The 787 Dreamliner is not the first time
has raised the bar. It's done it before with the majestic 747
that changed the face of long distance air travel when it was
introduced. Sadly, now the iconic creation is facing the threat
of gradual extinction. The once idolized plane isn't attracting
airlines like before. Will the 747 die a slow death? Or can it
get a new lease on life.
Lufthansa Boeing 747-400, Source:
Looking back in time
In the late 1960s, Boeing made history by creating the biggest
aircraft in the world, the 747, in just 16 months. The jumbo jet,
known as the Queen of the Skies, was the first wide-body jet ever
manufactured. It could carry far more passengers and cover a
greater distance than all other aircraft at the time. The first
commercial flight hit the skies in 1970. Boeing built three
variants of the colossal plane, a passenger version, a cargo
version, and a convertible model that could be flown either as a
passenger plane or a freighter model.
When the 747 program was launched, very few people could
afford international travel. But the advent of this wide-body jet
brought about a change, making long flights more economical for
carriers. Airlines were able to reduce fares, which in turn
increased passenger traffic. In the 1980s, airlines rushed to
place orders for 747-400 wide-body.
Boeing boasts its 747 fleet has flown more than 42 billion
nautical miles -- a stretch that can take you to the moon and
back 101,500 times. The American major also takes pride in the
fact that the 747 has served more than 5.6 billion passengers
across the globe.
The turning point
For decades, the double-decker, four-engine plane reigned the
skies, dramatically transformed air travel, and better connected
the globe. However, in 1988 engines became so advanced and
dependable that government started permitting planes with two
engines to fly across oceans. This paved the way for Boeing's 777
and Airbus A330, to emerge as alternatives to the 747 for
long-haul routes. These were instant hits, and now both the aero
majors are building the successors of 777 and A330 to gain more
traction in the long-haul market.
A slump in the cargo market and limited requirement for large
passenger planes also affected demand for the 747. The passenger
version accommodates 380 to 560 seats, and can be an airline's
money-making machine as long as its capacity is utilized to the
maximum. But if it is under-booked, it can hurt the bottom line.
Business passengers favor connecting flights over direct flights,
as plane fares are much lower. A 747 needs 63,000 gallons of fuel
costing around $200,000. When the cost is apportioned among
lesser heads, it significantly pulls up the cost per seat.
Fuel cost is a constant headache for airlines as it generally
accounts for more than 33% of operating costs. The four-engine
jet is a fuel-guzzler, making it an extremely costly and
undesirable proposition. Advanced technology of the newer planes
has ultimately caught up with the 747, killing its demand and
creating pricing pressure.
Twelve years 747 airplane deliveries, chart made by author,
Data source: Bloomberg
Can 747-8 help its cause?
In 2011, Boeing rolled out the 747-8 with better engines and a
longer fuselage hump than its predecessor 747-400. It had hoped
that this upgraded version would perk up sales of the 747 family,
but reality fell short of Boeing's expectations. With twin-engine
planes going the distance and saving fuel, airlines turned a deaf
ear to this four-engine jumbo in spite of the updates.
In 2013, Boeing was forced to cut the production rate of the
747-8 twice in six months because of weakness in the cargo
market. The plane is currently being produced at the rate of 1.5
a month, or 18 a year, well behind the annual production
rate of 122 in 1990.
But Boeing is not giving up yet. The latest sale of 747-8
in July made 747 the first ever wide-body aircraft to accomplish
a delivery milestone of 1,500 units. Though the company's 777
(more so the introduction of 777X) is perceived to be
cannibalizing the jumbo's demand, Boeing feels 747 has a place of
its own as it's of a different size, and once the air cargo
situation improves, Boeing expects the aircraft will perform
747-8 Intercontinental, Source:
The company is planning to modify the 747-8 to make it more
attractive for carriers. It's going to introduce technical
upgrades and pitch the aircraft more aggressively. Boeing wants
to increase annual production by 17% with the hopes that it can
woo Asian and European airlines for the passenger versions and
that the freight market will pick up by 2016. The aero major is
engaging airlines to improve the 747-8's features under "Project
Ozark". Changes could include a better range -- from 7,700
nautical miles at present to 8,200 nautical miles; and
That's not all. Boeing has another smart strategy up its
sleeves. It repurchases older versions of 747s from carriers,
hoping that they would order 747-8s. The strategy has been
successful to some extent.
Foolish last words
The 747 is a revolutionary model that changed the face of
aviation, but Boeing isn't ready to put it in the past just yet.
Boeing's marketing chief Randy Tinseth says that 747 sales were
negatively affected by the economic slump, and is optimistic of a
turnaround. Through the 747-8 technical upgrade plan and the 747
buyback program, the company is hoping to drive demand and put
the Queen of the Skies back on the throne.
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Is The Boeing Company's Iconic Jumbo Jet A Thing
of The Past?
originally appeared on Fool.com.
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