Sunday, September 8, 2013

Max Effort Will Beat The Neo Flight

The 13 % percent fuel burn claim for the 737-800 Max over current models will beat a similarly appointed Neo from Airbus by 8%. With the CFM engine maker who is set with GE  going down the hallways of design, a certainty will achieve that result. All the early rush in the market going for Neo has formed a substantial waiting line with its 60% market partition lead over Boeing's 40% sales stable of newly ordered 737 Max's. This aircraft, the Max, came to the market one year later after Airbus rounds up a substantial number of Neo Flights during aviation's Paris and London market places. I readdress the Max and Neo contemplation one more time, and it won''t be the last time, until after first delivery of both aircraft.

Calgary based, West Jet is going to order 40 737-800  and another 25 737-700 Max from a signed letter of intent, and pricing the tentative order at 6.3 billion. There are plenty of mega orders for Boeing prior to this order as it has gathered more than 1300+ Max's to date. Even though Boeing still is behind on the A-320 Neo, in total order book account, because  its loyalty representation for Airbus in orders had one more year of sales work before Boeing's launch date. That sales order saturation is also mirrored by Boeing's plight of loyalty orders for the Max, which is the continuous fleet renewal onslaught found in the nifty single aisle market.  West Jet is a Boeing customer. What has not been discussed is the trench warfare sales campaign's going on from Hotel to Hotel and corporate offices around the world. That is where the value of both competing Airlines will make its point.

The question of who has the best airplane for the market will be answered during the 2014 campaign with the following prospective customer types.

  • New emerging Airlines with no allegiance established
  • Total Fleet renewal Needs
  • Mixed Fleet Airlines consolidating inventory
  • Age of senior pilots and personnel turn-over, retraining staff with better equipment.
  • Front Office Plans towards creating new fiscal model for profitability
These points illustrate areas that both manufacturers are keen to wedge-in and take some orders from companies who are seeking to compete with the big dogs. That is where capitalization, pricing, or operational costs advantages can make up a lot of ground, when competing in the market. Boeing will like to tell first time Boeing buyers we have the technology, we have the price and we have aircraft capacity that will beat out your competitors for your size of market. The 787-800 Max has more seats and goes the distance on less fuel. Boeing will employ the "Edge" system on emerging marketers throughout the world.

Phase two, is always seeking to find a way for taking away loyalty customers from Airbus. That is where the new Max and CFM come into play. If you fly 3,000 miles with 12 more people on-board than your competitor, who will be offering a 8% less fuel economy (Airbus similar advanced  Neo model), its a no brain-er.  Especially if you have a mixed fleet of A-320's and 737 NG's. Then turn-over your aging A-320 fleet into the Max line. Companies can make a transition easily with training in-house and its existing NG maintenance crews. 

Over to the really dedicated Neo-flights, those companies that fly exclusively, Airbus. Boeing won't solve that sales dilemma, but the market-place will adjust by draining the Airbus swamp of its customers if the 737 Max lives up to its advance proclamations of 13% edge over current model flying, leaving the Neo back behind by 8%. It will be a slow process, but a doable one as the new "start up types" start to erode routes of the Airbus customers. The economical types like SWA in the US and Ryan Air out of Ireland are raising eyebrows as to how vulnerable Airbus fleets are to the 737. When the Max hits the fan blade, it may too late for Airbus' aspirations for the single aisle market.