Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 5:29 am

Hello, and first of all, this is not about bashing.

I’ve read this afternoon both Boeing and Airbus views about the market (documents taken from their website). I am not expert and had no pre-opinion. I’m just curious about all these market debates we can read everywhere at the moment.

The Airbus documentation is I believe more detailed and in the end looks more realistic to me but this of course opened to discussion.

Basically Airbus is saying the long range point to point network does not work. At best you have hub to point and many of these markets are discontinued. So they are less likely to deeply impact the hub-hub traffic.

When I’m thinking about the long range network, from Europe (I don’t know very well other continents), it is true I can’t find a point-point route except for charters or maybe some seasonal routes. They seem all linked to the large cities at one side at least. In France for instance, there was Lyon-NYC for a while if I remember but again this was a point-Hub type of route.

So from here I would give more credits to Airbus.

This leads to the question : if the 7E7-8/9 are designed for point-point, maybe it is designed with not enough seats or too much range? In fact aircraft like 777, A330, A340 and perhaps the A350 look more appropriate as they offer more seats.

If you have any thoughts to share.
Never trust the obvious
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:02 am

Basically Airbus is saying the long range point to point network does not work. At best you have hub to point and many of these markets are discontinued. So they are less likely to deeply impact the hub-hub traffic.

If this were the case, the 7E7 wouldn't scare Airbus and the A350 is a waste of $3 billion. Both markets will be there, both aircraft will be needed. Each company has a different opinion on which market will be bigger, however. Based on the past few years, the 747 sized aircraft really hasn't been as popular. Airlines have been shifting to smaller 777/A330 or 767/A300 sized aircraft. Only a few routes warrant an aircraft the size of the A380, as it's uneconomical on shorter routes. The 7E7 is designed for both long and short range flights. This is why I see the 7E7 as the better choice. It gives airlines more options and the ability to offer more frequencies. This doesn't mean the A380 won't have it's place, just that the 7E7 will have a larger chunk of the market.
 
AA737-823
Posts: 4898
Joined: Wed Mar 01, 2000 11:10 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:05 am

I disagree with the idea.
As I have said in other posts (before I get slammed!) I think that there IS a market for the A380. But not a big one. Airbus will be successful at it, but if Boeing jumped in and did the same, both manufacturers would go down the tubes for a while.

I think that the 7E7 has a much larger market. The 767 (which it replaces, mind you) has been a VERY successful aircraft, with production approaching 1000 units (not quite there yet).
Additionally, the Southwest business model works. And one of the main ideas behind it is POINT TO POINT SERVICE. Connect the dots. Passengers prefer to fly nonstop (except us aeroplane nerds). The 7E7 will make it more feasible for airlines to fly nonstop routes to connect the dots.
Now, it will be viable for an airline to fly secondary longhaul routes. For example, Instead of having to do LHR to JFK, we might see a growth of MAN-BWI or something. NOT AS MANY PAX demand that service, but that's okay- the 7E7 is smaller than the 777 or 747.

On top of all that, the bloomin' thing burns 20% less fuel (if it merely MEETS Boeing's specs... I can't think of a recent airplane that has met them, they have all EXCEEDED projections... the 717, 737NG, and 7773ER all burn less fuel that Boeing promised...). SO- airlines could even use the 7E7 to replace existing 767 and A300 fleets.
Northwest announced today that it is replacing its remaining DC-10-30s with 333s... all for just 20% less fuel. Granted, there will be a reduction early on in maintenance costs, but that will disappear over the 20 year life span of the plane.
If the 7E7 can burn 20% less fuel that even the A333 (which it just might accomplish), you have instantly turned the A333, A300, A310, and 767 into obsolete replicas of DC-10s.
When times get good again (surely they will???) these things just might sell like hotcakes, ESPECIALLY (here's factor number something) given how CHEAP Boeing is selling them!
The target price was $120 million.
The A350 will sell for $160-$180 million, Airbus says.
Burns less fuel, costs less money...

That's about all I have in my pointy little head at this point.
Hope this is a valuable perspective.
R
 
User avatar
N328KF
Posts: 5810
Joined: Tue May 25, 2004 3:50 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:05 am

Airther would have us fly 777-400s and A380-800s in to places like Westchester, New York.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
NYC777
Posts: 5066
Joined: Wed Jun 09, 2004 3:00 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:10 am

126 orders with at least 100 more in negotiations, Airbus coming up with the A350 in response...in a word..NO!!!!!!!
That which does not kill me makes me stronger.
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:16 am

to FriendlySkies :

The A350 have more seats so it can link big/average markets, not small point-point markets the 7E7 is aming at according to Boeing.

And i would like more in depth analysis about the market rather than just saying the usual "both markets will be there".

As for the evolution of the 747 sales, it does not tell much about the market except we know many were misused (for their range only) and airlines are not keen to order 747 when a 500+ seater will be soon out. Also some 777/A340 aircraft offer almost similar seat capacity but are perhaps more flexible/modern aircraft. So i believe looking at the 747 evolution may not be fully appropriate the explain the way the market is evolving.

