Sustainability and supply chain issues are among the hot topics at the Paris Air Show, which returns to the industry's calendar after a four-year break. ATW editors discuss the key themes of the show this year, as well as the latest aircraft orders.
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Rush Transcript
David Casey:
Hello, everyone, and thank you for joining us for Window Seat, the Aviation Week Transport podcast. I'm Route's Editor-in-Chief, David Casey so welcome on board.
I'm joined today by my two colleagues, Victoria Moores and Alan Dron, and we're recording this week's episode at the 54th Paris Air Show in Le Bourget, just outside the French capital. The event is held every other year, alternating with Farnborough, and Paris returns to the industry's calendar for the first time since before the pandemic in 2019. About 320,000 visitors are expected during the course of the seven-day event, with almost 2,500 exhibitors from 47 countries around the world. And the organizers have also said there are 158 aircraft here, about 2,700 journalists, and nearly 300 startups in attendance.
In terms for orders so far, IndiGo has stolen the show with a blockbuster order for 500 Airbus A320 Family aircraft, and as expected, decarbonization has been a central theme of the show. We're going to talk in more detail about some of the orders and the key themes that are emerging, but firstly, let's discuss the atmosphere here so far at the event.
Victoria and Alan, you're both here reporting for Air Transport World, and you've been frantically running around, attending press briefings and conducting interviews. I know you've attended many air shows in the past and you were in Farnborough last year for the first one that happened post-pandemic, how has Paris '23 compared to previous air shows, and what's the feeling that you are getting this year?
Victoria Moores:
Yeah, hi, David. I think that my feeling about this year's show is it's been a bit strange and it felt like there was a very slow start on Monday. In years gone by, we would typically expect the show to start very full-on, very quickly. Monday and Tuesday are usually the busiest days for aircraft orders.
In actual fact, Monday felt bizarrely quite quiet, but we did have that huge order from IndiGo. And I wonder, somebody mentioned to me that it could have been because the IndiGo order was anticipated, that's the reason why we didn't see as much activity on Monday, but on Tuesday it's been much busier. It's been much more of a normal airshow atmosphere.
David Casey:
Do you concur with that on? I know previously you felt a little bit flat yesterday.
Alan Dron:
Yeah, it did feel flat yesterday. I mean, anyone who's attended a Paris Air Show will know that normally the first day requires a machete to get through the crowds on the chalet line. Yesterday a Swiss Army knife would probably have sufficed, but today a machete was definitely needed because the chalet line was back to its normal packed self. Maybe Tuesday is the new Monday.
David Casey:
Well, I'm sure our listeners already know there's flying displays throughout the event, as well as static displays. I don't know about you two, but I've been too busy to see any of the flying displays unfortunately, I've mainly just heard them overhead, but I have been able to look at some of the aircraft here on the ground. So we've got Boeing with the 737-10, the largest member of the Max Family, as well as the new 777-9. And Airbus as well has been showcasing the A321XLR, which is due to enter service sometime next year.
We've also seen a new Saudi carrier. Alan, tell us about that. What's the story?
Alan Dron:
Well, the big new entrant of entrant of course on the airline scene is Riyadh Air, the new Saudi flag carrier, which brought its newly painted 787 to the static display. And the company then threw a presentation at one of Paris's swankiest hotels. It was emblematic of just how much money and how serious Saudi Arabia is about the project. Having ordered up to 72 787s a few months ago, observers thought that Paris would be the ideal location for them to announce a major narrow-body order, but negotiations with the airframers are apparently still ongoing.
The Riyadh Air welcome event was notable for one of the small pieces of monsoon for which Paris in June is infamous, suddenly breaking over the hotel we were at, and the room's French windows blowing open to the accompaniment of shattering glass and billowing curtains. I turned around, fully expecting to see Count Dracula enter, but no, no, just the Riyadh Air CEO, Tony Douglas.
More seriously, there were hints that Riyadh Air will cooperate with existing Saudi carriers, at least on the domestic side. And initially Riyadh Air also intends to dramatically increase the Saudi capital's international connectivity. Rather remarkably at present, 93% of Riyadh airport's traffic is point-to-point. Riyadh Air wants to remedy that and it said quite clearly that its initial plans are to serve most of Europe and Asia's major capitals off the bat.
