Friday, August 11, 2017

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.

Image result for passenger security screening denver airport