THE 100 PASSENGER AIRCRAFT

Myth or Reality

by Robert Olivas President, O Associates (1991)

To understand the potential of involving ones self into the 100 seat market, you need to prepare yourself by looking at what has occurred over the past 25 years and what is happening now with manufacturers who have participated in this size aircraft.

Then known as the British Aircraft Corporation (BAC), offered in 1962 a 79 seat aircraft called the BAC-111 powered by the Rolls Royce Spey engine. It started somewhat successfully in the U.S.A. when Mohawk and American purchased the aircraft. However, competitive pressure from Douglas Aircraft DC-9 and Boeingís 737 removed the 111 from competitive position. Over the years, BAC was able to sell 230 aircraft which were produced in the U.K. They stretched the aircraft beginning in 1968 to 119 seats; 87 of the 230 are of this series. BAC became British Aerospace (BAe) which licensed the construction of the 119 seat version of the BAC-111 to Romania, where today they are being manufactured and sold in Eastern Europe. The BAe-111 aircraft which operated in the U.S. are out of the airline operations. A re-engine program with R.R. Tey engines is being offered but may only end up on corporate aircraft for continued operation into the 2000ís.

Douglas Aircraft competed with BAe with their version of the 80 seater, the DC-9-10. They were somewhat staggered from the losses to Mohawk and American but began gradually to have some success with the DC-9-10, Delta being the major buyer. However, when pressures from the airlines for a larger version of the DC-9 and Boeingís desire to get into the 100 seat market forced Douglas to offer the DC-9-30, which has 115 seats, it was launched by Eastern Airlines with deliveries starting in 1967. The pressure was always upward in size. MDC built the DC-9-40, 125 seats, 70 sold, deliveries in 1968; then the DC-9-50 , 185 seats, 90 sold, deliveries in 1975. Both Series 40ís and 50ís were excellent in economics but deficient in field performance and range - limiting their competitiveness; they were also the last DC aircraft. The Series 10 sold 137 aircraft, and the Series 30 approximately 700 aircraft. These aircraft have been out of production since 1982.

The used DC-9 fleet, operating in the U.S., will be subject to obsolescence, hush-kits or re-engining over the next ten years. The Series 10ís will be phased out of most airlines; however, if hush-kitted, they may still have a minimum useful life. Series 30 aircraft will split down the middle as to hush-kits or re-engining newer aircraft getting the latter. Series 40;s are all International (70) and Series 50ís are in the U.S. (90) deserve re-engining; however, small numbers may make certification costly.

Continued pressure upward in size to compensate for costs brought into development the MD-80 Series, 155 seats. Deliveries began in 1980 - a highly successful program that established a 150 seater bench mark; however, the MD-80 did not satisfy the market that the DC-9 was originally designed for - around 100 seats. Douglas was working on the MD-90 in 1983, a 100 - 115 seat aircraft, which fell victim to MDCís desire at that time to remove themselves from the commercial aircraft business. To salvage the situation, the MD-87 was developed - being only a fuselage shrink of the MD-80. This offered minimum development costs for MDC and provided an aircraft with 130 seats. However, the MD-87 has poor economics due to excessive weight and fuel burns. This aircraft requires a new wing and engine.

MDC is offering the MD-87 with the V2500 engine (called the MD-90-10) which assists the fuel burn deficiencies but does not lower the excessive weight for the aircraft. My understanding is a wing change is under review. Boeing, the third player in the above 100 seat aircraft, came in late but ultimately became champion with their aggressive marketing and engineering groups. Their initial aircraft was the 737-100 - of which 30 were sold to LUFTHANSA. It had 114 seats with deliveries beginning in 1968. This was followed by the 737-200 (United) with 125 seats - deliveries also beginning in 1968. Boeing dominated the International marketplace with the 737 due to its superior take-off performance and range capability against the DC-9, even though they were slower MACH .72 to .76. Their excellent climb capabilities on short routes overcame the lower cruise speed.

The 737-300 development was in response to the MD-80 and Boeingís requirement for a Stage III version of the 737. The aircraft developed with the CFM-56 engine, with excellent fuel efficiency, 141 seats and a Mach cruise of .74, in lieu of .72 on the Series 200, made it a formidable competitor. The 737-400 was sold to Piedmont Airlines to stave off a purchase of MD-80ís. The Series 400 has 155 seats equal to the MD-80 aircraft. The 737-500 was sold to Southwest Airlines to assist Boeing in launching the aircraft; again, a downward requirement for a smaller aircraft. However, like the MD-87, the 737-500 is inefficient in that it is overweight and has a larger than required engine. We have no knowledge at this point of Boeing improving the -500 to make its economics attractive; this aircraft has 122 seats.

