In looking at data around the Boeing vs. Bombardier dust-up, we discovered angle worth sharing.  Focusing on the 100-130 seat market, which includes the 737-700 and A319.

Note the fleet size grew from 2000 through 2010 (lower numbers). Between 2010 and 2015, the market shrank over 11%.  So there must have been upsizing by 2015.  Even so, the market is around 4,000 aircraft.

More importantly, note how the fleet has aged (upper numbers).  An aging fleet is excellent news for the new entrants.  Because the incumbents are not competitive with C Series and E2.  AirInsight forecasts over 4,500 aircraft in the segment and we expect Bombardier and Embraer to split 80% of this market.  Which is a big change from where it is now.

Which brings us to the next chart.  This segment has essentially been a Big Duopoly pool.  Airbus has been the market maker, eating up share from others as it caught up with Boeing.

Note as Airbus was moving into this market with its A319, Boeing didn’t do much at all.  Indeed, Boeing’s market share started declining from 2000 and by 2015 it was under half for the first time in fifteen years.  Boeing wasn’t ignoring this market – it was busy moving customers upmarket to the 737-800 and more recently to the MAX8.  And doing this successfully.  This is evidenced by the shrinkage in the fleet size. Bear in mind rising oil prices were an incentive for airlines to move to larger aircraft for the improved economics.  Boeing’s strategy was correct, and customers understood this.

However, customers that want to stay in the sub-130 seat segment are not going to go to Airbus and Boeing for their next re-fleeting.  That is clear.  We can see that in the limited interest in the A319neo and 737 MAX7.

Which is another way of saying the road ahead for Bombardier and Embraer is open.  These two OEMs can ignore the Big Duopoly below 150 seats, regardless of the DOC decision.  The largest region for aircraft in this segment in 2015 was Asia/Pacific at 30.4% and then another 45% from around the world.  The USA was only at 24%.  The DOC’s findings won’t stop the inevitable growth in the segment outside the US.  Bombardier and Embraer should do just fine regardless of any trade dust-up.

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Addison Schonland
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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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