Airline Supply And Demand (101) Is Off The Tracks

A Train pulls up at the station and the passengers walk on board. Without little attention the passenger is seated and gets comfortable as possible, Snoring passengers and crying children take little notice for the new passenger. Only the passenger then squirms about a little and thinks about the Train fare and wishing for a private compartment. It doesn’t matter what train maker or car builder represents the system this is the only way from here to there.

The $99 fare for the next ten hours is more of an adventure than a vacation. The Train is an immovable market object because it is what it is, an immovable market object going down the track whether or not it competes.

Airplanes are not much different than the train example. The passenger becomes a fixed object and the airplane becomes the variable item on a quest to make money. If it takes narrower seats or less pitch to make money so be it, the fixed passenger won’t change the dynamic unless something else happens where money can be made. That is the essence of free market evolution in the 21st century.

The airline industry is entering a period of more space for its passengers with less room used on the aircraft. Eventually the scientist are projecting a standing passenger rather than a seated passenger giving the traveler more room. Putting on a $400,000 helmet gives the passenger the universe through its thoughts and eye motions. The body is packed snugly in rows upon row of other bodies hooked up to that helmet.

Economy Plus Cabin Sans Helmet

In fact the airlines will advertise the best helmets showing tropical flora and fauna while sending scents of pineapple to a passengers sensory organs. It may also induce sleep for an extra charge, even if landing in Alaska on a Pineapple express.  

Additionally, the premium economy position supports the passenger with nine vertical positions. The business class has a hard sided container making it more than just an economy body bag. First class brags of lie flat vertical incline of 45 degrees. They even get a wake-up call before landing. Restrooms or sanitary stations summons a flight attendant coming from a “seat” passenger's helmet by looking at the Icon for such service longer than five seconds. Then the flight attendant will move you and your flight bag out to the center aisle as if you are a hanging side of beef on a meat hook.

Passengers wonder where the word "seat" comes from since the tradition of posing like the letter K was mentioned in ancient history has long been an abandoned custom of travelers.

Why is this so and what happened to the traveler? 

"The airlines drove the airplane maker to this and it comes from corporate profit margins just for its owners, the stock holders,” exclaims the Steward of Airline services standing at the boarding counter.

“It’s all for the passenger’s pleasure and safety after-all”, trumpets the sign over the exit.

Upon hearing this, I googled "flight bag" and it gave the answer in clear terms, “The passenger space found on an airline wrapped in a bag, box or placed on a slanted board”.

Sounds reasonable as I studied further on the laws of supply and demand. Demand drives the market and supply drives demand. Not being confused I went back to the train station analogy and saw the wisdom of trains are trains in spite of a $99 fare. 

The rails are so wide and the engine so big. Crossings are crossings and passengers demand its square foot of room as stated in the Constitution of Travel. This is also known as COT as a place guaranteed even on safari.

Therefore, the laws of supply and demand starts with the airline demands in order to make money and its ability to convince customers they are getting a good deal from flying 17 hours straight through using a flight bag containing a 400K entertainment helmet. Don’t forget the 9 position vertical sling found in economy. The customer asks about economy plus and the flight steward replies, “Don’t get me started go back to your flight bag”.

Market forces are in play where the profit demands an ample supply of revenue centers. This all explained in the college level economics class. The passenger is just a place holder after-all. The course work refers to place holders in Economical-Accounting 404 during the senior year of school.

Passengers are more of an unavoidable factor when an airline seeks its profits. It demands an ample supply of profits in spite of its customer’s desire for a relaxing trip at an affordable “seat” in premium economy. 

Even though a passenger can’t afford a business class box it expects relief in economy. After-all, after thirty seconds staring at the boy/girl icon in the corner of the 400K helmet visor a customer expects a flight attendant to release them out of the flight bag to do some of its business next to business class.

All of this is because of train travel, so don’t blame the airlines, blame the steam engine.

The 787-10 Took-off And Landed & Other 1st Quarter 787 Musings

The 787 1st Quarter has landed and what a finish as March goes out like a Lion. The 787-10 flew like a Dream in-liner with its stable mates he 787-8 and 787-9. It was blustery and some clouds as the 787-10 ushered March out like a Lion. And.... April showers of adulation will bring May Flowers of more orders. Here is the March 787 program score cards.

787-10 First Flight

PR News Wire

March went out like a lion

A-whippin' up the water in the bay.

Then April cried and stepped aside, 

And along came pretty little May! 

