Donna Hrinak
Vice President of Boeing and President
Boeing Latin America
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View from the Top

Mexico a Major Contributor to ‘Quetzalcóatl’ Development

Fri, 12/01/2017 - 17:32

Q: How do you see the aerospace sector developing in Mexico and Latin America?
A: The country has tremendous potential for Boeing’s three sectors: commercial aviation, supply chain, and lastly, defense, space and security. Our participation in the supply chain is of great importance to us. It represents about US$1 billion annually both in terms of direct purchases and those of our direct suppliers. Mexico is our largest supply base in Latin America. The 787-9 “Quetzalcoatl” for example is visibly a Mexican plane due to its patterned paintwork, but its interior is also Mexican. Its wire harnesses, landing gear and doors are made in Mexico. The 787-9 is our most modern and high-tech aircraft and Mexico is contributing in major ways to its development.
We anticipate that Latin America will need 2,960 new aircraft by 2035. Mexico is the second-largest market in the region, so we expect many of these aircraft to come to the country. Of those, 70 percent will be part of fleet expansions, not replacing existing airplanes. Airlines will continue expanding their fleets to potentially double in size by 2035.
We expect single-aisle aircraft will be most in demand in Latin America, such as the 737 MAX, the fastest-selling aircraft in Boeing’s aviation history. Aeroméxico has already ordered 60 and will begin receiving them in the first quarter of 2018. This type of aircraft will continue to grow in Latin America and we expect a total of 2,530 will be needed by 2035. Small wide bodies will also be acquired for certain flight routes, such as the 787, also flown by Aeroméxico. It is true that orders for wide bodies have dropped but the market for the single aisle has remained strong.
We have to listen closely to know what airlines want and what their passengers will pay for. There are many innovative technologies that could be used today, such as supersonic flight, but not at a price that everyone can afford. For the market to remain strong as the middle-class grows and more people fly, we have to make sure innovations match market demand. The price of fuel also influences all airlines. We can collaborate with Mexico on the development of alternative fuels and biofuels, which is one of the reasons Aeroméxico is working with us.
Q: How do you expect Boeing’s US$1 billion yearly investment in the supply chain to grow in the next few years?
A: This depends mostly on our suppliers’ ability to expand in the country and to develop the workforce to continue meriting support from federal and state governments. Our suppliers mostly manufacture components but we expect to move Mexico up the value chain by requesting more design and engineering-based jobs here.
Q: What are the main reasons behind the increased demand in single-aisle aircraft in Mexico?
A: The country has 46 free trade agreements reflecting Mexicans’ interest in traveling. This offers the possibility of opening new routes from Mexico. A similar trend is emerging throughout Latin America. Aeroméxico opened a route from Tijuana to Shanghai that is encouraging many US citizens to cross the border into Mexico to fly from Tijuana. This direct flight is possible thanks to Aeroméxico’s 787. This Mexican airline is one of a handful of all-Boeing fleets in the region, including Copa Airlines and Gol Airlines.
Q: How will the 787-10 change the aviation market?
A: The 787 has opened 160 new routes to date. It has the size and range to be suitable to open many new routes and the 787-10 extends that range to allow the generation of more direct routes. While there are larger aircraft in the market, there may not be enough travelers to fill them. Instead of having one aircraft with 500 passengers making a single flight, it might be more convenient for passengers and airlines to fly two 250-seat aircraft twice a day. This aircraft has the capacity and the same range as larger aircraft, offering significant flexibility to open new routes.
Another characteristic of the 787 might be best understood by quoting one of our executives: “Airplanes are cool but flying sucks.” This refers to the fact that passengers can find the experience uncomfortable. As an OEM, one way we can improve the passenger experience is varying the temperature ranges in an aircraft. The 787 incorporates our Sky Interior, which creates a more welcoming environment. The lighting can be changed depending on the time zone while larger windows let in more natural light. The aircraft is also much quieter and its humidity level is higher. This is because it is made of composites instead of aluminum and is pressurized at lower altitudes.
Q: What other initiatives is Boeing developing to improve passenger experience?
A: The best way to improve this area is by talking to passengers. We have two locations with an aircraft cabin that can simulate the conditions of a real flight, one is in Germany and the other at Brazil’s University of Sao Paulo. In Brazil, we recently asked for volunteers to test the conditions of a “flight” to measure preferences. For passengers with physical limitations, we have developed ways to make their experience smoother and easier, such as luggage storage that can be pulled down to an accessible height.
It is amazing how passengers around the world state the same needs. The main differences between passengers can be classified by age. Millennials, for instance, want internet access so they can message fellow passengers. They are willing to pay for that but are unwilling to pay for what they do not use, including food or drinks. This is one of the reasons low-cost carriers are growing so much in Mexico and other countries in Latin America. While these carriers charge for everything, passengers who do not use most of these services and are willing to pay when they do need something.
Q: What are Boeing’s recommendations to keep the Mexican industry growing?
A: So far, we have seen an excellent partnership between the Mexican government and the industry via organizations such as ProMéxico and FEMIA. The third vertex of that triangle, academia, is just starting to come on board. We need to ensure the labor force is adequate, in quantity of people and skillset, to be able to build the aircraft and satellites of the future. Mexico produces a vast number of engineers but what the sector needs now is technicians.
Technical schools have to train their students not just on how the factory works but on relationship management because an instrumental part of the supply chain relies on good working relationships between Tier 1s and OEMs. We want partners that are willing to develop long-term partnerships and understand the changing needs and demands of the market, something graduates can learn through relationship management before rising in the ranks to manage supplier companies. The companies that successfully incorporate this ability stand out in the sector.
To better understand how to work with suppliers in Mexico, I reached out to an executive in France. We consider that country to be the model on how to interact with suppliers. He said, “here in France our suppliers are French companies. In Mexico, our suppliers are French companies,” meaning that Mexican companies are not yet big players and they will not be able to start at the level of Safran and Latécoère. But they can start as Tier 2 or 3 companies and supply to Tier 1s. That is what Mexican companies should focus on. Mexican companies are very resourceful and are quick to bring new ideas to the table so the country is in a good position to enter the Top 10 in the aircraft industry, building on its competitive supply chain with innovation.
Q: What initiatives is Boeing developing to make aircraft environmentally friendly in the long term?
A: Boeing has a project called ecoDemonstrator, in which we take one of our aircraft and fill it with environmental experiments. We have run this experiment three times in the US using Boeing’s aircraft and in 2016 we ran it for the first time in Brazil, using an Embraer E-170. This was a joint project aimed at addressing the industry’s ambitious goals to reduce gas emissions. Some experiments included changing the paint of the aircraft to one that prevents ice accumulating on the surface and insects from sticking to the airplane. This reduces drag and fuel consumption. Other tested areas included controlled noise pollution, air safety and flying and landing techniques to reduce fuel consumption. The industry’s goal to reduce fuel consumption can be met partly by improving pilot training and partly by improving engines. The next ecoDemonstrator, to fly in 2018, is still under development and might happen through another partnership with Embraer.
On the commercial side, our top priority is getting the 737 MAX to our local customers, including Aeroméxico, Copa Airlines and Gol Airlines. The second will be to continue improving the added value of the supply chain.