the LR (Long Range) is made possible by an extra fuel tank in the rear centre of the aircraft. It is a telling sign of where the marketplace stands that airline are enamoured with an aircraft that allows for carrying more fuel, but not more passengers.

Airbus has said that airlines operating the A321XLR will be able to fly “long, thin routes” such as India to Europe or China to Australia, or transatlantic routes beyond the traditional hub-to-hub flights. Among the US-based routes, Airbus envisions the A321XLR on routes such as New York JFK-Hamburg, Washington Dulles-Lima, Orlando-Santiago de Chile, Chicago O’Hare-Milan, Houston Intercontinental-Reykjavik, Boston-Casablanca, JFK-Rome, and Miami-London.

New York-based JetBlue Airways, which has just taken delivery of its first A321LR to be used on New York JFK-London flights, has said it will use the XLR to fly nonstop from New York to continental European destinations such as Madrid.

The pandemic has driven both Airbus and Boeing to slash production on their popular twin-engine widebodies. Airlines are still ordering them but in smaller numbers.

Lufthansa, for example, in early May placed an order for five A350-900s and five 787-9s. As a result, Airbus has cut monthly production for the A350 from 10 to under five aircraft per month, while Boeing has lowered 787 productions from 14 aircraft per month to just five per month.

Airbus CEO Guillaume Faury said he expects the widebody market to be weak for the foreseeable future, with no increases in production rates insight.

Much as Boeing beat Airbus to the punch with the 787 versus the A350—Airbus initially bet on the superjumbo A380, which had limited sales success and which airlines are retiring fast—Airbus looks to have a huge advantage over Boeing with the A321XLR, which many airlines view as a replacement for the B757.

Boeing, still mired in the aftermath of the 737 MAX grounding, has shelved plans for the so-called New Midmarket Airplane, but it will have to come up with an answer to the A321XLR. American Airlines and United Airlines are XLR customers, but Delta Air Lines is still obtainable for Boeing if it can offer a viable alternative. Boeing has started sounding out suppliers for provisional requests for information on an all-new aircraft believed to be called the -5X. It is targeting the 250-275-seat size category in a two-class, twin-aisle configuration. The aircraft would likely have a range of up to 5,000 nautical miles. The prospective aircraft, then, would be slightly larger than the XLR in terms of seating capacity with about 300 nautical miles more in range.

An A321-sized competitor is “pretty much in the right space with respect to where next development e orts lean,” Boeing President and CEO Dave Calhoun told analysts. “We are really progressing well on our engineering and manufacturing technology development so that we’re ready when that moment comes to offer a really differentiated product.”

The new aircraft Boeing is considering appears to follow along the lines of the shelved NMA (New Midsize Aircraft) concept. Key NMA program elements that remain germane to an XLR (eXtra Long Range) competitor include an overriding focus on a twin-aisle design, capable of 5,000 nautical miles routes, that could be developed for single-aisle production costs. Program timing has, however, completely changed because of the pandemic.

Trends seen during the pandemic are, in many ways, a hyper-charged version of trends evidenced before COVID-19 rocked the airline industry. Airlines and passengers in the last decade have become more reliant on point-to-point long-haul flying and less dependent on hub-to-hub flying. In a report, McKinsey and Co. noted that the volume of connecting passengers fell 81% compared to pre-pandemic levels, while nonstop passenger volumes dropped by 61%.

“The share of connecting traffic at the global level has been falling in recent years, save for select intercontinental flows, which had been largely stable or growing before the crisis,” the McKinsey report states. “This shrinking share can be attributed to the growth of point-to-point carriers, with low-cost carriers seeing a particularly significant increase in their market share.”

McKinsey analysts do not expect the hub system to disappear, but several trends make more point-to-point long-haul flying attractive for airlines.

These include aircraft such as the Airbus A321XLR and Boeing 787 being used on “thinner, intercontinental city pairs nonstop,” the McKinsey analysis states. “Touted as potential hub destroyers, the role these aircraft play may be accelerated by COVID-19, which is bringing forward the retirement of very large widebody aircraft designed for hub operations, such as A380s and 747s.”

McKinsey points out that 65% of active and ordered A321LRs/XLRs are going to airlines that favour point-to-point flying over a hub system.

Another trend that has accelerated is a passenger preference for nonstop routes rather than connecting itineraries. Flying has become more complicated and flying on two or three different aircraft on a journey is even less desirable now for passengers than before the pandemic.

“Airlines will need to rethink pricing to fill nonstop flights, potentially reducing the nonstop premium and thereby undercutting demand for connecting flights operating on the same route,” the McKinsey analysts explain.

According to McKinsey, other factors favouring point-to-point flying post-pandemic are environmental concerns (passengers will perceive they are causing fewer carbon emissions by flying aboard just one, fuel-efficient aircraft), congestion at hubs and the inconvenience of tight connection times at hubs.

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