Used 737--200 aircraft are among the most coveted for future hush-kit or re-engine programs; however, due to the engine location, it is the most difficult to engineer. There are now packages which are available for the 737-200 that meet Stage III noise levels. Re-engining is also available for the aircraft using the Tey engine.

Fokker Aircraft, over the years, has been working its way up the number of seats in an aircraft and now sits at 107 seats in the F-100. In 1969, they began with the F-28-1000 with 65 seats and powered with the Rolls Royce Spey engine. By 1972, the F-28-2000 with 79 seats was delivered. The F-28-4000 with 85 seats was delivered in 1984.

Fokker developed the F-100 through an 18 ft. fuselage extension, wing aerodynamics improvements, incorporation of the Rolls Royce Tey engine and sophisticated glass cockpit. Swiss Air launched the F-100 in 1985. When U.S. Air purchased the aircraft, it got a large boost, but when American Airline ordered the aircraft, it assured the success of the program. Having achieved this success at 100 seats, Fokker is now prepared to stretch the aircraft. The aircraft shown to American Airline is 130 seats with a larger wing and fuel capacity - giving the aircraft Dallas to the East or West Coast. The only concern at American is the speed of the F-100 on routes of that length. A new engine by Rolls Royce is proposed for this aircraft.

Unlike the MD-87, MD-90-10 and the 737-500, the F-100 at 130 seats will be a highly efficient machine. Unless Boeing and Douglas do something to make their aircraft more efficient, the F-100 will win the economics game. The one factor that will limit Fokkerís success is production capability. Boeing or Douglas may take advantage of this if orders for 130 seater aircraft increase.

British Aerospace, like Fokker, have been pursuing the 100 seat aircraft market for the past ten years with the BAe-146. The initial 100 series seated 82 passengers at six abreast; the 200 series was at 100 seats, and the 300 series at 122 seats. The biggest boost to the program was PSAís purchase of the aircraft for operation out of Orange County Airport because of its low take-off noise levels making it unlimited in its scheduled operation. British Aerospace believed their star was going to rise in sales in the U.S. The aircraft had several limitations which negated the quiet airplane issue; i.e., six abreast proved so uncomfortable that they had to go to five abreast to make the passengers happy - destroying the economics of the aircraft. The use of four engines, in lieu of two, further deteriorated the economics and a Mach .65 cruise speed making any route over 300 n. mi. an additional economic burden. They begame very difficult to sell in the U.S.

BAe has recently announced a derivative of the BAe 146 which will be a 130 passenger aircraft. It will have a new wing for increased range and speed and incorporates either the CFM-56 or V2500 engine. They promise a new more efficient engine which will be available at a later date.

What about Airbus? They can do to the A320 what Boeing and Douglas did to create the 737-500 and MD-90-10. They were near that decision in 1984 but backed off. However, it is understood that they are revisiting the idea with plans for a new wing and engine to make it efficient - nothing for sure as of this date.

I am going to mention Canadair at this point as they have an aircraft trying to penetrate the regional market with their regional jet. This aircraft starts at 50 seats with a planned 70 seater. That will be it for Canadair. The aircraft beyond 70 seats just will not work without a major fuselage change.

The above historical background of the aircraft which have developed from under 100 seats - to the present, hovering at the 130 seat level. There are five manufacturers and a possible sixth with potential 130 seat aircraft, two inefficient (aircraft) being produced - the Boeing 737-500, MDCís MD-87, and four waiting to be launched - the MD 90-10, Fokker 130, British Aerospace BAe-130 and Airbus A320-130. All of these aircraft are derivatives of aircraft presently in production.

So why are we at the 130 seat level when the clamor is for a 100 seat aircraft. Basically, the ever increasing $/seat to manufacture aircraft forces the manufacturer to continue to stretch aircraft. This was basic to the aircraft stretches during my career at Douglas.

