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Boeing Needs A Competitor To The A321LR More Than Ever

Boeing and Airbus have been the two dominant commercial aircraft makers for decades. The Airbus A320 created real competition for Boeing’s long-serving 737 line, and that competition has made both products better. Boeing kept the lead on wide-body aircraft even as Airbus continued to take share of the narrow-body market. The well-documented troubles of the Boeing 737 MAX created a share gain for Airbus that will take Boeing years to recapture, if that is even possible.

Two older Being models, the 767 and 757, were real workhorse aircraft that filled an important space between the narrow-body aircraft and the larger wide-bodies created by both companies. The original Airbus A321 was an underpowered, range-constrained airplane that seemed like it wouldn't be much of a threat to Boeing’s dominance in the 200+ seating category when it first was released. But, how things change, and now the A321neo, with its LR and XLR versions, is the most sought-after aircraft in the category and leaves Boeing without a valid competitor for a space they used to control. The 737s are too small, and everything else larger that Boeing makes is too big.

With wide-body airplanes currently a drag on airline earnings due to the decimation by Covid of many of the international long-haul routes they’re used on, Boeing is caught looking from the outside as airlines decide on their fleets for a post-pandemic world in this critical size category.

Filling The Gap

Boeing recognizes this and is in discussions, once again, about a New Mid-Market Airplane (NMA). Not everyone is convinced this makes sense, given the current availability of the A321 series and long time to market for a brand new airplane. Airlines are making decisions now about how long-haul traffic may return, and what routes will stay and which markets will be carried through hubs versus flown non-stop.

The A321’s attractiveness comes from the fact that it has the operational costs and seating capacity of a narrow-body aircraft, but range to fly all but the longest routes worldwide. This creates opportunity to add point-to-point services in midsize markets, but also to efficiently feed hubs from a wide range of destinations. As Simple Flying points out, the “race is on” for this market and Airbus has a huge lead. This same article also reminds readers that the original Boeing long-haul plane, the 707, was a narrow-body aircraft that opened many new long routes in the world. We are clearly back to the future with this size aircraft.

Wide-Body Risk

Wide-body aircraft are more expensive to buy and more expensive to operate than the smaller narrow-body aircraft. They can make more money in good times, but lose a lot more money in weaker times. The current environment for long-haul travel is definitely weaker, and it is unclear when demand will return that can pay the fares needed to justify these larger aircraft. This makes narrow-body options a lower-risk opportunity for most airlines that fly longer distances. The A321LR and XLR models can't fly everywhere, but they open up more markets than were previously available with these economics.

It is tough that Boeing, long the dominant player with their 757 and 767 models, has been caught without a good competitor in this space. They can’t sell the 787 cheaply enough to make up the difference in fuel burn, size, and overall risk of operation, for a big new range of routes. Of course there are routes that will still justify this size category, but they are fewer than before and importantly Airbus has the only readily available product to take advantage of this growing middle-size market.

United Airlines’ New Order

United Airlines just placed a large order for 270 new airplanes, and while 200 of these were from Boeing they still ordered 70 Airbus A321neos as well. The Boeing 737 Max 10 is almost the same size and will try to absorb some of this space, but it is still a tad smaller than the A321 and it is brand new and unproven. Had United seen the 737 MAX 10 as a true competitor to the A321neo, they may not have split the order by adding those 70 A321s.

Don’t Count Boeing Out

Despite a tough current position in an important size category, no company understands the long-term nature of these products better than Boeing. Short-term gains in one period can become share losses in another, and Boeing continues to regain momentum with the 737 MAX aircraft. They understand this size category and what it will take to be competitive again, and as good as the Airbus products are they can’t make them fast enough to fill all of the near-term demand.

The world is better when Boeing and Airbus compete, which results in better products and better pricing for airlines, resulting in economic flights for consumers. If China can get their commercial aircraft competitive in the next few decades, that will add to an already robust worldwide marketplace promising to connect the world in ever more-efficient ways.

S: Forbes

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