Here's why Airbus and Boeing have big plans for small planes

If you want to start a bitter debate among people in the aviation industry, don't ask them about Brexit, or Donald Trump... to really watch the sparks fly, talk aircraft sizes.

The mother of all battles in recent decades was over jumbo jets: Airbus developed its A380 on the assumption that congestion at major airports would require more planes that could carry 500 people or more over intercontinental distances, while Boeing essentially argued that the size class it had invented with the 747 was becoming obsolete.

Boeing seems to have had the better of that dispute, with both manufacturers now focusing their energies on aircraft like the 787 and A350, which typically seat around 250 people and allow more daily flights.

The argument now brewing is over shorter-range aircraft. While congestion hasn't been enough to make airlines fall in love with the A380, it's becoming a major problem on busier routes.

At Sydney Airport, a flight takes off for Melbourne about every 10 minutes, and the airspace between Seoul and South Korea's Jeju Island is even more crowded.

Read: Sydney-Melbourne is now the world's second-busiest airline route

There was a time when high-speed rail was proclaimed as the solution, but a glance at the world's most congested air routes suggests this option has played out. Just six are in the less-than-700-kilometers range where trains pose a real competitive threat – and one of those is Tokyo-Osaka, where high-speed rail has been operating for more than half a century.

One way of increasing the carrying capacity of these routes would be to make the planes bigger.

Qantas mostly serves the Sydney-Melbourne-Brisbane triangle – which includes three of the top 25 city pairs globally – with Boeing 737s that carry 174 passengers.

Replace those with Airbus's latest A321 variant in a 206-seat layout, and you could shift the same number of passengers with just 85 percent of the landing slots. If you could get 240 people on board, you could get that down to about 73 percent.

That sweet spot is becoming the area of most active competition between Airbus and Boeing. Qantas has 45 A321neo planes on order, but CEO Alan Joyce was openly beating the drum for Boeing at a conference this week on the fringes of the Singapore Airshow.

The economics of Boeing's new mid-market plane – a model informally dubbed the 797 that would carry 225 to 275 people over shorter ranges than the similar-sized 787 – could be "superb," he said.

That would particularly be the case if it had twin aisles, which would allow passengers to disembark faster than the single-aisle Airbus A321 and Boeing 737 and reduce the turnaround time between flights, he said.

Similar arguments could apply to the Chinese, Indian, Southeast Asian, European and U.S. carriers that face the greatest risk of airport congestion over the coming decades.

Traffic on intraregional routes will more than double between 2016 and 2036, according to Boeing's latest market forecast, and account for almost half the growth globally over the period.

Such routes are best served by planes designed for shorter distances, since there tends to be a trade-off between passenger numbers, economics, and range.

Make planes about the size of the smallest A350s and 787s but with shorter ranges, and you stand the best chance of accommodating all those passengers and making a profit without causing gridlock at airports.

There's a risk buried in that forecast, though. The idea of using bigger planes on intraregional routes isn't new.

Boeing's single-aisle 757 and Airbus's double-aisle A300 targeted essentially the same market in the 1980s, before the 737 and A320 left them on the tarmac on the way to becoming the most successful commercial aircraft in history.

Airlines love the 737 and A320 because their small cabins are easy to fill. In an industry where you make good money flying planes 90 percent full and lose a fortune if that falls to 70 percent, that's a compelling advantage. It's an argument, too, that's just been proven again by the way the 787 and A350 are bringing on the demise of the larger 747 and A380.

In aviation, small is beautiful. Airlines that forget that lesson risk being saddled with empty cabins and discounted tickets for years to come.