New aircraft types will transform Australian airline fleets: part one – narrowbody arrivals
The evolution of Australia's commercial fleet is accelerating in the post-COVID-19 era, as airlines look to rebuild with new aircraft types to take advantage of emerging opportunities.
Australian airlines were forced to revise their strategies dramatically due to the COVID-19 crisis - in some cases overhauling existing order agreements, and in others making new purchase deals.
Many of the fleet plans put in place during the pandemic are starting to become reality, with deliveries ramping up or set to begin soon. Airlines are replacing veteran models with aircraft that will broaden their network prospects, as well as modernising their fleets.
Part one of this analysis will focus on narrowbody activity: Boeing 737 MAX aircraft have entered service with two Australian airlines this year - Virgin Australia and Bonza; Rex is continuing to build its 737 fleet, Qantas is preparing to receive the first of its Airbus A220s; and Jetstar has been ramping up its fleet of longer-range A321neo variants.
Summary:
- Virgin Australia is using the first of its 33 Boeing 737 MAX deliveries on a new route to Tokyo.
- The start-up LCC Bonza was first to receive MAXs in Australia, and now operates four.
- Rex has used 737s to expand to important new markets since the pandemic.
- Qantas is due to take delivery of its first A220 this year, with A321XLRs coming in 2024.
- Boeing has a greater share of Australian narrowbodies now, but Airbus has far more orders.
Virgin Australia has the largest narrowbody fleet, but Qantas and Jetstar lead in orders
To set the scene, the first chart below shows the current Australian narrowbody fleet.
Virgin Australia has the highest individual total, with 84 aircraft, although Qantas and Jetstar combined have 146.
Narrowbodies in service with Australian airlines, as of 07-Aug-23
The next chart shows outstanding narrowbody orders, and by this measure both Qantas and Jetstar are well ahead of Virgin Australia. The two Qantas Group airlines have firm orders for 149 narrowbodies, and about the same number again of purchase rights.
Virgin Australia has 32 narrowbodies remaining on order. These charts also show the transport category aircraft on order by the Royal Australian Air Force.
Narrowbodies on order by Australian airlines, as of 07-Aug-23
Virgin is immediately making use of the improved range of the 737 MAXs
Virgin Australia is a prime example of an airline introducing new variants.
The airline took delivery of its first Boeing 737-8 on 28-Jun-2023, from its orders for 33 737 MAX-family aircraft.
These comprise eight -8s and 25 of the larger -10 version that are due to arrive from next year. Although the airline had ordered the MAXs before the COVID-19 pandemic, it tweaked the order in 2020.
The initial MAX aircraft has been deployed on Virgin Australia's recently added route from Cairns to Tokyo - which is significant, as it marks the airline's return to long haul international flying after the pandemic.
Virgin Australia had planned to use 737-8s to launch the Tokyo route, but delays meant that the flight was operated briefly using a Boeing 737-700. The range, payload, and efficiency of the -8 makes it a far better proposition for this route than the older -700.
The use of the MAX on the Tokyo route showcases the additional flexibility the aircraft will give Virgin Australia as more are delivered over the next five years.
Virgin Australia is now operating a fleet of 84 Boeing narrowbodies, predominantly on domestic routes. It has gradually rebuilt its fleet to pre-pandemic levels, after paring it back to 58 737s as it emerged from bankruptcy in Nov-2020.
Bonza was first with 737 MAX deliveries, and Rex is also growing its narrowbody fleet
Virgin Australia was not the first of the country's airlines to operate 737 MAXs - that honour went to the start-up low cost carrier Bonza, which launched domestic flights with a fleet of three 737-8s in Jan-2023. Bonza has since taken delivery of a fourth 737-8, and has plans to add more.
Regional Express (Rex) is another Australian airline that made major fleet changes during the COVID-19 pandemic period. The airline decided to add Boeing 737-800s to its large turboprop fleet, partly to take advantage of the market opportunity afforded by Virgin Australia's temporary retreat.
Rex has steadily built its narrowbody jet fleet to seven 737s, and in Jul-2023 it signed a lease deal to add two more. One has arrived and is due to enter service in mid-Aug-2023, while the second is scheduled for delivery in Sep-2023.
Further growth could be coming - the airline says it may add another two 737s before mid-2024.
The introduction of the 737s has allowed Rex to branch out from its regional operations to compete with the larger airlines on trunk routes between Australia's largest east coast cities. The latest 737 additions represent "yet another step in fulfilling our ambition to fly to, and between, every [state] capital in Australia", said Rex Deputy Chairman John Sharp.
Qantas will use new Airbus models to begin its domestic fleet renewal
Qantas has put plans in place for a series of major fleet changes, affecting both its domestic and international operations.
The airline made no secret of its goal to secure attractive deals by being one of the first to resume ordering after the pandemic hiatus. The fruits of these efforts will soon be seen, with deliveries set to begin this year.
In May-2022 Qantas announced orders for 40 Airbus narrowbody aircraft to start the replacement of its domestic fleet, with purchase rights for another 94. It has already converted some of the purchase rights into nine more firm orders.
Combined with its existing orders earmarked for the subsidiary Jetstar, the Qantas Group now has nearly 300 narrowbodies in its order backlog, including purchase rights.
The latest tranche of firm orders includes 29 A220s, and these will be the first of the new Qantas aircraft to arrive. The initial A220 is already under construction in Mirabel, Canada, and it is expected to be delivered late this year for entry into service in early 2024.
Qantas will use the A220s to replace its veteran Boeing 717 jets: mainly on domestic routes from smaller cities such as Canberra and Hobart to major hubs in Brisbane, Melbourne and Sydney. Because the A220s have about double the range of the 717s, they can also be employed on some short haul international routes.
The airline expects to have seven A220s in service by the end of 2024, and all 29 by 2027. The first of the 717s was retired in Jun-2023.
Qantas' narrowbody firm orders also include 20 A321XLRs, which are due to begin replacing its domestic 737-800s from late 2024.
Longer-range Airbus narrowbodies are a good fit for Jetstar
Meanwhile, Jetstar has introduced A321LRs to its narrowbody fleet since the pandemic, with the added range of these aircraft giving the airline more network options in both the domestic and international arenas.
Jetstar received its first A321LR a year ago, and now operates nine of the aircraft. It is due to take delivery of the remainder of its 18 firm orders by the end of 2024.
As well as opening up new routes, these jets have also replaced Boeing 787-8s on some flights, thus freeing up the 787s for use in other markets.
The fleet renewal process has not been entirely smooth sailing, however: Qantas divulged in Feb-2023 that it was expecting "rolling delays" in its aircraft deliveries. This prompted it to acquire several "mid-life" used A320s to help boost short term capacity.
Airbus will boost its Australian share thanks to larger order book
All of the narrowbody order activity will cause a shift in manufacturer market share in Australia.
The chart below shows that Boeing has a nearly 70% share of the narrowbody market, as both Virgin and Qantas operate 737-family aircraft.
Narrowbodies in service in Australia, by manufacturer share
However, this chart shows that Airbus vastly outnumbers Boeing in total narrowbody orders in Australia, as Qantas transitions to A320neo-family aircraft.
Even factoring in fleet replacement, the in-service market share will increasingly shift in favour of Airbus.
Narrowbodies on order in Australia, by manufacturer share
