The Raw Prawn

The airline industry has been having a lot of trouble over the past few years, and it looks like it's getting even worse.

The most commonly cited problems:

• High fuel costs
• High labor costs due to union strife
• High fixed costs for the planes, which can make a short-term decrease in air travel deadly
• Cut-throat competitors, willing to take a loss in order to keep flying, combined with consumers that have become more price sensitive with the rise of online flight search engines
• Competition from "low cost" carriers like Southwest and Virgin Blue

So what do you do if you're Boeing, and your customers are going bankrupt left and right? You help them solve their problems.

The Chicago Tribune has an excellent in-depth article about Boeing's 7E7 "Dreamliner", which is being billed as a step-change in aviation. Why? Because this plane will be made from plastic. Commercial planes have always been made with metal, but this will be the first major commercial plane made from lightweight carbon fiber. They've been used in military planes for quite a while, but cost isn't really an issue for those. As Boeing-competitor Airbus's Chief Commercial Officer said:

"Have you seen the B2 fly by at almost $1 billion a copy?" asked Leahy at Airbus. "It only has two seats."

But Boeing believes they can make it happen. What does this mean for its customers?

The biggest and most obvious impact is on fuel costs. Using plastic composites lowers the 7E7s weight enough for it to be 20% more fuel efficient than the 767, the jet it is intended to replace.

There are also big maintenance benefits:

The biggest wear and tear on an aluminum airplane comes from pressurizing and depressurizing the cabin thousands of times over a lifetime of takeoffs and landings. Inflating the fuselage like a balloon to achieve cabin pressure wears on the aluminum skeleton and the joints between the hundreds of metallic skin panels. Corrosive moisture also builds up inside a jet. Over time, this all adds up to maintenance. A composite fuselage, on the other hand, won't corrode.

Less maintenance = fewer aircraft mechanics = lower labor costs. And the less time an aircraft spends getting repaired, the more time it can spend in the air.

Boeing's 7E7 also creates a better experience for their customers' customers: airline passengers. The strength of a composite fuselage allows it to withstand much greater pressure:

it can be blown up to the equivalent of 6,000 feet of altitude rather than 8,000 feet, which can help decrease fatigue on long flights without increasing an airline's maintenance budget. Stronger, more resilient carbon also means the 7E7 can have a more humid cabin and bigger windows--a big plus for passengers.

Boeing's 7E7 provides a good example of "thinking outside the box", of finding a revolutionary way to change your product to meet your customers' needs. In this case the product change may actually be able to help keep some of its customers alive.

"It became really obvious to us that the business model has to change," explained Mike Bair, the 48-year-old Boeing executive who heads the 7E7 program. "There are some notable exceptions, but, in aggregate, our customers can't make money with our product."

As for when:

Assembly of the first 7E7 is likely to occur in late 2006 or early 2007, with the jet entering airline service in the first half of 2008.

The article has a lot of other interesting stories, including how Boeing has shifted some of its risks (and rewards) onto its suppliers, by making them partners. It's also worth reading the story of how they got from "it's impossible to make a commercial aircraft out of that" to Tuesday's public preview of a rivetless, seamless, one-piece carbon composite fuselage.

Final note: Do you have any frequent flier miles on airlines that you rarely fly, that you know you'll never be able to redeem? Why not donate your airline miles to the Red Cross or the Make-a-Wish Foundation

More info about the 7E7
- The vital stats on the 7E7
- The 7E7's advantages
- Where the various components of the 7E7 are being made
- How the plane is made

Further Reading
- The Economist on the state subsidy dispute between Boeing and Airbus
- The article in next week's issue of The Economist about the Airbus A380, and how it will fare against the 7E7