Monday, August 29, 2011

The Boeing 757-200 - Can It Ever Be Replaced?

As the 757 reaches the twilight of its service life as a domestic workhorse for U.S. airlines many carriers are wondering what if any aircraft out there can replace its full range of capabilities.  The 757-200 was built to replace the legendary 727-200 and expand upon that aircraft's capability while reducing fuel burn and operating costs for the airlines.  By all measures the 757 exceeded Boeing's wildest expectations, delivering more range and better operating economic than even they expected.  The aircraft's high thrust to weight ratio resulted in exceptional shot field performance, making it an ideal platform for operations into small mountainous, high altitude airports.  But it is just as at home flying long thin transatlantic sectors which take full advantage of its incredible 3,900 nm range.  It is this incredible versatility and performance that has made the aircraft so successful, resulting in a total of 1050 airplanes being sold by Boeing since its introduction into service with Eastern Airlines back in 1983.

The 757-200 is mainly deployed on short and medium haul routes, carrying anywhere between 178 and 208 passengers in a two class arrangement depending on the seat pitch.  Delta Air Lines is currently the world's largest 757 operator with a fleet of 182 aircraft.  Delta's domestic 757-200 fleet is typically configured with 184 seats in a two class layout, which is close to the industry standard.  The 757-200 flies an average stage length of 1,178 nm.

Typical Two Class 757-200 Configuration

The 757 is the one airplane that all major U.S. legacy airlines have in common in their current fleet inventory, with American, Delta, United/Continental and US Airways all operating the aircraft.  In fact of the 938 aircraft currently active world wide as of August 2011, 488 or roughly 52% are being flown by U.S. domestic airlines according to  With a further 112 being flown by package carriers UPS and FedEx.  Currently the largest foreign operator is the UK's Thomson Airways with 26 airplanes.

The 757-200 is about 33% larger than the 727-200 it replaced and it consumes about 43% less fuel per seat, but the aircraft was designed for a vastly different domestic market in the United States, one in which legacy airlines faced very little competition from LCC's and yields were consistently high.  Now with the U.S. domestic market suffering from over capacity and diluted yields the aircraft is becoming harder to fill at economic levels.  In addition as fuel costs continue to escalate and with the aircraft's age becoming a significant liability both in terms of direct operating and maintenance costs the time has come for the major U.S. legacy carriers to examine the replacement options.

 Chart Courtesy of AirInsight

For US Airways this means finding an airplane that has the performance and range to allow them to fly the 2,196 nm Phoenix-Honolulu route nonstop even in the sweltering summer time heat of Arizona, something the 757 does very well.  CFO Derek Kerr of US Airways put it this way, "The dilemma we have now is that the 757 is a great airplane that is not made anymore.  That leaves a hole in the industry, and we need to figure out what to do to replace it."  Airbus spokesman Clay McConnell states that the A321 NEO as currently designed will be able to cover 90% of the existing 757 missions but that last 10% represents a niche for which there is no plug-in replacement.  But it isn't just the Honolulu route that concerns US Airways they also want to ensure the aircraft can cover the current 757 transatlantic sectors like Charlotte-Dublin (3226 nm) and Philadelphia-Lisbon (3,453 nm).  The airline is currently working with Airbus to see if the manufacturer can squeeze additional power and range out of the A321 NEO to cover the remaining 10% of the 757's mission profile.

Icelandair finds themselves in a similar position of trying to find an airplane that can replace the capabilities of its 757 fleet.  But unlike US Airways who's 757's fill a unique niche for Icelandair the 757 is the backbone of its fleet.  The country of Iceland is situated about 4-5 hours flying time from the United States and just under 3 from Europe.  This geographic position puts the 757 in striking distance of just about every major city on both continents.  Icelandair's 13 strong fleet of 757-200's (176 seats) and one streched 300 series (224 seats) cover every route in the airline's inventory including the new 3,148 nm long haul route from Keflavik to Seattle.  But the airline's 757-200 fleet is becoming long in the tooth averaging 16 years in age.  The time for their replacement is fast approaching with CEO Birkir Gudnason stating the airline will have to begin replacing the fleet in the 2015-2020 time frame.  Gudnason in an interview with Airline Business in July of 2010 summed up the 757 issue by saying,

          "Icelandair is looking at an eventual replacement for its 757s.  As many 757 operators know,
          this is not a straight forward task.  The 757 is the perfect aircraft for our network and location.
          Icelandair is looking at aircraft with 150 or more seats and might even split the order between
          two types as there is no one aircraft that can do the job it wants a present."

