In the aviation world, a launch customer is an airline that takes the first delivery of a new type of aircraft. A few years ago, Norwegian and Southwest were vying for recognition as the Boeing 737 MAX launch customer. Looking back, it may be a decision they now regret. The title has both its risks and its rewards, and that is what we will look at in this article.
There are a few advantages to being the launch customer for a new aircraft type. This could include some extra media attention paired with bragging rights. It could also mean some increased passenger traffic from aviation enthusiasts as they want to be some of the first passengers aboard a new plane. In fact, ANA tickets sold in an online auction to fly on the new 787 in 2011 went for as high as $34,000.
It was just three years ago that Cathay Pacific had the honor of hosting a large ceremony to celebrate delivery of the first Airbus A350. With VIPs in attendance and cameras rolling, Cathay had a great opportunity to show the world why they should book tickets with the carrier.
One 2017 CNBC article wrote the following about Norwegian’s 737 MAX launch:
For Norwegian Air, taking delivery of its new Boeing 737 MAX 8 is another great marketing opportunity. It’s offering a dozen people a once-in-a-lifetime ride on the airline’s newest plane.
We’ve certainly written a few articles about about airlines becoming launch customers. With the Paris Air Show just around the corner, we’ve described how Qatar Airways’ desire to be the 797 launch customer. We also wrote recently about Lufthansa being the European launch customer for the Boeing 777x.
For the manufacturer, having a launch customer really just means ‘getting the ball rolling’ as it seeks an order with enough volume to attract even more business. For larger manufacturers with a firm establishment, airlines may be fighting for the title.
On the other side, it may be a risk that an airline has to evaluate. Having a launch customer signifies trust in a new product that has never before seen commercial service. This was critical for Bombardier when it had SWISS as the launch customer for the CSeries (now Airbus A220).
The risk of delay
However, despite the great fanfare and potential marketing opportunities, being a launch customer now carries more and more risk. With increasing technological innovation comes the potential for delays, as engineers strive for more efficiency.
This has been the case numerous times. most recently we wrote about Lufthansa anticipating delays to the 777x launch. After Norwegian held an auction for mid-June 2017 tickets to fly on the brand new 737 MAX, Boeing announced that delivery was delayed until the end of that month. This caused some embarrassment and inconvenience for Norwegian.
You may recall the significant delays that plagued the 787 Dreamliner program. According to the Telegraph, the Dreamliner was an astounding three years behind schedule. The aircraft type had an original delivery target of May 2008. However, the first 787 only made it to launch customer All Nippon Airways (ANA) in September 2011.
The risk of malfunction
Now in 2019, we know all too well the risk of adopting a new aircraft. During its bumpy entry into service, the Dreamliner was plagued with many problems. These issues included manufacturing errors, engine defects, hydraulic system glitches, fuel leaks, and battery problems.
As the first airline to take on the 737 MAX 9, Lion Air has perhaps paid the greatest price as a launch customer. In October of 2018 it lost 189 passengers and crew when one of its 737 MAX aircraft plunged into the sea. Since then, much has been written about the 737 MAX and its issues.
The 737 MAX is the worst case scenario for any launch customer and early adopter. Large orders were placed and regular service was scheduled. All of the buildup came to a halt when the aircraft type was grounded and billions of dollars of investments left unusable. To this day, large fleets of the 737 MAX sit parked, unable to fly and generate revenue for their owners.
In conclusion, airlines must seriously evaluate the risk and reward of being a launch customer. They must evaluate whether the publicity and title is a reasonable risk in exchange for possible delays and mechanical issues.
Knowing that recent launches have had both major and minor problems, do you think it’s worth the risk?