This week’s featured link:
In strategy shift, Boeing backs 7 MAX: sources – Leeham News
Though this article is about Boeing trying to support the 737-7MAX, that’s not actually what grabbed my eye. United recently purchased some 737-700s from Boeing and apparently is topping that order up instead of going with the Bombardier C-Series or Embraer E-jet. Other than fleet commonality, it’s hard to see how an airplane nobody wants anymore (the -700 series) would get an order from United here. But then there’s this:
Then Boeing swooped in and sold 40 current generation 737-700s to [United] at what [Leeham News] was told was priced in the low-to-mid $20m, well below what [Bombardier] could offer.
According to Boeing, the 2015 list price for a 737-700 is $80.6 million. Nobody pays list price, of course, but that is one insanely hefty discount. And it certainly explains why United shunned what is probably a superior aircraft in the C-Series or Embraer. It’s hard to turn down prices like that.
Two for the road:
A short history of the much-maligned jet bridge – USA Today
This is a great look back at the history of the jet bridge. It’s fun to read, and it explains why we don’t have glass-walled jet bridges in the US like they do elsewhere.
The Real Story of Germanwings Flight 9525 – GQ
I actually find the title of this story misleading. Yes there’s something in this long piece about what actually happened onboard, but the more interesting bits talk about what happened before and after. Who should have caught what and where before this pilot went on his suicide mission? Should Lufthansa have done more for families after the fact? It’s a long read, but it’s worth it if you have 15 minutes to spare.
Having first traveled by air when you had to board through stairs from the tarmac (on ALL aircraft), the jet bridge is a fine invention. That said, I recently flew on Turkish from IAH to ODS via IST and back from ODS through IST to ORD. In Istanbul the jet bridge is rarely utilized, even when available, and when it is used, you often travel through the jet bridge just to climb down the stairs to take a bus to the terminal even when parked adjacent to the gate. It must be a fee for usage thing … or is it? I found the whole thing rather odd!
The Germanwings story is interesting, but it really doesn’t go into detail as to how or why Lufthansa would allow someone so young with so few flight hours the right seat in an A320, budget carrier or not. It should go without saying the bigger the plane is the more experience the flight crew is. I know this is not a hard and fast rule but you don’t go from a Cessna to a 777 overnight. The article glosses over this rapid rise. I get that when I step aboard a CRJ the cockpit crew may not be the most experienced but when on an A320 I expect to have serious experience up front…in both seats.
I love the Burbank Airport ! You still go outside and board the plane. When you exit the plane , you can imagine what it was like to see photographers ready to take pics as you step out, and descend!
My guess is that Boeing had unsold 737-700’s available at the end of the -700 production run. If these aircraft are not already under contract, they tend to be hard to sell, so big discounts are common for the ‘tail end charlies’ and/or if you want the business badly enough. Lead times on materials are long, and my guess is Boeing already was committed to buying the parts to build these aircraft.
I would not be surprised if Boeing was prepared to lose money on these 737-700’s aircraft to keep the C-Series out of the United inventory. This is not a new phenomenon. My own belief was the real reason the 747-8i was built wasn’t so much to sell, as to make potential A380 buyers think long and hard about the need for such an aircraft. when you have two aircraft types competing, the analysis tends to be much more rigorous than you see with a ‘sole source’ procurement. That rigorous analysis has lead many airlines to conclude that neither aircraft is especially attractive compared to smaller aircraft with similar (or in some cases lower) ASM costs. The result is neither aircraft is garnering many new orders.
It seems to have succeeded in that regard. While the A380 has sold reasonably well, the backlog is shrinking rapidly as new orders have been few and far between. So while Boeing is likely to lose money on the 747-8i program, that is probably more than made up for by the additional 787’s and 777’s that will be sold instead of A380’s. or 747-8i’s.
What are you willling to do if you want the business badly enough? It was widely reported some years back that USAir was buying A320’s for well under $20 million a copy, and one of the ways the leasing companies got burned was USAir financed (Sale/Leaseback) them for considerably more than what they paid for them. When USAir filed for Chapter 11, the leasing companies took a pretty big ‘haircut’.
I would add that I am sure that all of non-recurring engineering(NRE) costs in the 737NG program were recovered years ago. By contrast the C series probably has upwards of $3 billion USD tied up in NRE that has to be recovered somewhere. that NRE at this stage may be upwards of $10 million per airframe. The need to recover the NRE is one of the reasons shiny new fleets tend to be expensive.
Very interesting analysis, Matt. I would love to see more thoughts like this from you or Brett. Thanks!
I agree with Matt – I believe the Boeing philosophy was not just to keep the C series out of UA, but to knock it out of contention completely.
It was interesting to note that the CEO of IAG recently visited Belfast, and one of the thoughts was that they might order some either for the Vueling operation, or for BA to use out of LCY. He praised Bombardier for “taking on” Boeing and Airbus and adding more competition to aircraft manufacturing.
When the order didn’t materialize Bombardier announced 1,000 redundancies.
Such is the way…..
Any idea what the justification for fire codes preventing windows in jet bridges in the US until recently was? It makes no sense to me, if for no other reason than you want passengers in the jet bridge to be able to see if there’s a fire right outside that may affect them.
Alex Hill – No clue, but I thought that was the most interesting part of the story.
Back in the 80’s, the AA folks in Champaign, IL (CMI) invented the first ‘jet-bridge adaptor’ to be used on regional aircraft (ATR 42 and ATR72 aircraft).
This was a huge development – no one had successfully used a jetbridge on a regional aircraft before, especially one with a rear door.
One of the big concerns was how we would get over the first regulations that required the bridge to seal around the aircraft fuselage to prevent a possible fire from spreading and cutting off the primary exit from the aircraft.
I can’t recall all the details, but we fought off those issues on a station by station basis whenever they arose (and that was rare!). Jetbridge adaptors were then ordered systemwide for all airports that had regional service, and the developments that followed included the ability to use adaptors on most regional (turbo-prop) aircraft including the J-31.
The fire regulations never came up again to my knowledge
Subsequently the Killeen / Ft Hood airport (GRK) installed a glass walled jetbridge and had no such issues.
I can’t tell you the last time I saw a jet bridge actually form a seal around the boarding door … !
I think you meant to say, “United recently purchased some 737-700s from Boeing,” not “United recently purchased some 737-700s from United.”
Andrew – Nah, it was a very complex transaction where United ended up selling airplanes to itself. Yeah, that’s the ticket. (Fixed, thank you.)
And there goes United copying Delta again. ;)
Buying a less popular aircraft at bargain prices is a move we’ve seen Delta do a few times. I’m not sure how many times they’ve done it with brand new aircraft, but their recent acquisitions have made them the world’s largest operator, by far, of both the MD-90 and 717. And actually, they’re close to being the world’s only MD-90 operator; it looks like Uni Air might still have two, but I’m not sure for how much longer.
I’m probably being stupid, but why does the USA not have glass jet bridges, compared to Europe ?
David – It says in the article it was a fire thing.
Or at least a fire code thing; those two may or may not be related. ;)
Wichita’s (ICT) New Terminal has All-Glass Jetways/Airbridges at all locations in use. Gates 10-12 are still blocked by demo of old terminal.