So if the 757 must soon be replaced than what do airlines replace it with?  Does an airplane currently exist that has the seating capacity, performance and range to cover the entire existing mission portfolio of the 757.  The short answer is no, there isn't an airplane being produced by either Boeing or Airbus that can fully replace the 757.  Even the newly launched A321 NEO, with its significant improvement in fuel burn over the 757 doesn't have the legs to match the class leading 3,900 nm range of the 757-200.  So it would seem at least on paper that the Boeing 757 occupies a unique niche in the narrowbody market for which a 1:1 replacement does not exist. 

Understanding this reality and accepting that a 757 replacement will come with some compromise in range, payload and performance the question then becomes what aircraft comes closest to filling this gap.  The answer is not universal, but instead is predicated on a variety of factors that are in someways unique to each specific airline.  But objectively there are only two current viable options, the Boeing 737-900ER and the Airbus A321-200.  For airlines that can afford to wait until 2016 the A321 NEO enters the discussion.  But how do these three aircraft match up head to head as compared to the 757-200?

Comparative Aircraft Specifications

 AirInsight 757 Replacement Report

As stated earlier the average 757 stage length is just under 1,200 nm which is well within the range of all three potential replacements which will allow operators to cover the majority of the existing 757 mission profile.  Among the two current aircraft in production the 737-900ER with a maximum range of 3,265 nm holds a very slight edge over the A321-200 at 3,200 nm, but both fall well short of the 757's maximum full payload range of 3,900 nm.  Even the A321 NEO with its new fuel efficient engines and other range boosting improvements comes up 220 nm short of matching the 757-200.  While the 757's maximum range comes into play on only a handful of niche routes, primarily on long thin transatlantic flights between the U.S. and secondary European markets, these missions have become an important component of several U.S. airline's international route portfolios.  These routes allow airlines like Continental to maximize the strengths of the 757-200 in markets like New York/Newark to Oslo, Hamburg and Copenhagen where the current demand can't support widebody aircraft like the 767-300ER or A330-200.  These thin routes because of their strong yields and limited competition mean the 757's higher operating costs are not a significant issue and allow airlines like Continental to turn a profit with the aircraft.  Taking these important niche market into consideration all three of the potential 757 replacements don't have the legs to fly many of these routes to continental Europe.  Even under the best of conditions the 737-900ER and A321-200 would struggle to make the UK nonstop.

Still Air Range Comparison of the 757-200 to the 737-900ER, A321-200 and A321 NEO

Map generated by the Great Circle Mapper - copyright © Karl L. Swartz

The difference in seating capacity is negligible between all four aircraft, with the A321-200 and A321 NEO holding a five seat advantage over the 737-900ER and a one seat deficit to the 757-200 using a consistent seat pitch in a typical two class layout.

Comparative Economics

AirInsight 757 Replacement Report

When comparing the economics of the A321-200 and 737-900ER in terms of seat-mile and aircraft mile costs the 737-900ER holds a small but significant advantage.  The 737-900ER has a cost per available seat mile advantage of 1.9% and a 54 cent edge in cost per aircraft mile over the A321-200 when compared to the baseline 757-200.

However when both the A321-200 and 757-200 are compared to the A321 NEO, the NEO leaves both in the dust.  The difficulty in comparing the NEO to the two existing production airplane, is that the former's economics are based on modeling and not real world operational experience.  While there is little doubt that the re-engined A321 offering from Airbus will realize significant improvements in fuel efficiency and reduce airline operating costs when compared to its contemporaries the actual real world savings are hard to quantify as the aircraft's final configuration hasn't been frozen yet.  As with most aircraft even a derivative such as the A321 NEO, tweaks to engine thrust, weight and the overall configurations are likely before the design is frozen which will undoubtedly change the aircraft's economics, especially when you consider that Airbus is being pressured by operators to increase both the thrust and range of the aircraft to cover the full mission profile of the 757.