[Edited 2005-01-26 22:17:10]
Never trust the obvious
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:21 am

Exactly how much more in depth do you want? It's no secret that the A350 was developed to compete with the 7E7...it just happens to be bigger. What Airbus fails to realize is that there will ALWAYS be a market for a smaller widebody. Look at all the 767s & A300s out there...Airbus has NOTHING, I'll repeat that, NOTHING, to replace the short range versions of these planes. The A330 and the A350 are too heavy to economically fly these routes...enter the 7E7-3, designed specifically for shorter routes & 767A/A300 replacement. If it gets to the point where airlines need to fly A380s between ORD & MKE, then the world has too many people.  Big grin

No matter how much you try to deny it, the 7E7 will be one of Boeing's biggest successes...Airbus knows it, hence the A350. There is no definate way of knowing which market will be bigger in 20 years, all anyone can say is there will be a market for both. If you invent a time machine and want to go find out for us, be my guest. But you won't and can't get a definate answer, because it's all theory.
 
Ken777
Posts: 9046
Joined: Thu Mar 11, 2004 5:39 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:28 am

Both companies have potentially profitable planes IF they exceed expectations. Both also have related competition (the 350 and 747 ADV) that could impact their sales.

The critical issue for both is to "get it right the first time". A cannot afford to have SQ reject long term use of the 380 (they've done that with another A plane) and B cannot afford to have their new technologies fail to perform as promised.

In terms of profitability, A is more at risk from outside issues, like a serious downturn in the economy or terrorists activities that dramatically reduce passenger traffic.

Overall, it is going to be an interesting time to follow both companies as they venture into new territories.
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:31 am

toAA737-823

You were mentioning the 767, but if you look at the transatlantic market, 767s are doing Hub to point but no point to point. CO for instance has announced new routes using 757 but all I believe are from NYC. Again this is not point to point.

About Soutwest, first I’m not sure the Southwest network model would work for the long range. In addition, people seem to think low costs are doing point to point while in Europe at least, they are mostly doing hub to point (many start from secondary airports around London). So again, even for the low costs, point to point does not really exists.

Airlines like ANA have ordered 7E7s but did they mention where they would fly them on the long range market ?
Because again, if they fly from Tokyo, this would not be point to point. So are they actually planing routes like Kawasaki-Phoenix (this would really be point-point) ?

OK, I’m not saying the 7E7 won’t be successful, it’s just about Boeing saying this is the “point to point” aircraft. But I can’t imagine where is this point to point potential ? because if point-point route don't work very well at the regional level, i can't imagine how they could work at the international level ?

[Edited 2005-01-26 22:35:50]

[Edited 2005-01-26 22:38:42]
Never trust the obvious
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:37 am

OK so perhaps the title was not good.

Maybe the question should be :

WHERE IS THE POINT TO POINT POTENTIAL BOEING IS TALKING ABOUT ?
Never trust the obvious
 
Leskova
Posts: 5547
Joined: Wed Oct 08, 2003 3:39 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:39 am

A large part of the drop in pax sales of the B747-400 can probably be attributed to the long line of problems that airlines have faced in the past years: Asian traffic dropped significantly with the economic crisis there in the 1990s, only to be hammered again with the events beginning with 11 September 2001.

So, yes, I agree with you, Aither, that the evolution of the markets into more point-to-point flying is not the only reason why the B747-400 has developed into a plane less and less interesting for dozens of airlines.

As for the future, eventually, we'll have to wait and see how it will turn out, because it certainly could go both ways - but I do see a limit to point-to-point flying, a limit that will always have to be overcome by hubs.

Here in Germany, for example, there are several larger cities that simply do not warrant even nonstop intercontinental flights to hubs - most notably Hamburg and Berlin (and it remains to be seen whether DL and CO will succeed with their new flights from these two towns), not to mention further cities like Hannover, Leipzig, Dresden and Nürnberg. These towns will, in all likelihood, have to continue to rely on hubs for longhauls.

Sure, a lot of people want nonstops - or at least the smallest number of intermediate stops available... but as soon as you offer them a flight that's €25 to €50 cheaper with an additional connection, most people will take the cheaper flight... and if the flight with the additional connection is with an airline that they, for whatever reason (because they have flown with them before, because they think it's a good airline, ...), prefer, then they'll also select the connection over the nonstop, even if the connection is, in fact, a bit more expensive.

The next problem that I see, especially for Continental but to a lesser degree for Delta as well (and this might be a surprise to some), is that both brands aren't really all that well known here - so unless they unleash a huge (or at least "large") amount of marketing money in Hamburg and Berlin, as they probably will, there's no way that they'll be able to get a lot of passengers into their nonstops, if (especially) Lufthansa, Air France, British Airways or KLM offer flights going through their hubs at roughly the same price.


With the lowering of cost that will, most likely, be brought about by the B7e7, I do see some additional city pairs becoming profitable, but as I see it, this will not put more than a small dent into hub flying.

Then again, we'll see in a few years...

Regards,
Frank
Smile - it confuses people!
 
