A321XLR: A game changer for thin markets

As the Paris Air Show comes to an end, there was the usual buzz around orders, options, firm commitment, intent and repeat orders. Amidst all this, Airbus announced the launch of A321XLR which also clocked orders at the air show.

I have been a keen follower of “thin markets” and this has led to me study the regional jets at one end of the spectrum and the B787 on the other end. The aircraft which enable opening up of new routes or help reduce costs on existing routes for an airline can go great lengths in improving profitability of an airline. Should the network be built around the aircraft you have or should you look for an aircraft which supports your network plan is an unending debate and best had in person.

Sometimes, the thin markets are a gold mine, other times – a disaster and the A321XLR is another aircraft which can support “thin markets” effectively.

The aircraft

Airbus has released the primary specs of the A321XLR which is up for induction in 2023. The aircraft will have a range of 4,700nm / 8,704kms, which is 15% more than the A321LR. On paper, this caters to Mumbai – London as well as Delhi – London.

However, the range is dependent on multiple factors like weight of the aircraft, route which the airliner takes and the winds component. In December 2011, United Airlines saw large scale diversions on routes operated by B757s between the US East coast and Europe. The exact usable range with fuel for alternate destination and luggage of passengers will be known close to the delivery of the aircraft and will vary from operator to operator.

Airbus, in its press release, said that A321XLR will have 30% lower fuel burn per seat than previous generation aircraft and it intends to combine single-aisle economics with long-haul wide body cabin comfort.

The aircraft will see some changes which include the new Rear Centre Tank (RCT) to carry the additional fuel instead of the Auxiliary Fuel Tanks (ACTs), a modified landing gear for an increased maximum take-off weight (MTOW) of 101 metric tonnes and a wing trailing-edge flap which will help have same take-off performance and engine thrust requirements as the A321neo.

The RCT would hold more fuel than several optional ACTs and take up lesser space in cargo hold – which will help free up the space for cargo and baggage. While the RCT will take up less space than the ACTs, it will take up space which will reduce the available space of cargo-hold.

The market

Hundreds of new markets open up each year across the world. Many mature and grow, while few links disappear from the map. For every market which matures, there are markets which are waiting to be get connected and this is possible if there is an aircraft which has the right range and right capacity.

The A321XLR is a ready replacement for the B757s, 1050 of which were built, with the first entering service in 1983 and most being on the last leg of their life cycle. The range of the A321XLR surpasses the B757s, while the capacity is short of the B757-300.

Airbus has clocked close to 250 orders for the A321XLR, few of which were converted from other A320 family orders. The customers is an interesting mix with American Airlines, Flynas, IAG, jetBlue, Middle Eastern Airlines and Saudia operating a dual class fleet and in all likely hood go ahead with the same. Cebu Pacific Air and all airlines owned by IndiGo partners have a mono class fleet, while Qantas may utilize its aircraft with subsidiary Jetstar which operates a mono class fleet.  

Perception & challenges

Social media was flooded with the “cramped” narrow-body experience for 8 hours. While that is a valid concern, it is based on assumption that airlines will opt for slim line seats with minimal leg room and fly the A321XLR. The criticism is pointless till we see what airlines are up to. A better way to look at the market is to look at the B757 and the markets it opened up back then. As Asia – Pacific matures; the same can be replicated in this part of the world. The B757, also a single aisle aircraft, had a smaller cabin width than what the A321XLR would have.

Incidentally some wide body aircraft across airlines have narrower seats and same or lesser legroom and the debate should focus more on passenger experience and not narrow body v/s wide body. The advantage of a non-stop outweighs the minimal discomfort at times and a good example of that was the B737-BBJ flight operated by Privat Air for Lufthansa between Frankfurt and Pune, which had 32 Business Class seats and 60 economy ones and more often than not was full. I have taken the flight on more than one occasion, for the convenience and have seen fellow travelers, family and friends say the same.

Nothing stops airlines from operating 8+ hour flights with limited legroom and slim line seats if there is demand for such a product. Will this be the incremental traffic, which will be attracted to the relatively cheaper option or will be passengers who are moving away from the established carriers on the route – time will tell. There is evidence though that full service carrier in the past have tried to go closer to the low cost carrier experience to compete with them rather than differentiate themselves.

Genuine challenges remain around the number of lavatories and luggage capacity.

Network Thoughts

An airline network strategy is multi-pronged, especially that of a network carrier. Over the years, LCCs have also moved to be a network carrier. As operations expand, attracting traffic is easier if an airline has higher number of frequencies on a particular route. A quick glance in and around India for the routes which are operated shows routes like Reunion Island – Bangkok, Ahmedabad – London, Delhi – Manila, Delhi – Jakarta and Delhi – Denpasar which are either operated by B787 non-daily ops or are not connected and stretching to the maximum limit of current aircraft, which have potential to see A321XLR operation. 270 seats x 3 days a week v/s 180 seats x 5 days, sees the second option being more popular in the market. Definitely, this is dependent on operational aspects like slots and bilateral agreement.

Indian low cost carriers are signing code shares and pushing their inventory on the GDS and that makes them attractive to feed networks of Lufthansa, KLM, ANA, JAL and many others who are more than the 5 flight hour bracket of Singapore Airlines, Thai and the middle eastern carriers. While most of the Indian bilateral agreements have a cap on destinations in India, such a cap rarely exists for Indian carriers for the point of origin, making it possible to look at upcoming metro cities like Ahmedabad or Pune to connect to Amsterdam or Frankfurt or look for places like Hyderabad to connect to Europe – with wide body aircraft deployment would lead to over capacity currently.

 Tail Note 

The A321XLR is interesting segments which will make Boeing take a re-look at the timing of yet un-named New Middle-market Aircraft (NMA). The NMA could be twin-aisle and that will make the A321XLR longest range single-aisle aircraft.

Only 10% of current order book is from airlines in Asia, but there is a long way to go. Airlines in Asia which signed up for the A320neo and the B737MAX en masse have been battling either the engine issues of Pratt&Whitney powered A320neo or the grounding of B737MAX, making them go slow about ordering new planes. The fastest growth has come from Cebu Pacific, AirAsia group, LionAir group and IndiGo – all LCCs and it will take a while to analyze if a sub-fleet which is not a large number, would make sense.

There is no denying the fact that A321XLR has a market, it is now for airlines to look into how well it fits in their overall strategy. With IndiGo and Spicejet, both having ambitions of launching flights to London, there definitely will be an interest in this aircraft but will it materialize into orders? We will have to wait!

Tail Note:

Information related to Range & Seats from respective aircraft manufacturer website. Median number of seats considered where manufacturer has given a range for seat configuration. A380, B767 not considered since they are not available for direct purchase. Though B757 is not in production, it is considered to see commonality with the A321XLR market. Turboprops not considered. Newer versions of aircraft considered (Eg: A320ceo not part of this, same with A330s)