ICAO Air Transport Symposium SESSION 7: BREAKING THE MOLD BUSINESS MODELS OF NEW AIRLINES Ricky Mack Boeing Commercial Airplanes Business Development & Strategy Integration BOEING is a trademark of The Boeing Company. Copyright 2012 Boeing. All rights reserved.
Agenda The tools for successful business models Ingredients for success Segments industry, passengers & airlines Technology, capability & efficiency Passenger preference Airline opportunities Market response
Successful Business Models Focus on the passengers & understanding of the market Simplified schedule, direct services Provide the basics well Simplified /lower fare structure Additional/ level services available at extra cost Low complexity in operations and fleet $ $ CM$ D Higher resource and asset utilization Affordable unit costs
The Passenger Is At The Center Airline Strategy Market Segment Business Model Airlines Policy Safety Liberalization Environment Authorities Passenger OEMS Capability Technology Efficiency Reliability 4
Airlines Cater to Different Passenger Segments Short-Haul 65% Travel Business 25% Travel (40-50% Revenue) Becoming price sensitive Extremely time sensitive Point to point/frequency Some cross-over to LCC Low price sensitivity Point to point preferred Time sensitive High quality service Total trip cost sensitive Service of less importance Unbundled/ancillary fees Somewhat time sensitive Price sensitive Low time sensitivity Medium service levels Personal 75% Travel (50-60% Revenue) Long-Haul 35% Travel Passenger demand dimensions are changing 5
Airline Business Models are Evolving All-Premium / Business? Full Service Global Network Long-Haul Independents Short/Medium Haul Independents Mixed Offering Broad Network Regionals Low Fare Long-haul Low Fare Charter/Inclusive Tour Low Cost Short Haul Medium Haul Long Haul 6
787 Dreamliner the game changer Developed after extensive passenger focus group research Offering unrivaled comfort and spaciousness for passengers Breakthrough business opportunities for airlines Cleaner, quieter and more efficient for the environment
787 s Innovative Technologies More-Electric Systems Architecture Composite Primary Structure Modern Engines Optimized Flight Deck Passenger-PleasingPleasing Features Advanced Aerodynamics
A New Sensation in Passenger Comfort Things you ll see New architecture Larger bins and windows Innovative lighting Things you ll feel Lower cabin altitude Improved humidity Better air quality Improved temperature control Smoother ride
Flexible Seating Configuration Regional First/business Premium Economy business economy class class class 8-abreast 9-abreast 4-abreast 6-abreast 7-abreast (3-2-3 (2-4-2 arrangement) Airlines can configure the 787 for their business realities
Connecting More Cities Directly From London 787-9 Honolulu 280 three-class passengers Tokyo 787-8 242 three-class passengers Mexico City New York Lima Santiago Los Angeles LONDON Delhi Hong Kong Mumbai Dubai Addis Ababa Singapore Perth Buenos Aires Johannesburg Boeing typical mission rules 85% annual winds Airways and traffic allowances included 787 performance subject to flight test verification
Fuel Efficiency 225 SEATS 275 SEATS 200 SEATS 250 SEATS 300 SEATS 350 SEATS 400 SEATS 450 SEATS er seat Fuel cons sumption p 20% Better Current Twins Current Quads 500 SEATS 550 SEATS 787 Fuel consumption per trip Only the 787 offers this fuel use advantage
Costs Reduced with 787 787 reduces fuel use, maintenance costs and fees including landing fees and ground handling % Contribution to operating costs 100% Service Fees Maintenance Cabin Crew Flight Crew which are often related to airplane weight Longer intervals between ee routine checks Fewer tasks to accomplish within those checks Less unscheduled maintenance 0% Fuel $0.50 $1.50 $2.50 $3.50 $4.50 Cost of fuel (U.S. $ / U.S. gallon) 52 additional flying days over first 12 years
Quieter Takeoffs, Landings London Heathrow 787 A340-300 A330-200 767-300ER 85 dba contours 6,000 nmi mission LHR-03092009_018 Noise footprint stays within the airport boundaries
Careful Choices, Clever Design Lower emissions 20% fewer carbon dioxide emissions Below limits on hydrocarbons, smoke, NOX, CO Quieter Community noise contained within airport boundaries Ramp noise below ICAO regulations; cabin noise optimized Lifecycle improvements ISO 14001 factory; reducing environmental footprint Composite recycling
Designed for the Reality of Airliner Ownership EASY to configure EASY to reconfigure and update EASY to transition EASY to finance ownership
787 Market Unprecedented Market Response 787-9 851 total orders from 58 customers 280 seats * 787-8 242 seats * 3,020 airplanes 3,590 airplanes Small twin-aisle Medium twinaisle Large twinaisle 787-size airplanes p are 42 percent of the commercial market As of March 2012 * Leasing operator COPYRIGHT 2012 THE BOEINGOutlook COMPANY (CMO) 2011-2030 Source: Boeing Current Market *
Changing the Game Meeting airlines needs Providing capability & opportunity Contributing the tools for successful business models Improving environmental performance Making flying fun again!
The first new jetliner of the 21 st Century Thank you! BOEING is a trademark of The Boeing Company. Copyright 2012 Boeing. All rights reserved. The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing.