Big Plane vs Little Plane | The Economics of Long-Haul Flights

If you've been alive for ten years, you've probably heard of two planes: the Airbus A380 and the Boeing 787 Dreamliner. These two planes have dominated news cycles around the world because they are both extremely innovative: the A380 is the largest airliner to ever exist, while the Dreamliner is one of the most efficient and emphasizes unrivaled passenger comfort. However, hidden by all the fanfare, lies a much deeper story about the economy, innovation and how the airline industry works. So believe it or not, work on the Airbus a380 started in 1988.

More people were flying than ever and the airports weren't getting much bigger. 

Airbus saw the success of the Boeing 747 and needed a bigger plane to compete. At first, Airbus envisioned making an ultra-wide jet by placing two A340 fuselages side by side, but then went for the design we see today: a fully two-stage jet. An A380 can hypothetically carry up to 868 people in an all-economy configuration, although the densest in practice is 615 seats - that's more than double that of the 787. Airbus has decided to focus on manufacturing 'a large capacity aircraft because he believed in the star model of aviation.

Photo by Shifaaz shamoon on Unsplash

With the hub and spoke model, passengers traveling from small airports - we'll use Hartford, Connecticut as an example - to a long-haul destination, like London, England, will need to connect through a hub. In the case of Hartford, passengers would likely take a short flight to New York, Atlanta or Chicago to catch their transatlantic flight to London. This is obviously inefficient for the passenger. On nearly all routes between Hartford and London, passengers must fly from their destination to catch their transatlantic flight. However, for airlines there may be an advantage.

 Let’s say, for the sake of explanation, there are only six airports in the whole of the United States: New York, Boston, DC, Los Angeles, San Francisco and Seattle. If an airline had one flight from each destination to all other destinations, it would have to operate 16 routes. If they only have one hub airport on each coast, say New York and Los Angeles, they just need a route between each secondary airport and each hub, and a transcontinental hub-to-hub route - five. in total. Obviously, there will be a fairly high demand on the one transcontinental route, so the airlines can put a large aircraft, like the A380, on that route to meet its demand.

Since its release, the A380 has often been placed on these high-demand, long-haul routes known as main routes. 

The world's second busiest long-haul route, from Dubai to London, sees eight A380s a day, in addition to five small planes that fly this route. The Dreamliner has a very different purpose. It is a fairly modest aircraft. It can only accommodate around 220 passengers in a typical configuration. Its composite construction makes it extremely light and fuel efficient, which helps lower operating costs. In the late 1990s, Boeing began to see a slowdown in sales of its big 747s and 767s, and began to think about what to build next.

They first sought to create an aircraft called the Sonic Cruiser, which would have had the same fuel efficiency as conventional planes, while flying 15% faster, just below the sound barrier. Airlines were initially enthusiastic, but after the 9/11 attacks and rising fuel costs, airlines were more interested in fuel efficiency than speed. The 787 kept that promise, achieving up to 102 mpg per seat (2.41 L / 100 km) compared to the paltry 74 mpg per seat (3.16 L / 100 km) of the A380. The Dreamliner also has an absolutely huge range of up to 8,000 miles, and best of all, it's efficient at that distance. Boeing made an aircraft so small because it believes in an entirely different model of aviation - the point-to-point model.

In this model, in order to carry passengers from Hartford to London, the airlines simply operate a direct flight between Hartford and London. Obviously, the demand would be lower, but there is still a demand. In the past, to follow a route like this, an airline would have had to use an aircraft with a higher capacity than demand because smaller planes could not travel such a distance non-stop. In view of this, airlines resorted to the star model to concentrate all demand on certain routes where they could fill large, long-haul aircraft. Now, with planes like the Dreamliner, airlines can fly long trips with less demand while still being efficient.

The star model was also popular in the past, as airlines found it more cost effective to fly fewer flights at higher capacity. 

It’s really a simple economy. Doing a lot of one thing together costs less than doing a lot of one thing separately: it's economies of scale. Except that it doesn't really extend to the airline industry. For a bigger plane you need more ground crew, more flight attendants, more check-in officers, more fuel, more or less of everything. The only cost that remains the same is that of the pilots, and the only ones to reduce are the doors and takeoffs.

When you now do more flights at the bigger, more expensive airports, you end up spending more money. 

Airports like Hartford, Connecticut are cheap - labor is cheap, takeoff costs are cheap, everything costs less than at JFK or Newark. There are just fewer flights to compete with. Not only that, but direct flights clearly cost a ton less, as airlines only have to pay once, rather than twice, for the per-flight costs I talked about a lot in my "Why Flying Is So Expensive" post. ".

United Airlines has been a major innovator of the point-to-point model with its Newark hub.
 Newark is an airport suited to serving smaller planes, so United took the opportunity to open direct flights to smaller destinations on the British Isles using narrow-body planes stretched to the upper limits of their range. United Primary uses the Boeing 757 to reach smaller destinations like Shannon, Ireland; Belfast, Northern Ireland; Glasgow and Edinburgh, Scotland; and Manchester, Newcastle and Birmingham, England. Often times United Flight from Newark is the only transatlantic flight serving these airports. United are able to operate these routes because the east coast of the United States and the British Isles are just close enough to each other to be reached with a narrow-body aircraft.

With the 787, airlines can open even longer routes between smaller destinations. 

Routes like these are called long and lean - long distance, but demanding. This includes routes like Tokyo to Seattle; London to Chennai, India; Wuhan, China to San Francisco; Beijing to Boston; Nairobi, Kenya to Paris; Santiago, Chile to Madrid; Warsaw, Poland to Beijing; From Doha to Edinburgh, Scotland; the list goes on. The efficiency of this aircraft has also enabled the creation of a whole new class of low-budget long-haul carriers. The top three players in this category are Australia-based JetStar Airlines, Singapore-based Scoot Airlines, and Norwegian Airlines based in both Scandinavia and London.

Low-cost short-haul airlines have been possible for some time thanks to efficient short-haul aircraft, but this is really the first time that there has been such an efficient long-haul aircraft, so these three airlines are using reducing operating costs to deliver significantly lower ticket prices, while using the principles of low cost airlines that I described in my “How Low Cost Airlines Work” post. What's even more exciting for us consumers is the upcoming Boeing 737 MAX. This aircraft is a redesigned version of the long-standing Boeing 737 with greater capacity, longer range and higher fuel efficiency.

This means that we could imagine seeing very low demand routes like Manchester to Cleveland, Lyon to New York and Belfast to DC operated in the near future. Norwegian airlines have previously hinted at plans to use the 737 MAX to open an auxiliary transatlantic hub in Edinburgh, a relatively small city. So the A380 was a failure. Airbus has not received a new order in years and recently announced that it would cut production to just 12 per year. During this time, the 787 has racked up nearly 1,200 orders. Point-to-point flight has always been better for the consumer, but with these recent innovations, it's now better for airlines too. In light of this, it is clear that point-to-point flight is truly the future of aviation.

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