In some ways the 737-800 has already supplanted the 757 in the U.S. domestic market.  Continental, American and Delta all have large existing 737-800 fleets, and all of these carriers currently deploy the airplane extensively across their respective domestic networks.  But the 737-800 has not been used by these carriers to replace the 757.  Instead airlines, most specifically Continental have introduced the 737-800 and more recently 900ER into the domestic system on routes previously flown by the 757-200, which has allowed the airline to deploy its 757 fleet on higher yield international routes to South America and Europe.  This successful strategy has allowed airlines to extend the life of this aging airframe, effectively giving the 757 a second lease on life.

For Delta and American the time to act on a 757 replacement is now, with both announcing large narrow-body orders within the last 30 days primarily to replace their 757's.  Delta chose the 737-900ER due largely to the availability of early delivery positions and attractive pricing.  Delta's replacement timetable didn't allow for Boeing to offer the 737RE and likewise Airbus was forced to offer a mixture of A321-200's and A321 NEO's which was not an attractive solution to Delta.  It didn't hurt that the 737-900ER has slightly better economics and the carrier still has a gentlemen's agreement with Boeing that gives it the ability to jump the production line and secure delivery positions that are not available to the average airline customer.

American chose a different path, splitting the order between Airbus and Boeing.  The airline ordered a total of 260 Airbus aircraft, 130 of which are from the current A320 family and the other 130 being A321 NEO's.  The A321's are presumably to replace the 757-200 fleet.  American also ordered 200 aircraft from Boeing, split equally between the existing 737NG, most likely more 737-800's as well as some new 900ER's.  The remaining 100 aircraft will be for the newly announced 737RE.  The biggest concern for American was price and financing arrangements, as the carrier's current debt rating makes securing financing through traditional avenues difficult.

United/Continental has yet to decide how they will replace their 757's but a decision is probably not far away especially considering the combined 137 strong 757 fleet is an average of 17.6 years old.
But unlike American and Delta, Continental's entire 757-200 fleet is dedicated almost exclusively to international flying, primarily on transatlantic sectors from Newark.  Continental pushes their 757's to edge of the performance/range envelope so any potential replacement is going to have to match the 757's full payload range of 3,900 nm to be a serious contender.  United's 757's on the other hand are deployed extensively on its domestic network where the aircraft's top end range doesn't come into play.  This also explains why United has only equipped a handful of their p.s. 757's which operate on trans-continental sectors between JFK-SFO and LAX with the blended winglets.  With the exception of the trans-continental routes the 737-900ER or A321-200 could plug into United's domestic network and cover 99% of the routes without much difficulty.

Continental Airlines 757-200 Trans-Atlantic Routes

Of the two currently available solutions the 737-900ER is slightly more cost effective, but probably not enough to sway an existing Airbus A320 series operator and the same can be said of existing Boeing 737 customers.  At the end of the day while there is no 1:1 replacement, both the 737-900ER and A321-200 come close enough to replacing the 757-200 that it doesn't really make sense for either manufacturer to chase this limited niche market for the handful of operators like Continental and Icelandair that utilize the 757-200's full performance/range capabilities.  Airbus and Boeing will likely both try to squeeze additional range out of their re-engined aircraft families to get as close as possible to covering the full 757 market, but the simple reality is that the market that the 757 was built to cover doesn't exist anymore.  Instead it has fragmented into several sub-markets with the 737-800, 737-900ER, A320-200, and A321 taking over the bulk of the domestic 757 routes and the 787-8 providing the best solution for existing 757 customers like Icelandair and Continental/United that need the extra range but don't want a huge increase in capacity over the 757-200.


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The author is an independent aviaion consultant with 7 years of industry experience and holds a Masters Degree in Aviation Safety from Embry-Riddle Aeronautical University

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