As the price of jet fuel continues to rise—up 20 percent at the beginning of 2011, according to the Air Transport Association—airlines struggle to stay financially viable, and while first-class passengers are forced to chug down-sized martinis from paper cups and economy travelers forfeit their complimentary wooly socks and earplugs, the real cost savings will come from the redesign of airplanes themselves, building more fuel-efficient engines and lighter skeletons.
This was top of mind for American Airlines last week when it placed a huge order with both Airbus and Boeing for 460 planes, with options for another 465. The order is predicated on new fuel-efficient engine design as well as improvements in the airframes—including weight reduction and aerodynamics.
Operating costs for Dallas based American Airlines are the highest among its domestic peers, with a fleet of fuel-guzzling airplanes, most of which are at least 15 years of age. The Airbus and Boeing order is set to put American back in the game.
“We’ll have the youngest fleet among our U.S. peers within five years as a result of this deal,” said American Airlines president Tom Horton during an interview with CNN International.
Airbus will provide 260 fuel-efficient A320 airplanes, 130 of which could be fitted with the new A320neo engine. Airbus claims a 15 percent fuel-burn reduction with its A320neo, as well as the capacity to carry up to two tons more weight and fly an additional 500 nautical miles. The aircraft will also be fitted with a geared turbofan—designed to increase operating efficiency by enabling the turbine and fan to operate at separate, optimum speeds.
The A320 line has many fuel-saving innovations built into its design including the aptly named Sharklet—a wingtip device intended to reduce the aircraft’s drag by altering the airflow near the wingtips—but the A320neo is in a class of its own, offering up to 30 percent total fuel savings compared to prior-generation narrowbody aircraft from Airbus.
On the other side the fence, Boeing will provide 200 airplanes to American, half of which will have a new, more fuel-efficient CFM International LEAP-X engine. The re-engineered 737 will “improve fuel efficiency by 10 to 12 percent,” Boeing Commercial Airplanes marketing chief Randy Tinseth wrote on his blog Wednesday last.
Although it appears that Boeing has been somewhat usurped by Airbus, American Airlines is pitching the deal as joint effort which could not have been undertaken by any one single manufacturer.
“Some have characterized this as a split deal. I would characterize it as a both deal,” Horton said. “We decided that each deal was so compelling, and the replacement economics and flexibility for both was so compelling that we wanted to do both.” American has flown an all-Boeing fleet since 2009.
Whatever the inside wrangling, American’s decision to purchase 460 planes—the largest commercial aircraft order in history—has left some wondering whether it’s the right move given the uncertain economy. Perhaps this deal will provide a much-needed psychological boost to the economy—Boeing’s stock price jumped more than three percent last week and American’s stock was up by more than one percent. And even though Airbus walked away with a bigger piece of the pie, the renewed Boeing investment will provide jobs for hundreds of new workers at Boeing’s Renton, WA facility.