The Final Chapter Of Demand Number 10: A Summary Of Things To Come

What this booklet was to accomplish for addressing 10 thought provoking subject matters from a passenger perspective, and why the aviation industry straddles so many different customer types. The customer types have many opposing objectives as well as many common goals within its industry. A Boeing perspective has a clear vision of its commercial aircraft producing function and must compete in the field with its airline customers.

Mission/Vision provided from: 

http://www.boeing.com/commercial/

“Boeing Commercial Airplanes is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, efficiency and value to our customers and a superior flying experience to their customers. Today, there are more than 10,000 Boeing commercial jetliners in service; airplanes that fly farther on less fuel, airplanes that reduce airport noise and emissions, airplanes that provide passenger-preferred comfort while delivering superior bottom-line performance to operators. Leadership for today and tomorrow. That's a better way to fly.”

Judging briefly what this tells this presentation, Boeing is strongly in it with this statement,… 

“while delivering superior bottom-line performance to operators. Leadership for today and tomorrow. That's a better way to fly.”

Below, is a recognition to its airline customer while it structures its mission towards for that customer while giving an inference to the travel passengers.

“Boeing Commercial Airplanes is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, efficiency and value to our customers and a superior flying experience to their customers.”

The superior flying condition for its passenger customer is affected by an airline’s own goals in the service and capacity areas. Boeing provides an over-all superior environment and advanced technology for passengers. Where the airline controls the passenger configurations for its own profitability and business success. Once again the passenger controls very little demand on its aviation ride.

It is better observed where Boeing has constructed many options for an airline’s consideration. When the airline has a business plan, Boeing commercial airplane flexibility is a big tool box for it to purchase its product. The airline can simply buy seats, adjust colors and offer amenities for which a Boeing produce airplane can offer. Boeing would diminish its product selling capacity to an airline customer, if it controlled airline configuration for the sake of the passenger. Boeing only offers possibilities for future passengers of an airline. There is a separation from the manufacturer and passenger at this point. Boeing sells the ability to do many things for any perspective passenger, but leaves that decision to its airline customer.

Every time a passenger complains about a 787 experience because it was too cramped, it becomes an issue of the airline and not the Boeing 787. ANA, Boeing's first customer in delivery, used the 787-8 by only installing an 8 across configuration in the main cabin. ANA established a configuration for its 787-8 with 8 across economy seating for 180. The airplane capacity has about 222 seats in two classes. They were on to something as an airline customer to Boeing. The manufacturer always said the 787 was design for 8 across seating but had the ability for 9 across seating for which a preponderance of 787’s goes 9 across in the economy section.

The final say for the airline culture, if passengers demand cheap tickets, then it has lost its demand power. If airlines configures beyond the standard design constraints, it cannot blame Boeing. If Boeing provides so many options for idle hands, it has provided enough rope to hang itself.

What is coming is meat hook seating for cheap tickets that can fly 9,000 miles leaving a smaller carbon footprint.

The Culture Of Demand Chapter 9: The Powerless Passenger Can Demand?

The manufacturer and the airline controls ticket prices for what is provided, all the passenger can do is shop cheap airline tickets online. The limits of passenger demand is from what flight outbound has the cheapest seat and then it must suffer its outcome because trains and buses are pure torture and not convenient for world travel.

Premium Economy Class seats for former Business Class passengers.

The passenger pushes an airline by not filling an airplane up on a particular route. If the airline can’t fill its seats regularly, it will eventually cancel the route offered, and the passenger then must find a plan “B” for its travel options. The airline is a groping monster looking for a way to make money for its stockholders. If it can’t cram passengers on-board, then it will cancel the offer entirely. Passengers remain glued to ticket price in the process, and has little to do in a product demand participation. 

Most airlines want to upgrade its business class at the expense of a first class section. So the wealthy passenger who may look at price for bragging rights within its own friends circle has lost its power of demand for a sensible ticket deal and has been downgraded to business class offering. Where the business class is downgraded and enticed into Premium Economy and so forth.

