The Airbus A320 family of short-medium haul airliners is ubiquitous. Airbus claims one takes off or lands every two seconds, and over 6,500 of them have been delivered since the first one entered service in early 1988. The fly-by-wire aircraft family, comprising the standard A320 plus shortened A318 and A319 and lengthened A321, has been a stunning success. These sales have helped fuel Airbus' growth over the last twenty years in its continuing duel with Boeing to be the world's leading airliner manufacturer.
All products, in whatever industry, come to a point where extra development is essential to keep the customers coming. Recognising the A320 family's age and increasing demand from airlines for greater fuel efficiency, both to stem the impact of high oil price rises and to assist in boosting their environmental targets, Airbus has launched an upgrade for the aircraft - the A320neo (or new engine option).
The A320neo will sport new more fuel efficient engines and performance improvements - "the best becomes better", Airbus says. The aircraft, which will enter service in 2016, has already got two customers. Virgin America, which will be the launch customer, has purchased 30 and Indian low-cost airline IndiGo has signed a Memorandum of Understanding to purchase no fewer than 150 - the largest commitment for a commercial aircraft ever made.
So far, so straightforward - aircraft manufacturer announces upgrade to highly successful aircraft. But the A320neo's launch is significant because of the wider context within the short-medium haul jet airliner market. The A320neo is being pitched to a huge and lucrative market, which will also shortly see some brand new aircraft entrants soon. And the aircraft's launch also marks the opening of the next chapter in the long-running battle between Airbus and Boeing.
The A320neo is an upgrade of the main A320 aircraft plus the A319 and A321 which will respectively become the A319neo, A320neo and the A321neo. The A318 is not included in the upgrade. Airbus claim the A320neo will be far more fuel efficient than any other short-medium haul airliner because it uses a new generation of jet engines. Airlines will be able to choose between the LEAP-X manufactured by CFM International and the PurePower PW1100G from Pratt & Whitney. These powerplants are being promoted by their operators as some of the most fuel-efficient jet engines ever built. Airbus says the engines will mean the A320neo will use 15 per cent less fuel than the current A320 family models and save 3,600 tonnes of carbon dioxide, as well as having fewer NOX emissions, lower operating costs and less noise.
Assisting the engines with these savings will be the one external change that will distinguish the A320neo from its elder siblings - the so-called "Sharklet" wingtip fins. The Sharklets are not new, Airbus having evaluated them a few years ago, and they will be available as an option on existing A320 family aircraft from 2012. But they will come as standard on the A320neo. Airbus says the new engines and the Sharklets increase the aircraft's range by 575 miles and the payload by two tonnes.
Airbus is bullish that these performance figures will lead to other airlines following Virgin America and IndiGo in placing orders for the A320neo, with the company confident the upgrade to a proven, big-selling product will be enough to entice customers. Airbus says they anticipate selling over 4,000 A320neos over the next 15 years.
This statistic shows why the A320neo's launch is a significant one. Demand for air travel in Asia, Latin America and the Middle East is growing. Airbus' latest Global Market Forecast predicts a market of nearly 17,900 new single-aisle aircraft by 2030. The A320neo's launch, therefore, is Airbus' strategic move in positioning itself to take advantage of an expanding - and lucrative - market over the long term.
More than this, though, the A320neo's launch is noteworthy because there are some brand new entrants into the market for short-medium haul jetliners on the horizon. Airbus and Boeing have dominated this market for years with their A320 and 737 families, but two new competitors will be coming on the scene over the next few years - Bombardier's CSeries and China's C919.
The CSeries, expected to fly in 2012, currently has orders from Lufthansa, Republic Airlines Holdings and Irish lessor Lease Corporation International. The C919, being produced by Commercial Aircraft Corporation of China (COMAC) and visually very similar in appearance to the A320 family, is due to fly in 2014. At Airshow China in Zhuhai last November, 55 were ordered by several Chinese airlines as well as leasing companies.
With these new entrants and the forecast size of the market for short-medium haul aircraft, industry analysts were keen to see what Airbus would do. Certainly Airbus had what Flight described as a "protracted internal debate" over whether to re-engine the A320 or to develop a completely new airliner for the market. In the end, Airbus played safe.
"New engine and new airplane technology really isn't going to come out until the second half of the 2020s, at some point beyond 2025/2026," said John Leahy, Airbus chief operating officer for customers, in explaining Airbus' rationale in launching the A320neo. "The technology is just not there today for an all-new airplane. Some people might argue it is, [but] we don't think it is."
Translation - it's far more prudent to offer performance improvements in an upgraded version of a popular aircraft, rather than running the risk of launching a completely new design. The implication is that it would be far better for airlines to purchase a proven product over the unproven CSeries and C919.
Certainly, Airbus and Boeing alike are both dismissive of the two newcomers. Leahy was recently quoted by Air Transport Intelligence as saying: "There is virtually no business case for the CSeries. It has the same number of seats, we [in the A320neo] have a wider fuselage, the fuel burn is similar and we offer 1,200nm more range." Jim Simon, Boeing vice-president for China aircraft sales, told BBC News at Zhuhai that Boeing weren't worried about the C919 "because it makes us sharper at our game".
Indeed, the launch of the A320neo raises another question. What will Boeing now do? How will they respond to the Airbus upgrade and any future big orders of the CSeries and C919? Will they go down the Airbus route and re-engine the 737NG, or will they create a completely new airliner?
Both options have merits. Redeveloping the 737NG makes sense not just because the 737 is a success story. The embarrassing and costly delays Boeing has suffered with the 787 Dreamliner (the company has recently announced a seventh delay in the delivery of this aircraft to the third quarter of 2011, over three years behind schedule) may have shaken investor confidence in Boeing's ability to deliver a brand new airliner. Re-engining the 737NG would certainly be lower-risk, though the current LEAP-X and PW1100G engines don't actually fit under the wings of a 737 without sufficient ground clearance.
On the other hand, some analysts say development of a completely new design to replace the 737NG and rival the A320neo, CSeries and C919 could be a smarter move. With Airbus not producing a new short-medium haul airliner until at least the middle of the next decade, some believe Boeing could steal a march by launching a new product in the intervening period, bringing it to market by the early 2020s ahead of any new Airbus product. One consultancy, Buckingham Research, thinks an announcement could come soon.
"We think [Boeing] could announce the launch of a replacement for the 717, 757, and the 737NG in 2011/early 2012 with a 2017/18 service entry target," said the company. It says "there is an opportunity for Boeing to exploit a competitive advantage as we don't think any of the new market entrants offers operators a comprehensive solution to changing market dynamics (fuel prices, demand for higher capacity, etc.)." They say Airbus and parent company EADS have continuing large drains on resources in the medium term with the A350XWB and A400M programmes, and that by contrast Boeing will have the capacity to create a 737NG replacement as the difficulties with the 787 end as it moves through certification and into service. "Launching a new narrowbody now could give Boeing a potential 3-yr first-to-market advantage which was a decisive factor in the initial sales success of the 787," said the company.
If this was to occur - and Boeing hasn't indicated anything yet - the launch of the A320neo could in hindsight come to be seen as a conservative, safety-first option. That's understandable though given the developmental, financial and organisational upheavals Airbus has faced in recent years with the A380 and the A350XWB. For their part Airbus clearly feels the A320neo is the right product. As John Leahy put it: "We're not redesigning the A320, it's pretty damn good just the way it is."
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