The changing economics of aircraft

AMNov18Feature - Boeing4
AMNov18Feature - Boeing4

In this Q&A session, Aerospace Manufacturing hears the views of Boeing’s strategy director for Europe, Richard Mills about the company’s new Sheffield manufacturing facility, supply chain relationships and new aircraft demands.

In this Q&A session, Aerospace Manufacturing hears the views of Boeing’s strategy director for Europe, Richard Mills about the company’s new Sheffield manufacturing facility, supply chain relationships and new aircraft demands.

Acting as Boeing’s strategy director for Europe, Richard Mills is responsible for developing and implementing Boeing’s corporate strategy for Europe and also plays a leadership role in business unit initiatives in the region. Mills was involved in the setting up of Boeing Sheffield – Boeing’s first manufacturing facility in Europe - which was announced in 2017. He also supports Boeing HorizonX in its engagement with companies in Europe.

What will be the initial operations carried out at Boeing’s new manufacturing facility which opened in Sheffield recently?

Boeing Sheffield, a Boeing Fabrication facility, will play a key role in enabling our company’s vision to connect, protect, explore and inspire the world through aerospace innovation. The Sheffield facility is part of Boeing’s broader plan to grow in-house production of selective technologies in ways that enhance our company’s production efficiency and reduce cost while maintaining quality.

The Sheffield facility will play a key role in enabling the company’s vision to inspire the world through aerospace innovation

Our investment into this production footprint in Yorkshire also triggers an increase in Boeing R&D at the AMRC, research that will be leveraged in Boeing Sheffield and across all Boeing Fabrication facilities worldwide. Our new site here will become one of 12 manufacturing sites in four countries that make up Boeing Fabrication, one of the largest suppliers to Boeing Commercial Airplanes. Our team in Sheffield will help Boeing compete on a global playing field by manufacturing actuation system components for Boeing’s Next-Generation 737, 737 MAX and 777 aircraft.

The facility will produce around 7,000 components a month, which will be shipped to our Portland, Oregon facility for assembly and then onto our assembly lines in Washington State. In opening Boeing Sheffield, we are advancing both aerospace innovation and our global growth strategy. The partnership between our sites in Sheffield and Portland is a win-win for the UK and the US. We are developing a new source of expertise and talent in the UK and connecting the team with a high-performing Boeing site in the US. Boeing appreciates the support of the Sheffield City Region and ATI in enabling this important initiative to be taken forward.

How is Boeing UK working with its supply chain partners to develop new manufacturing technologies and advances?

Boeing is actively working with existing and new potential supply chain partners to develop and commercially exploit leading edge manufacturing technologies. In April 2017 Boeing hosted more than 35 UK companies at the Technology Showcase event in Seattle. The event allowed UK companies unique access to Boeing technical experts to showcase their technology for future opportunities. Boeing has also had a long history of working with its supply chain partners to advance new manufacturing technologies through collaborative research centres such as the AMRC with Boeing and the AFRC.

What future do you see for Boeing UK? Is there anything more that the Government and UK industry bodies can do to help sustain and grow the industry?

Richard Mills, Boeing’s strategy director for Europe

The company’s long-standing relationship with British industry, the armed forces and the aviation industry dates back over 80 years. Today, the UK remains a critically important market, supplier base and a source of some of the world’s most innovative technology partners for Boeing. Since 2015, Boeing has spent £5.6 billion with more than 250 UK suppliers, and we have more than 2,200 teammates working across commercial, defence and services, as well as a thriving apprenticeship scheme. Boeing is proud of its relationships with British industry and our growing UK footprint, and the UK is an important source of talent for our company. We ask the Government to continue its support for R&T and supplier development, in order to spur continued innovation and improved productivity.

The demand for new passenger aircraft is now on a steep upturn. Is this still continuing and what areas has Boeing identified for improvement to help meet the demand?

