As the trend continues of commercial airlines modifying their fleets to contain fewer of the largest widebodies and replacing them with more midsize widebodies and more sizeable narrowbodies, significant effects on the industry as a whole will likely play out over the next five to ten years.

This evolution comes at a time when the estimated average annual global fleet growth is about 4.2%, with the growth in Asia outpacing other regions. Against that backdrop, the trend toward longer-range, less sizeable aircraft will have implications for many types of players, and also change the way existing markets are accessed, unlock new markets, and impact everyone throughout the value chain.

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One of the main drivers of the trend is increasing fuel efficiency and corresponding range improvement, which opens up a new world of network opportunities to airlines. For example, the 787 has increasingly enabled flying into secondary markets, and the A350 makes possible a new set of ultra-long-haul routes, such as Singapore Airlines’ New York-Singapore route and Qantas’ London–Perth route. Also, Airbus’ A321LR is set to play an increasingly visible role on transatlantic routes such as JetBlue’s US-Europe plans, which are set to start with flights to London in 2021.

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Some of these opportunities were initially seized on by low-cost carriers and hybrid players such as Norwegian and Jetstar looking to export the low-cost model to long-haul, but have been rapidly expanding through traditional full-service carriers including British Airways, Aer Lingus, Lufthansa.

Together, these trends will increasingly challenge more traditional connection-driven network models and markets, and the operational set-ups that come with them.

Boarding call: Get your business ready for change

Already we’re seeing the effects of the move to midsize aircraft playing out in manufacturers’ strategies and order books, including Airbus’ termination of its A380 program, and Boeing’s empty airline order book for the 747, as well as its plans for a new mid-market airplane that will fall between the 787 and 737 in size (pending further impact from the effects of the ongoing 737 MAX issues).

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Operations will need to evolve as airlines integrate lower-frequency, more complex long-haul strategies into their networks. Network design becomes increasingly complex in this scenario, affecting connection opportunities and considering constraints on airport capacity and slots, for example. Major hubs will remain a feature and strategic advantage for full-service carriers, but greater point-to-point flying will impact both traffic and operation of these hubs. Effective strategic partnerships and alliance set-ups can further accelerate and unlock opportunities from lower-frequency direct routes and secondary flying.

Allocating competitive capacity becomes a major success factor, as competitors with more flexible and efficient fleets will be able to compete in especially high-yield, lower-volume routes more efficiently than carriers with more limited options.

From a revenue perspective, airlines will be even more challenged to carefully control cabin density and develop configurations that preserve the lucrative premium passenger options that large widebodies offer on long-haul flights.

At the same time, deploying less sizeable aircraft will have additional cost implications in areas such as the way crews are arranged to accommodate matters of seniority and cockpit-cabin staff ratios as well as scale effects on airport, handling, and base operations.

Expanding types of aircraft in a fleet will also affect complexity cost for crew, maintenance, repair and operations (MRO), and terminal operations, especially for legacy airlines that have established significant infrastructure around more traditional models.

Landing on an effective value chain set-up

From an OEM and aircraft supply chain perspective, a shift to smaller aircraft will have a profound impact on the balance of sunk production infrastructure, as well as options for growth in the future. As seen with Boeing’s previous experience of supply chain issues with the launch of the 787, new product launches do not always go according to plan, and getting both the product offering and launch right in a changing market is critical for both the OEMs and their supply chain.

Airports too will be affected and should consider possible new opportunities that access to a wider set of airlines can offer, especially the potential for new international and intercontinental flights for secondary or regional airports where, previously, airlines had no business case or access. The impact this would have on airport design and operation will create the opportunity for competitive differentiation—destinations that can cope with additional volume of aircraft for the same volume of passengers, and also generate faster turn-times, will be at an advantage.

Similarly, ground service providers and MROs that can accommodate changing demand—high volume but smaller events—will be able to profit from the trend.

Finally, the shift to smaller aircraft also provides a large market opportunity for lessors, who have traditionally favored the narrowbody market due to its more limited risk-exposure characteristics and redeployment opportunities.  

All told, the trend promises much opportunity for players across the industry, in addition to some challenges, and those companies that can be flexible and adapt to the change that the move to fleets with smaller widebody and more sizeable narrowbody aircraft brings will find themselves on top.