Once again passenger demand has little power in commercial aviation. Most manufacturing giants of aircraft brag about three metrics, flight range, customer capacity and fuel efficiency. Airbus has gone five inches wider than Boeing, and markets that point as the main reason to fly with an XWB Airbus. What does 5” really mean to the passengers? Start with dividing a 9 seat row and duo aisles by 5 inches. These eleven units mentioned are from the 9 seats and two aisles and can amount to an average of .45 inches in expansion width for each seat or aisle width for the equation. A 16.5 inch wide seat on a 787 could also be about 17 inches wide seat on an Airbus A-350. A 20 inch wide aisle on a 787 can also be a 20.45 inch wide aisle on an Airbus A350. It amounts to finger's width advantage for the Airbus for each passenger. Don’t even talk to Airbus about having 8 across seating. It about the number of passengers it loads on its “extra-wide-body” aircraft.

Boeing with the 787 dynamic went for efficiency improvement at every corner and remained resolute that it built the 787 for the passenger's travel senses when applying every technology it could muster. Electronic lights, dim-able large windows, and LED lights to name a few. They pioneered breathable air with a 6,000 foot cabin pressure rather than having a 8,000 foot cabin atmosphere. However, they had Airbus at every corner so Airbus went wider than Boeing in its medium wide body.

Boeing also is offering the 777X by 2020. It will be wider than either the Boeing 787 or Airbus A350. The passenger reward for this feat could be 10 across seating by some airlines. The passenger will have no say with this airline demand, because both manufacturers are playing the customer card with the airlines, presenting a profit machine based on seats possible. It won’t be a manufacturer problem but an airline problem for how many seats it orders up for its delivery aircraft. Needing to go to Australia for the lowest cost is a passenger problem. The Airline has to pay for the airplane costing $350 million, so the passenger must pay for this large flying and seating arena. Once again if a passenger needs to get there, they will pay and that’s the airline’s demand. The manufacturer once again is in the business to sell a profit machine pleasing both the airline and its passengers. It falls on the airline to stuff how many seats in each aircraft delivered, and it’s the passenger who demands a low ticket price. 

The passenger surrenders its demand power in place of a low ticket price. An extra wide 5 inches in the cabin is pure marketing genius which the customer won’t analyze when looking at its ticket receipt. Airbus has done an excellent job of a knock-off of the 787 with its A350. When in fact both types are once again, just "profit machines" for stockholders. There is a point in this discussion passengers are just lemmings lured to the edge, with who has what for a travel pleasure at the lowest cost, and this idea trickles down into the single aisle market.

The Culture Of Demand Chapter 8: Sit Right Here

Commercial aviation has become something as comfortable as a huge stadium bleacher with its seats. Sometimes over 100,000 fans cram their posteriors between two parallel lines with a row and number painted between the lines. The much vaunted mid field seats on the lower decks go for $100 a seat in any ordinary event going from left to right. The top row of the stadium with the same seat spacing may go for $50 since it is so far from the field of play. What fun everyone had standing the whole time length of the match. Sitting was not an option. The posterior may be only 14” wide when seated but the shoulders may go for 30” across. The stadium space goes for about 16” wide as if it creates a vertical space 16” wide. People may have to stand at an angle facing the field. Going to a game with your significant other fan can stand in a somewhat side-ways layering half the torso behind the person sitting next to you. Fans often fake turning and talking to someone behind them when in fact they are readjusting for the next play since the person(s) in front of them have suddenly blocked the view.


Stadium cushion - No dimension greater than  13.5" x 12" x 14.5"

The culture accepts the twist and turns at a stadium event as if it was worth every penny being there at least to be seen either by others or on TV. The airlines have it all wrong in its seating scheme. They too need to go more than 16.5” wide for the posterior and then on three seat row allow the shoulders of the outside seats expand behind the middle seat passenger. A slight stagger in seating is needed much like the stadium twist or moving the arm around the person next to the fan to make more room in the 16” vertical space available.

Airlines think vertically. A 16.5” seat bottom should hold its 30”+ wide shoulders at the top of the seat, hence a stadium twist for the window seat passenger, and half a shoulder’s width sticking out on the other side into the aisle. The passenger seated in the middle just folds its arms in surrender until the snack cart flies by, then all he** breaks out including losing your nuts when trying to open the snack wrapper. Ever had a cola snort up your nose? If so, you have either been to a stadium event or flown on an airplane.

