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Analysis: What Airlines Want In Middle-of-Market (MOM) Aircraft
11 July 2016

Jens Flottau

Boeing believes there is a big market for a new aircraft in the space between the current Boeing-Airbus narrowbody families and the smallest widebodies. What it has not determined is the size and performance characteristics of that so-called middle-of-the-market (MOM) aircraft.

But a joint survey of airlines and air cargo carriers by Bank of America Merrill Lynch and Aviation Week/Penton Research provides some clues about what airlines want in a new aircraft—be it from Boeing, Airbus or a new player in that segment. Some of the results are surprising and show how technologically challenging such a project would be for the manufacturer that chooses to launch an aircraft in the category.

First surprise: Airlines, traditionally conservative when it comes to innovations that are challenging to much of their operational status quo, seem to be prepared to reintroduce widebodies into medium-haul flying. Sixty percent of the carriers participating in the survey would consider ordering a small widebody, provided it fits into existing airport gate infrastructure.

The limitation at many airports is wingspan: a new aircraft cannot be much wider than an Airbus A320 or a Boeing 737 if it is to use narrowbody gates. And wingspan is defined in part by the range requirement, which leads to the next challenge: Of the airlines interested in buying a MOM jet, 22% would need a range of 4,000-5,000 nm, 24% would want 3,000-3,999 nm and another 23% want only 2,000-2,999 nm.

That wide spread of range requirements is a major issue for aircraft designers: A significant number of airlines merely want more passenger capacity; others want range, and some want both.

To make things even more complex, almost half of the airlines surveyed that would buy a MOM aircraft have defined their preferred two-class seating capacity as being 150-199 seats. Only 27% want 200-249 seats, and many fewer want an even larger aircraft. Those answers suggest a new midsize aircraft does not have to be larger than 250 seats, and its smallest variant could be smaller than Boeing and Airbus currently think.

Given the level of demand for a smaller jet just developing a shrunk version of an aircraft optimized for larger capacity won’t be good enough. Significant investment would have to be made to ensure key design features such as wings, empennage and engines fit its size and are optimized for the segment.

Airlines also have concrete ideas about materials: A clear majority wants the fuselage and the wings to be made of composite materials—today characteristics of only the most modern widebodies such as the Airbus A350 and the Boeing 787 and unheard of in the narrowbody space.

Back to the seating preference: The fact that so many airlines are interested in an aircraft with fewer than 200 seats makes clear that many ultimately consider the MOM aircraft also as a replacement for Boeing 737 or Airbus A320 fleets, not only a model for a new segment. In fact, only 18% of airlines responded that they would use such a jet to open new markets as a pure addition to their fleets while most cited replacement (35%) or some combination of upgauging or downsizing of average unit capacity. The new midsize aircraft is not only about filling the niche created by the discontinuation of the 757; airlines go far beyond that narrow application in their planning.

But Boeing or any other manufacturer may not want to choose that route because there would be a clear danger of cannibalizing existing aircraft families. For Boeing, definition work will all depend on what it expects for the future of the 737. The company could assume that with average aircraft size increasing anyway, the new design could over time become its smallest offering as the 737 slowly decreases. Or Boeing could conclude that the current 737 will be succeeded in its own segment with the midsize aircraft coming in just above it.

That second path would require a massive capital investment, which would be challenging, given all of Boeing’s other burdens—recovery of 787 development costs, plus the 737 MAX and 777X developments. To make matters worse, the midsize aircraft would likely have to be developed as a family of different versions to satisfy as many customer demands as possible.

But who says it is necessarily Boeing that would build an aircraft in that segment? Airbus will soon be much less constrained in terms of spending: The A350-900 is already in service, and the −1000 will follow next year. Investment on a possible stretch would likely be more incremental, and most of the work on the A320neo family is also behind it.

Then again, Airbus probably already has what comes closest to airline requirements in that part of the market, the A321neo and the A330neo. Why would it risk making them obsolete unless it was absolutely necessary?

But airlines are clearly showing their interest: 89% of airlines and air cargo operators surveyed said they would buy a MOM aircraft. And 82% of those that are interested can imagine buying it before 2023. A possible huge rise in fuel costs is not necessarily a driver—many carriers would order a midsize aircraft even if fuel stays at or below $70 per barrel.

As customers and suppliers await Boeing’s decision on whether to move forward, there are clearly a lot of factors at play behind the scenes.