The years since 2010 have been marked by terrorism, sluggish economies, exchange rate and commodity price volatility, and concerns about international trade and the free movement of people. While these developments might suggest lower air travel growth, the opposite has been the case. Air travel has proven to be a resilient market, and robust growth is expected to continue in the future.

Starting in 2010, as the world began its recovery from the global financial crisis, global revenue passenger-kilometres (RPK) have grown at an average pace of 6.5%, well above the widely used 5% per year benchmark established by global industry performance in the past 25 to 35 years. The trend accelerated in 2017, with global RPKs up 7.5% from the previous year.

Some industry commentators and stakeholders look at recent above-trend growth in the industry and question whether it is sustainable. While we acknowledge risks in the business environment, we remain confident in the strength of commercial aviation for several reasons.

Strong consumer spending is driving economic growth in many parts of the world. Although industrial weakness lowered overall economic growth in certain markets, notably the US and China, the slowdown concentrated in sectors such as mining and heavy industry that have a relatively small effect on overall passenger traffic. The maturation of many emerging market economies will further increase the share of consumption in overall GDP, bolstering traffic growth.

People in emerging markets have new opportunities to travel because of rising incomes, accompanied by improved service and lowered prices resulting from increased competition in the airline sector. This expansion, tied to structural changes of these economies and their air transport industries, is relatively resistant to cyclical fluctuations.

The 777X will acquire innovations that came with the 787 Dreamliner

Demand in the commercial market is forecast to more than double in the next two decades. To meet this demand, we forecast the number of jet aircraft will nearly double to 48,000, at an average annual growth rate of 3.5%. To support this fleet growth, Boeing forecasts a need for more than 42,700 new deliveries, valued at over $6 trillion, for growth and replacement in the next 20 years. Single-aisle aircraft command the largest share of new deliveries at more than 70%, with airlines needing more than 31,300 in the next 20 years. These new aircraft will continue to stimulate growth and provide required replacements for older, less-efficient aircraft. In addition, more than 9,000 new widebody aircraft will be delivered, allowing airlines to serve new markets—passenger and cargo— more efficiently than in the past. Consistent with air travel demand growth trends, we forecast that by 2037, approximately 40% of all new aircraft will be delivered to airlines based in the Asia region. An additional 40% will be delivered to airlines in Europe and North America combined, with the remaining 20% delivered to the Middle East, Latin America, Russia and Central Asia, and Africa.

Can we expect to see new ground-up aircraft platforms being developed or will the trend for producing re-engined and refined existing aircraft platforms continue?

The difficulties and expense of designing all-new aircraft, combined with a continuing strong airline demand means there has been a shift towards incremental improvements and a reliance more on updates to existing products rather than ground-up redesigns. However, you do not need new programmes to develop new technologies, you can take the things you create on programmes and bring them to other aircraft, to develop a really good aircraft that meets the market needs and focus on faster production and updates to existing designs rather than new aircraft that are costly to design, test, and bring to market.

Incremental improvements can be significant, the 777X, due in 2020, will acquire innovations that came with the 787 Dreamliner. Including new composite wings instead of traditional aluminium designs; a tail assembly that uses new, more aerodynamic materials; bigger windows; and a more comfortable, higher interior air pressure. A major incentive for updates is better fuel efficiency - in particular fuel efficiency per passenger.

The 737 MAX is changing the economics of air travel. The aircraft is 14% more fuel efficient than today’s 737-800 and over 20% more fuel efficient than the first 737 Next-Generation aircraft delivered. The improvements far exceed simply adding a new engine. The efficiency of the aircraft is gained through improved aerodynamics. We changed the winglet, improved the tail area, and reduced drag across the fuselage. The Advance Technology Winglet improves efficiency by almost 2% and the revised tail structure eliminates large vortex structures that increased drag. Overall, the 737 MAX is 14-16% more fuel efficient than our latest 737-800s.

www.boeing.com

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Boeing

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