The bottom of the frame says it all, the 787 has 1,211 of its 787 family booked! It also has delivered 532 frames by 1st Qtr 2017. It has become an aviation Juggernaut. The Boeing program has already crept closer to the mid-point of delivery equaling unfilled orders so Boeing still has its work cut out for its sales office. Out of 1211 orders booked Boeing has delivered about 44% of that number were the unfilled tally represents 56 percent. Using the 1,211 787 order number Boeing needs to deliver another 74 of its 787 for marking the halfway point in its 787 backlog to deliver ratio. This of course assumes no other orders will be booked during the next six months. The 12 Dreamliner a month production number will deliver 72 frames up through the first week of October and meet a 50/50 split for 787 Dreamliners delivered with Dreamliners unfilled. Only if Boeing does not book another 787 order during this time period.

Fig. 1

Fig.2 below marks the year 2017 quarter by quarter of accumulated 787 deliveries and orders.

Fig. 2

Fig. 3 Below is a snapshot of productivity when comparing the Boeing guidance of 12 frames a month delivered. The first Quarter 2017 has fallen off the 12 a month pace by about 1.33 frames over 90 days. The 10.67 average number within this time frame recognizes the usual slow first of year start and the 787-10 in process interruption in Charleston. When Charleston completes its third 787-10 test frame it may resume its normal 787-8 and 787-9 production rate. After June 1, 2017 look to see Charleston production to resume its establish pace from the last two years. Everett, WA will have no production interruptions even as 787-10 testing moves to Everett, WA. With all 787-10 test frames.

Fig.  4: Below is the program's long term strength. The order column paints a picture of order ebb and flows. 2017 is projected as a slower order year than other years. A Winging It estimation is for 150 wide bodies ordered during 2017 of which the 787 could be pressed to reach 50 of those numbers. However, there are a few large orders pending which could fall to Boeing's chief competitor Airbus. There is also the change the aviation market from WB production's saturation and those pending large orders may hold off until market conditions optimize itself for completing those large orders. Finally, Boeing has positioned itself well to weather an order drought during 2017 and Airbus is operating on thinner margins from a production point of view and its over-all WB backlog. A solid order year for Boeing could doom its competitor as a second tier supplier of wide bodied aircraft. All-in-all, we'll see how 2017 plays out.

In Figure five, the chart demonstrates the 787-9 progress and is rapidly closing the 787-8 to 787-9 balance as the 787-9 is only about 132 behind at this time, and it should take only 18 more months catching the 787-8 in flying numbers. During that 18 month period the 787-10 make its debut with its customers as a flying example. The 787-8 has run out its strong initial order string having only 86 customer orders in backlog which may also be subject to change when customers weigh towards more 787-9 orders by converting its long held 787-8 orders. It also remains to be seen if Boeing will come out with a 797 that would complement both its single aisle aircraft and its wide bodied aircraft as a market gap filler. The announcement of such an offering may increase interest in the 787-8 customers as they would have a tandem pair covering the middle of the market with both a high density and mid density offering.  

Fig. 5 Below

Boeing's Book Setting Up 2017 For A Solid Year

These are preliminary numbers for Boeing orders taken during March and over-all first quarter 2017. After Boeing publishes its final March numbers, a clearer picture will determine that a typically slow first quarter is an encouragement for its 2017 order outlook. Below (in Figure 1.) is the unofficial March order synopsis until Boeing 1^st quarter final numbers are posted. It is safe to say the single aisle division is well and alive and has anchored its presence for 2017.

Fig. 1

Above includes the March 28th Boeing Posting of 53 unidentified 737 orders and four 787's ordered. “Winging It”, understands at this point in time, it must assume orders are for 737 Max-8's and cancellations are for the 737-8 NG's. It also assumes 787 orders are for the -9's when used for model type adjustments. Boeing information made available will adjust Winging It Charts. Only a final accounting will validate an accurate activity for orders during 2017. This chart and others are used as guidelines and not actual firm numbers but is an excellent indicator of ordering activity. 

The summary reporting for first quarter to date 2017 has indicated a gross 110 737's were ordered and an additional 28 wide body orders were booked. However, adjustments are made for determining the net number using month by month tallies made within the above chart. During the first three months Boeing has cancelled an assumed 23 737-8's NG and another 5 of its 747-8's. The ending net numbers give an actual picture for first quarter. Boeing netted 87 single aisle 737's. This is where assumptions come into play until actual numbers are available. A cancellation of 737 NG's may be a conversion from a former order and added to the 737 Max 8 order tally by the same number. However, the net effect totals an 87 YTD single aisle order.

