Origins of Commercial Aircraft

TWA_1940Aircraft come into being for a number of reasons. New aircraft may be introduced because of new technology or new requirements, or just to replace their aging predecessors. Commercial aircraft programs are driven by demand and air travel is booming (over 3 trillion revenue passenger kilometres (RPKs) in the year 2004 and 5-6% forecasted growth).


Source: Boeing Current Market Outlook 2004

The market for new aircraft is the difference between the required and available RPKs, and as can be seen from the curve below, current in service aircraft and aircraft on order do not come close to filling the projected demand. In 2006, Boeing estimated that: “The need to expand the existing fleet to meet growing demand, plus the need to replace older airplanes with newer, better ones, creates a market for 27,210 new airplanes worth $2.6 trillion to be delivered over the next 20 years.”

In fact, for many years, commercial aircraft have represented one of the few areas in which the United States has achieved a favorable trade balance.

Why doesn’t everyone go out and start an airplane company? It seems that there are enormous amounts of money to be made. History has shown that this is not so easy. In fact the saying goes, “If you want to make a small fortune, start with a large fortune and invest in aviation.”

Airplanes are very expensive, risky projects. The plot below shows the cumulative gain or loss in an airplane project during its life. This curve is sometimes called the “you bet your company” curve, for obvious reasons. The plot was drawn in 1985 and the scale has changed. It was recently (1995) estimated that a new large airplane project at Boeing would take 20 billion dollars to develop.

Thus, commercial airplane programs are risky propositions and companies are not likely to assume even more risk on projects that rely on unproven technology. This is one reason that innovative concepts are not likely to be tried out on the next generation commercial airliner and why aircraft such as the A340 look so much like their ancestors, such as the Boeing 707.

One approach to minimize the risk involved in new aircraft development is to base the design as much as possible on an older design. Thus the DC-9-10, a 77,000 lb, 80 passenger airplane grew into a DC-9-20, then the -30, -40, -50, -80 then on to the MD-80 and MD-90 series. The MD-90 weighs as much as 172,000 lbs and can carry 150 passengers. This design was then shrunk to make a more contemporary version of the DC-9-30, called the MD95 and later renamed the Boeing 717 following the merger of McDonnell-Douglas and Boeing in 1997.

Another approach might be to start small…but even for small airplanes there are difficulties. Along with the investment risk, there is a liability risk which is of especially great concern to U.S. manufacturers of small aircraft. It is often cited as one of the primary reasons for the dramatic decline in new single engine aircraft in this country.

So the development of a new airplane is still a Sporty Game, as detailed in John Newhouse’s book by that name.

Why is a new airplane project undertaken?
Generally to make money. But it is much more complicated than just having a better product as the discussion of new aircraft development, by Richard Shevell, suggests.

The reason that new airplane projects begin is:
1. New technology or new processes become available that provide the aircraft company with a competitive advantage.
2. New roles and missions are identified that can be addressed much more effectively with an airplane designed for that application.

This is true for military and recreational aircraft as well as commercial aircraft.

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