Body bloat may change from passenger to passenger but the smallest frame in a row may have the same horizontal dimension of a larger passenger. 16.5" wide seats is not a good linear solution. People have taken its stadium experience and boarded airplanes without the promise of entertainment. Standing on an airplane will be the final straw for passengers if airlines don’t stop the nonsense. Should the industry have a seat law?

One way to stop the seat silliness is through the manufacturer. It must build airplanes that can only have seat spacing for people who don’t like touching. The airline who tries to cram more in less space would violate the certification of the airplane. In this case example; a 787-8 would be certified for 240 seats and not exceed the limit. The 787-9 would be certified for 290 seats and no more. City safety inspectors do it to restaurants as I sat at a diner recently, a sign said, “maximum occupancy 78 persons”. I know it’s a fire code or something like that, but planes do catch on fire.  A certification process would have to set a standard from square footage of the seating area on an airline. Bring the social engineers, and medical people to determine the non-touching area needed and a pitch which prevents deep vein thrombosis on a long ride. Even though a passengers has a great time at a stadium event, airline travel in a tube smaller than the men’s room at the stadium, is inhumane. If narrow minded seats do not allow a person to open up a snack wrapper on a long trip, then I'm not going.

Boeing Backlog Report In Units and $$

A new feature is looking at Boeing Cash Reserve through its backlog through list prices. No actual amount can be counted until it delivers an airplane. However, the potential cash value at list price indicts what it could receive as it delivers each type at list price.


Boeing Backlog Report:

The Culture Of Demand Chapter 7: Leadership Creates Demand Everywhere

The twist and turns of who is leading whom is the saga of every going concern. Boeing’s business history has had it all and found out what works and what doesn’t work. Listing all of Boeing’s past leaders would be an exercise for the reader or the writer but this story is about a philosophical perspective and will discuss in general terms using one of Boeing’s pst leaders named, Alan Mulally.

Wikipedia reports this on Alan Mulally: 

“Mulally was hired by Boeing immediately out of college in 1969 as an engineer. He held a number of engineering and program management positions, making contributions to the Boeing 727, 737, 747, 757, 767 and Boeing 777 projects. He led the cockpit design team on the 757/767 project. Its revolutionary design featured the first all-digital flight deck in a commercial aircraft, the first two-man crew for long range aircraft, and a common type rating for pilots on two different aircraft. He worked on the 777 program first as director of engineering and, from September 1992, as vice-president and general manager.^”

He retired from Ford Motor Company as its CEO in 2014. He led Ford to a resurgence. He led Boeing on everything during the first decade of the 2000’s as provided briefly above. So what’s the magic of Alan Mulally? He was an engineer in an engineering world. There are different type’s industrial leaders. Those coming from the field of work experience, the accountants, and those trained as an example, engineers, in a specialty like aerospace.

Boeing was in the midst of “business storm" as early in the first decade of this century. The conventional wisdom said, "have an accountant as your leader and you will prosper as a company." Others say, "have a financial wizard and you will prosper, and finally the 911 call goes out and says get me somebody who knows what we are doing!"

Boeing went through these stages before settling in on Alan Mulally as its leader and then promptly lost him to a dying Ford Motor Company who is became a leader today in the auto industry while customers came flocking to Ford in droves. A "Sea Change" happened and it was part in due to an Engineer and partly due to Alan Mulally a Leader.

Demand for your product starts at a company's head, and Boeing had lost its head to financial metrics. The engineer wants a work bench or a cad. They talk to people who have grips about what works and what doesn’t. An engineer also has a vision of what could be made and what shouldn’t be made. Alan Mulally is an engineer. The problem here they ignore costs and only want a positive outcome regardless of costs. In comes the accountant leader who knows how to measure progress into oblivion with financial efficiency of a Scrooge. 

