Airbus’ dominance in the narrow body segment is growing with every passing year. In January the company announced the first order of the A321neo, which is being seen as a replacement for the Boeing 757. As such, an industry analyst said at the annual aircraft industry conference held at Washington that Boeing may revive the 757 by adding new engines on the plane. But the American plane maker dismissed the proposal outright.
Boeing feels the heat
The 757 aircraft operates on the trans-Atlantic route, where a narrow body plane is a little less powered and a wide body is a bit bigger. So the 757 satisfies the need of a niche market. However the company discontinued the model making the last delivery in 2005. So there is a gap created in this single-aisle market space where neither the 737 nor the A320 family is able to operate as effectively. To somewhat fill in this gap, Airbus has launched the A321neo aircraft, the largest plane of the A320neo family, which has a range of 4,000 nautical miles and can manage a takeoff weight of 97 tons.
In comparison, the 757 could carry 180 to 240 passengers to a maximum range of 4,100 nautical miles. However, in the absence of the 757 model, Air Lease Corp.’s awarded an order for 30 planes to Airbus for A321neo. So it’s high time for Boeing to introduce a replacement for the 757 and retain its dominance in the niche space.
An upgraded 757 is not feasible
Boeing has secretly been in talks with 30 customers to assess the potential of a plane that will be bigger than a 737 Max 10 with more range. The company found that 95% of the 757 routes can be covered by flying the 737 Max 10. But the remaining needs to be addressed. It’s important for Boeing to come out with an alternative especially as Airbus’ narrow body market share is expanding.
Randy Tinseth, Boeing’s vice president for marketing of the commercial airplanes division, said that the company is working on a 757 replacement, but it may take some time for the company before it comes to a solid conclusion. However, Tinseth firmly said that the company has no plans to add new engines to the out-of-production model. The company has considered re-engineering the 757 “a couple of times,” he said, but found that the business case isn’t profitable. The 757 has a unique production system which increases the manufacturing cost, making it pretty expensive for the plane maker.
If Boeing doesn’t reengineer the 757, the next option is to launch a new design. However a new program could cost around $15 billion (concluding from the latest new programs such as the 787 Dreamliner and the A350 XWB in which both the aircraft manufacturers have bled billions in the name of development cost). Presently Boeing might not be very keen on investing such a huge amount in a new program given the kind of risks and cost overruns that are involved in new undertakings. Before doing so, the plane maker would want to concentrate on recovering the massive deferred cost accumulated on the Dreamliner which is running over the $25 billion mark.
But the need is pressing
Boeing might not be looking for a 757 replacement, in the form of an upgrade or a new launch, in the immediate future. However, the plane maker cannot ignore this segment for long. Airbus is encroaching with full force and gaining traction in the single-aisle market. Even aerospace analyst Richard Aboulafia of the Teal Group is supporting a re-engineer. He says that airline operators want more sophisticated and fuel efficient engines on existing models rather than a fresh make with composite material, which pulls up the development cost massively. So upgrading the 757 should be the most economical option for Boeing. It’s just a matter of time for the plane maker to decide when.