Friday, June 20, 2014

The Enigma Of Unidentified Customers Drives Boeing's Order Book

Boeing received a boost to its 737 order book this month and has several other orders swirling about in order limbo. Recently it received an order for 80 737 in the form of maybe 60 Max and 20 NG from one customer. Also...

Jiuyuan Airlines is to take delivery of its 50 Boeing 737s by 2020


"Jiuyuan Airlines is a planned Chinese LCC start-up, expecting to launch services in Aug-2014. The carrier will be a JV between Juneyao Airlines and CTI, with Juneyao Airlines to hold at least a 70% stake. The start-up will focus on secondary and third-tier cities from its hub at Guangzhou Baiyun Airport. The carrier also has plans to expand to serve destinations in South Asia, East Asia and Northeast Asia once it has consolidated its domestic network. Jiuyuan Airlines plans to initially operate three leased Boeing 737-800 aircraft in a 189-seat, all-economy class configuration. The start-up has future orders for 50 Boeing 737NG and MAX variants. Jiuyuan Airlines was was officially established and registered in Baiyun District on 02-Apr-2014 and is now in the process of applying for its air operator’s licence with CAAC".

The Orient is beginning to become Boeing's go to market for single aisle 737's. The 737 standard is rapidly becoming the choice of airline operations as a complete package, while customers may add operational gap filling services from Boeing, such as its "Edge" program. The edge offers support programs that would keep all new equipment flying when an upstart airline may lack the technical upgrading of its staff, as it keeps up with an infusion of new aircraft.

I've never even heard of Juiyuan Airlines, as of today. It’s part of the Enigma of Boeing's unidentified 737 customers, which will have a reveal sometime in the future. The Boeing marketing team always falls back on, "it’s up to the customer to announce fleet aquisitions". China, a burgeoning market, has many mystery players, Shangdong Airlines and now Juiyaun. Fifty and Fifty and now 80 float about aviation's competitive realm. The key here, is that China, Asia, and the likes are guarding its order books, which grows Boeing's Unidentified Order Book in significant number. The order battle field has shifted to China. No longer are sales campaigns ensconced in Europe or North America. 

For the next ten years, it will be China, as Boeing has predicted in its prognostications for the market. Billions of people, new economic growth have placed China as the place to do business. It is important for the aviation duopoly to sink its heels into that market as it had predicted it needed to do last year, or from prior years of reports.

Now the many Chinese airlines would prefer to keep its order book unknown for a while, so its own Chinese competitors cannot read the "Tea Leaves" very well on its purchases. 

Since, there are only a few producers, Boeing, Airbus, and Comac in the running currently, it would be important for those customer airlines not to tip its hand. Boeing wants no part in displaying a Chinese Airlines intent on equipment at this crucial stage of fleet expansion.

Every time a Shangdong announces for fifty it causes a Chinese ripple across aviation's market place because of China's former locked potential is beginning to unravel, and any unwanted Boeing announcement causes like minded competitors in this huge market to adjust its game plan. 

Boeing's recent string of 737 orders "unidentified", and "announced", have been at a relatively fast pace. This Boeing order pacing may continue towards the end of 2014. 

Not knowing all the airlines in China, whether a start-up or established, it will be exciting time to follow the region's ordering during the next six months. 

Ordering season has officially started in China, and Boeing is playing a huge role in this endeavor. Therefore, a caution is issued, "learn all the names of Chinese based airlines whether in start-up phase or legacy airline for China". 

The stepping stones for growth are being placed in China at this time. Go for regional services, order 737's stones. Go international, order 787, and 777 stones. The path to international travel is through a strong regional (China region) operation first for a few years, then expand upon opportunity of available international routes. 

Picking the right airplane maker first, is the pathway to future orders later on, when routes expand. Fifty 737's ordered now, indicates that a customer would order 787/777's later, as the airline customer expands its fleet.  

Boeing has a nurturing plan for growing airlines around the world, and the Chinese market is ripe for this kind of nurture on airline's business models.