David Casey:
Okay. But no new orders then this week, maybe want to watch next year at Farnborough. Let's talk then about some of the key themes that we've seen emerging. So the show opened against the backdrop of optimism really about new orders and about demand for air travel. Also, about concerns with supply chain issues, as well as the obvious intense scrutiny on the sector's environmental pledges and how it will achieve them.
Decarbonization has been a key focus of the show and the organizers have been keen to emphasize the progress being made. We've got the Paris Air Labs, which highlights some of the innovations underway. And one thing I've actually found interesting since my last show here in 2019 is that none of the orders that have been announced so far actually have the size of the deal, even the list prices. Instead, the PR for each is all centered upon the sustainability benefits of having a more fuel-efficient fleet. I was actually at a press conference earlier with Philippine Airlines' order, and maybe the first five, 10 minutes were devoted to how the aircraft was going to help the airline reduce emissions and meet those sustainability goals.
Victoria, have you picked up on that? Sustainability is key to everything that we're hearing this week.
Victoria Moores:
Yeah, absolutely. Like you just mentioned, the only time that I've heard a list price being mentioned was when somebody from the audience specifically asked, "What's the list price of these aircraft?" Sustainability has been throughout the entire show a really, really central theme. And of course there were concerns initially coming into the show that we might see some kind of protests, some kind of activists attending the show.
We did see a statement come out from 14 environmental groups, arguing that the ideas presented here, like SAFs and technologies, are false climate solutions. These bodies are saying this is mere greenwash and totally insufficient and that air travel just needs to be reduced. But what I've seen from the briefings at the show is a very, very strong driver to absolutely minimize aviation's emissions and that this is a pressing concern.
David Casey:
It's interesting, isn't it, because the air show happens on the back of a recent report from US consultancy firm Bain, which suggested that aviation may only reach 70% of its net-zero target by 2050. And we also heard at the IATA AGM early this month from Qatar Airway CEO, Akbar Al Baker, suggesting that 2050 was a “PR exercise”. I know you've been speaking to people about this, engaging their opinion, what have they been saying?
Victoria Moores:
Well, let's revisit the Bain report. The Bain report said that aviation was actually only likely to achieve 70% of its net-zero target by 2050. Like you say, there's been other comments suggesting that it might not be realistic to hit that target. So in press conferences I've been asking various executives whether or not they believe it's realistically achievable, and the message that I've heard back from that is, it's going to be incredibly hard.
So it's not a dead cert. Yes, this is going to happen, we are going to achieve it. Obviously a lot hangs on the regulatory side of this, the investment side of this, there are things which are beyond airlines' controls. But one of the comments that I heard in one of the sustainability panels was, "Don't underestimate what the aviation industry can do when it's really determined to achieve something." I'm hearing that determination. Whether or not it's achievable remains to be seen.
David Casey:
On the theme of sustainability, you heard some interesting comments as well from the Air France CEO on SAF. Can you tell us about those?
Victoria Moores:
Yeah, this again is about the investment levels required to achieve net-zero by 2050. And Air France's CEO Anne Rigail was making some comments about the relative costs of SAF, and she was saying that conventional jet fuel is currently 800 euros a ton. Now, if you compare that with the kind of prices that Air France is paying for SAF, that's 3,500 euros per ton. In France, because of the mandates, that goes up to 5,000 euros a ton. Whereas in the US, where the industry is supported by incentives, it drops back down to 2,000 euros a ton.
Now all of those are very big figures, but if you compare 800 Euros a ton to 5,000 euros a ton, that's a massive difference. And also that difference between France and the US, it's nearly double the cost to get SAF in France, more than that. It really does show that the US incentives are making a huge difference in terms of SAF.
David Casey:
Yeah, there's clearly a huge difference for any airlines, bottom line.
Alan, moving on to other key themes. We've seen a lot of talk about supply chain challenges. Now obviously coming into the show we've known about the various issues that Boeing and Airbus are facing in terms of delivery delays. What has the manufacturers been saying? I actually heard a quote before from the CCO from Irish leasing company Avolon, and he was saying we're in for a period of structural undersupply of aircraft. How have the manufacturers responded?
Alan Dron:
Well, Stan Deal, the boss of Boeing Commercial Airplanes, said right at the start of the show that he can see elements of recovery in the supply chain, and it does seem that things are slowly stabilizing. They're not getting hugely better yet, but they're not getting any worse.