Rj111
Posts: 3007
Joined: Wed Sep 08, 2004 9:02 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:40 am

56 orders Nyc777

In my book the 7E7 will give airlines options to extend P2P services to longer haul destinations, like MAD-NRT. I don't however think that this network will be as extensive as the typical TransAtlantic one, nor do i think the current TransAtlantic one will begin to see many new routes.
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:44 am

MAD-NRT is point to hub... or hub to hub some could argue..
Never trust the obvious
 
doug_or
Posts: 3122
Joined: Sat Mar 18, 2000 9:55 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 6:59 am

Theres no reason te 7E7 can't go between hubs as p2p flying. If you fly on UAL between SFO and ORD (as your o & d), then you're using the flight as a p2p. Its more convient for you and cheaper for the airline than making you connect in Denver.

Likewise, if NW flies a 7E7 from DTW to HEL, they are creating a new market. Yes, they could fly poeple to AMS and have them connect to HEL, and yes some people from IND may use it, connecting in DTW. But a new route is still opened, increasing NW's ability to compete by decreaseing costs and and increasing the value of their service. The fact that they are able to get the $ from the poeple connecting from IND (and MKE, and JAX, Etc) is just gravy.
When in doubt, one B pump off
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 7:24 am

Doug,

You assimilate Point to Point as O & D. Interesting.

So LON-NYC would be point to point if for instance your origin is LON and final destination NYC.

However, i don't think this is the Boeing interpretation of Point to Point as they talk about city pairs and not O&D.
Never trust the obvious
 
aerobalance
Posts: 4308
Joined: Sat Sep 23, 2000 8:35 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:05 am

Not just point to point as a selling issue, but an increase in FREQUENCY of flights to a destination throughout the day. A selling point for the business traveler.
"Sing a song, play guitar, make it snappy..."
 
mNeo
Posts: 718
Joined: Fri Mar 26, 2004 8:12 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:11 am

The problem with long rand point to point is maintinance. After a 36hour flight from LHR-SYD BA planes need to be tuned up a little. This system also raises the question of 5th freedom rights. U cant just start flying CDG-DXB-SIN-HKG-CDG (just as an example). WN does not have as many regluations as long haul travel does. Remember that Airlines are looking to attract the customes that buy the buisness class seats. Theres not that great of a demand to fly daily, but also frequency counts.

I think that the 7E7 was desinged for 762/3 A300/310 replacement.
Powered by Maina
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:11 am

Aither, I think that you have illustrated a valid issue.

IMVHO, the 7E7 really is just an innovative 767 replacement that offers better economics (likewise, the A350 is just an A330/A340 replacement).

The extra range from both aircraft is obviously nice to have but... how many totally NEW point-to-point or point-to-hub services will they really initiate?

My guess is very few.

If you look at the OAG data base, there are very few 767 or 330 flights that even approach their range limits.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:16 am

However, i don't think this is the Boeing interpretation of Point to Point as they talk about city pairs and not O&D.

P2P means one thing: flying a flight between two cities that would normally require a connection. O & D is city pairs, think about it...origin & destination, hmm....point 1 to point 2. Boeing is giving airlines the opportunity to fly longer routes without having to stop. This doesn't mean that Boeing sees the hub & spoke system going away, but rather, the hub & spoke system utilizing fewer connections and more P2P, thus releaving the heavy loads on super hubs like ORD & ATL and making it easier for passengers to get where they're going. Airbus thinks that airlines want to make super super hubs, with a bunch of double decker airplanes sitting around a 75 gate concourse. Which sounds more reasonable to you?
 
singaporegirl
Posts: 288
Joined: Thu Oct 26, 2000 5:49 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:32 am

ken777: "A cannot afford to have SQ reject long term use of the 380 (they've done that with another A plane)"

sq dumped b757s in favour of a310s as well. i don't remember the reason though, this was way before my time!  Big grin
Ladies & Gentlemen, we will now demonstrate the use of the safety equipment on this aircraft...
 
User avatar
mariner
Posts: 18182
Joined: Fri Nov 23, 2001 7:29 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:35 am

FriendlySkies:

We've been through this on other threads, and this isn't what Airbus thinks at all.

Airbus does think that there will be some "superhubs". Let's start with one - Singapore - for which there can be no possible alternative within that same country.

So point to point flying isn't going to help much there. Do you really think people who want to go to Singapore are going to fly to Malacca in another country?

Singapore is/will be a superhub, no matter what Boeing says.

There is certainly a market for point to point flights from the US to Britain, say, and other European countries, but can you seriously imagine the day when most passengers flying to Britain don't want to go to London?

Do you want to talk about Russia? The passenger demand is for Moscow and St. Petersburg. I can't see many point to point flights from Indianapolis to Ekaterinaburg doing all that well.

Australia? The Oz government has tried to persuade airlines to fly to other cities, but without much luck - most people want to go to Sydney.

And then there's Africa - but you probably get the point. If you don't, I could go on. And on. And on.

cheers

mariner
aeternum nauta
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:43 am

No, Airbus believe in both (they even say 60+ new routes on the very long range market and that A330 and A340 are designed for these routes).