All netting effect flows into a cash value when using Boeing's latest price listing. Boeing has a net $9.66 billion single aisle booked value using its latest list price listing for its 2017orders. It also booked another 4.45 Billion from its wide body orders. This would include the 747 cancellations and the fifteen KC-46 orders during the quarter. In all the total net book value for 2017 is about $14.11 billion at list prices.

The data above is used in the tracking of Boeing vs Airbus, "World's Largest Airplane Maker" data. Winging It is waiting for Airbus' posted first quarter numbers from its website. To date, they have under performed its expectation, but it is known for posting after Boeing compiling its "last minute" orders and deliveries. I am expecting Airbus to come out with about 100 single aisle orders for its first quarter summary of its orders and delivery recap. It currently has a minus order status.

My First Aviation Kiss A DC-3 1969

A long time ago when I was seventeen I was smitten by aviation's allure on a DC-3 flying across Montana. The reason was not import, it was high school football after-all. The trip was the event on the venerable DC-3. Below is a video from a you tube archive demonstrating a Colombian flight. 

Flying onboard Aerovilla Douglas DC-3(C-47A-80-DL) HK-3292 (c/n 19661) engine start + cockpit views. Departure from Villavicencio META to La Padrera, Capt. Joaquin Hernan Sanclamente & copilot Pablo Maurico Tovar (Date September 1999). see also

http://www.michaelprophet.com/News_ar...

It was bubble gum at 6,000 feet to open the ear canal and equalize the eardrum pressure. The FL10 was to be maintained even going over the Rocky Mountains or the Continental Divide as "we" high school chaps would call it. Taking off from Missoula, MT or MSO airport on a vintage charter airplane was a common expectation as none even knew what a 737 was in 1969. Prop planes and prop jets were the common equipment at the smoke jumper capital of the US Forest Service in Missoula.

The two hour flight to Billings, Mt was a big adventure as all first flights are, where later a Johnson Flying Service Ford Tri-Motors was the next adventure.

The aviation bug invested every imagined or experienced flight from that point forward. The "football" trip ruined my aviation innocence. The view from the starboard side of the Rocky Mountains hundreds of feet below was stunning, then a look at the engine caused fear and angst as sparks continually shot backwards as the motor made a popping noise. The one flight attendant seamed uninterested at the noise as she made sure everyone had a candy bar and a fruit for every passenger. An updraft from the Rocky Mountains caught the wings and flexed them skyward making a bending tin noise as the movie title "Pushing Tin" suggests.

Pushing Tin Trailer

John Cussack

Flying wasn't just enjoyable it was an adventure and football didn't matter at all.

Boeing Gets Its Wings (plant) In Everett, Wa.

Boeing is building more than a 1.2 million square foot plant in Everett, Washington, it’s getting its wings for lofty soaring in the financial markets. A recent Wall Street 24/7 article  Chris Lange has pointed out the subtle and strategic Boeing Change Management move in his article. No longer will Japan's heavy industry independently shoulder the wing load as Boeing will produce the 777X family of folding CFRP wings. AKA (carbon fiber reinforced plastic) 

Wing Plant Under Construction Biz Journal Photo 2015.

The whole move to Everett is not about the 777X wing but a bigger picture which is emerging. Boeing is embarking on an additional CFRP expedition into the world of concept, design and make process. Boeing wants to control its own destiny in this world of high tech adventures. Value added comes to mind as a power point word play offering. Boeing has shifted in a seismic manner using Everett expertise and Charleston manufacturing muscle. The pathway is being paved with nuanced cement pouring on acreage found around the US. Everett wing plant is built for much more than the 777X wing. It is positioned to... start naming the commercial, military and space list of things to do before getting too excited about wing plant possibilities. 

Wing Plant Model

Its extremely huge autoclaves could cure an M-1 Abrams Main Battle Tank, if the military wanted a CFRP-MBT, hah no chance for that unless...?  The crazy group of "Men in Black Rimmed Glasses" maybe turned loose in Everett's 1.2 million sq. ft. playground. The outcome is a vast array of ideas for every purpose using CFRP. Trekkies say, "the Space the Final Frontier Convention", being held at the Everett wing plant sometime after the "San Diego Convention Center" loses Comic-Con in 2024. Fat chance that will happen when the 797 needs wings followed by a new single aisle wing. Don't forget my wish list for a MBT offering that the guy in Black Rimmed Glasses proposed. They might even make a movie sequel to "Men in Black". Will Smith may drift on by when picking colors out for his new jet. 

