Boeing’s quest for NMA steers it away from its history

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The first in a series focusing on Boeing’s road to developing its next all-new commercial airplane.

It’s hard to miss the large well-lit display case in the lobby of Boeing Commercial Airplanes’ suburban Seattle corporate campus. It’s where the company shows off its Collier Trophies. The 525-pound bronze trophy is on permanent display in Washington, D.C., but winners get a take home-sized version of their triumph.

The 107-year old trophy is awarded by the National Aeronautic Association to the flying innovation that pushes the frontiers of air and space. The highest honor in U.S. aerospace is an homage to soaring higher, faster and farther. The holy trinity of flying’s most romanticized objectives.

Boeing is awarded the Robert J. Collier Trophy in May 2012 for its development of the Boeing 787 Dreamliner.

Boeing won the trophy every time it set out to design, build and mass-produce a twin-aisle jetliner. The jumbo 747 won in 1970, the 767 (and 757) in 1982, the 777 again in 1995 and its troubled, but no-less path-breaking 787 Dreamliner won in 2011. Each opened new frontiers of commercial flying technology.

And with each successive airliner came tremendous and growing costs. Every leap in technology and performance more costly than the last.1As part of a study of aircraft emissions, a team at MIT found “aircraft price is inversely proportional to [direct operating cost]. For example, the DC9-30 costs around 5.6 cents/RPK to operate, and its purchase price was around $160,000 per seat. Comparatively, DOC for the B777 is only 1.4 cents/RPK, whereas its purchase price is around $400,000 per seat.”

But what if Boeing set out to design an all-new airplane that didn’t push the boundaries?

2019 will mark 60 years since the 707 began flying passengers – the start of Boeing’s commercial jet age. It will also bring a Board of Directors vote in the first quarter on whether to start shopping its small twin-aisle jet concept, the New Middle-Market Airplane (NMA) to airlines and lessors, according several familiar with the company’s internal planning. Formal launch is now expected in 2020.

“This is not a technology push airplane,” explained Dennis Muilenburg, Boeing’s chief executive officer on June 1. Its product strategy for the NMA is very un-Boeing-like: “We don’t see this as a technology push on engines or avionics or any of the internal systems in the airplane.”

Boeing declined to provide comment for this article.

That’s part of a generational shift going on inside the aerospace giant. A mere six years ago, seasoned Boeing executives held fast to their proposition to airlines that “we compete on value, we compete on performance.” And they believed their airplanes deserved a premium price for their premium technology.

But airlines’ inability to pass on costs to fickle consumers that largely picked air fares on price meant relentless competition between Airbus and Boeing to win deals with steadily falling price tags. The technological lifecycle for commercial airplanes 2Dr. Theodore Piepenbrock, whose ongoing work on business ecosystems established a unifying framework for understanding why firms in the same environment perform differently over time, posits that the commercial aerospace business has been on a path toward maturity since the industry inflected with the arrival of the jet age. The dominant attribute of successful firms in increasingly mature industries is an enterprise architecture that focuses on process innovation, not product innovation. and air travel reached maturity years ago and Boeing’s all-new airplane strategy is catching up to that reality.

MIT researchers in 2001 mapped the inverse relationship between the decreasing cost to operate the airplane and the increasing cost to acquire it.

It’s been taking hold elsewhere in Boeing for years. Nowhere was this more apparent than in the fight for single-aisle jet dominance. For two generations, the European and U.S. plane makers improved their products in countless incremental ways and accelerated output with innovative industrial wizardry to become their largest sources of profit.

“Once upon a time there was a difference between [the A320 and 737],” said Henri Courpron, founder of Plane View Partners and former CEO of International Lease Finance Corporation, who has bought and sold Airbus and Boeing jets for decades. “Now they’re essentially a commodity.”

It’s strange to liken something as complex as a jetliner to a commodity like soybeans or gold, for example. However, all things being effectively equal in the choices between airplanes — reliability, efficiency and performance — the ability to deliver a passenger from point A to B at the lowest total cost was the winning attribute.

