Ailing Airbus welcomes a new competitor: A330neo

By Ericka Outhwaite Corsia is finally adding a third aircraft to its Airbus A330 fleet. From next month, the high-yield flying brand will become a three-carrier model, says its CEO, Simon Woods. “With three…

Ailing Airbus welcomes a new competitor: A330neo

By Ericka Outhwaite

Corsia is finally adding a third aircraft to its Airbus A330 fleet. From next month, the high-yield flying brand will become a three-carrier model, says its CEO, Simon Woods. “With three different airplanes on the market, we can offer customers an incredibly varied range of price points,” he says. “That really gives us the option to grow to 600 passengers a day.”

The Canberra-based company started on a trip down Australia’s coast with a single A330 airliner in 2003, followed by an A350, and the third plane, a newer A330neo. All three jets carry 266 passengers and carry roughly 12 tonnes of freight. The Airbus A330 has, like all large commercial jets, been in short supply since 2017. The main reason, according to Boeing, is that strong aircraft demand around the world has pushed prices higher. The firm reported last week that revenues in Boeing’s commercial plane division surged 43 percent last quarter over the same period in 2018. Boeing’s best-selling model, the 737 MAX, saw jet deliveries surge by over 150 percent. Airbus, meanwhile, has seen smaller gains in bookings and delivery totals.

Lately, competitive pressures are proving no match for the A330neo. Without any overall constraints, any potential competitor for Airbus has little incentive to invest in an aircraft that needs maintenance. Most airlines are choosing between the A330 and the A350: Up to half of Airbus’s deliveries are now either the A330neo or the A350. In 2017, from the beginning of the year through the end of 2018, Airbus has delivered more than 190 Airbus aircraft, amounting to over half of all jet delivery worldwide. Business Insider projects that in the third quarter of 2019, more Airbus jets will be delivered than jetliners from all competing jet manufacturers combined.

When the A330neo was first rolled out by Airbus in 2016, after the radical redesign of the A330-300, it was touted as Airbus’ entry into the segment that was serving as a de facto “long-range market.” Among other things, the new aircraft would allow for more revenue-generating flights to international destinations, such as to India, and a reduction in fuel consumption. At the time, Airbus’s commercial plan president, Eric Schulz, said that it was built for a time when “new air travel or [a] lot of new air travel is happening.” During his presentation, Schulz said that the concept of “an airplane that is a hybrid of a legacy business and a next-generation experience,” could transform the aviation industry.

The Boeing 787 Dreamliner had been designated a competitor of the A330neo, but Airbus won the fight with its new jet, says executive director of research at AirMedia Group Ltd., Andy Kaplan. “Unfortunately Boeing was not able to make a product like that,” he says. “There is no impact that Boeing can bring to the market.”

Even in an era of smartphone-style jets of the sky, the A330neo is doing what some still think will be impossible: appealing to economy-class passengers. Like Boeing’s 787, it will be at its most attractive in the middle of the passenger plane, between the cockpit and the rear. And while Schulz had said at the time that he believed that a new airplane was needed to bridge the gap between the $1,600-per-hour economy class and the $2,600-per-hour premium economy seats, the A330neo is proving that middle seats can be profitable, says Kaplan. “Especially if you can fill them.”

Another newcomer in the market is Singapore Airlines’ A350s, which reach between Singapore and Sydney for $3,800.

Business on 07/30/2019

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