In Boeing’s case an airplane begins to look like a suit an accountant would wear. They look at every piece of the program's puzzle. If an electronic switch costs too much, then find a cheaper switch and give up some of the first switches capability.

The problem becomes a conundrum between those who can invent and those who will prevent. Alan Mulally, threaded the needle leading with an inventor’s attitude. Accountants before Mulally had failed to save the company from loss. However, Alan was on the leading edge of spending Boeing’s capital through all its programs, including the 787 project. 

Accountants had to find a way towards financial efficiency with an Engineer at the helm. Going the route of miser loses and going the route of a dreamer loses. Hence, a Dreamliner made a $30 Billion deferred costs pit. A balance had to be found and Boeing missed the balance between the two worlds until success could be found with its products.

The legacy Alan Mulally leaves is a company who does not want another moon shot like the 787, but it needs to keep pace with its obvious market demand or just get out of making airplanes when it can’t keep up with that market demand. Both Ford and Boeing have retained much of what Alan Mulally envisioned but they both keep a wary eye on over-doing it with its customers. 

Both accountants and engineers can make a good or a great leader from its own expertise, but the best results come from a leader having the talent from within themselves in spite of their own subject matter training.

The Culture Of Demand Chapter 6: Boeing Finally Wants A NMA

Boeing has stubbornly held off on a New Medium Aircraft (NMA) replacing its successful 757 since 2005. Airbus, its competitor, has made “Bank” on its A321. It was a direct assault on a cancelled 757 segment. Boeing had a “duh moment” and lost the single aisle wars for a generation of people, not just a decade, but a generation of 20 years. The stockholders demanded profitability, hence the gamble on high priced wide body aircraft which would infuse a flow above $200 million a unit sold and delivered. 

This is a marked contrast having only $100 million for each 757 replacement it could get in the market since 2005. Boeing bet its future on wide body development and it shows on the comparative balance sheets between Boeing and Airbus. Boeing reigns supreme over Airbus with its wide body offering and Airbus reigns supreme with its A321 single aisle offering.

Boeing stalled when coming out with a NMA, because of the 787, Max, and finally the 777X family emergence. Boeing’s strategy was clear, "build-big and they will come". The Max program was a stop gap exercise in manufacturing dominance.  It bought more time as it said it needed to do some customer surveys for a NMA. It wanted to find the right fit for its “customers”.  Boeing already knew what it needed through the results Airbus had achieved with its A321 program. Boeing just needed to build a better and greater A321 than Airbus had managed.

The last thing on Boeing’s to-do list since 2003 was a NMA and it has yet to announce a formal offering of such an aircraft. It now dithers over timing of when it must announce. It has the plan-in-hand for the NMA which awaits final tweaks. 

However, Boeing does not want Airbus to announce an upgraded A321 coming out of its stable. It does not want to over-tax financial resources until the 777X is well on its program way. It’s approaching a debutante 777X start by 2018. Boeing does want a thirsty market for its NMA and awaits “market tensions” for a launch time. In other words the clamor for having a 797 is not loud enough yet, but is closing in on that loud assessment, even as the aviation world puts its demand boot on Boeing’s neck.

What Boeing lacks at this time is available money and airline demand. The passengers can just wait since they don’t have a dog in this fight. Or do they? 

The passenger/customer is the paying part of an airlines fortunes. Boeing is waiting for the passenger crescendo for a NMA which will sweep Airbus off its feet and make Boeing Stockholders happy at the same time. 

The passenger demand is a critical component to this scenario and the Boeing hype machine hasn’t stopped for three years regarding a NMA. Airbus shrugs at a Boeing NMA concept. What else can they do but send John Leahy out saying, "Boeing’s NMA concept is over-rated"?

So the passenger does have a dog in this fight and Boeing is going to make a passenger centric NMA. It should include wider seats, better pitch and cabin flexibility for any greedy airlines who insist on 30” pitch by 17” wide seats. In fact, the human being needs at least 34” pitch and 18” wide seats, which is a coincidental aspiration of an NMA, which may allow for such arrangement. 

