October 9, 2013 7:32 pm

The fast-approaching end of the jumbo jet era

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Airlines now want midsized aircraft that are cheap to fly and easy to deploy

With its sale of composite, fuel-efficient A350 jets to Japan Airlines this week, Airbus entered a market that Boeing has, until now, controlled. It also proved Boeing’s point. The era of the grand aviation project, symbolised by Airbus’s decision more than a decade ago to build the A380 as a superjumbo rival to the Boeing 747, is over.

Airlines do not want jumbos. They want midsized aircraft that are cheap to fly and easy to deploy – as the Boeing 787 will be if the company can stop its lithium-ion batteries catching fire.

The remaining champion of a grand project is Boris Johnson, the mayor of London, who wants to close Heathrow airport and construct a new £40bn superhub east of the city. Even François Mitterrand, the French president who built the Parisian projets, and whose brother once ran Aérospatiale, might have regarded that as ambitious.

It has the whiff not only of a vanity project but of a former age, when Boeing intended to build the Sonic Cruiser, a successor to Concorde. It turned to the 787 in 2003, as oil prices rose and airlines focused on efficiency. Airbus, which invested $15bn on the A380, had to be pushed by airlines into following it with the A350.

Boeing was correct. Airbus is never likely to recoup the A380’s development costs and is struggling to amass the 30 orders a year it needs to make a marginal profit. Meanwhile, airlines such as JAL and Lufthansa are closing noisy, fuel-guzzling 747 fleets and buying more flexible A350s and 787s.

Many A380s have been ordered by the Gulf airlines Emirates, Etihad and Qatar, with desert hubs that are “superconnectors” for pan-continental traffic. Most growth will be in single and twin-aisle aircraft, often carrying their passengers direct to destinations, many of them owned by low-cost airlines.

“The A380 is a niche aircraft,” says Nick Cunningham, an analyst at Agency Partners. “The niche exists, but it isn’t that big.” Aside from its sheer bulk, the A380 has four engines, which has made the A340 uncompetitive against Boeing’s twin-engined 777. Two engines can now go a long way, cheaply.

So Boeing should be breaking open the champagne instead of wailing in Japan. The gamble that it took on building large parts of the fuselage, wings and tail of aircraft from lightweight carbon composite instead of aluminium, overturning the technology of decades, paid off. Half of the materials in both the 787 and the A350 are composite.

The fact that Airbus built the wrong aircraft in the A380 gave Boeing another strategic advantage. It plans to upgrade the 777, which is a size larger than the 787 and A350, by 2020 and will then have a broader range than Airbus of the most popular wide-bodied aircraft.

But Boeing was too enthusiastic a pioneer. Composites worked after delays but it still has problems with batteries and it failed to upgrade the 777 rapidly enough, leaving Airbus an opportunity. Boeing “has modern, competitive, second-to-none jets hobbled by dubious management”, says Richard Aboulafia, an analyst at Teal Group.

Both, in their different ways, were too ambitious a decade ago, took on excess risk, and are living with the consequences. Airbus’s mistake was strategic, while Boeing’s was technological. Of the two blunders, the second is more easily fixed, to judge by past launches.

The companies have learnt from their experiences. Instead of building a new aircraft to replace its older A320 single-aisle jet, Airbus upgraded the existing one with new engines to the A320neo, which has been selling well. Similarly, Boeing’s 777X is an evolved version of the 777, using some 787 technology.

It would be strange, then, to repeat Airbus’s error by making a big bet on aviation’s future being dominated by aircraft flying from superhubs, carrying more than 500 passengers each. Yet such notions inform Mr Johnson’s call to replace Heathrow with a huge new airport, possibly on reclaimed land – “Boris island” – in the Thames estuary.

Heathrow’s two runways are at 98 per cent capacity and delays are common but continental European hubs are freer – Schiphol near Amsterdam has six runways. Mr Johnson insists a third Heathrow runway would be too noisy and a superhub is required – airlines will not want to switch to airports such as Gatwick and Stansted.

Sir Howard Davies, chairman of the Airports Commission, a body set up by the UK government to put off a decision about airport expansion until after the 2015 general election, says that “some additional runway capacity” will be needed over coming decades in the southeast of England. He is right, but “some capacity” does not mean Dubai-on-Sea.

Indeed, changes in aircraft sizes and fuel efficiency could have a significant impact on patterns of travel, and the balance between hubs and smaller airports. The sorts of aircraft now in heavy demand from Boeing and Airbus can be flown from hubs, but they can equally be used to operate point-to-point flights between cities.

There are about 25 flights a day from Heathrow to New York, for example. These could be disrupted by a low-cost carrier such as Ryanair or Norwegian Air Shuttle flying 787s or A350s from Gatwick or Stansted, drawing passengers from Heathrow. If such a change occurred in the middle of building over Heathrow and constructing a superhub, planners would look stupid.

Airbus won in Japan with a jet it did not plan to make, in an industry where efficiency and flexibility now count for more than size. Aviation visionaries, take note.

john.gapper@ft.com

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Letters in response to this article:

Catching up with our competitors / From Mr Daniel Moylan

A picture to illustrate Boris Johnson’s proposal

Boeing 787s and the hub model / From Mr Ross Baker

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