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June 16, 2024
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On Monday, as part of the Airbus NA Tour and introduction to the A220 program, the briefing included a “voice of the customer” session.  You can watch that briefing here.

It occurred to us after this briefing that Air Canada is doing something unusual. Previously the airline had described the CS300 (as it was then known) as “could prove as transformative as Boeing 787s“.  Associating the CS300 with the 787 is a substantial statement.  The 787 has proven to be the winner Boeing said it would be.  Hub busting and offering new market opportunities across the globe.  From well-established brands like ANA and JAL opening new city pairs to Japan from the US to upstart Norwegian disrupting low-cost travel across the North Atlantic.  The 787 has become a formidable tool.

In the briefing, viewers will note the reference to using the now named A220 “like the CRJ”.  That is, use the A220 to scoop up passengers across the US and feed them into the Air Canada network going beyond Canada. The airline estimates 1% market share of US outbound international traffic is worth $1bn per year.  With that kind of upside, you can bet it gets attention.

But the issue that intrigued us was that Air Canada is going to use the A220-300.  This aircraft offers twice the capacity of the CRJ900.  Would it not make sense to utilize the A220-100? After all,  the airline has made cleat the A220 is replacing their E-190s.  These E-190s seat 97, and the E-190 seats 28% more.  The leap from 97 seats to an expected ~135 is another 39% jump.  In the new plan, Air Canada will have a large gap from 76 seats to ~135.

The selection of the A220-300 is unusual in terms to allowing for such a wide seat gap. Or does the airline have a different vision?

When asked about this Air Canada responded:

  1. The main objectives of the A220-300 is to replace the E90 providing much more favorable economics and better range capability. The comparison to the CRJ is merely to show what Bombardier/Airbus products have allowed us to do in the USA. As the CRJ opened many new small and thin markets in the 1990s, the A220 will allow us to open a set of new US routes that would not be feasible with the current narrowbody products on the market (737MAX too big, A319/737MAX unfavorable economics)
  2. The main objective of our presence in the US is to serve the large and growing Canada-USA demand.  We’re satisfied with the performance of our growing US network
  3. The A220 is not a CRJ replacement – it’s an E90 replacement. On Monday we announced a revised CPA deal with our express carriers that will see growth in our CRJ900 fleet counts – these will replace the CRJ in the fullness of time.

The response indicates the A220-300 may not be too big after all.  The markets under consideration require more range than the E-190 offers and require better economics than the A319 or 737MAX. i.e. the A220-300 is capable of doing exactly what Bombardier claimed it would when it was called the C Series.

Deploying the A220-300 allows for flights from Vancouver, Toronto, and Montreal to reach far south and attract traffic into the Air Canada network. In doing so, American travelers get to use Canadian hubs that are smaller and easier than the mega-hubs in the US.  Air Canada will no doubt be touting shorter transit times when these A220s come on stream. Again, this fits exactly with what Bombardier originally spoke of with the C Series. Air Canada has 19 E-190s and 45 A220-300s on order.  It is clear one can expect Air Canada’s strategy to reach far and wide across the US. They must be seeing lots of cherries to “cherry pick” from.

The concept of “right-sizing” was not only put forward by Bombardier.  Embraer has been an even stronger proponent of this strategy. If Air Canada’s strategy with the A220 proves as disruptive as its CRJ900s have been, then US airlines will react. Delta will send its A220s deep into Canada, attracting traffic going south and to Africa, for example. United and American cannot ignore this activity. Which means the E-190/5-E2s are also in play and will compete with the A220. The crossover jet may be entering its “time”.  Airbus made clear they see the A220s main market as North America.

Regarding the third point from the airline above. Note the language “growth in our CRJ900 fleet counts”.  As an example, Jazz has 54 CRJ 200s and 700s.  If Air Canada’s CPA deal is to standardize its regional feed around the CRJ900 then Bombardier is going to see more orders. Chorus has already made this statement.

author avatar
Addison Schonland
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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