August 2012

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From the Flight Archive: "The cost of broken promises"

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TheCostofBrokenPromises.jpgSEATTLE -- Had everything gone to plan, the first 747-8 freighter would be entering service right about now.

In the brief period since Friday's unprecedented decision by Cargolux to "reject" by the first two 747-8 freighters, much has been written (and speculated) about why the negotiations between the European cargo carrier and Boeing fell apart at the last moment. The weight and performance of the aircraft, and the role of Cargolux 35% stakeholder Qatar Airways, appear to be at the heart of the negotiations

For a launch customer hours before first delivery, yes, such a dispute has no precedent. Though major changes in orders due to performance targets have great precedent. As the foundation of the business case for launching (as an aircraft maker) and purchasing (as a customer) a new commercial transport, performance targets are at the heart of any decision.

Just over two decades ago, in July 1991, Singapore Airlines cancelled its $3 billion order for 20 McDonnell Douglas MD-11s after its Pratt & Whitney 4460-powered aircraft were found to not be able to perform its Singapore to Paris route without a 11,000lb (5t) payload restriction. That route, and the airline's rigorous planning rules, was the basis for the purchase. After planned improvements to the engines and even a proposed center fuel tank and wingspan increase, Singapore, fed up with P&W and McDonnell Douglas, nixed its order outright and defected to Airbus. The move launched the CFM56-powered A340-300.
Although SIA says the cancellation was simply due to the MD-11's inability to meet payload/range targets for specific missions such as Singapore- Paris, it appears that the airline was determined to teach both Douglas and P&W a lesson for months of confusion over the actual performance that the aircraft would deliver.
Douglas introduced the drag reductions out of frustration at the failure of both engine companies to meet their performance guarantees. Although both suppliers announced engine improvements quickly, the long lead-times involved meant that significant reductions in fuel- burn would not be available until at least the end of 1992, with P&W's four-stage product improvement programme (PIP) not due to be completed until late 1994.

Working in Boeing's favor is its 100% marketshare in the jumbo freighter carrier market. That position was cemented after UPS and FedEx walked away from the A380F when the A380-800 delays prompted the freighter variant's shelving by Airbus. Cargolux has no alternative in the category, but as we saw with Singapore in 1991, history has shown us frustrated customers have a way of launching new aircraft.

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