We have been most fortunate to be briefed by two leading aircraft OEMs in the last two weeks. And what a different view of the world they show — one wonders if they’re in the same business.

The chart below shows how Airbus views the world – everyone is moving up to larger aircraft. They went on to show the same trend at Boeing.  And since the presenter was John Leahy, this chart was also an opportunity to tweak Bombardier’s nose, which you can see on our video here. Somehow, in the process, Mr. Leahy simply ignored Embraer.

a1There are two ways to see this change of course – either the market is indeed shrinking at the bottom end. Or, that Airbus (and Boeing) are being pushed over 150 seats by newer aircraft that are substantially more efficient that their existing or re-engined models.

The second of these arguments is cogently made by Embraer. As their chart shows, the market may not be shrinking below 150 seats. In fact for flights under 2,000NM, that market looks robust. The conclusion is based on data from SABRE, and not Embraer, which asks the question of why one would put 180 seats into a market that can only support 80-150 passengers?  Increasingly airlines are talking about “right sizing”.

a2These two distinct views on the 100-150 seat segments indicate that the debate may not be as clear cut as either party suggests. The market below 150 seats might actually be large enough for the smaller duopoly to thrive. It is almost certainly too small for the big duopoly – for them the market has moved over 150 seats. But that doesn’t mean the market is insufficient for others, particularly if their aircraft are more efficient.

The most unsettling thing for the big duopoly is the smaller duopoly’s penchant for stretching aircraft. Embraer has built the KC390 with its attendant IP of what it takes to make a big airplane. Bombardier, which, according to the Wall Street Journal, is offering customers a CS500 stretch, has yet to see a fuselage they can’t stretch to double its original size.

The competition in the 100-150 seat market will get even more interesting, as the two upstarts start replacing two legacy single aisle aircraft.

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