The Rise of Narrow-Body Aircraft – Why Airlines Are Thinking Small

Bigger isn’t always better, at least when it comes to planes. Narrow-body aircraft are all the rage in the commercial aviation circle these days. Some are deeming these vessels “game-changers” and backorders are piling up.

But what exactly is all the fuss about? Let’s dive in and have a look.

Airbus A321neo: A “Game-Changer”

As we iterated in our growth framework series for airlines, systemic changes and investments that have long-term impacts will outpace short-term cost-cutting measures. This is readily seen when it comes to fleet upgrades.

While the costs of new aircraft are significant, the impact is even greater. According to IATA, each new generation of aircraft is on average 20% more fuel-efficient than the model it replaces.

Wizzair CEO József Váradi attributes much of his airline's success to its efficient narrow-body Airbus fleet:

“We believe that the asset is critically important. In our view, the A321neo aircraft is the game-changer aircraft.”

“The A321 is the most efficient narrow-body aircraft today and will probably continue to be in the next few years. When you look at the A320 classic, the A321 classic is a 10% lower cost reduction and the A321neo is a 20% lower cost reduction.”

Beyond the cost savings, there are clear environmental advantages to flying the most modern planes. Flying sustainably also creates a positive brand sentiment between an airline and its travelers.

Váradi goes on to say, “[The A321neo] produces the lowest fuel burn, in terms of carbon and noise. I think sustainability and the impact on nature will become an increasing issue going forward. The new generation of consumers is much more responsible with regard to the environment than previous generations.”

The Airbus A220: The New Darling

Another strong believer in the new models of narrow-body Airbus aircraft is David Neeleman. The Founder of JetBlue and Azul Brazilian Airlines is spearheading a new airline, currently going by the name Moxy. He recently signed an order for 60 Airbus A220-300 aircraft.

“With a low cost of operation and spacious cabin, the A220 will allow us to provide passengers with lower fares and a high quality, comfortable flying experience,” said Neeleman. “The A220’s ability to operate profitably in thin, underserved markets across a broad spectrum of ranges is unique.”

The A220 is specifically designed for the 100 to 150 passenger market and provides both a great passenger experience and supreme operational capabilities for airlines. The aircraft features wider seats, bigger windows and a quieter flight. At the same, it claims a 20% lower fuel burn thanks to improved aerodynamics, lighter materials and new engines.

Airbus A220-300

“We believe the A220 really is the future of this segment of the market, and the flying public will know from the minute they set foot onboard that they’re experiencing the best our industry has to offer.”

Neeleman is not alone in his praise for the A220. Chris McGinnis of SF Gate penned the article Airlines falling in love with the Airbus A220. JetBlue, Delta, and Air Canada are among some of the biggest buyers of the aircraft, signing on for orders of 60, 90 and 45, respectively. JetBlue said the A220-300s will burn 40% less fuel than the Embraer 190s they are replacing.

Airbus recently received ETOPS approval for the A220, meaning the aircraft can make longer voyages. Such trips include from the west coast of the USA to Hawaii, or the east coast to Europe.

With an order book of over 537 aircraft to date, the A220 is well on its way to seizing the majority of the 100 to 150-seat aircraft market.

As a matter of fact, it seems that the only thing that could slow down the A220 is politics. The U.S. government shutdown may delay the deployment of the A220 at various airlines.

Cutting Costs on Long Haul Flights

Traditionally, narrow-bodies have been used for short and medium-haul flights. But technological advances are making it to possible to fly them longer distances.

The fuel efficiency and smaller capacity make these aircraft a pervasive tool for long-haul flights to secondary airports with less demand (routes which have shown strategic importance for the likes of Norwegian and the HNA Group in China).

Conventional wisdom would suggest that these would be silver bullets for low-cost carriers flying long haul. However, leading the way in narrow-body long-haul flights (>4500km) is Panamanian flagship carrier Copa Airlines, followed by full-service carriers United, American and Icelandair (depicted in the chart below).

Source: OAG Schedules Analyser – non-stop flights, week commencing 7 August. Long-haul = 4,500km or farther.

Further amplifying this trend is the recent demise of the Airbus 380 — the world's largest passenger plane. The last A380 will be produced in 2021. Although popular with passengers, the aircraft has been passed over by airlines in favor of smaller, more efficient vessels.

Meanwhile, the A220s that JetBlue is expecting could be used to launch the airline’s much anticipated transatlantic flights.

As more fuel-efficient narrow-body planes are produced and put into operation, it will be telling to monitor the long haul strategy airlines take – especially as it pertains to the low-cost full-service paradigm.

Production Increasing to Meet Surging Demand

With all of this buzz surrounding the newest models of narrow-body aircraft, demand is surging as manufacturing giants Airbus and Boeing figure out how to keep up.

Airbus aspires to produce up to 60 A320neo series jets per month in mid-2019, while Boeing plans to make 57 737MAXs per month by the same time. Meanwhile, backorders keep piling up. Boeing has 4,615 outstanding orders to fulfill for its 737 series, while Airbus needs to produce 6,126 A320 jets.

If Boeing and Airbus can reach their production goals, they’d reach a total annual output of 1,680 narrow-bodies. This would be about four times the amount of 2004’s 425 A320/737 deliveries.

Narrow-body production from Boeing and Airbus

The graph above, derived from Forbes, projects narrow-body production from both Boeing and Airbus. These current predictions would equate to a 450% growth in narrow-body aircraft, delivering more narrow-body aircraft between 2010 and 2024 than what were delivered from 1958-2009.

While these are ambitious targets, demand doesn’t seem to be waning anytime soon. The promise of a better customer experience and greater fuel efficiency have commercial aviation customers lining up for these new planes.

Some might go crazy for those juicy doubles, but airlines are springing their budget for those aircraft with the itty-bitty waists.

Joseph Vito DeLuca

Joseph Vito DeLuca

Chief Marketing Officer at Yieldr