September 2007 Archives

A big conference going on in Atlanta this week focuses on a more glamorous, but at the same time lesser known, area of our industry. That’s the VIP or business jet category.

In my last job I was able to participate in the sale of five 747-8s for VIP operations. It’s an absolutely fascinating business. Also a successful one.

“Business jets” come in widebodies, too. Here’s a concept image of a 787 VIP airplane.

Just for example, there are more than 20 747s in VIP configurations today, and we clearly expect over the next 20 years for those airplanes to be replaced. Not only that, we see further growth in that market as well.

Boeing Business Jets is a collaboration between Boeing Commercial Airplanes and GE Aircraft Engines that markets jets with the cabin size of a Next-Generation 737-700, but with the wing and landing gear of the longer-range Next-Generation 737-800.

It turns out we had somewhat miscalculated when we launched this venture back in 1996. At the time, we forecast sales of maybe a half dozen or so airplanes per year. Instead, BBJ sold well over 100 airplanes in the first 10 years!

And during those 10 years, we launched the BBJ-2, and the BBJ-3, extending our collaboration with GE Aircraft Engines. We also began selling VIP versions of our popular widebody 787, 777 and 747 airplanes, independent of any engine company collaboration. As the BBJ begins its second decade, orders are at 151 for BBJs and widebodies combined.

Boeing’s business jet customers by region: the highest concentration split between the Middle East and North America - closely followed by Europe. Private individuals are the largest customer segment, followed by government transport, corporate, and charter operators.

The event going on in Atlanta is the 60th annual meeting and conference hosted by the National Business Aviation Association. Its goal is to create an environment that fosters business aviation around the world.

And the show is a great time for Boeing to update existing and prospective customers on features that make flying easier for busy executives and government officials.

“Lower Cabin Altitude” is one of those features. It’s a system that regulates the cabin environment to equal a maximum elevation of 6,500 feet above sea level. Customers love this feature, which is standard on all new BBJs and available as a retrofit kit for in-service BBJs. It’s also available of course on the 787 VIP airplane. And just think, soon we’ll all have the benefit of “lower cabin altitude” as passengers on the 787 Dreamliner.

For those who can’t make it to the NBAA this year – you can get a taste of what’s new at our recently re-launched Website for Boeing Business Jets. When you navigate around the site, you’ll find you’ll be able to check out the floor plans and specifications of these special airplanes. And you’ll also find out that Boeing provides worldwide support for the individuals, businesses, and governments who operate VIP jets.

I’ll be checking out the site myself. I can’t make NBAA either, as I continue my travels through Asia this week.

BEIJING – Since my last trip to China, some things have changed, and some haven’t. The Sichuan dishes are just as spicy – and as good - as I remember them. No change there. But the Beijing skyline is boasting a couple of new skyscrapers just since my visit last winter.

This week I’m here to present the new Boeing Current Market Outlook (CMO) to journalists. Needless to say, this visit comes at an exciting time in China. They’re on a great ride right now, as the China of today is a place of both change and growth. The aviation industry is no exception.

My China market overview presentation is part of the 2007 Current Market Outlook. The complete Boeing CMO book is now available for download (3MB PDF) here, or by clicking the image above.

You’d be hard pressed to find anyone who says the air travel market for Greater China is going to do anything but continue to grow at phenomenal, unprecedented rates. China’s thriving economy is the driving force. The 20-year China economic Gross Domestic Product (GDP) forecast of 6.6% per year is the highest in the world - and more than double the world GDP forecast.

Consequently, we forecast that air travel will expand significantly, led by an average annual growth in domestic air travel of 8.8%. This incredible growth will nearly quadruple China’s airplane fleet over the next 20 years.

Chinese airlines will need nearly 3,400 new airplanes over the next 20 years. China’s fleet will grow from 1,150 today to 4,460 airplanes by 2026, nearly quadrupling in size. There will be nearly 3,400 new airplanes added to the fleet, both passenger and freighter airplanes. Of these, more than 3,100 will be for growth, while 250 will be for replacement of the passenger fleet.

About three-quarters of these deliveries to Chinese airlines over the next 20 years will be made up of regional jets (330) and other single-aisle airplanes (2,200). These airplanes will make up 47% of China’s delivery dollars ($9 billion and $150 billion, respectively).

Another 22% of China’s deliveries, 750 units, will be intermediate-sized twin-aisle airplanes, which represents 46% of total delivery dollars ($157 billion). The single-aisle and twin-aisle market segments combined will make up 90 percent of China’s total delivery dollars.

Just 3% of deliveries, 90 airplanes, will be of the 747-size and larger category. These airplanes make up the remaining 7% of the delivery dollars for China ($24 billion).

We’ve witnessed some incredible dynamics in this marketplace, especially in the last several years. Take a look at the charts below:

The number of Chinese passengers traveling by air has more than doubled since 2000. China’s commercial airplane fleet has also doubled in size since 2000 - and new aircraft will continue to be required to match the increase in travelers as well as expanded airport facilities and infrastructure.

Something I’ve been talking about here is one of the positive results of the China market’s rapid growth: China has the largest and youngest fleet in the Asia-Pacific region. At the end of 2006, 1,150 airplanes were active and in service in the China fleet. The average age of the in-service fleet was 7.6 years - more than 2½ years younger in age than the Asia-Pacific fleet average. Consequently, the airlines of China make up one of the most capable, fuel efficient, and environmentally progressive fleets in the world.

Meeting the press in Beijing.

By the way, as of August 2007, China’s fleet includes 709 Boeing airplanes. With China Southern’s announcement for 55 737’s earlier this month, Chinese airlines have an additional 323 Boeing jets on order.

