On the market for a supersonic airliner

If you build it, they will come.

Cover photo credit: Brooklands Museum, UK

United’s recent order for 15 Boom Supersonic Overture aircraft prompted an AvTalk Podcast episode on the likelihood of Overture entering service. Guests Jon Ostrower and John Walton joined the show to discuss the market size and viability of a modern supersonic transport. Both conclude that supersonic flight is unlikely to return at scale, if at all.

My previous experience leading airline business development for Boom Supersonic tells a different story on the fundamentals of a market for high speed flight.

Comparing supersonic airliners to premium cabin economics 

To fairly evaluate a modern supersonic transport in the existing marketplace, it is necessary to identify the right point of comparison. Boom and Exosonic plan to match premium cabin fares. The relevant economic comparison is a supersonic aircraft versus a subsonic premium cabin. Analyzing economics for subsonic aircraft by cabin is a novel idea for airlines. Most of the ones I spoke with during my tenure at Boom only evaluated economics at the aircraft level. 

Premium seats take 3-4 times as much space as economy seats do. They are heavier and need amenities that constrain space and increase fuel burn. Therefore, each premium seat carries a higher operating cost per seat and carbon allocation. Once you properly compare supersonic transports to subsonic premium cabins, the economics of supersonics become compelling. 

Customers in premium cabins assign a high value to their time. Many travel in premium cabins to assure rest and productivity. By matching existing premium cabin costs, SSTs can be considered a similar class of product at a higher speed.

Aircraft Utilization, Patterns & Demand Directionality

Utilization and Aircraft Reliability

Ostrower described Concorde’s utilization as “lazy,” due to passenger time-of-day preferences and slot limitations.

Concorde was indeed a low utilization aircraft. On its core JFK-LHR route, BA flew each tail an average of 4 hours per day through the 1990s. Designed in the 1960s, Concorde's utilization was also constrained by its technical limitations. Plagued by frequent scheduled and unscheduled maintenance, it couldn't fly high utilization patterns.  

A modern supersonic airliner would necessarily deliver far better reliability. New aircraft use modern materials, engine technology, and incorporate health monitoring practices, each of which contributes to aircraft reliability.

Given the high cost of a supersonic aircraft, high block hour production is a critical input to the economic equation. Reduced maintenance downtime allows for fixed costs to be spread over more hours, lowering the per-hour operating cost.

High reliability and aircraft utilization are prerequisites to supersonic commercial viability. 

On Schedule Patterns

Some of the busiest airports in the world have limiting operational hours and curfews. That’s why it is critical for modern SSTs to be able to serve a variety of global markets. A diverse set of destinations would allow a modern SST to fly when Concorde could not. 

Since Concorde's retirement, the world has gotten richer. Advancements in technology, manufacturing, and trade have opened new premium travel markets. Routes with dense premium traffic—potential supersonic routes—now include:

• Europe to the Middle East

• North & South Asia to the US West Coast

• North America to South America

• Europe to the US West Coast (if supersonic flight is allowed over unpopulated areas of Northern Canada)

Non-western premium markets now rival those connecting the traditional financial centers. In 2019, airlines flew 75% as many seats on the London to Dubai route than they did on the New York to London route. The balance of wealth and power has shifted beyond the North Atlantic. No longer will supersonic transports serve only a limited subset of bankers traveling over the North Atlantic. 

Technology has revolutionized traveler time-of-day preferences. Computers offer flexibility about when and how we choose to be productive. One can sit on an airplane equipped with high-speed WiFi and have a productive work day while in transit, making shorter daylight flights more attractive. 

With supersonic travel, this might mean departing New York at 8 am and landing in London at 5 pm, in time for dinner. The result is a short but productive day on the aircraft, followed by an energetic evening. Adequate rest in a real bed allows the traveler to be up and working the next day. 

By comparison, sleeping on today’s sub-7-hour red-eye is difficult, particularly when interrupted by two meal services and poor lighting. Transatlantic redeyes result in a groggy morning and the need for an afternoon nap. On my subsonic trips across the Atlantic, even in premium cabins, I don’t recall ever feeling well rested upon arrival.

Premium transatlantic markets offer a similar comparison point to premium US transcontinental markets. The divergence is the time zone differential. To improve red-eyes, airlines have deployed international-style lie-flat premium seats on US transcons. Yet, morning departures tend to outperform redeyes on trip revenue with passengers choosing to work part of their day on the flight.

Supersonic transports allow transatlantic flights to resemble transcons, effectively transforming uncomfortably short redeyes into daylight flights. If it’s an option, passengers prefer to fly during the day.

Departure times for large-cabin business jets crossing the Atlantic illustrate this point. Many depart early ET-time (5:00 or 6:00am) to arrive in Western Europe by mid-evening. This behavior illustrates a time-of-day preference for ultra time-sensitive customers.

Demand directionality

Concorde's load factor was imbalanced between eastbound and westbound transatlantic trips. Westbound trips recorded a higher load factor because in local time, Concorde arrived before it departed. Thus Concorde actually lengthened the usable day when flying westbound.

A modern supersonic airliner might be different because of availability and price. Afternoon and early evening flights weren't regularly on offer with Concorde. If they were, we could expect performance similar to afternoon transcons. An example is the late afternoon (3:20pm) departure from LA that arrives in NYC before midnight (11:51pm).

These flights would become even more attractive if priced at existing premium fares. By comparison, Concorde tickets came at a two-to-four-fold premium.

At price and schedule parity, load factor imbalance might not be an issue. 

Will passengers pay a premium to fly faster?

If so, how much?

To caveat—any new commercial supersonic airliner should aim to be on par with the economics of a subsonic premium cabin. From that starting point, premiums would only sweeten the revenue story. 

The FAA recommends a value of $63.20 per business passenger-hour. Multiplying that number by supersonic time savings offers an estimated revenue premium. In the case of a New York-to-London passenger, one might assume a time-saved value of around $200. Passengers (and their employers) should be willing to apply those savings toward fares. A $200 premium is approximately 10-20% above existing transatlantic business-class fares.

Concorde proved that there is a market, however small, for faster flight. The development of a new supersonic airliner would be justified by a multi-hundred aircraft market. To achieve this scale, supersonic fares must have a lower premium than that of Concorde's, but some premium over subsonic business class may be tenable.

Concluding Thoughts

A modern supersonic transport cannot and will not resemble Concorde. We should stop using Concorde as the backdrop for a future supersonic market.

Certifying a new transport category airplane is a risky, multi-billion-dollar endeavor. Yet today, more than ever before, hard tech businesses are thriving. Fueled by the remarkable success of SpaceX, commercial space is receiving unprecedented investment. Not long ago, traditional OEMs relegated electric vehicles to the dust-bin of history. In Tesla, we found a maverick unwilling to accept the status quo.

The question, then, is not whether there is a market for supersonic travel. It is whether Boom, and other startup supersonic manufacturers, can execute well.

It is easy for industry experts to raise objections to tackling hard things. But entrepreneurs and optimists shift the burden of proof to ask “why isn’t this possible?” and “what would it take to make this true?”. By not asking these questions, we risk missing the opportunity to build a better world. 

If you build it, they will come.