But they see not that much new city pairs.

Like i said i don't deny the possibility the 7E7 can open new routes. It's just about the type. You say whatever the route, if it is new, it increases the direct traffic so this is point to point, whatever both cities are hub or not.

THE ISSUE OF DEFINITION
So point to point should not be read as basically "non hub" to "non hub" but "direct flight" only (it can be Hub-Hub!). I can accept that definition although in Boeing documentation, it looks like this is not the one they are using but anyway...



But if we admit the "non hub" to "non hub" does not work, new routes will be opened between :
A : hub-hub
B : hub-non hub

For A, i think all the direct routes already exist.

For B, this is indeed the 777, A340/A330 and A350/7E7 market.
The question is how many Hub-non hub routes you can profitably open ?
Maybe a lot maybe not because as mentioned in my first post Airbus is saying many Hub-non hub routes have proved not profitable. I'm not sure the marginal increased efficiency of 7E7 and A350 can change that (ok 20% less fuel burn but fuel burn % of DOC is what 20-30% ?).
Never trust the obvious
 
roguetrader
Posts: 1404
Joined: Tue Aug 03, 2004 5:14 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:45 am

Aither,

You're right to read the detailed market analysis provided by both Boeing and Airbus. Until people read that, they're just giving their opinion based mostly on what manufacturer they like or think is smarter.

You were mentioning the 767, but if you look at the transatlantic market, 767s are doing Hub to point but no point to point. CO for instance has announced new routes using 757 but all I believe are from NYC. Again this is not point to point.

Actually, EWR is not much of a hub for CO, something like 80% of their traffic is from the NYC area, so this is in fact a point to point route, as are, I'm guessing, most long range routes form JFK. Big hubs for international travel in the US are ORD, ATL, DFW - not coastal cities which are good O&D markets, but not good hubs.

SO, NYC (JFK/EWR/LGA) to anywhere is mostly point to point, since not much connecting traffic takes place in NY. If you read the Airbus forecast closely, this is exactly their point, namely, that big cities like LA and NY and London and Tokyo and Paris (and several cities in China), have so much population that they alone require an A380 size airplane, regardless of the connections made in those cities connecting from smaller airports. Airbus specifically cites the point that most people in Asia want to go to either Los Angeles or New York in America, or London or Paris in Europe...and that's it. Asians have little need for connections or service to small and medium sized cities, according to Airbus.

Airbus in their forecast actually agrees with Boeing in that passengers prefer point to point. Airbus is simply arguing that, except for in America, point to point means the traditional big city airports we all know and love. Really, if you look at Airbus predicted markets for the A380 it boils down to either:

1. airlines with not enough capacity at slot controlled airports, namely LHR and NRT
2. Asian passengers to both Europe and America who are thought to only want to go from and to big cities, they DO want point to point, but point to point between two big cities only - they don't need the 7E7 because they aren't interested in service from or between medium to smaller cities.

Anyway, it should be noted that Airbus and Boeing both agree that by far the most jetliners ordered in the next 20 years will be SINGLE AISLE short and medium ranged 737NG/A319 type planes, so a lot of this 7E7 v. A380 debate is missing the boat: the real question is who will when the market for small to medium sized mainline jets?

kind regards,

RogueTrader


[Edited 2005-01-27 00:49:45]
 
Rj111
Posts: 3007
Joined: Wed Sep 08, 2004 9:02 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:46 am

This doesn't mean that Boeing sees the hub & spoke system going away, but rather, the hub & spoke system utilizing fewer connections and more P2P, thus releaving the heavy loads on super hubs like ORD & ATL and making it easier for passengers to get where they're going.

ATL's a pretty crap example don't you think. The 7E7 is essentially a direct 767 replacement, bar the trivial amount of 777's the 767 is DL's big plane. Range isn't a problem for DL's routes, so if they wanted to relive the ATL hub, they'd be doing it already.

sq dumped b757s in favour of a310s as well. i don't remember the reason though, this was way before my time!

Pax preferred widebody comfort.
 
Sjoerd
Posts: 349
Joined: Thu Aug 14, 2003 10:47 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:46 am

Real point to point and frequency (as in a market shift away from hub and spoke) can only be done with an airplane the size of an A319/320 and a range of 8000 nm (and even better economics than the B7E7).

The B7E7 and A350 will just replace B757, B767 and A300, A310 and eventually older A330, A343. In that case the B7E7 isn't too small and is aimed at the right market. The B7E8 is the size of an B763 and A300, the B7E9 is the size of the B764, A332 and A358. The B7E7 pax numbers always talked about seem low, but are for 3 classes, something most airlines won't have.

In the end it comes down to this : Boeing (so far) doesn't have an A380 competitor and Airbus doesn't have a B7E3 competitor (which might help sell the B7E8-9, but won't sell in large numbers itself). Apart from that both manufacturers have a very similar market forecast and product line.

The B7E7 and the related talk of Boeing about how people want point to point is aimed at making the A380 less atractive. Also the media like to emphasize how totally different A and B see the future and this is simply not true.

