Guidance from ISTAT Americas

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Last week saw the usual excellent presentations from the industry was presented at ISTAT Americas 2017, an annual event of the International Society of Transport Aircraft Trading, 5-7 March.  A key takeaway for us what the focus Airbus and Boeing placed on capabilities.   Airbus stressed the capabilities of the A321neo and the A330neo.   Boeing did the same for the 787.   Whereas just a few years ago, the stress was on fuel burn savings, the new mantra is about what these aircraft can do with airline route structures.  There is useful guidance here for Bombardier and Embraer.

All four still talk about fuel efficiency – but it is no longer the primary point.  The emphasis has changed; from fuel savings to capabilities, particularly range. It appears the two big OEMs see that now is the time to discuss how the aircraft can do so much more in terms of range.  Airbus, rightly, points to the A321neo’s improved range allowing disruptive use to replace almost all 757 routes, and its A330neo being able to virtually match the 787 for range but at lower cost.   Boeing, also rightly, showed how over the past three years the 787 has created over 100 new markets because of its range.

Airlines can use the new aircraft from Airbus and Boeing to identify and develop new markets.  An airline fly directly from its home base, typically a hub it dominates, to far flung places with potential.  The case is compelling and well-argued by Airbus and Boeing.  The interest in these aircraft is clear from the orders.  And therein lies guidance for Bombardier and Embraer.  Bombardier’s CSeries is already in service.  Embraer proudly rolled out its largest aircraft last week, the E195-E2.   Should the marketers of the CSeries and E2, also be focusing on capabilities especially range?

The following table illustrates some key metrics of the Bombardier and Embraer aircraft.  Embraer just announced its E195-E2 launch customer as Brazil’s AZUL and the launch customer for the E190-E2 is Norway’s Wideroe.  Bombardier’s CS100 lunch customer is SWISS and the CS300 launch customer is airBaltic.

Wideroe plans 144 single class seating, optimizing capacity.  The airline’s route map shows that currently it will not be exploiting the E190-E2’s range.  As the following image shows, 3,000NM from Oslo reaches several new markets.  Wideroe only has three E190-E@s firmed but it has 12 options.  Might new routes be on the cards? We expect so.

 

 

 

Azul’s route map has several legs outside Brazil, and the airline has A330neo’s on order (the A350 order is apparently being considered for conversion to A330neo).   What could the E195-E2 mean for the route map?  The E195-E2 could open several new regional markets that the current E-195 can’t reach.  On the map at right, the inner circle is the E-195 range and the outer circle is the E195-E2 range. The E195 has a range of 2,000NM compared to 2,450NM for the E195-E2. The additional 22% in range the new aircraft also offers 13% more passengers.   Azul it seems could use the new aircraft to primarily get better economics on existing markets.

 

 

Next looking at the CS100 at SWISS, the airline’s route map is global.  The CS100 will be focused within Europe. But the CS100 has a range capability that can open new markets – far into Africa for example. Another capability will be LCY (London City) which has an steep glide path and short runway.  The CS100 has an ability to fly long-distances from difficult airports with short runways and tricky approach paths.  This is a double capability in one,  the CS100 can fly from LCY to Moscow or Riyadh non-stop. Being small and light, the CS100 is likely to have the economics to allow SWISS to serve Lagos, which is not a market served at present.  The range of the CSeries is exactly what Air Canada plans for its own fleet.  Indeed, Bombardier must be thrilled that Air Canada has compared the capabilities of the CSeries as a market opener to the 787.

 

 

For airBaltic, the CSeries also opens new options.  The airline’s route map shows long legs like Dubai from Riga that the CS300 allows.  The great circle map shows that the airline could even consider Indian markets.  Riga to New Delhi is within reach.

 

 

 

 

As Bombardier and Embraer ponder selling their new aircraft it seems clear that focusing on range as a key metric should open airlines to the benefits of “right sizing” and deploying these new, smaller, single aisle aircraft as route development tools.  Moreover, these aircraft could not work on long-thin routes unless their passenger cabins were comfortable.  Both of these new aircraft don’t feel like a regional jet, and are equal to or more comfortable than 737 and A320 competitors.

For LCCs like Azul and Wideroe the E2 could be an excellent demonstrator vehicle of what the new aircraft are capable of.  Bombardier has attracted the attention of big names like Air Canada, SWISS, Delta and Korean already.  We may be about to see these new aircraft deployed in ways that are both innovative and disruptive.

© 2017, Addison Schonland. All rights reserved.

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