With the five manufacturers busy at the 130 seat level and one manufacturer limited to no larger than 70 seats in their aircraft, the 100 seat aircraft is limited to two manufacturers - Fokker with the F-100 and BAe with the BAe 146-200 (four engines). If they were both to sell out their production lines with these aircraft over 10 years, they would deliver 1400 aircraft. Dilute this with production of the 130 seater and you may deliver 700 aircraft - far too low for a 10 year period of 100 seat aircraft.

Now that we have the historical background to the 100 seat aircraft and the void that will exist at this size, how would be propose to meet the demand for this size aircraft.

Obviously, others have come to the same conclusion as to additional requirement for aircraft of the 100 seat size. The Deutsche Aerospace Group in Germany propose a new range of aircraft which would be in the 80 - 130 seat category and estimate a $2 billion outlay in development costs. They plan to develop with the aircraft an 18,000 to 22,000 pound thrust engine in conjunction with Pratt and Whitney and Soviet Ministry of Aviation. My concern is the cost of the aircraft becoming prohibitive with its development costs and high manufacturing costs. If the U.S. is a major part of its market, the weakness of the dollar will make it difficult for it to be penetrated. As an example, the Dornier 328 is an excellent commuter aircraft which receives raves from the airlines, but is finding it difficult to penetrate the market due to the price set by the exchange rate of Deutsche marks to the dollar.

With the numbers of manufacturers and aircraft types in the competition for this market, it would seem ludicrous to propose alternatives for additional aircraft types. However, the following offers an opportunity to market aircraft with minimum development cost and produced in countries where labor rates and exchange rates are beneficial.

As can be seen, most of the activity to penetrate this market with efficient aircraft are European manufacturers. Both Boeing and McDonnell Douglas had aircraft that played well in the 100 seat size; i.e., DC-9-30 and 737-200. However, the cost of technology required larger aircraft.

For Boeing and Douglas to develop new aircraft in the 100 seat market seems highly unlikely, but they are concerned that other manufacturers will replace their fleets of 737-200 and DC-9ís. They need a program to resurrect the older designs and incorporate new technology; i.e., cockpit, engine, wing refinements, etc.

This can play well in that the development costs can be limited to approximately $500 million in lieu of $2 billion, and the U.S. exchange rate will be in favor for export to Europe. In addition, cooperative programs with manufacturer of the aircraft in locations like China and Indonesia would be a natural for selling aircraft in Pacific and Asia.

When you look at the licensing program British Aerospace (BAe) has with Romania which is producing the BAe-111-500, an aircraft that could not compete with the 737-200 or DC-9-30, it does give a look into what can be accomplished in large market potential areas; i.e., China or Indonesia.

What is needed is a catalyst for a program which would be involved in the development of aircraft in the 100 seat market utilizing the previously developed Boeing and McDonnell Douglas aircraft.

AIRCRAFT TO BE CONSIDERED

Both Boeing and McDonnell Douglas have aircraft that would be available, with technology changes, to be competitive with the newer more costly programs by utilizing the lower development costs to initiate the programs. Let us review these:

BOEING

737-100 - Only 30 built - 114 seats

737-200 - Most successful - over a thousand built - 125 seats

The 737-100/200 seats became difficult to re-engine due to location under the wing.

McDONNELL DOUGLAS

DC-9-20 - 10 built - Incorporated Series 10 fuselage and Series 30 sing. Came at start of Series 30 program which the airline preferred - 80 seats.

DC-9-30 - Most successful - 115 seats

DC-9-40 - Sold 70 to TDA & SAS - 125 seats

DC-9-50 - Sold 90 to Eastern North Central & Hawaiian - 135 seats

Both DC-9-20 and -30 - Optimum engine location for re-engining. These could be a new family of aircraft. The DC-9-40 and -50 improve economics considerably but would require larger wings to make performance and range adequate to compete with other aircraft.

TECHNOLOGY IMPROVEMENT

1. Composite - where feasible

2. Cockpit - MD-88 and 737-300 technology cockpits

3. Wing refinements - as required

4. Engine compatibility a. Rolls Royce - 700 b. German/P&W;/Soviet development c. Any engine in 17,000 - 20,000 LR - thrust range

Manufacturer locations should be obtained where development money is available and wages would provide a competitively priced aircraft. These are states in the U.S. offering incentives to locate manufacturing facilities. Each of these need to be investigated to determine facilities and dollars available for development.

