Market

Within a few months of the first flight of the French and the British Concorde prototypes (March

2. and April 9, 1969). the US SST finalist, the Boeing 2707. had booked 122 options from 26 airlines to purchase aircraft: the Concorde had booked 74 options from 16 airlines. Thus, nearly 200 SSTs were "on order." A year later, in 1970. the FAA predicted 500-800 SSTs would be in operation by 1990. It is now 1996.

Tvelvc Concordes operate today with a limited schedule and at load factors below 50<* These aircraft need only pay their operating costs exclusive of the amortization of their purchase, they were essentially free to the two airlines flying them |I0J. What happened^ The fares required to pay for their operation deter their use. Maintenance costs are said to be seven times those of a 747 and fuel costs per passenger mile at least three times that of the 747.

Studies by Boeing and by McDonnell Douglas predict a market for 600 to 1500 SSTs (11]. (12]. Міомо of Japan Aircraft Development predicted a market for 600 Mach 2.5 SSTs with a 5500 nautical mile range, and estimated perhaps a 50^ increase in this market derived from its stimulation by the travel time saved 113}. Davies, on the other hand, found it to he between 9 and 36 aircraft, depending on how optimistic one is (14]. The enormous differences among these studies stem from what one projects for the fare required to cover the aircraft’s total operating costs. It lakes a long time to sell one thousand aircraft. The first Boeing 747 began commercial flights in 1970; twenty-four years later one thousand 747$ had been deliv- crcd.

The challenge is to design, build, certify ami operate an SST while providing the air­lines a return on investment comparable to a similar investment in subsonic aircraft. This can only be accomplished with marginally increased fares over those for subsonic transport. The marginal increase in fares required, however, depends upon many factors, including aircraft price and operating cost.

Marginally increased fares – what does that mean? Assume such transport effectively saves the trasxlcr some fraction of a day. or at most, a whole day Whatever that traveler’s expenses would be for that day. or, correspondingly, whatever his income might be for that day. provides a reliable guide as to what he would be willing to pay to save a fraction of a day of business travel, or have as extra time for his vacation. This intuitive judgment agrees with stud­ies which predict little fall-off in ticket sales for a 10% surcharge 111|, [13].

As noted earlier, non-discoum passengers comprises 30% of the international market. To secure a significant fraction of this market an SST will need to provide three-class service. Current Boeing studies reflect this, hut show an SST with about 9% of the passengers in first class. 19% in business class, and 72% in economy. Can an SST succeed if it fills empty seats with discount coach passengers0 Can it succeed if it docs not?

A final comment is warranted on the growth of revenue passenger miles accorded air transports The "information highway” will reduce business travel needs. For a few hundred dollars you can buy the software needed for your group to discuss and share visual information by electronic mail. It is now possible, with more expensive software, to have the real-time image of each member in a working group displayed, hear their voices, and share visual infor­mation. A telecommunications vice president recently told me that he spent $23.000 on hard­ware and software and saved $100,000 in travel costs in the first year. The importance of this change was noted some years ago by Simpson in his remarks to the 1989 European Symposium on Future Supersonic-Hypersonic Transportation [15] When the information highway becomes an international highway, which it now nearly is. this will reduce the need for international busi­ness travel while simultaneously expanding the amount of international business li seems likely that these two effects will offset one another.

Technology has progressed steadily since the Concorde was conceived. But reduced energy efficiency, the sonic bang, engine emissions, and airport noise, remain deterrents to the economic success and acceptability of an SST. Let me now turn to the environmental barriers facing a future SST.