A Commercial Aviation Consultancy

Bombardier

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The commercial aerospace industry has two duopolies – a big one (Airbus & Boeing) and a small one (Bombardier & Embraer).  If markets were clearly differentiated these four companies would coexist in an environment where there are two competitions.  But, as we know, the commercial aerospace business is not cleanly split – there is a growing area of friction between the duopolies where their interest meet.

The area where the friction is occurring is the 111-140 seat segment, and that segment itself built on the foundation of the 91-110 seat segment.  The under 100 seat segment is where the regional jet makers of the small duopoly have traditionally traded and honed their craft.  Success at the sub-100 seat segment has enabled the smaller duopoly firms to experiment by stretching aircraft and even developing aircraft with more than 100 seats.  The success Bombardier and Embraer enjoyed has attracted attention and competition from Mitsubishi in Japan and SuperJet from Russia and Italy.  To maintain their duopoly Bombardier and Embraer decided to grow their aircraft up to the nominally 130 seat size. Continue reading

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Take a look at this chart of the 2014 in service passenger airliner fleet.  In our view this provides a very useful breakdown of the OEMs by seat segment.  It also highlights some opportunities for new business. Continue reading

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The much delayed ARJ has started test flights for launch customer Chengdu Airlines. The first two deliveries are set occur in April or May. This will be the first Chinese attempt at offering a regional airliner.

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So how does their offering compare to competitive products that exist today?

2015-03-18_15-17-49The Chinese have publicly stated that they did not expect to produce a world-beating aircraft out of the box, and that the ARJ-21 was to be a learning experience. But they did expect to make an aircraft that could be competitive, given the capital cost differential, for Chinese airlines, which they have done.

The table above shows the seating is virtually identical in a typical two-class configuration. But then the other numbers come into play – the ARJ is much heavier; 16% more than the CRJ and 14.4% heavier than the E-175. This causes an interesting requirement – all three use various… Continue reading

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Unique to the United States airline industry is a labor restriction called “Scope Clause“.  The clause essentially limits US regional airlines to an aircraft weighing no more than 86,000 pounds and limited to 76 seats.  The idea is protectionist.  Mainline airlines do not want regionals flying larger aircraft.  Because if regionals don’t have this limit, you can be sure the regionals will add larger aircraft and undercut mainline aircraft economics.

What does this look like though? The first chart compares the US market with the rest of the world in terms of deployed fleets of regional jet aircraft.  A few things to note.  The US was an early adopter of regional jets and has a substantial deployed fleet. But US airlines struggled mightily as regional aircraft have been stretched or offered in larger sizes.  Outside the US, regional aircraft follow a… Continue reading

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Ross Mitchell from Bombardier summarizes his ISTAT presentation and shares some thoughts on their programs.

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