Thursday, June 25, 2015

Fracking The Aviation Market

Fracking is a term used for extracting deep oil deposits in well establish rock formation holding an oil reserve. A drill path goes down through to the rock layer, makes a hard turn into the horizontal layer, and then exploits the layered strata with explosions releasing the oil.

The world is divided into two major aviation framers, Boeing and Airbus. The aviation strata Boeing needs to exploit, is Airbus' cadre of customers. Entrenched in hard layers are duration of time familiarity, training cost, and operational convenience. Boeing has breached operational efficiency in the market place, but lacks a fracking technique which would dislodge Airbus customers pumped up by Boeing and vice-versa for Airbus.

The Aviation market grows more fixed than flexible out of billions required for making a change to another frame maker. Qatar has chosen the cream of both framers' crop for its offering. It went with the more is better for installing fixtures in a Qatar aircraft, going Airbus in numbers and Boeing for class type.  The Boeing 737 is the exclusive market model for Southwest Airlines, a mid-sized footprint in the world of travel.

Can an all Airbus Fleet be fracked? The answer is hoped for in this introduction on a fixed market vs a flexible market. A fixed market customer is someone like SouthWest Airlines. A flexible market is the Qatar example even though it’s leaning towards Airbus at this time as it loves the 787 in its fleet.

Fracking the market has its best results during a fleet renewal period.

Every time an aircraft becomes obsolete through time and use an airline needs an explosion changing its preference. An Airbus A320 NEO quickly filled the opportunity gap for its existing customers. Yes, Boeing hesitated, because of the 787 capital outlay in 2010. Boeing didn't frack the Airbus Market five years ago, and it is now paying for it with Airbus Sedimentary customers. The question is pushed forward to the year 2030. The next great fracking will occur in the single aisle market place. Who comes first will lead the way. Boeing must revolutionize the single Aisle Market by 2030. It will frack Airbus sideways unless they counter offer ahead of Boeing.

The developmental pushing and shoving has just started. The A-320 NEO is a placeholder as the name implies. The 737 MAX is a stop gap name as it also implies. Both are adequate, and both fell victim to money spent on other projects first.

In 2030 the airplane words should be a dedication to the single aisle renaissance!

Plastic and engines added to less drag will frack the competitor immensely, releasing its valued customers to the winning framer. Boeing has to plan now for the next paradigm shift.

Opportunity replaces the fear of not doing anything. The new Boeing CEO has his objectives in view long before this is written. In short today's offering is a follow-up to yesterday's ramblings. Boeing is in good hands as it has the best team.