Sjoerd

[Edited 2005-01-27 01:10:47]

[Edited 2005-01-27 01:12:55]
Flanders + Wallonnia + Brussels = the UNITED STATES of BELGIUM
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 8:50 am

The question is why is Singapore a super-hub. It's because the city-state government's made aviation a priority, but also because their economy was in better developed than many of their neighbors. Will Singapore maintain its advantage over the long term, given that the O&D traffic is naturally limited for a small nation such as Singapore. Will neighboring countries with large population that currently have underdeveloped aviation sectors eventually develop airports and airlines that surpass Singapore's? Will SG's customers eventually get options that allow them to avoid connecting through Singapore?
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
User avatar
mariner
Posts: 18182
Joined: Fri Nov 23, 2001 7:29 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 9:14 am

Atmx2000:

"It's because the city-state government's made aviation a priority..."

Sorry, but that isn't why Singapore is a super-hub - it goes back much further than that, to the founding of the city by Sir Stamford Raffles.

Why did he chose that spot? It has a superb harbor, almost unmatched anywhere else in that part of the world.

Successive governments understood that Singapore had no natural resources - not even rubber as in next door Malaysia - and so they capitalized on the harbor and made Singapore a center of commerce.

The later extension became air travel. But without being a center of commerce, without that air travel, without that harbor, Singapore would be nothing. Do you really believe any government is going to let that happen?

There is no question that Kuala Lumpur and Jakarta will continue to grow and expand and compete with Singapore.

But there seems little reason to imagine they will ever replace Singapore.

Same applies to Hong Kong. It really doesn't matter how successful Shanghai becomes, Hong Kong will always be a major business center, in the same way that London and Frankfurt will always be banking centers.

cheers

mariner
aeternum nauta
 
lehpron
Posts: 6846
Joined: Tue Jul 10, 2001 3:42 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 9:38 am

Boeing is producing a product that will fit their view of what the market will require.

Airbus is produced a product that will fit their view of what the market will be.

I only worded them differently because they didn't start at the same time.

There is no such thing as a 'wrong' market, nobody has the right idea since both are basically banking on the what they think the future needs; they are likely both correct, but magnitude is still a big unknown. One can, however, produce a product that is either too early or too late. Too early is sometimes misinterpreted as 'a market that is not there' -- a pesimistic view point. A380 falls into this category sometimes, sadly. Some say it is either early/designed for a later use or being built for no reason. What would you believe?

10 years ago there was no market for MP3 players, 20 years ago there was no market for wireless keyboards, 30 years ago there was no market for a fuel efficient automobile -- it could have been too early too. All of the above would have need microchips to operate of even be of use. But you could have saved gas money, or not be stuck around a big machine, or not have to lug around your giant mono FM/AM radio.

We can make markets too, one would have to inform their customer as to why they would need it. Those who don't think they need it likely don't know.

Boeing knows, Airbus knows, their contractors know, their potential customers know. There are probably hundreds of aerospace markets out there -- Boeing and Airbus are focusing their attention on their own one. A lot of those markets will require technology/infrastructure that might not even exist yet -- that doesn't meant they are not there. Put your mind to it and put your money where you mouth is. Boeing and Airbus have.

End of discussion, unless you wanna battle emotions, go for it.
The meaning of life is curiosity; we were put on this planet to explore opportunities.
 
roguetrader
Posts: 1404
Joined: Tue Aug 03, 2004 5:14 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 10:26 am

The question is why is Singapore a super-hub.

This is actually a VERY good question, as it speaks to the heart of the hub versus point to point debate - in an international context and outside of America.

Much of the Airbus market forecast is based A LOT on the success of the Emirates and SQ model in the last few years. In a way it makes sense: Airbus is suggesting that the profitable airlines of today are doing right now what will turn out to be the wave of the future - large international hubs with less intrinsic value in and of themselves for O&D. (no offense Dubai and Singapore) In fact, these airlines are concentrating a lot on the exact markets Airbus projects for the A380, namely Asia to Europe air travel and Asia to anywhere long distance air travel.

If markets and aircraft from Malaysia, Indonesia, Australia, etc... can fill a plane and fly OVER hubs in Singapore and Dubai, the market could very well fracture - like what happened in north Atlantic traffic. There are new city pairs over the Atlantic every year - will east Asian traffic show the same pattern? Most actual flying customers who want to avoid changing planes will fly carriers that can offer nonstop service, where this is technically possible and where there is little, if any, price premium for nonstop service. NOTE this could still be on an A380, as Airbus contends that these hubs are necessary to funnel traffic into the few long range destinations Asians wish to travel

One of the main things Airbus says about the A380 is that everyone in China wants to fly to only a couple cities in Europe and America (LA,NY, Paris, London), if this is in fact true and true for the rest of East Asia, the A380 is a big sucess. Airbus says the A380 IS A POINT TO POINT aircraft.

As I said before, what everyone is missing is that the real market, as both A & B admit, is in small and midsize single aisle jets to fill US, EU and Chinese domestic travel.

kind regards,

RogueTrader
 
FriendlySkies
Posts: 3540
Joined: Fri Aug 13, 2004 3:57 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 10:30 am

As I said before, what everyone is missing is that the real market, as both A & B admit, is in small and midsize single aisle jets to fill US, EU and Chinese domestic travel.