Next stop for me is Shanghai, and beyond, to meet with both airlines and media. Along the way I also hope to catch up with some of the many friends I’ve had the pleasure to make since my first trip to China back in 1991.

Finally, I have to note that on this year’s trip I find myself deeply missing my former colleague, Randy Baseler. Randy and I enjoyed traveling to China together many times. I think it’s safe to say we never met a “dumpling” that we didn’t like!

The 787 Dreamliner program has completed the third of three large-scale structural tests - to determine whether the actual airframe performs in a simulated “crash landing” condition the same way as software modeling predicts.

Much of the results are in and we’ve concluded that the testing was a success.

The testing basically validated the analytical tool we’ll use to demonstrate compliance with the FAA’s “special condition” covering the crashworthiness of our composite structure.

787 program personnel discuss a composite piece that was dropped as part of the final physical crashworthiness test of the 787 Dreamliner’s composite fuselage last month.

We’ll continue to model a variety of crash scenarios to comply with the FAA’s condition – which requires us to show that the 787’s fuselage is as crashworthy as today’s aluminum airframes.

The testing of the Dreamliner’s composite fuselage took place in late August at a Boeing facility in Arizona. The idea was to simulate specific impact conditions that had already been modeled on the computer, and then determine the accuracy by comparing the results of the physical test to the computer model.

In the first test we crushed a composite fuselage section slowly between steel plates. In the second test, a suspended steel plate was rammed into a fuselage section.

And in the last of the three tests, engineers dropped a 10,000-pound, 20-foot wide, half-barrel fuselage from a drop tower onto a steel-plated platform. The fuselage section included 18 seats and two loaded cargo containers. We also added extra weight to account for passengers and the top upper skin and overhead luggage bins that were removed from the test fuselage.

The results from all three of the tests matched the computational analysis.

So what’s the significance? The testing and analysis show the accuracy of our computational tools. These tools will be used to demonstrate that the 787 has comparable characteristics to today’s similarly-sized airplanes made out of aluminum. The results will be used as part of the overall certification process for the 787 for entry into service next year.

Doing a blog is challenging – all the more so in the consumer-focused world of the airline industry. So my hat is off to Delta Air Lines. They just started a blog called Under the Wing.

Delta launched the blog just a couple of weeks ago. And already they’ve talked about some topics near and dear to my heart, such as enhancing the in-flight experience, and focusing on the customer. Great discussions.

And while I’m on the subject, I want to extend a personal welcome to Richard Anderson, Delta’s new CEO. Before taking on the new job, he served key roles in a number of big companies such as Continental and Northwest Airlines, and was a Delta board member. I met Richard many years ago and was always impressed. I’m confident he’ll be a fantastic leader at Delta Air Lines.

Like many of you, I woke up a bit earlier than usual yesterday. It was a big day at the house - the first day of the school year.

So my normal routine got a bit changed - I managed to make some coffee, and I did let the dogs out, but I didn’t get around to feeding them. Breakfast would have to wait because I also had to head to work early to catch the 787 program update call.

It was our regular quarterly call for media and investors. But this one held more than the usual anticipation. There’s been a lot of attention to when this airplane is going to fly, and how it’s being assembled – more than any airplane I can remember.

787 first flight is now targeted for mid-November to mid-December.

And as many had expected, BCA president and CEO Scott Carson and 787 Program general manager Mike Bair confirmed that we’re changing our first flight schedule.

We’re now targeting first flight for somewhere in the mid-November to mid-December timeframe.

We’ve always said that building new airplanes is a difficult, complex task. The 787 is no exception. But even with this change in schedule, the team will implement contingency plans, and we still think we’ll meet our first delivery in May 2008.

You may have figured out that this gives us a window of about six months for flight test. Very true. It’s an aggressive plan. And it includes all the risks you’d see in a typical flight test program. But barring any major new discoveries we think we have an achievable plan for flight certification.

Once the first airplane is in the air, we’ll be approaching 787 flight test as an around-the-clock operation – that means 24/7. The program will include 34 pilots and six aircraft. They’ll be conducting 3,100 hours of flight testing and 3,700 hours of ground testing.

Extensive simulation and testing we’ve already done on the ground and in the air (in the case of the avionics and flight controls) gives us a significant head start.

But getting back to the announcement – what happened to the schedule?

Well, the two main issues are the documentation and execution of “traveled” assembly work that has moved into Everett on Airplane #1, and finishing the integration of our flight control system software. We’re working hard on these issues and we’re making good progress.

After the 787 rollout in July, we did remove major pieces of the airplane because primary and secondary structure was not complete. We also needed to replace temporary fasteners. That was part of the plan all along. Now we’re moving forward on completing the assemblies, and installing the wiring and systems. I can tell you that the installations we’ve completed have gone well and the design tools have done what we expected and more.

In the meantime, the market response to the Dreamliner continues to reinforce our view that this is the right airplane for the right time. This week, Aeroflot shareholders approved the purchase of 22 new 787 Dreamliners, putting the program over 700 orders.

Of course, customers determine when to announce orders, so there’s no truth to the notion that this is all a scheme to arrange for a total of 787 orders by the time of first flight!

But in all seriousness, we’re facing our challenges head on. We have an experienced team that understands the issues and knows how to complete a complex airplane program.

Our goal remains the same – to meet the commitments we’ve made to our customers, and to deliver airplanes on time that perform to their expectations over the life of the program. And as always, we’ll keep the lines of communication open as we go forward.

Oh, and don’t worry, the dogs finally got their breakfast.