Jon Norris opines about how the commercial aviation industry could be reshaped in the future if airframers opted to deliver green aircraft and let completions centres handle the rest though post-delivery retrofits.
Fast forward to the year 2025. Airbus and Boeing are delivering 65 A320neos and 737MAX aircraft each and every month from multiple production lines in Brazil, China, France, Germany, India, Russia and the United States. That’s over 1,500 aircraft a year just from Airbus and Boeing alone. The other three airframers manufacturing single-aisle aircraft together produce a further 1,000 aircraft a year.
The huge growth in passenger numbers, with air traffic doubling since 2012, continues unabated as predicted by SITA board chair Paul Coby.
Keeping pace with the increasing level of demand from the world’s airlines (who themselves are facing intensifying competition) and avoiding crippling delivery delay payments, means that these aircraft roll off the production lines in an identical and ‘green’ condition to ensure just-in-time delivery to one of 20-plus worldwide third party interior completion houses.
Delivering green is commonplace for VIP and business aircraft. Not so in commercial, although flydubai has shown how commercial airlines can take delivery of new aircraft and seamlessly send them straight into mod. This green field retrofit programme for flydubai’s new 737s, undertaken at Aviation Technical Services, was implemented because Lumexis’ IFE system is not yet linefit offerable at Boeing. Meanwhile, the speed and ease at which Southwest Airlines retrofits its own 737s with a new EVOLVE interior – years after taking delivery of the airliners – underscores how some carriers are capable of executing complex completions in-house.
In 2025, using completion houses would ensure that all cabin customisation activities are decoupled from the production line so that green aircraft delivery continues uninterrupted despite last minute customer change requests, late supply chain deliveries or frequent equipment upgrades.
Three months prior to entry-into-service the airlines receiving the aircraft have committed to choosing the entire interior fit of the aircraft from a catalogue of options that are supplied by a single supplier per airframer. The supply chain has consolidated over the last 10 years to leave just three major supplier-groups providing a one-stop-shop for cabin interiors and systems.
The post-delivery retrofit model means that each supplier group must compete on their own merits and the attractiveness of their catalogue offer to maintain or grow market share.
Under the above scenario, by 2025 aircraft production has become a commodity business where volume of aircraft units sold and delivery punctuality have become the new currency. Production processes are honed on a regular basis utilising the new nine-sigma techniques to bolster narrowed unit profit margins.
Coming back to the present time, passengers are becoming ever more discerning about the services they receive and the experiences they encounter when flying. Yet they remain extremely price sensitive, and, as such, airline margins remain razor thin. As IATA director general and CEO Tony Tyler recently stated, “The airline industry’s best annual net profit margin of this century was just 2.9%. A business that can’t generate a satisfactory return on capital is not sustainable over the long term and that’s the position in which the air transport industry finds itself, and this is odd because aviation creates so much value for the world.”
At the same time, Boeing is pursuing a new revenue model that will see it charge recurring royalty fees of its suppliers in exchange for interfacing with the airframer’s intellectual property (IP). Aircraft owners/operators and third-party service providers are already well accustomed to paying recurring fees for licensing Boeing IP. Every time they modify a Boeing aircraft with a new product or system and use Boeing data, they pay the airframer.
Is ‘going green’ a natural next step for all parties?