That incremental evolution has spawned a dominant airplane, with a dominant price, in the nascent ‘middle of the market’: Airbus’s 180 to 240-seat A321neo. The once poky 1993 short-hauler has benefitted from that quarter century of evolution to become a trans-Atlantic airplane.

Airbus’s new top salesman, Eric Schulz, last week said its A321neos “are the cheapest way to serve that market” of cost-obsessed airlines. This is where Boeing is aiming — at least in part — with the NMA.

Today Muilenburg talks of creating an airplane that’s “got to have a unique combination of capabilities for customers and economics, but that’s more about hitting a cost point in terms of how you produce the airplane.”

Delta Air Lines CEO Ed Bastian cuts right to the chase. If they’re going to buy the NMA, they want it for the “cheapest price possible.”

The 797 will be Boeing’s first commodity twin-aisle airplane. It’s an uncomfortable admission for the plane maker. Commodity airplanes don’t win Colliers.

A Less-Electric Airplane

While little is known about the NMA outside of Boeing, what’s increasingly clear is that the NMA is not only happening, but steadily moving toward reality.3Boeing officially has said it has made no decision to launch the new airliner and Muilenburg said in June the company would pick a direction “during the next year.”

The product strategy behind its NMA, Muilenburg explained, is designed “in large case, [with] the ability to reuse or modify 787 systems or 737 systems or use existing engine technology packaged in a new way. So in many cases, the technology exists. It’s about packaging the technology.”

So far, only one industrial group outside Boeing has gotten a really good look at that “packaging”: CFM International, Rolls-Royce and Pratt & Whitney. The trio on June 27 – after no fewer than four rounds of requests for information – submitted their proposals to supply a 45,000 pound thrust engine for the NMA.

But embedded in the engine competition are some of the first real details about how the NMA is becoming the 797.

Beyond just the thrust and fuel-efficiency targets, the three engine makers have been given a requirement to create an engine that bleeds high-temperature pneumatic air for the aircraft’s major systems, according to two people familiar with the requirements.

It’s the first big hint about the aircraft’s technological direction and a crucial one for suppliers trying to position themselves for a spot on the jet.

The architecture is a return to the familiar from Boeing’s last all-new jet. The more-electric systems on the 787 provide power for everything from engine-start to environmental control. It’s the right fit for the more frequent, shorter-range mission of the airplane, say program insiders, but it’s also a lesson from airlines’ expensive experience with the Dreamliner’s electrified design.

The Spruce Goose

But as the product strategy emphasizes “no new technology,” according to one engineer familiar with the design effort, all the airplane’s most important attributes are in how it will be built.

“All the work we’re doing on digitization, automation, everything we’re doing to drive new lean processes [is to] create the production system of the future,” said Muilenburg. “That’s really what this airplane would be about and closing the business case will be dependent on our confidence in that production system.”

Bombardier in 2012 unveiled its own wooden mock-up of the CS100 to test and validate its use of tooling structures to build the CSeries.

Inside top secret parts of the company’s Boeing Field Development Center in an industrial neighborhood in South Seattle those questions are being answered. The company has already built large conceptual portions of the NMA. Though they aren’t made of aluminum or carbon fiber, but rather the original composite material: Wood.

A “Spruce Goose” has taken shape.

Its given name is a hat tip to Howard Hughes’ wooden H-4 Hercules behemoth – his own Spruce Goose. His aircraft only flew once on a brief low-altitude trip over Long Beach Harbor in 1947.

Boeing in 2017 built the wooden mock-ups as a spatial integrator as manufacturing engineering plans come together, said two people familiar with effort. The demonstrators – complete with wiring – are for validating how it will eventually build the NMA in the real world starting in the next decade.

It’s a return to an older method of analog aircraft design. In layman’s terms, the engineer said, the Spruce Goose is designed to “see if s*** fits.”

It’s a remarkably low-tech way to conceive a new aircraft program. And for decades, the company with the best airplanes had the best chance of success. Now it’s the company with the best factory.

Is there a trophy for that?