Now that has accomplished the first flight of the MC-21, what can we project for the program’s prospects?  After all, the MC-21 is entering a segment of the market that is going to be tough, even merciless.  The MC-21 will face off against the Airbus and Boeing programs, and just to make things interesting, the COMAC C919.  Russian and China are entering a brutal market segment in commercial aviation.   The newcomers can expect no quarter and no mercy.  The incumbents in the duopoly rough with each other and will not hold back against the new entrants.

But unlike Airbus and Boeing (both national champions of course), and COMAC have national shareholders who don’t give a toss about the WTO.  They will not be easily dismissed.  They are also national champions.

The has been a long time coming and might still take a few more delays.  The C919 that recently undertook its first flight may not be the same as the one that reaches EIS.  We think more tweaks are probably coming.  The MC-21, on the other hand, is also beset with but comes from a much more established aerospace source.  Russia’s has deep IP resources and experience.  The MC-21 we saw fly yesterday is likely to very closely resemble the aircraft that reaches EIS.

The MC-21 is going to follow the same path as the C919.  Russian airlines are going to be encouraged to support it.  Not only will they do this because of state policy, they will be pleased because it is priced in local currency and should be relatively cheaper than western aircraft.  Looking at the CIS market we see the following.  The charts list seat categories with fleet size on the left and percent on the right.

The light green represents the space where the MC-21 is aimed: 132 to 163 seats.  This is squarely in Airbus and Boeing territory.  To illustrate how Airbus and Boeing dominate the market in the segment take a look at this table. The duopoly accounts for 81% market share of the 2016 fleet.

Irkut has a good opportunity though because the remainder of the fleet is aging.  Most models are out of production.  That means a soft sell for 66 aircraft is there for the taking.  Looking at the MC-21 order book we note there are orders for 190 aircraft, but by far the focus is on the larger model.

looks well placed to replace the initial aging models and then will be able to eat away at the Airbus and Boeing models too.  However, this is not assured. Airbus and Boeing will stay creative to keep moving the goal posts.  Moreover, CIS airlines will not want to compromise their own fleet planning and derisk this by staying close to the duopoly.  If cannot industrialize quickly enough and deliveries are too slow or delayed, the region’s airlines will rush back to the duopoly and western finance houses.

In 2016 76% of this CIS seat segment fleet was leased.  For any kind of competition in the leasing market, the CIS finance sector will have to up its game.  VEB Leasing and Ilyushin Finance are already customers for the MC-21.  This a good first step, with 22% of the orders in lessor’s hands.

In summary, the MC-21 has a better than even chance of succeeding.  It has a reasonable home market to work with.  will have learned how to compete outside the CIS from the SSJ.  If the MC-21 turns out to meet its specifications, then UAC has a fine product on its hands that may further disrupt the duopoly.

Please follow and like us:
%d bloggers like this: