Saturday, February 25, 2017

Boeing and Singapore Air Validate A "Sea Change"

The A-380 is bigger than most visionary predictions. Boeing complained when the A-380 first delivered that it had a shorten order book and Airbus wouldn’t turn a profit with the big bird. Boeing believed that from its own waning 747 orders. It didn’t expect to beat the A-380 many attributes, but did want to dampen the Airbus enthusiasm for its Opus Grande rendition of "Ride of the Valkyries". The Airbus A-380 will never make it to Valhalla.

This visual metaphor for the A-380 has a group of back-slapping Boeing execs restraining from singing the “I told you so chorus” as Singapore Air unloads its leased A-380’s (5) and will hold on to its remaining nineteen A-380’s it had purchased.

If Batman’s Robin were in the house you might hear a “Holy flying pig” exclamation! Because Boeing just sold 20 777-9X to Singapore Air. While having only nineteen A-380’s in its fleet, the message is not lost on the aviation world as it will receive 20 777-9X over the next years in a stream of deliveries mirroring the same retirement rate for Singapore’s fleet of A-380’s in total. The icing came when Singapore had already booked 30 of Boeing’s 787-10, thus covering every route Singapore had and will have going forward. It ordered an additional nineteen 787-10’s for expansions of its Markets.

Seats are seats going everywhere:

  • A-380: 545 seats X 19 = 10,355 passengers going 19 places to and fro.
  • 777-9X: 405 seats X 20   = 8,100 going 20 places.
  • 787-10: 330 seat X 49    = 16,170 going 49 places.
There is ample room to replace the A-380, as a planner now has 24,270 Boeing seats that can fly to 69 locations a day. Hanging on to the A-380 would handcuff Singapore Air from its market expansion plans when it goes long or regional risking not filling seats.

Singapore can now open up new routes with the Boeing orders. Even though it was keen on the A-350’s ordered for its fleets, the signal is loud and long Boeing has a critical offering that completes Singapore’s plans. It didn’t order more A-350’s? A two manufacturer fleet gives Singapore dominance beyond it region for years to come, but the A-380 is good until the last 777-9X is delivered from this recent order.

A further danger exists for Airbus if Singapore develops longer thin routes requiring less passenger density. It may order some 777-8X when those routes are established. The flexing of commonality from type to type is way more flexible with Boeing than Airbus in this case.

A final thought, the aviation world watches each other with due diligence because opportunities are shrinking as every airline expands its footprints. The Middle East is ahead of the curve with its order books, however China lags and has notice this Singapore nuance. Then EVA Air ordered 24 787-10’s. There is a sea change happening and Boeing has caught a tailwind from that change.