passenger Jumbo since it entered service a couple of years ago, with US and Japanese carriers, who traditionally supported the 747, notable by their lack of interest.
FALLING OUT OF FASHION Why has the iconic ‘Queen of the Skies’, as the 747 was dubbed when it first flew, fallen out of fashion? After all, it revo- lutionised air travel in the latter decades of the 20th century and captivated billions with its sheer size and distinctive hump-back fu- selage. BA says more than 3.5 billion people have flown in a 747 during the aircraft’s lifetime so far. Although the Jumbo is unlikely to disap-
pear anytime soon – many aviation analysts expect the 747-400 model (the most common type flying today) to be in service with some carriers for at least another decade – there are others who think that once the Jumbo as a passenger plane starts to lose support, the end could come more quickly. The basic problem with the 747 is that it has four giant, fuel-guzzling engines which have proved increasingly expensive to operate as oil – and hence aviation fuel – prices rose sharply in the late 2000s. Fuel represents about one third of flying costs facing airlines, accord- ing to IATA. Moreover, the 747’s brash new rival – the giant (some would say ungainly) A380 produced by the Franco-German Airbus Group – is more fuel-efficient than the Jumbo, given its use of new lighter materials and engine technology.
WIDE-BODIED COMPETITION Yet for a long time the 747 held significant advantages over most other jets: notably, a longer range and ability to carry more passengers than rival aircraft. But all that changed in the mid-1990s when Boeing and Airbus developed new wide- bodied jets – the 777 and A330, in particular. Both aircraft utilised new engine technol- ogy for power, performance and efficiency, enabling them to compete more closely with the 747 for the first time in terms of routes and capacity. Boeing moved further in this direction in 2011 with the 787 Dreamliner, albeit with some unfortunate launch problems, and has high hopes for the bigger and more powerful 777X aircraft expected in about 2020. Airbus has a new aircraft named the A350XWB (extra wide body) that is able to carry up to
BUYINGBUSINESSTRAVEL.COM
Pan Am stewardesses in the stairwell of an early B747
The 747 captivated billions with its sheer size and distinctive hump-back fuselage
350 passengers in a three-class set-up. It is due to enter service later this year with Qatar Airways as the launch customer. But the key point about all these aircraft is
that they only have two engines; historically twin-engine carriers have been restricted by regulators on how far from a ‘diversion airport’ they are able to fly on one engine, lim- iting the length of time they can travel over water without reaching a safe airport if one engine fails. From the mid-1980s onwards, however, the restrictions were relaxed to take account of engine improvements, enabling flights by twin-engine jets to most parts of the world. From an airline’s financial point of view a twin-engine, long-haul jet is a no-brainer – a point emphasised by IAG chief executive Willie Walsh when recently presenting the airline group’s full-year results. He said the four A380s delivered last year to BA showed a “significant reduction in seat costs” in comparison to BA’s 747s. Also, the rise of the new generation of
smaller, yet wide-body jets with longer ranges and fuel-efficient engines is also having an impact on one of the basic tenets of the airline world: the ‘hub-and-spoke’ model that has dominated for decades. Hub-and-spoke enables airlines to achieve substantial econo- mies of scale by operating out of large hub airports, feeding in traffic from smaller airports. The world’s biggest hub airport, according to figures released in April this year by Airports
Council International, is Atlanta, Georgia, which saw some 94.4 million passengers pass through last year, followed by Beijing (83.7 million) and Heathrow (72.4 million). But the fastest growing hub in the top ten is Dubai in seventh place, with more than 15 per cent growth in passengers last year to 66.4 million. Behind this growth has been the success of Emirates in positioning Dubai as a more convenient hub than Europe for Asian traffic to the West. Not surprisingly, Emirates has become the most prominent cheerleader for the giant A380, and accounts for about 30 per cent of the aircraft’s 452 deliveries and confirmed orders so far.
HEDGING BETS Yet demand for the A380 has appeared to stall recently (as it has for the 747). This perhaps suggests that many airlines are hedging their bets over whether the hub-and-spoke model will continue in its present form, especially given the flexibility that buying new gen- eration twin-engine aircraft gives them in providing what passengers want: frequent departures at main hubs and direct flights between smaller airports.
Demand for point-to-point flights is
clearly shown by the success of Ryanair and Southwest Airlines in Europe and America respectively. This trend is also borne out by new research published last year by academ- ics at Leeds University’s Institute for Trans- port Studies, based on a survey of travellers using Glasgow and Edinburgh airports. This concluded that there was a “strong aversion” to being forced to use connecting flights via a hub airport. “In particular, we observed a very high willingness to accept higher airfares in return for direct flights,” the survey added. This poses a potential dilemma for travel
buyers in seeking to enforce fare discipline on travellers who prefer direct point-to-point flights rather than the hassle of flying via a hub. One global travel director I speak to says her policy allows “the most economical direct flight to be chosen”, while another buyer says: “We would not generally allow direct flights to be chosen if there was a cheaper flight including a connection.”
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