Alcoa Aerospace Marketing Director Dan Goodman is in France for this week’s Paris Air Show. Speaking from Alcoa’s exhibit stand at Le Bourget Airport, he provides the following view of the aviation marketplace – looking at its evolution from the both a technology and competitive landscape point of view:
Q. Why have the world’s airlines ordered thousands of aircraft at a time when many of them are struggling financially?
A. The simple answer is technology. With oil prices hovering at about $100 per barrel, the airlines are clearly ready to pay for technology that can deliver better fuel efficiency while lowering their maintenance costs. Ten years ago, jet fuel accounted for about 20 percent of an airline’s direct operating costs. Today, this figure is closer to 40 percent. This is why we see aircraft with higher sticker prices selling well, and why even the struggling airlines are still ordering airplanes.
This effect is clearly visible when you look at aircraft retirement ages. Market forecasters previously assumed a 30-year lifetime as the rule of thumb for how long an airline would keep a plane in its fleet. But due to the attractiveness of newer technology, the new rule of thumb now looks closer to 25 years. So, what we’re seeing is that airlines are not waiting as long to sell-off or retire aircraft. The advantages that technology promises in lowering costs and fuel consumption is also why we see such keen interest in new aeroengine solutions such as Pratt-Whitney’s Geared Turbo Fan (GTF) and GE’s LEAP-X models.
Q. How is Alcoa responding to this trend?
A. Alcoa is very well placed to deliver exactly what the airlines and airframers want in terms of technology improvements. On the airframe side, Alcoa Aerospace’s new solutions incorporate third-generation aluminum-lithium alloys and advanced structural concepts for wings and fuselage sections. These applications can deliver as much as 10 percent in weight savings over composite-intensive planes, as well as up to 30 percent lower cost to manufacture, operate and repair – all at significantly lower production risk, while also offering lower program risk for aircraft manufacturers. On the propulsion side of the equation, our turbine airfoils enable the kind of improvements in specific fuel consumption that are driving a whole new generation of aircraft engine products.
Q. What other trends are you noticing at the show?
A. The growing number of major players in the aircraft industry. Years ago, the field included many players who are no longer in the commercial aircraft game. Names like Lockheed, McDonnell Douglas, Fairchild and deHavilland gradually disappeared leaving two duopolies – one in large aircraft (Boeing and Airbus) and another in regional Jets (Embraer and Bombardier). Now we’re seeing those duopolies beginning to crumble. In large aircraft, we’re witnessing the emergence of a Chinese competitor in COMAC while the Regional Jet space will soon be occupied by no fewer than five players as COMAC, Mitsubishi and Sukhoi join the ranks of the aforementioned Brazilian and Canadian manufacturers.
In this evolving competitive landscape, Alcoa also has a strong position, as we work with all of these key players – even those who currently are viewed as emerging competitors. We are taking the long-term view in looking for all new realistic opportunities to expand our relationships with them – which will open more business opportunities for our company.