Delta Shuns Boeing Dreamliner, Buys Airbus Ordinary-Liner
While other carriers line up to buy the newly introduced Boeing (BA) 787 and the not-yet-introduced Airbus A350, Delta just bought 30 Airbus A321s and 10 Airbus A330-300s, reliable but ordinary aircraft, for delivery between 2015 and 2017.
"If everybody behaved like Delta, the boom jetliner market would collapse," said Richard Aboulafia, vice president of consulting firm Teal Group. "Everybody else is in an arms race, and Delta is doing the exact opposite." Delta, it appears, does not suffer from "FOMO," the fear of missing out. Its first 787 is due to arrive in 2020 and it does not have an A350 order.
Aboulafia called Delta "contrarians in the jet business -- possibly genius contrarians" and said "they have turned the accepted logic of the business on its head. While everyone says the key to international passengers is 787s, Delta says 'No -- why not put lie flat seats in old 747s?' Passengers don't care about high tech jets, they care about lying flat. I think these guys are dangerous geniuses."Avoiding the industry's most fashionable products enables Delta to avoid paying high prices. "You can get incredible deals on current generation jets," Aboulafia said. Analysts say that every single customer gets a discount and preferred customers such as Delta can get 50% discounts. List prices are about $107 million for an A321 and $239 million for an A330-300. Delta also looked at comparable Boeing aircraft, the 737-900 and the 777-300. Analyst Scott Hamilton of Leeham Co. said Delta "didn't want to be among the leading recipients of new technology," adding, "you can buy a lot of fuel for a cheaper airplane and not take the technology risk just yet." Technologies like the 787 and the engines on it and on the Airbus 321Neo are still proving themselves, he said. "Delta wants to see engines in service for a while before they commit." United (UAL) has taken a different tack as the only U.S. airline to fly the 787. United has opened a route from Houston to Lagos and plans to open a route from San Francisco to Chengdu, China's fourth largest city, that could not be effectively served with a predecessor aircraft. "I don't know if (United's strategy) is a better strategy -- it's just a different strategy," Hamilton said. As for American (AAMRQ), it has an everything-under-the sun aircraft order that includes Airbus A320 and Boeing 737 narrowbody jets as well as Boeing 777 and 787 widebody jets. In that case, Hamilton said, the carrier had to act to restock its aging fleet. "The MD80s are so old and the 757s are aging and you needed to replace the former in particular sooner than you could if you waited to get new technology airplane," Hamilton said. "American has never been shy about buying new technology airplanes, but they were not the first to buy the 787," he said. "They are in a better spot, a few years down the road," when the airplane's initial bugs are likely to be ironed out. Follow @tedreednc -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed
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