Then the true question is, why aren't either of them making one?!
 
Boeing7E7
Posts: 5512
Joined: Sat Jul 31, 2004 9:35 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 11:13 am

This leads to the question : if the 7E7-8/9 are designed for point-point, maybe it is designed with not enough seats or too much range? In fact aircraft like 777, A330, A340 and perhaps the A350 look more appropriate as they offer more seats.

It's designed for not only point to point, but also hub to hub high frequency and hub to new point. Outside a hub to hub environment, there no need for a long range aircraft with over 230 seats. The 7E7-8 will be used for hub to point, point to point (hub bypass) and hub raiding, 7E7-3 a more efficient replacement on US domestic routes and high capacity short hauls in Asia and the -9 will be predominantly a hub to hub solution, with route capacity expansion 5-7 years after 7E7-8 success in a market.

The A-380, as with the 747 serves one purpose. Hub to hub.

As I said before, what everyone is missing is that the real market, as both A & B admit, is in small and midsize single aisle jets to fill US, EU and Chinese domestic travel.

This market is still about 5-7 years out. The ARJ will likely fill the need until they require a larger 737/A320 size bird. By then the 737-E and 320NG will be in the air.

 
lehpron
Posts: 6846
Joined: Tue Jul 10, 2001 3:42 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 12:16 pm

>>"This market is still about 5-7 years out. The ARJ will likely fill the need until they require a larger 737/A320 size bird. By then the 737-E and 320NG will be in the air."<<

Considering how long it takes to even make a derivative, some company that wants to fill that should start now, otherwise they'll be late, eh?

Know any worthy companies that are taking up the potential challenge as we speak? Cuz the better get with da program.

Oooohhh!  Laugh out loud
The meaning of life is curiosity; we were put on this planet to explore opportunities.
 
PVG
Posts: 461
Joined: Wed Dec 01, 2004 7:39 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 12:26 pm

I doubt that people would prefer to connect at hub to save 25 or 50 Euro. The difference has to be substantial to convince people to stop at a hub. The new DL/CO flights to Hamburg/Berlin will be a good test. The key is how many people live within a 1-2 hour driving/commuting distance of those airports. I imagine that both DL & CO have done a little homework and discovered that many of their flyers from Frankfurt actually originate in these 2 cities and that there might be a market. If they are successful, I can bet that you will see alot more of these type of flights.

Singapore is a hub because Quantas has to stop to re-fuel for their European flights and figured out that they could pick-up many high paying premium customers in the process so they have a substantial operation there. SQ&EK also enjoy monopolies for now. If they had more competition, their current model may not look very good. I'm currently trying to book some travel in the mid-east and am discovering that everything seems to have to connect in DXB and the fares are very high. I don't quite understand why, but I certainly would prefer to be able to fly point to point rather then wasting an hour or so on the ground and especially if it doesn't really save you money.
 
User avatar
mariner
Posts: 18182
Joined: Fri Nov 23, 2001 7:29 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 12:37 pm

Boeing7E7:

"The A380, as with the 747, serves one purpose. Hub to hub."

Um - so where does Auckland fit into that theory? Both Qantas and Emirates (apparently) intend flying the A380 there, but it is not a hub for either of them:

http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10007192

It is, I agree, a hub, but for Air New Zealand, who have not ordered the aircraft.

cheers

mariner
aeternum nauta
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 12:42 pm

I think the 7E7-8 and -9 are a great idea.

I think the -3 will appeal to the Japanese and nobody else.

Come on, tell me that there's nothing to replace 763s and A300s. Well, the 7E7-3 isn't really it either.

The 7E7-3, in the new published configuration, will carry almost 300 passengers. The 764 (which is longer, but not as wide) carries about 20 less than that, and we saw how well it sold.

300 seats is a lot to fill on 3500nm stages these days. I don't see DL rushing to replace their 762s and 763s with 300 seat planes, personally, nor really many other carriers.

N
 
User avatar
lightsaber
Crew
Posts: 11828
Joined: Wed Jan 19, 2005 10:55 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 1:26 pm

I think the 7E7 is marketed into the correct markets. Let's just take the 7E8. The initial point to point will be from large cities for their O&D to trans-ocean destinations that were not served before. Take LAX (my home airport) to Berlin or any other non-direct flight from LA to Europe. Those are the types of markets that will be opened up at airports serving large O&D markets with surplus runway/terminal capacity. Contenental's use of 757's from Newark is a prime example of good potential 7E8/9 routes. One can connect almost any city in the work to London, Paris, New York, Tokyo, Chicago, Los Angeles, Hong Kong, and a few other cities as long as their is runway capacity and an aircraft sized for Multiple flights a day.

Heck, for certain markets, the A380 could do "point to point" (LHR-JFK, LAX-NRT, etc.) For most, a smaller airframe is required.

