My own dream was for a twin aisle middle body aircraft with seven across seating, totaling 200 passengers and a 6,000 mile range. The dance card at Boeing Works is full until 2025. That is when better things will come again for speculations on airplane growth. I could imagine another 787-300 type announcement at that time, as passenger seat counts continues its growth.
As discussed, three replacement scenarios are analysed: replacing the 757 with smaller aircraft and maintaining a daily frequency of five flights per trip; replacing it with smaller aircraft and increasing frequency to maintain daily seat capacity on a route; and replacing it with larger aircraft at the same daily frequency where traffic growth is high. The best aircraft to replace the 757 are those providing the largest trip cost saving per seat reduced, or the smallest increase in trip cost per seat added. The marginal cost per seat reduced or added should be considered against the average cost per seat of the aircraft concerned.
Smaller aircraft, same frequency
The effect on the total seats supplied and total trip cost for operating five daily flights with the 757-200 and the six replacement options is shown (see table,page 31). The first issue to consider is the average cost per seat for each aircraft type. Trip costs for each have already been discussed, as well as the split between cash direct operating costs (DOC) per seat and finance or lease cost per seat.
The 757-200 has the highest cash DOC per seat of all seven aircraft types. A lease rate of $350,000 per month makes its total cost per seat relatively high compared to the other types except the 737-700 and A319, which are the smallest. Lease rates for the 757 are highly variable, however. Unsurprisingly, the largest types (the A321 and 737-900ER) have the lowest costs per seat, with an advantage of $6-8 over the 757-200.
The A321 is the best option, since it offers a 10-seat smaller capacity and a $2,100 lower trip cost by comparison: a cost more than $214 lower per seat reduced. That is, the five flights have a $10,700 lower cost than the 757-200’s five flights, but the A321 offers just 50 seats less (see table, page 31). This saving compares to the A321’s cost per seat of $71. The 737-900ER is similar, and saves $153 per seat reduced, compared to its cost per seat of $73. These reductions in seat numbers are also likely to be accompanied by a stronger yield mix, and so higher revenue per seat. Airlines could thus benefit from both more efficient aircraft and stronger revenues. The 737-800 is the next most efficient and the A320 has a marginal advantage of $2 per seat. Despite having lower cash DOCs per seat than the 757-200, the A319 and 737-700 have total costs per seat higher than the 757-200.
Smaller aircraft, same frequency
If unrestricted by airport and airspace congestion, airlines may choose to replace the 757-200 with smaller narrowbodies operated at higher frequency, providing a daily seat volume close to the 950 provided by five 757-200 flights. In this case the A321 and 737-900ER have to be operated at five flights per day to provide a total number of seats as close as possible to the 950 generated by the 757-200’s five daily flights.
The A320 and 737-800 have to be operated at six flights per day, and the 737-700 and A319 at seven flights per day. The overall effect on the number of seats provided and total trip cost is shown (see table, page 31). The 737-800, A321 and A319 provide the biggest saving per seat reduced or added. The 737-800 has a $3,640 lower trip cost operating at six flights per day and giving just 10 seats more than the 757-200 at five daily flights (see table, page 31).
The 737-800, therefore, offers a substantial reduction in operating costs for a slightly higher seat capacity. The A321 and A320 both offer 900 seats, 50 less than the 757-200, and also have lower trip costs. Both have a large saving per seat reduced, but the A321 and 737-900ER offer the second and third most economic options. The A319 and 737-700 have lower total costs, but the reductions are small in relation to the reduction in total seat numbers.
Larger aircraft
In this scenario the effect of operating the 787-3 and A330-200 at four and five daily frequencies compared with the 757-200’s five is analysed. This increases the number of daily seats by 200-515, or by 21-54%. The main issue is how the increase in total trip costs compares to the extra capacity. The additional cost per seat added is higher than their average cost per seat, indicating that airlines will have to increase their yield mixes and average revenue per seat to cover the higher cost of operating larger aircraft. Higher belly freight capacity may help. The option of using larger aircraft is, however, only likely to be partially adopted by airlines replacing their 757s with larger aircraft on two or three of the busier daily frequencies.
This will be at times of the day when load factors on the 757 are so high that unacceptable levels of spill occur, and also when there is a high level of demand from business passengers paying high yielding fares. The 787-3 has a trip cost of $81 per seat, and the A330-200 a trip cost of $82 per seat, $2 and $3 more than the 757-200 respectively.
Their modern designs give the 787-3 and A33-200, however, lower cash DOCs per seat than the 757-200. The difference in overall cost per seat is marginal, however, and remains highly sensitive to the actual lease rates of the aircraft analysed. Lease rates will be the most important factor determining if it is economic to replace the 757 with larger types. While airlines experiencing high traffic growth may have little option about introducing larger aircraft, they should at least benefit from stable passenger yields when growth rates are high.
Summary
Although the 757 is old, its fuel burn performance is still affordable. Its maintenance costs, although not significantly increased with age, are higher than those of the narrowbody aircraft offered by Airbus and Boeing. The Blended Winglet system may prolong the 757’s operating life with original operators. The conversion-to-freighter modifications for the 757 are likely to provide an attractive exit strategy for some airlines. Replacement with the A321 or 737-900ER in an environment of strong competition and weak yields are among the most attractive options. These aircraft are of lighter designs, have lower maintenance costs, particularly engine reserves, and have lower fuel burns. The A320 and 737-800 also provide economic solutions in some circumstances. Although not analysed, airlines can of course finely adjust their capacity requirements by replacing 757s with mixed A321/320 or 737-900/-800 fleets as required. This is the main purpose of three- and four-aircraft families, which is to provide airlines with seat capacity flexibility and match supply more closely with demand Replacement with larger aircraft in strong passenger markets is most likely to be economic when 757s are replaced on busier flights. This is because high yield mixes will be required to cover the higher costs of operating these aircraft. This will be at peak periods when demand from business passengers is high.
AIRCRAFT ANALYSIS & FLEET PLANNING
ISSUE NO. 42 • AUGUST/SEPTEMBER 2005 AIRCRAFT COMMERCE
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