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Aboulafia: “Some solid commercial orders in Paris”

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Aboulafia: “Some solid commercial orders in Paris”

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Richard Aboulafia is Vice President, Analysis at Teal Group and writes for several international aviation magazines and publications. He is also an authority in the aviation industry, and spoke to euronews about the 50th Paris Air Show currently taking place in Le Bourget, France:

euronews:
What can we expect from this year’s Paris Air Show? Important announcements, new industry deals?

Richard Aboulafia:
“We should see some solid orders for larger versions of current planes. Given the persistently high price of fuel, it’s not surprising that customers are seeking the best economics from the most-stretched jets: 787-10X, A350-1000, and probably 777-9X. Also, higher seating density versions of aircraft should be popular, such as the new 737-800/MAX 8 with extra seats, and perhaps the high capacity version of the CSeries CS300, if Bombardier can finally get aggressive about selling that plane. Perhaps a larger, or high density version of the new re-engined Embraer 190 series will see some orders, or at least talk.”

euronews:
Boeing has turned the page on the problems of 787 batteries. What happened is perhaps a sign that the American manufacturer has gone too far in innovating technology and production process?

Aboulafia:
“There’s no question of that. Moving forward, new technology will be viewed on a strictly economic basis (i.e., does it pay for itself in terms of reduced production costs, or additional pricing power, or market share?). In terms of production process, Boeing, and everyone else, badly needs to re-think the idea of having partners play major roles in design and integration. Outsourcing works, but only if the prime contractor has total oversight over all major systems and key structures. Boeing has talked about moving more of this work back in house, but if they decide to outsource the 777X wing to Japan, without maintaining a strong co-design role, that would indicate that they’re still willing to take risks with this approach.”

euronews:
Europe is still affected by the economic crisis. “Traditional” airliners are forced to restructure or even, as with Air France, to tighten restructuring already underway, while the low-cost airlines are generally fine. Is it Europe’s destiny to become a low-cost continent in commercial aviation?

Aboulafia:
“The business models of IAG, Lufthansa, and Air France look sound, as do those of Europe’s LCCs. However, European politicians seem happy to let the Arab Gulf carriers, particularly Emirates, attack legacy airline long-haul traffic, just as long as they use A380s for the job. On the other hand, what choice do they have? Either way, Emirates, Qatar, and Etihad look set to grow their share of traffic relative to European legacies. As for smaller, non-LCC European players, most are on borrowed time. Hopefully, they’ll wind up absorbed into the three big carriers. Otherwise, they’ll simply disappear.”

euronews:
Airbus’ COO John Leahy said that within 10 years the African market of commercial aviation will be as important as that of Asia. Do you agree with this statement?

Aboulafia:
“Mr. Leahy is a superb diplomat. But of course good diplomacy can sometimes take precedent over solid reality. There is no way to adjust the numbers to make Africa as important as Asia in ten years, unless somehow Asia’s travel growth numbers fall drastically and Africa’s numbers rise dramatically. Nobody else is expecting either of these trends to emerge.”