Boeing, like a lot of the big companies, is trying to be very collaborative with supply chain. They're putting some of their executives together with senior executives from supply chain members, and the emphasis is that it's very much not a finger-pointing exercise. They really are trying to pull together to plug some of the gaps that have occurred over the past 18 months or so.
Victoria Moores:
Yeah. Following on from that, Alan, I've heard a very similar picture across all of the briefings that I've been at. There hasn't been that finger-pointing attitude. It's been a case of, "We are going to do everything we can to work together to get through this because it's going to continue for a little while longer to get the supply chain online."
And just building on that, I'd like to share a comment that I heard from Avolon, the lessor, CEO today, and he was actually saying, "What we want the manufacturers to do is to really focus on stabilizing the reliability of their existing programs and platforms, rather than necessarily focusing on these futuristic technologies." Because if you think about replacing an aircraft that has an environmental impact for fleet renewal, if we're able to get the performance, reliability, durability of the existing technologies really performing, that would make a huge difference. Because right now the engine problems in the industry are offsetting the cost benefits of operating these new technologies.
David Casey:
Let's talk then more about some of the orders that we've seen. Typically, at Paris and at Farnborough, there's a real rivalry between Airbus and Boeing in particular about who has the biggest order book by the end. It's fair to say, as we said at the start, Monday was a slower day for the number announcements. That was probably because of that huge order from Indian LCC IndiGo for 500 A320 Family aircraft. CEO Pieter Elbers said it was difficult to overstate the significance of it, adding it was a day that he'll never forget. And that takes the number of Airbus aircraft on order by IndiGo to nearly 1,000.
Now day two has been much busier. We've seen announcements from Airbus and Boeing. Have there been any ones that catch your eye?
Victoria Moores:
I think for me, David, it feels as though there is a bit of a decoupling of order announcements and air shows. It seems to be that if an airline wants to announce their order or a manufacturer wants to announce an order, rather than getting lost in all of the various headlines of an air show like this, I believe that more and more we are seeing airlines, lessors, other companies, announce their commitments and orders outside of the show. And I think that that is leading to fewer order announcements at air shows. I don't know, maybe Farnborough next year will prove is wrong.
David Casey:
We shall see. Alan, any other ones beside the Boeing and Airbus orders?
Alan Dron:
Just one slightly curious development, somewhat to people's surprise, De Havilland Canada announced a new version of the Twin Otter, the Classic 300-G, which is aimed at giving a potential new lease of life for one of commercial aviation's oldest inhabitants. The Canadian manufacturer said that they went round customers late last year, basically asking what they wanted from future purchases of the type. Perhaps unsurprisingly, the airlines said they wanted more economy, better figures.
So De Havilland Canada have managed to save almost 500 pounds in the basic weight of the aircraft, mainly through a new avionic set and some redesigned airframe components. This is going to give the aircraft greater payload range performance, although details were not precisely given. De Havilland Canada said that they really wanted the customers to give an idea of what they wanted, but it's difficult not to believe that the exercise wasn't carried out with one eye on a potential major new competitor in the 19-seat category, the passenger version of Cessna's new SkyCourier twin turboprop.
Victoria Moores:
Yeah, I wonder if I could bring in something along those lines. You're talking there about the regional market, Alan, and this is perhaps not notable for the actual details of it. It's an ATR announcement that was today. They were talking about their EVO program, which is their futuristic aircraft technologies. Now ATR is still sticking by its timeline to have their EVO family in service, if they decide to go ahead, in the early 2030s, stroke 2030.
But what they have said is that they were originally planning to decide on whether or not they were going to launch that aircraft program by the end of 2023 or in 2023. Now they've pushed that back to 2025. And in the press conference they were asked whether or not this could be because Embraer has decided to delay their turboprop program. The CEO of ATR said, no, that wasn't the case, but they really do need to get the technologies right. What matters is the entry-into-service date, not when they do the marketing launch of the aircraft. Therefore, they're playing it down as being rather irrelevant, the fact that they're taking a little bit more time. So that's one thing that I did hear on the regional aircraft programs.
David Casey:
Interesting. Thanks for that, Victoria.
We are just about out of time for today, so Victoria and Alan, thank you very much for your input today. Time to rest your feet before we do it all again tomorrow. And to our listeners, thank you for joining us. Make sure you don't miss us by subscribing to the Window Seat Podcast on Apple Podcasts or wherever you listen. Until then, this is David Casey, disembarking from Window Seat.
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