Planes by the pound in a carbon-constrained world

One of the more interesting phrases we’ve come across in aviation is selling “planes by the pound,” which is one way to think of Boeing’s and Airbus’s differing approaches for selling widebody aircraft for high capacity, short-distance routes described here. The phrase refers to a pricing policy in which identical aircraft are assigned different maximum weights based on their intended use, with the nominally lighter aircraft sold at a discount. It might not seem rational that airlines would spend more money to buy a heavier aircraft. Since fuel cost is a major expense for airlines,with each pound of a typical narrowbody aircraft translating to about 4.5 tons of fuel and 14 tons of CO2 over its lifetime, one would expect manufacturers to charge more for lighter, not heavier, aircraft. But why the reverse?

To better understand this practice, let’s talk a little bit about an aircraft’s Maximum Take-Off Weight (MTOW, or Maximum Take-Off Mass for those of us using SI units). MTOW is the sum of the maximum aircraft empty weight, fuel, and payload that an aircraft can take off at – similar to Gross Vehicle Weight (GVW) for on-road vehicles. MTOW determines a given aircraft’s potential payload and range, as illustrated by Figure 1. The blue line in Figure 1 estimates the maximum payload-range capabilities for the upcoming A350-900 airplane with its nominal MTOW, while the red line represents the payload-range capabilities for the same aircraft with a lower MTOW. Carrying the same number of passengers (assuming the airplane does not carry any cargo), the airplane with higher MTOW can fly farther than the other. Or, in reverse, flying the same distance, the airplane with higher MTOW can carry more passengers. Straightforward, right?

Chart: payload vs. range at different MTOWs

Figure 1. Anticipated payload range diagram for an Airbus A350-900 aircraft at different MTOWs

Unfortunately, not. While MTOW is theoretically an objective engineering parameter, in reality the same aircraft type is typically marketed at a variety of MTOWs (“paper” variants) because MTOW helps determine many important operational expenses, notably airport landing fees and en route charges for aircraft traffic control. Thus, airlines that don’t require an aircraft’s maximum payload-range capability can purchase a lower MTOW, and thus a lower nominal capability, from manufacturers and save on operating costs in the process. Manufacturers are likely willing to cut those airlines a deal because this strategy allow them to compete in a different market segment on the cheap compared to the cost of developing a whole new aircraft. If so desired, the full payload-range capabilities of the aircraft can be reinstated later (for a fee) when the aircraft is up for resale.

Interesting, no doubt, but how does this relate to the competition between Boeing and Airbus on the high-passenger-capacity, short-distance market in Asia? While all airframers to some degree sell aircraft by the pound, these two manufacturers have announced different sales strategies for this particular market segment, with Boeing bulking up by creating a new aircraft type—stretching the smaller 787-9 aircraft to fit more passengers—while Airbus will put the larger A350 on a virtual diet via paper MTOW reductions. This is a smart ploy: if it works, Airbus will be able to grab some of the regional widebody market without spending a dime on developing a new aircraft.

How does this all relate to our main concern, the environment? In the real world, the fuel efficiency of a given flight is independent of an aircraft’s MTOW: an A350 carrying 310 passengers between Singapore and Sydney will consume the same amount of fuel whether it has an MTOW of 268 tonnes or 250 tonnes. For regulators, though, particularly those developing ICAO’s CO2 standard for new aircraft, this is not the case. As explained here, under ICAO’s CO2 standard lower MTOW variants for a given airframe/engine combination will have their efficiency tested at a lighter weight, and therefore look more efficient relative to the CO2 standard compared to higher MTOW variants. As a rule of thumb, a 5% paper MTOW reduction from the true maximum should provide an additional 1.5% margin to a standard, and would have marginal impacts on aircraft values even if the MTOW restriction was made permanent under a CO2 standard (see here).

ICAO is still ironing out a number of tricky issues for the standard, including how to integrate MTOW changes into its cost effectiveness analysis, en route to finalizing the standard in 2015. The question is: will ICAO’s standard be set at a level to really promote more efficient planes, or will a clever marketing scheme undermine the first global measure to address aviation’s climate impact?