Both Boeing and Douglas should be approached with concepts of offering versions of their aircraft that offer minimum investment; i.e., engineering drawings, liaison and optimum return on their investment for domestic production with returns from international production.

SUMMARY

What is presented is a brief description of the development of the 100 seat market and described as who will be the competitors for this marketplace in the present and near future. If the trend continued, most of the 100 seat aircraft will be built offshore of the U.S. in a market previously dominated by Boeing and Douglas.

Both the 737-200 and DC-9-30 aircraft could have retained their competitive stature with technology changes and would provide aircraft superior to what is being offered by other manufacturers with a minimum development cost.

Boeing and Douglas are now full up with aircraft programs and the use of their resource dollars. They will literally sit and watch the expansion into the 100 seat market of foreign produced aircraft expansion unless a program of resurrecting these aircraft for future production is developed.

BUSINESS PLAN

To determine the viability of a program which uses previously produced aircraft, a series of studies must be concluded to determine the direction in which to proceed. These studies include looks into (1) the aircraft, (2) the engine, (3) the development dollars and the manufacturing place (domestic and foreign) and (4) the airline requirement.

1. THE AIRCRAFT

Both the DC-9-30/40 and 737-100/200 are aircraft which fit the 100 passenger marketplace requirements. Their demise was due to the stop in application of new technology to this size aircraft and excessive cost of manufacturing. The larger and newer versions, the MD-87 and 737-500, have the technology needed in these smaller aircraft and can readily be transferable. These would be interiors, glass cockpits and composite designs. Further analysis is required to determine if wing refinements can be made; i.e., winglets to improve the fuel burns; if so, these can also be modified to used aircraft in operation today.

2. THE ENGINE

Lack of a proper engine in the early 1980ís for the 100 seat aircraft is another reason for the demise of these aircraft. Attempts were made to make a version of the DC-9-30 with the Pratt & Whitney JT8D-200, but fuel saving was deficient and the engine too heavy.

With the now planned development of very efficient engines in the 16,000 lb. - 20,000 lb. thrust levels by several engine manufacturers, there is now the opportunity to provide an engine to fit the aircraft size.

Application and feasibility of these engines to the aircraft need to be studied to determine their use in this program. At this time, we know that Rolls Royce is planning an engine for use on the Fokker-130 and the consortium of Pratt & Whitney, Deutsch Aerospace and the Soviet Ministry are looking at an engine for use on an MBB aircraft. General Electric will want to get into the game once they determine the market requirements.

3. THE DEVELOPMENT DOLLARS AND THE MANUFACTURING PLACE: DOMESTIC AND FOREIGN

I put these together because the obtaining of development dollars will need to be tied to the manufacturing place. Both Boeing and Douglas or the one most feasible to work with will want this to be a minimum risk program. Their plates are full - both in facilities and use of resource dollars.

This is an advantage in that it opens up areas in the U.S. where facilities, lower wages and development dollars can be found. In addition, once the point is made to the U.S. Government of the loss of export dollars, as more and more 100 seat aircraft are built off-shore, they may also provide assistance in obtaining development dollars. Both Federal and States assistance groups interested in providing development dollars and manufacturing facilities to obtain labor adding programs need to be addressed.

Over the years, both Boeing and Douglas have tried to penetrate markets where large quantities of aircraft are required - these being China and Indonesia. A new market similar to China and Indonesia is now opening in Russia and Eastern Europe.

Minimum success of direct sales has been made in China and Indonesia, but to be highly successful, manufacture of these aircraft will be required in these countries and in the Soviet Union. This can be useful in the overall success of this program in obtaining development dollars. Off-shore manufacturing to off-shore customers is a requirement to obtain development dollars.

THE AIRLINE REQUIREMENT

There were times in the mid-1980ís that if Douglas would have had a DC-9-30 with a new technology engine, glass cockpit and composites, they would have sold U.S. Air and American Airlines in lieu of Fokker selling the F-100. The market exists for this size aircraft.

Many airlines are waiting for other aircraft in this size to appear and the time is near for decisions; i.e., Northwest Airline is this year. World-wide, if a good program can be brought forth, there will be a market for 2000 aircraft - the same market Boeing and Douglas went for in 1965.

The above is a general business plan that needs further discussion. I am enthusiastic about the possibilities of these programs having been involved with these aircraft for over 25 years.