Boeing's airline customer may try to wedge in a 30" X 17" seat but a proposed NMA may be designed for a 34" X 18" arrangement. The airline customer may control the pitch dimension but a duo aisle would be hard to go 8 across from a proposed 7 across cabin concept. Unless, Boeing goes a few inches wider on the cabin allowing airline greed to manifest itself with 17’ wide seats enabling 8 across seating on a proposed NMA.

Customers demand both room and low price options for travel. This is a difficult passenger demanded proposition, which the manufacturer may meet the passengers halfway while appeasing its airline customers at the same time. It may trickle down to a 220-270 NMA seat flexibility for both the airline and the passenger's ticket price depending on what business model Boeing’s direct customers may want. 

No matter what is said about what should or should not be offered, Boeing will offer its “Customers”   a chance to name their own poison in that seating range and then say it isn’t our fault, it’s the airlines fault for cramming in seats.

Therefore, "demand" is a nebulous term when designing a new-medium-aircraft. It all depends what position you are in a line at the board room, the terminal, or the Airshow announcement stage.

   

The Boeing vs Airbus Estimated Backlog for July Ending

Below are the backlog comparisons in units and list price values as shown by each manufacturers websites.

Fig 1. Wide Body Summary Recap

Fig. 2 Single Aisle Summary Recap:

The Culture Of Demand Chapter 5: Ignoring The Passenger Supply Stream Is Silly.

A long time ago passengers were considered an infinite supply without limits to airline growth. It was just a matter of time before passenger demand pushed airplane supply forward. However, the passenger supply has a limit and it now demands its participation in whole scheme of things. The “industry” somehow knows what’s best for its passengers when presenting its profit making plans. It has failed to recognize passengers have a dog in this fight.

Once again pitch is mentioned as the battle line between the Airline and its potential customers. The airline sets a pitch standard thus forcing its configuration by seat count scheme giving the passenger little to squawk about, because they want a cheap ticket. The airlines produce supply by seat count and the passenger demands a low seat price. Everyone is happy? That is how supply and demand is not supposed to work. Passengers should cause a demand for a supply of tickets which competition is built upon. However, it won’t work that way if airlines are seeking a profit solution over the backs of its customers, as it approaches the 30” pitch line in the sand.

An old sentiment arose with the three class configuration. Economy paid for the flight, first class gave the trip its profits and Business class was a bonus to the airline. Essentially, First class seats were for stockholders and the like. When operational and fuel costs rose, the number of economy seats had to increase much to the delight of low fare paying travel addicts. The squeeze towards 17” wide seats with a 30” pitch arose to pay for the costs of current single aisle routes in play.

A new conundrum has arrived. What happens when you don’t have a first class or even a business class on a LCC operation like Ryan Air? How does a profit arrive at a destination when everything is an economy seat?  Ryan Air has opted for ancillary profit centers which won’t fly, as one solution for its lack of high end ticket prices. It will simply make the equivalent first class revenue replaced by its other ancillary products it will be offering.

    

The case in point, is every terminal has a seating area near the gate before boarding. The long waiting passengers are in an anxious situation and going to a restaurant or shop causes additional tension as a passenger is always listening, watching and rushing to get back to their terminal boarding area seat. A proposal is offering gate kiosks for passenger snacks, meals, and other services for the trip. Everyone forgets something and it’s too far or risky to walk for trip supplies. Have a credit card, the airline has a machine or place to spend your slippery money.

You could be renting a car for your destination from the Airline

So what’s an airline to do when it has only economy seats at $99 each? The 8 or so First or Business class seats costs four times the economy class seats. If economy class is around $99, then the up class seat will be around $400. Times that number by 8 and the airline must find another $3,200 in revenue for the flight. The first class space could hold about 12 economy seats and add a stretch of several more rows in the back and viola the airline has about 20 additional economy seats at $99 each. Now the airline only has to make another $1,200 dollars with its terminal point of sale machines. With two hundred single aisle customers in waiting with carry on under tow, it would only take about a $6 transaction from each customer buying snacks, food or even a motel room/car rental before loading. Having a credit card spends money fast and it would be common for a $40 dollar run up before boarding with all kinds of Airline add-ons available. No First class seats profit no problem. The culture is changing.