PARIS 2019 BLOG: The significance of the A321XLR’s long legs
Day three of the air show was a good one for Airbus and particularly its newly-launched A321XLR, which is demonstrating early on that airlines see how they can stretch their networks, enter new markets and do good business with a longer-legged narrowbody.
Big XLR orders or commitments today came from American Airlines (50), Indigo Partners (50) and Qantas (36). Not all of these were entirely new—some were switches from other A320neo family orders and options. But this was a solid show of the level of interest in this plane by big-name companies.
Indigo is especially noteworthy. Founder and managing partner Bill Franke has created a global ultra-LCC powerhouse, with Frontier in the US, JetSmart in Chile, Volaris in Mexico and Wizz in Hungary changing the face of commercial flying in all the regions they operate. Listening to the comments from their CEOs at signing ceremony in Airbus’ Paris chalet, you realize just how much a narrowbody with the XLR’s range will enable ultra-LCCs to further change the aviation competitive landscape.
Frontier CEO Barry Biffle talked about the potential to extend the Denver-based airline’s reach to Europe and South America. JetSmart CEO Estuardo Ortiz is eyeing the Caribbean and US from Chile. Wizz CEO József Váradi talked of a “huge geography” and the “unique opportunities to extend the operating model.”
This should be a wake-up call for the legacy carriers. Aircraft are coming into the market that will allow the ultra-LCCs to do in long-haul international markets what they have achieved in the short- and medium-haul markets. A phenomenon that could be at least as disruptive as when the Gulf carriers connected the world via their Middle East hubs with all-new widebodies.
While some LCCs have entered long-haul international, notably AirAsiaX and Norwegian, it’s a market dominated by flag carriers and widebodies. One of the main reasons for that is that going longer brings higher operational costs than with short, point-to-point routes. Passengers tend to bring more, heavier bags. Aircraft utilization goes down with fewer frequencies. Food, beverage and IFE services have to be factored in. There are higher crew costs and other fees associated with longer, international flights. But an aircraft like the XLR gets the baseline operating economics down to widebody levels. And the owners and CEOS of these new-generation ultra-LCCs are innovative and disciplined.
An additional thought on Tuesday’s announcement by International Airlines Group (IAG) of an LOI for 200 Boeing 737 MAXs and one that speaks to how the legacy players like IAG, which owns British Airways, must strategize against the ultra-LCCs. Irish ultra-LCC Ryanair is an all-Boeing 737 operator and was the launch customer for a high-density version of the MAX, for which it has 135 orders and 75 options. In securing a very large number of MAXs now, IAG CEO Willie Walsh may also have made sure that Ryanair’s Michael O’Leary didn’t get a slew of additional MAX slots at a special price.
Wednesday was also a good day for the order books of the regional aircraft suppliers, with Embraer signing a deal with KLM Cityhopper for up to 35 E2 jets; ATR announcing 17 provisional orders for a newly-unveiled short takeoff and landing version of its ATR 42 plus 23 orders for other ATR variants; and Mitsubishi saying it has a potential launch customer for its SpaceJet M100.
Karen Walker email@example.com