Oh, Singapore is a trade hub because the Straights of Singapore are a natural path for shipping lanes. Think of the oceans like a grass field; while you can walk anywhere, defined paths logically spring up between common destinations (ok, help me, I'm paraphrasing an old book I read, but I'm not recalling the author or title.) The straights of Singapore, Straights of Gibraltar, Suez Canal, Panama Canal, and cape of good hope are all natural trade focal points. Good management/government only helps a positive trend.

Lightsaber

Lightsaber.
"They did not know it was impossible, so they did it!" - Mark Twain
 
ckfred
Posts: 4714
Joined: Wed Apr 25, 2001 12:50 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 3:16 pm

The thing that you have to remember is that most European and Asian carriers fly internationally from one hub, or maybe one large hub and one smaller hub.

U.S. carriers tend to fly from several hubs. UA flies from ORD, IAD, JFK/EWR, SFO, and LAX. AA flies from BOS, JFK, MIA, ORD, DFW, and LAX. DL flies from ATL, JFK, and CVG.

The A380 won't work with U.S. carriers, with the possible exceptions of NW and UA flying to Asia. But, both carriers seem content with their 747 fleets.

In addition, U.S. carriers work on the model of flying smaller planes more frequently. AA flies ORD-LHR 4 times a day, with a 5th flight during the summer, using 777-200s. If AA thought it could fill 2 747s on ORD-LHR, then that's what it would fly. But AA, and other carriers, feel that travelers want a choice of departures. So, instead of flying 2 747s with a lot of empty seats, if flies 4 777s that are often full.

That's why U.S. carriers won't have a lot of interest in the A380. But, they will have interest in the 7E7, particularly when they get their finances in order. There are a lot of 767s and A300s that are getting up there in years. These are prime candidates to be replaced with 7E7s.
 
Boeing7E7
Posts: 5512
Joined: Sat Jul 31, 2004 9:35 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 4:02 pm

Um - so where does Auckland fit into that theory? Both Qantas and Emirates (apparently) intend flying the A380 there, but it is not a hub for either of them

I'm sure well see a 380 flying from Kanas City to Berlin real soon... Not.

They'll never fill that thing out of Auckland.

[Edited 2005-01-27 08:07:16]
 
PVG
Posts: 461
Joined: Wed Dec 01, 2004 7:39 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 4:47 pm

The question is would AA be making more money if they flew 2 747's or 380's ORD/LHR I/O 4 777's daily regardless of what people want? They may want, but will they pay?
 
Boeing7E7
Posts: 5512
Joined: Sat Jul 31, 2004 9:35 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 4:51 pm

Considering they have an 89.7% LF in that market, the answer is no... They wouldn't be making more money.
 
AApilot2b
Posts: 451
Joined: Wed Nov 01, 2000 12:38 pm

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 9:24 pm

History is a good prediction of the future. In the seventies and early eighties, the 747 dominated North Atlantic routes. For example: if you were flying to Atlanta, Georgia, from Manchester, England, you were routed via London and New York. The introduction of the 767 caused route fragmentation and today you can travel directly from Atlanta to Manchester on a smaller twin. This phenomena repeated itself all over the world. By the mid nineties the 767 became the dominant aircraft over the North Atlantic and today these twin jets still rule. Passengers can fly point to point over numerous routes that were not available in the past. Hello?
Of course Airbus is going to play down the 7E7 market. They have placed their hope in the A380 (which is fine). However, it is unrealistic to state that route fragmentation will not continue. Passengers want convenient, cheap flights. The 7E7 will offer both.
 
moman
Posts: 708
Joined: Tue Aug 10, 2004 7:17 am

RE: Is The 7E7 Designed For A Wrong Market?

Thu Jan 27, 2005 10:41 pm

Aapilot2b, quite insightful (and correct!)

As I said before, what everyone is missing is that the real market, as both A & B admit, is in small and midsize single aisle jets to fill US, EU and Chinese domestic travel.

Then the true question is, why aren't either of them making one?!


For continental US flights, I think this here is the devil in the details. Both Boeign and Airbus have missed the opportunity here with the 318/717 market. B seems content to let the regional jets fill the market but EMB jets will start to get bigger and bigger until they are bumping up right under the 737 and B will start to feel a little uncomfortable about this. AA has mentioned they would love a 100-seat aircraft. I bet there are other customers that could also have a use for it. My feeling is Boeing will do an about face and reintroduce a small jet about the 717 size.

The future in the US here is more frequencies with smaller jets. RJs can only do so much. Southwest has proven this model time and time again.

The 7E7 will apply the same "inter-US" model on a world scale. There will be a large market since the jet will be so versatile. The A380 will successfully serve a niche market, mainly in Asia and the middle east. The 747 is flying history but it is yesterday, not tomorrow. 35+ year old design.

People today are trained to believe if it's not new, it's junk, and while we on here know better, the general pop. does not. There is a reason TWA advertised "the youngest major fleet" and why ATA now advertises "one of the youngest fleets".

Moman






AA Platinum Member - American Airlines Forever
 
milan320
Posts: 818
Joined: Mon Jan 03, 2005 2:25 pm

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 1:04 am

I'm sure well see a 380 flying from Kanas City to Berlin real soon... Not.