Wing Plant CFRP Auto Clave could fit a A1 M1 MBT @ 144 inch wide where the autoclave is 336 inches at its widest point

The point is, Boeing has made a square foot pivot for a purpose driven facility for which Charleston does not have in any foreseeable time. Boeing has inserted another manufacturing and development cog within its Everett facility foot-print.

Machine in Wing Making mode.

   

Boeing Filling The Gap by The Numbers

It’s by the percentages when viewing a gap offering. The center point in the gap is about 220 seats. The object is filling a hole from single aisle to duo aisle. The step increase is in the relevant range of 20% seat change depending on range requirements. Boeing is going for about 220 seats on its 797 proposal.

Reading the chart can become mind boggling, but if following color queues and seat count relationships one can establish a firm picture of the "Gap" emerging where the 797 will fill-in and strike against the A-321 at the same time. The 787-8 has engineered 242 seats and the 737 Max -8 only has 162 in its standard configuration. A span of 80 seats jumping from the 737 Max 8 and the 787-8 exists and the midpoint between the two is 202 seats. It is not coincidence that 202 seats mirrors the 200 seat 737 Max-200 Ryan Air has ordered. It straddles center between the 162 seat 737 Max 8 and the 787-8's 242 base seating configuration.

The chart is a basic explanation of relational sizing in Boeing's family of aircraft and where the 797 should fit in the scheme of things. All comparisons are based against the 787-8 seat count of 242 as shown in figure 1.

·      787-8 242 seats and a 0% relationship with itself

·      787-9 is a 290 seat configuration 20% larger seat capacity than the 787-8

·      787-10 is a 330 seat configuration 36% larger than the 787-8 and 14% more than the 787-9

Fig. 1

That completes the 787-8 Green matrix without considering the 797-Gap or the 737 Max 8 positioning. Going down the left column and tracing across are results of capacity increases by percentage from model to model starting with the 787-8 column and moving right. The gap again is somewhat centered between the 787-8 and the 737 Max 8. The closer to +- zero percentage the closer to the 787-8 in seat capacity.

Considering the 797 row it appears the seating capacity of 220 seats is 9% less than the 242 seat 787-8 capacity, 24% less of its capacity of the 787-9, and 33% less than the 787-10 seat capacity. 

The 737 Max 8 is the primary seller of the single aisle frames in this decade and is used as a base line in this case for single aisle comparisons with Boeing dual aisle mid wide body types. The 787-8 is the nearest dual aisle aircraft capacity above the Max family core. The gap dynamic between single aisle and duo aisle is filled-in with a 797, assuming its the fill between dual aisle 787-8 and the 737 Max 8.

The far right two columns is a comparison with each of the 787 family of aircraft comparing the concept 797, and the single aisle 737 Max 8. As an observation, the 737 Max 8's seating capacity is less than all duo aisle aircraft and moving increments  of about 10% seating change from model to 787 model. The 797 is also shown as a negative percentage while tracking in increments of about 10% with each of the 787's listed, however. 

Additionally, the 737 Max starts at 33% less seats than the 787-8 and then moves against succeeding 787 models at about a 10% incremental change with each 787 model change. What this shows is the 797 proposal is positioned well in the center as it is starts about 10% less than the 787-8 seats and moves about 10% capacity change per model. When factoring seat options a customer may order the 797 will center itself between the 737 Max and 787-8.

Range will always change as payload weight changes by number of seats availble on a particular aircraft. It may be a good assumption the 797 would fly either from 4,000 to 5,000 miles depending on the load factor of seated customers.

Loong Air China On Verge Of Order (for a) Large Single Aisle Order

In a down order year, Boeing is pulling strings while keeping up the order pressure on Airbus. There is a China completion center caveat in the order book recipe. Boeing is going to build a single aisle completion center in China. The latest hint comes out of Aviation Week & Space Technology.

"Boeing’s biggest rewards for agreeing to set up 737 completion center in China will come in the years ahead. But a taste is probably imminent, as an airline based in the same province prepares to order 737 MAX aircraft and sizes up 787s for another contract. By a happy coincidence for Boeing, Loong Air has the most aggressive expansion plan of any small airline in China and has the backing of a strong provincial government, auguring well for repeat orders."

How many and when, will be posted as soon as someone speaks of an order completion? Loong Airlines (China) could be a significant player in China's aviation industry. There is a hint of a 787 order on a second contract. Another pending feather in Boeing's hat may float down during 2017. A slow order year can be an exciting year after-all.