Boeing has been incredibly innovative in the last few decades. Their 737 MAX aircraft has changed domestic flying, their 787 has created the concept of long haul low cost (such as Norwegian) and their upcoming 777X is going to redefine what it means to fly in a post jumbo jet world.
But there is one area that is still underserved, the medium-haul, high capacity marketplace.
What is the middle of the market?
If we were to look at the current aircraft on the market, based on range and passengers it would look something like this:
|737 MAX-9||178||3550 nm||US$120.2M|
|737 MAX-10||188||3300 nm||US$129.9M|
|Empty middle of the market|
As you can see, there is a gap between aircraft that can carry 206 to 242 passengers, a gap between 4000 nm and 7000 nm range and a $110 million USD cost difference. This ‘middle of the market’ is currently underserved.
A potential new aircraft that could fill this gap is the Boeing 797. There are two variants of the aircraft:
As you can see, it neatly slots into this market and would allow high capacity routes, such as Chicago to New York, or Sydney to Melbourne, to be effectively served. In fact, the first airline to operate one would simply clean up.
We have discussed potential new routes for this aircraft in a previous article.
How the Boeing 797 would transform low-cost carries
The Boeing 797 will feature technology found on both the 787 and the 777X, that will reduce operation costs up to 40%. These savings may be passed onto passengers, allowing airlines to directly compete on price. This will give them a huge advantage over their competitors who are operating heavier and less efficient aircraft. Because the 797 is also smaller and twin-aisled, it means faster boarding and disembarking (as fast as a 737).
Additionally, the 797 will cost carriers less to buy. Because the aircraft will be around $120-150 million (estimated), it will allow more budget carriers to enter the market place and disrupt the incumbents.
We may see new low-cost routes from smaller cities, such as Boston to Frankfurt, Washington to Florence, or even Quebec City, Canada to Nice, France. These smaller airports have much smaller fees than New York or London and are actually underserved. Customers have less preference to fly via hubs and would prefer to go right to their destination, a growing trend that the 797 is well suited to take advantage of.
The 797 could potentially beat out the 787 Dreamliner, which whilst bigger, simply means more tickets to sell. By focusing on smaller routes (with less competition), a low-cost carrier could clean up whilst a 787 requires a higher level of base demand (as well as more fuel to get off the ground).
What do you think? Do you think that the 797 will open up new opportunities for low-cost carriers?