And do you think we'll see a 7E7 flying from Kansas City to Berlin? I doubt it ... how many people go from Kansas City to Berlin on a regular basis? I doubt a lot - they won't be able to fill the plane, so it won't be profitable. For those who'd like to go from Kansas City to Berlin - they'll have to go to a hub.

/Milan320
I accept bribes ... :-)
 
User avatar
mariner
Posts: 18182
Joined: Fri Nov 23, 2001 7:29 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 1:22 am

Boeing7E7:

"They'll never fill that thing out of Auckland."

And you know this how?

If they can fill, as they do, several 747's a day out of Auckland, then a couple of A380's shouldn't be a problem.

cheers

mariner
aeternum nauta
 
User avatar
RayChuang
Posts: 8005
Joined: Sat Jun 24, 2000 7:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 1:31 am

I think the 7E7 in the longer run will be quite popular.

One reason for this: there are too many 767's, A300B's and A310's that are approaching retirement age and frankly, most airlines don't want the very long ranges of the A350 or the 7E7-8/9 models. I do think that Boeing may develop an intermediate range (about 5,000 nautical miles) range 7E7 based on the 7E7-3, and that could become very popular from 2010 on.
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 1:52 am

Refer to my previous comment on this. The 7E7-3 is too big to be a good replacement for A300s, A310s, and 2 class 767s.

300 seats is a ridiculous amount for these markets.

N
 
Rj111
Posts: 3007
Joined: Wed Sep 08, 2004 9:02 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 1:56 am

It'll be a perfect replacement for the A300 Gig (it's an almost identical size) and ok for the 763. A310, 762 757 -200 and -300 are pushing it though.
 
gigneil
Posts: 14133
Joined: Fri Nov 08, 2002 10:25 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 2:04 am

300 seats is 20 to 30 more than you put on an A300, and 40 to 50 more than you get on a 2 class 767-300.

Sure, I think its a possible replacement for high density routes. AA, for example, could fill a 7E7-3 on its Caribbean and northern South America routes nooo problem, and I think it would be beneficial for them to do so.

Delta could probably use it replace their 764, but I think they'd think twice before replacing their domestic 763 with it. Further, it wouldn't fit the bill for DL's Hawaii ops, they'd have to fly the 7E7-8 on that.

I stand by my thumbs up to the 7E7-8 and 7E7-9 and thumbs down to the 7E7-3.  Smile/happy/getting dizzy

N


ps. I'm not exactly sure how boeing is getting to a 300 seat number for the 7E7-3. I mean, the plane was 217 seats in three classes not too long ago, then it went up to what 225? Putting in 70 more seats by going from three classes to two is a big, big difference.
 
ckfred
Posts: 4714
Joined: Wed Apr 25, 2001 12:50 pm

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 4:07 am

The fact that the 7E7 has three series, -3, -8, and -9, tells me that Boeing has left some room for future versions, including a version that has the passenger capacity of the -8 or -9, but with the range of the -3. There could even be a version that carries around 200 in a 2-class configuration with the -3's range, which would be in the middle of the 2 class 757 and 767-200 in terms of passenger capacity.

I know a number of people who miss flying domestic long hauls on DC-10s, L-1011s, and 767s. These planes are roomier and can board and deplane a lot faster than a 757. If Boeing can design a -2 series that has the -3's range, but with 200 seats in a 2-class configuration, and costs less to operate than a 757, that plane will become the 757 replacement and probably will end the A321 production.
 
Aither
Topic Author
Posts: 991
Joined: Mon Oct 25, 2004 3:43 am

RE: Is The 7E7 Designed For A Wrong Market?

Fri Jan 28, 2005 5:36 am

OK,

It seems nobody really believes in point to point as “non hub”-“non hub”. Even the examples given above seems all linked to at least a hub (or a major city – we can indeed debate whether NYC or LAX are hubs). I also believe routes like Kansas city – Berlin would not work.

So what remains is large cities to smaller places.
The transatlantic is a good example where many smaller places have some transatlantic services, mostly on the american side. But I tend believe that this fragmentation belongs to the past as the most profitable markets are now served. For instance, if I want to go to the U.S., I would choose to go to NYC, WAS, MIA, SEA, LAX, SFO, DFW, DTT, LAS… and basically that’s all. I don’t think I will have some business to do in Kansas city one day. The issue here is that all these destinations are already directly operated. So what’s next ? or how big can be the new remaining transatlantic routes ?
Interestingly, despite all these new large routes, there is no less traffic on the large routes like LON-NYC. So where is the fragmentation effect ?

Also I don’t think we can use the transatlantic as an example of what will happen elsewhere for many reasons. One is range is not the same so increased frequencies to more than one or two daily flights is irrelevant (time windows, convenient schedule, aircraft utilisation).

But I didn’t want to talk too much about frequencies but rather about the new long range route opportunities that remain and Boeing say the 7E7 is designed for (in addition of replacement on existing routes).

[Edited 2005-01-27 21:39:06]
Never trust the obvious