Dim Outlook For Smallest Single-Aisles

By Jens Flottau, Guy Norris
Source: Aviation Week & Space Technology
June 03, 2013

As interest in higher-capacity models grows in every sector of the air transport business from new turboprops to the largest twinjets, even some of the latest models are clearly losing out. But unlike in earlier cases, demand is weak for the smallest narrowbody variants—years before first deliveries.

The smallest members of the Airbus and Boeing single-aisle series have become the proverbial orphans of the family. Sandwiched between their larger-capacity brethren (top photo) and an emerging generation of purpose-designed small airliners (bottom photo), the A319NEO and the 737 MAX 7 series also are competing for the first time in the same general size category with new products from China and Russia. But the most imminent competition is coming from Bombardier's CSeries.

More than two-and-a-half years after the NEO was launched—with stellar sales including 2,125 firm orders plus almost 800 options and other commitments—a mere 45 A319NEOs have been selected. The situation is even gloomier for the 737-7. Until May 15, it had not booked a single order since the MAX was launched in 2011. Following the decision by Southwest Airlines to convert 30 previously announced orders to the 737-7, the short-bodied model now accounts for only 2% of the 1,315 firm MAX orders as of late May.

Boeing is no stranger to the phenomenon, having seen orders for the 737-800 outstrip those for the 737-700 by more than three-to-one. As a natural replacement for trunk-route equipment such as the Boeing 727-200 and MD-80, the -800 has sold more than 4,220 compared with 1,450 for the -700. The omens also seem favorable for the identically sized 737-8 which has so far accumulated firm orders for 1,121, or 85% of the entire MAX orderbook.

The gradual change in preference for the larger models is illustrated by the fate of the 737-600 which was developed as the Next Generation version of the 737-500. Although the -500 sold moderately well, accumulating sales of 389, the unfortunate 737-600 managed a mere 69 orders and now appears to be no longer offered. The 737-600 was also aimed at the sales-challenged A318 which, at the time of its development, also competed with the MD-95/Boeing 717. With even more options capable of competing directly with the 737-7, Boeing may be wondering if it is about to experience a repeat of the fate of the -600, albeit in a larger size category.

In the current-engine-option A320 family, the A320 has accumulated by far the most orders, roughly two-thirds of the total. Airbus has sold more A319s (1,477) than A321s (1,228) of the current-generation aircraft and with its total orderbook, the A319 has been a significant commercial success in its own right. But Airbus points out that market dynamics have changed dramatically over the past five years. Airlines have placed a much greater emphasis on unit costs and are moving away from the smallest members of the narrowbody families, which have naturally the highest unit cost in that market segment.

As far as Airbus is concerned, production is being adapted accordingly. It has provisions in place, mainly as far as its supply chain is concerned, to move production of the A321 up to 18 a month. That is almost half of the entire A320 output, which is now at 42 aircraft per month, and double the current capacity for the A321. A319 production continues, but its backlog is shrinking and now stands at only 109 aircraft in total (not counting the 45 A319NEOs). The supply chain has to be prepared to build parts for an unprecedented number of A321s even as Airbus prepares to roll over to the A321NEO. The manufacturer also must deal with rapidly declining rates for the A319. The A318, of which only 79 have been built, is not offered in the NEO version.

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