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Pratt & Whitney Canada is starting to push its new PurePower PW800 engine.  The PW800 fits into PW&C’s business aircraft category and operates in the 10,000 lbs thrust and higher class.  This engine shares a common core with the P&W geared turbofan (PW1000G).

Currently the PW800 powers the Gulfstream G500 and G600.  This was a major coup for P&WC, as they displaced long time engine supplier Rolls-Royce for the new Gulfstream jets.

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It appears the commercial aerospace world has coalesced into two camps.  We have called these the big and small duopolies.  However the line between these two is growing blurry.  This was something we first heard from Embraer’s John Slattery in February, when he described a world that was more nuanced than a split market might indicate.

What do these two segments look like?

As of 1Q16, there were 31,068 commercial aircraft in service.  The next chart lays out the share between the biggest players.  The “Other” category includes the OEMs in the smaller chart.  The big four account for 85% of the market. Continue reading

In Part 2, we go up a segment to 101-200 sets, looking list prices and seat count.  This segment is where most commercial aircraft are sold, with the 150-180 seat sub-segment being the sweet spot. Up until June this year, the segment has been the exclusive preserve of the big duopoly. This segment has been the traditional play ground for Airbus and Boeing; it is where their “bread & butter” models compete.

However, in June when SWISS takes delivery of their first CS100, the playground grows.  As the chart illustrates, the segment could have been defined differently – we might have started at 120 seats.  Traditionally there was a “no man’s land” between regional jets and mainline jets.  Typically the 100 seat marker was the watershed.  The arrival of the CSeries and E2 shake things up.  The CSeries is buying its way in at steep discounts because it is truly a new aircraft.  The E2 is a refresh and will build on a customer base with over 1,000 E-Jets in service.  Embraer may find though, that this foundation does not protect it from also offering aggressive pricing.  As Bombardier and Embraer enter the mainline arena, they are about to face a considerably nastier market environment. Continue reading

Aircraft pricing is a touchy subject.  Airlines don’t like to discuss it, nor do the OEMs.  Nobody pays list prices, and nobody talks about the discount they get either.  Indeed, as we have heard at ISTAT – if you want to know transaction prices, take the list price and divide by two, and go from there.

It turns out that formula is close to the truth.  We took a look at a selection of aircraft and compared the list price to market values, using data from Collateral Verifications.  Take a look at the table.  We placed the aircraft in order from largest discount to lowest discount from list prices. Continue reading

It is well known that list prices for commercial aircraft are no guide to market pricing.  The list numbers are nowhere close to reality.

However, list prices do provide a useful guide to OEM market posture. List prices send signals to competitors even if competitors know that, ultimately, the customer will grind vendors down to the bone.  Let’s take a look at the commercial aircraft business and compare list pricing and seat capacity. Continue reading

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