Aircraft lessor SMBC says next generation jets at least a decade away, stressing importance of SAF

Global commercial aircraft lessor SMBC Aviation Capital predicts it will be at least a decade before the next generation of all-new airliners enter commercial service. The company says new concepts will need to be at least 20% more fuel efficient than the planes they replace, as aviation strives to achieve net zero carbon emissions by 2050. The Dublin-based, Japanese-owned lessor says the next generation will most likely seat 180-220 passengers, the size of today’s narrowbody Airbus A321, and does not see an all-new widebody jet coming to market before 2044. And while there is significant focus on new zero-emission electric and hydrogen-powered aircraft, SMBC believes they both address only a fraction of aviation’s emissions compared to sustainable aviation fuel, “the highest impact avenue” for decarbonising the air transport sector.  

The leasing company’s assessments are contained in a new discussion paper, ‘Fuelling the Future of Flight’. While the rival Airbus A320 and Boeing 737 families of single-aisle jets dominate the airliner market – and SMBC’s fleet of 987 jets – the lessor thinks neither platform can be further refined to meet future efficiency and environmental requirements.

“Airbus, with its A320 family, is on its third iteration (including the -100),” says SMBC, “while Boeing’s 737 family originated in the mid-1960s and is on its fourth iteration. We do not expect another version of either type given their limitation to accommodate bigger engines, so both replacements will be clean sheet designs.

“We expect both Boeing and Airbus to announce new aircraft types in the late 2020s to early 2030s to replace the (Airbus) neo and (Boeing 737) MAX. We believe the aircraft will be optimised around 180-220 passengers in two-class configuration size, with a shrink version available with around 30 seats less as well as a stretched design adding 30-50 seats more.”

The lessor describes as “more straightforward” the widebody jet market, with the twin-engine Airbus A350 and Boeing 787 families at the core of that segment, and the long-delayed Boeing 777X – “which is essentially a re-engined Boeing 777-300ER” – currently expected to enter commercial service during 2026.

“We do not expect a clean sheet design in the medium-to-large widebody segment over the coming two decades,” says SMBC. “Rather, there will be further Product Improvement Packages on the engines, and eventually a re-engined offering.”

SMBC says a key reason aviation’s emissions are so difficult to abate is the combination of long development cycles for new aircraft types and their long economic lives, “making the fleet renewal process span decades.”

Although smaller airframers are evolving, the company sees no competitive third-party entrant able to challenge Airbus and Boeing, due to market barriers including cost, engineering expertise and ability to produce planes at sufficient rates, and with global support.

“Developing a new aircraft is expensive with $15 billion the most commonly used estimate,” says the lessor. “Single-aisle aircraft have historically cost between $10 billion and $12 billion, but the Airbus A320 and Boeing 737 are derivatives of older designs.  

“Earlier in the year, Boeing’s David Calhoun referenced a price tag of $50 billion which presumably assumes an all-new design with significant margin for delays or cost overruns, and likely includes the engine OEM (original equipment manufacturer) costs as well.”

SMBC says it takes a further four-to-six years before the delivery of the first new aircraft, then another three-to-five years in which existing and new aircraft models are both produced while the older version is phased out.

“This essentially means that following the announcement of a new aircraft type, it is likely 10 years before production has shifted from the existing to the new technology,” it estimates.

“We believe that the next new technology aircraft will need to be 20%+ more efficient than its predecessor to drive meaningful change,” says the lessor, reinforcing the industry position that sustainable aviation fuel is considered as the “highest impact avenue” to cleaner flight, reducing aviation’s carbon emissions by over 70%, and calls on governments to incentivise and encourage SAF development.

“Battery and hydrogen technology will indeed be developed but will be limited to smaller aircraft with fewer passengers, a segment of the market that makes up just 16% of emissions,” adds SMBC, questioning the scale of their contribution, and casting doubt on the logistics of hydrogen propulsion.

“While a battery-powered solution may work on some shorter-range aircraft, only 4% of emissions come from flights less than 500km. Hydrogen takes up three times as much space as kerosene, needs to be stored at very low temperatures (-253 degrees C) and is highly flammable. In addition, there are over 41,000 airports in the world that would require substantial investment to change ground refuelling infrastructure.

“At this point, the main engine OEMs are focusing on design improvements to their kerosene / SAF-powered engines.”

Tony Harrington

Correspondent

• Linkedin