When Easyjet picked a new aircraft for its fleet upgrade, the next step was a complex engine selection process. Gary Smith, the airline’s head of engineering, explains some of the intricacies.
The aircraft procurement process, designated Project Eagle, was a three-way contest between the Airbus A320neo, Boeing 737 MAX and Bombardier CS300.
Airbus was the winner, with a contract announcement in June 2013 for 100 A320neos plus a further 100 purchase rights to be exercised by 2025. In November 2015, 30 A320neos were added, the ACF variant, which features a modified door layout that provides for up to 240 seats.
At the end of 2017, outstanding orders for Easyjet were for 100 A320neo and 30 A321neo ACF aircraft.
The main driver behind the new acquisition programme was the introduction of larger aircraft to reduce the cost per seat (CPS). Around half of the current fleet consists of 156-seat Airbus A319s but, by 2021, 73 per cent will be the 186-seat A320ceo/neo and the 235-seat A321neo ACF aircraft.
Easyjet has already achieved significant CPS savings since the introduction of the A319 in 2003. Using this as a baseline, these savings will reach over 30 per cent by the end of this year. They have come from:
- the Tech Insertion programme for CFM56 engines in 2009
- Sharklets, lighter seats and improved aerodynamics in 2013
- A320 cabin conversion on 105 aircraft with SpaceFlex v2 galley and six extra seats in 2016
- introduction of the A320neo with LEAP-1A engine in 2017
- introduction of the A321neo ACF with 235 seats in 2018.
As a result of the airframe decision, the engine procurement process, designated Project Vulcan, was a two-way contest between the CFM International LEAP-1A and the Pratt & Whitney Pure Power PW1100G.
Easyjet’s approach for the technical evaluation was mainly focused on the technologies used (operability, reliability, lessons learned from legacy programmes, roadmap to certification, and entry into service) rather than deep scientific analysis of the engines’ thermodynamic cycle.
From a technical point of view, this included engine technical suitability; technology risk assessment; potential for future development; ability to meet future environmental standards and equivalent reliability to current generation engines.
Operability requirements included fuel burn guarantees, minimised fuel burn for the A320neo Family and sensitivity to change of mission.
Maintenance support requirements were validation of bare engine economics; minimised support costs through a Maintenance Support Agreement (MSA); suitable maintenance programmes for the Easyjet operational model; and minimum complexity in technical support processes.
Comparing the basic architecture of the two engines, the core of the PW1100G is simpler, with fewer moving parts. However, the gearbox between the fan and the core allows a larger, slower turning fan and also allows the low pressure core stages to rotate faster, operating in a ‘sweeter spot’.
The trade off is gearbox reliability and the greater drag created by the larger engine nacelle. The engine may also be more susceptible to FOD, with the larger fan.
With the engine accessories mounted on the core engine, there is lower drag and less pipework but a hotter environment is challenging from an engineering perspective and there is a need to open the C duct for access.
The LEAP-1A core has more stages, with each compressor and turbine stage adding to the engine’s ability to extract rotational energy from fuel. However, there is a trade off in complexity and weight. The airline notes that the fan blades are repairable.
With the accessories mounted on the fan case, they are in a cooler environment but the larger fan case means more drag. Access to items on the base of the engine is also more difficult to access.
Overall, fan case mounting has a lower risk from an engineering perspective, so the PW1100G carries a higher reliability risk.
Life cycle costs
easyJet says the business model of OEMs for the last 30 years has been to offer discounts at acquisition and then make a higher margin from maintenance services and spare parts.
Project Vulcan was a comparative evaluation process with the objective of selecting the engine with the lowest lifecycle cost, taking into account the current technology of the A320ceo Family and future technology of the A320neo Family; acquisition costs; maintenance and fuel life cycle costs; technical and programme risk; and support.
The engine life cycle cost was evaluated through a 20-year Net Present Value model. This was very complex and so development and validation was carried out in collaboration with accountancy firm EY.
The model looked at the aircraft type (A319/A320/A321); acquisition costs for the aircraft and engines; fuel burn; LLP costs; repair/restoration costs (different MSAs); and commercial incentives on the A319/320ceo fleet.
For fuel burn, easyJet provided Airbus with a list of representative routes from the airline’s network and a set of operating parameters. The OEM then took data from both engine suppliers and used its performance software to produce fuel burn estimates for each route and each aircraft type.
This was used by the airline in order to create two main outputs:
- multiplication of fuel burn times number of sectors operated to give block fuel for an average sector
- block fuel burn plotted against sector length (time) for each aircraft/engine variant.
This data was then loaded into the financial model to calculate fuel burn cost for a standard operation and to analyse sensitivity of fuel burn against mission length.
Smith comments that fuel is the biggest driver in life cycle cost evaluation but it may not be the deciding factor in engine selection.
However, it is important to negotiate adequate fuel burn guarantees to eliminate/mitigate risk around performance shortfalls at entry into service, when the engine is immature, and/or one engine improving at a faster pace than the other.
OEMs increase their prices annually, taking into account inflation, raw material prices and labour costs. He notes that price escalation of new and installed engines is usually based on US public indices, which are an accurate representation of the real cost increase to the OEM.
However, if airlines can negotiate escalation caps for spares, they can save considerable amounts of money.
For this reason, escalation caps can be a competitive advantage against other airlines in the long term and are a key element in the selection process – for example, over a long lifecycle, a small advantage on price escalation can completely offset a fuel burn disadvantage.
If an airline is already operating an engine from one of the bidders, the OEM may try to offer concessions on the installed fleet as part of the new engine deal.
A large installed fleet can be an advantage for the OEM in providing good long term business but the airline can use the acquisition process to resolve commercial issues that it may have with the support offered.
Another advantage is that the other OEM can only offer concessions against the new engine. He notes that where airlines do have a large installed fleet, there have been few cases where they have switched engine suppliers.
The negotiation process is not just about economics but is also an opportunity for the airline to get the suppliers to provide a set of guarantees. For Easyjet, this was to ensure that they were aligned with the claims made for the competing engines.
For example, if reliability is claimed to be the same as current powerplants, this should be reflected in guarantees for Technical Dispatch Reliability and Unscheduled Engine Removals.
Others include product warranty against failure for airframe, engines and engine systems; long term performance (fuel burn); and service and support levels.
The guarantees act as an incentive for the OEM to resolve problems quickly. They typically have three elements:
- the form of the guarantee, which comprises absolute (a straightforward warranty or performance level to be delivered from the start), retention/period based (measured over time, often to ensure product durability), and comparative (normally relative to competitor’s product);
- a trigger, a ceiling or floor beyond which a remedy is provided;
- remedy, which describes the action taken if the trigger is activated. This is often financial and normally capped at a maximum value over the guarantee period.
Guarantees can be obtained for an entire fleet or for a smaller batch of aircraft, perhaps 20. The batch guarantee protects against problems when a technical issue arises that affects a large number of aircraft in the global fleet, with demand outstripping demand for the replacement parts.
An airline can be sure that the most seriously affected part of its fleet can be dealt with quickly.
There is also an opportunity to negotiate an MSA for the new engine. This is particularly important, he says, because of the way OEMs increasingly control the MRO market. It is a significant decision as maintenance costs could exceed acquisition costs over the life of the aircraft.
It also transfers risk from the airline to the OEM. With brand new engines, it may be that an airline will try to negotiate more flexibility after entry into service when more experience has been gained.
And the end result? easyJet selected the LEAP-1A.