The NEO and MAX have taken the market by storm. Customers seem to be willing to stand in line – even though the 787 and A380 programs taught that sometimes one can order too early. Yet the desire for fuel efficient workhorses appears inelastic.
With that as a backdrop we find this Reuters interview of ILFC Henri Courpron really interesting. Among the aerospace cognesti the consensus is that China is far (many years at least) from being a serious aerospace player. They plausibly cite the ARJ as the first example. Yet here we have a member of the industry cognesti saying very positive things about China’s aerospace ambitions.
As Airbus and Boeing see delivery slots rapidly rush to the right for their workhorse models, while every airline is desperate to get rid of fuel guzzling older airplanes, where can they go for new airplanes? Mr Courpron is telling us that China may be more real than many think. He is not alone, Ryanair has been saying good things about the Chinese C919 too. If ILFC and other lessors decide to significantly support the C919 in order to secure more product availability the Chinese will be very pleased and work even harder to get their new airplane right. But, we suspect, the C919 will remain the choice only after an Airbus or Boeing cannot be secured for many years.
We recommend for prospectors to take a close look at H9XQR – the C919 reconfigured to super-HQR (1+3+2) dissymmetric twin aisle – with Thompson-staggered seating at 737 seating standards : it just about fits in (remember : trim-to-trim cabin width is 153.5″ – 8″ more than the A320, or 14″ more than the 737) which could well turn the C919 Series into the market’s first TwinAisle QuickRotation feeder, potentially quite a “ground-worthy” money-spinner, a work-horse challenger opposite A320 and 737 “classic” (3+3).
We don’t know how long the current engouement for new airplanes will last. The world economic situation is unstable. Things would slow down dramatically if there was a worldwide economic recession.
On the other hand, a lot of airplanes currently in service around the world are getting older. These are not fuel efficient nor are they environmentally friendly, and they will have to be replaced, probably sooner than later. The expansion in developing countries could slow down, but it wouldn’t stop completely unless there was a planetary catastrophe of some kind.
So, no matter how we analyze the situation, things are looking rather good for airframers and engine makers. That is why United Technologies was ready to spend a substantial amount of money to acquire Goodrich Aerospace and complete its aerospace portfolio. It’s a reasonable gamble, if not a safe one.
If things keep going the way they are right now and there is no world recession, it will quickly lead to a saturation of the manufacturing capabilities of Airbus and Boeing. That would create a golden opportunity for new entrants like COMAC and Bombardier. And if these two can reach a workable agreement and determinately join force together, they could potentially disrupt the existing duopoly.
If the orderbooks of Boeing and Airbus get full, the first thing they will do is add production capacity. If the backlog gets too big, I bet Airbus and Boeing are going to start to offer some kind of high performance retrofits (as far as this isn’t the case already) to augment fuel economy. This augments the residual value and is far better than seeing customers go for a competing airliner, and might be the best cost-effective measure an airline can take compared to buying a non fleet-standard, unproven airplane. All depends on the price however …