If one limits the active airline passenger fleet In the United States to between 100-150 seats, then as of 2Q17 there were 1,671 aircraft. Of these, 699 were Airbus, 794 were Boeing and 178 were Douglas. Please bear in mind that even as we are in the 3Q17, the data is for the previous quarter.
Breaking this down further, the top eight airlines account for 93% of the fleet. The table lists the top ten, and the yellow highlights are airlines that have publicly opposed Boeing‘s complaints to the DoC. We should highlight at least one more, but cannot since this was not made public.
Looking at the market by model, we see the following.
Of the fleet, the Douglas aircraft are oldest. Boeing is next. Airbus has the youngest fleet. Boeing’s tension about the sub-150 seat market is understandable.
Now take a look at this. This was Delta’s fleet at the end of 2Q17. Is there any surprise they are moving on the CS100 and have an interest in the CS300? Delta is clearly not enamored with the 737-700 or the A319. Even its A320s are aging (ex-Northwest) and Delta has shown interest in the A321 and the 737-900ER which are outside this segment. But there are 115 Douglas aircraft that are quickly approaching their appointment with the desert. Neither Airbus or Boeing offer what Delta wanted.
As Delta’s CEO said this morning on their earnings call: “I think my words were very clear – we will not pay the tariff that are being discussed or debated. First of all, those tariffs are preliminary, as I mentioned. In our opinion, it is very difficult for Boeing or any other US manufacturer to claim harm with a product we purchased that they did not offer and that they don’t produce. In fact, they ended the production of the 717, which would be the closest, ten years ago. When we went through the RFP to select the C Series, Boeing competed very hard for the order. Except they were competing with not their own product but a Brazilian product, an Embraer product, that wasn’t even new, it was used E190’s, ironically from all places, from Canada. So, as you look through this and try to see how exactly a harm case is going to be developed, particularly to justify the type of tariffs that are being discussed, to us it’s unrealistic, a bit nonsensical. We’re working closely with our partners at Bombardier.”
In summary, we can understand Boeing’s concern about the sub-150 seat segment. They have lost their traditional leadership role. Airbus has won business and its fleet is younger so less likely to be replaced for a while. The Douglas fleet, a natural for Boeing to win, is not attracting Boeing orders. Bombardier is a threat to Boeing and Airbus in the sub-150 seat segment. So is Embraer, which will be coming into the 100-150 seat segment within 18 months.
The MAX7 (and A319neo) have not attracted a lot of interest. But the C Series and E2 have and will continue to do so. In the US market, suing Bombardier does not look like winning Boeing any MAX7 orders. Southwest’s MAX deliveries will be MAX8s for a while still. We wonder if they will ever take a MAX7. American does not look like a MAX7 buyer, nor does United which changed its last 737-700 order. Delta, we are quite certain, will not buy the MAX7. In short, Ray Conners’ concern is a reality already.
In the US market, suing Bombardier does not look like winning Boeing any MAX7 orders. Southwest’s MAX deliveries will be MAX8s for a while still. Southwest has 30 MAX7s on order compared to 170 MAX8s. We wonder if they will ever take a MAX7. American does not look like a MAX7 buyer, nor does United which changed its last 737-700 order. Delta, we are quite certain, will not order the MAX7. In short, Ray Conners’ concern is the reality already. The US market does not look like MAX7 friendly territory.
All the noise at the DoC claiming damage and a threat from Bombardier is too late. Boeing lost the sub-150 seat battle before the Delta order for C Series.
Airbus has a strong portfolio over 150 seats and does not seem worried about Bombardier or Embraer. Boeing also has a strong portfolio over 150 seats. So what, exactly, is all the fuss about? Boeing’s concern about the sub-150 seat segment is understandable (they are losing some business there) but seemingly irrational (they are winning big above 150 seats).
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.
Can some one please explain to me Boeing’s business strategy in pissing off all its customers?
When Boeing lost the Danish fighter contest to Lockheed’s F-35 it sued the Danish goverment.
Now it has it gotten it self into a pissing contest with Canada, Britian, Delta Airlines, and Bombardier over a size of airplane it doesn’t even sell.
If your a goverment or an airline do you really want to send Boeing that request for pricing knowing how they treat their customers? I don’t think so.
I think Boeing through multiple ill conceived business descisions has moved it self into the avoid if at all possible catagory.
Interesting comments… To complete them you should tell more about “A Possible Explanation For Boeing Going After Bombardier” 😉
Boeing are concerned for a number of reasons:
1. Potential CS500 down the road competing directly with the -8max.
2. Erosion of 7Max prices in an effort to compete with CS300, which leads to a cascading effect up the line (8max and to a lesser extent the 9/10).
3. Introduction of the C919 and MS-21 in the future will put further pressure on the 737 line to compete, Boeing are attempting to shore up what they can, now, before the inevitable price pressure a 4-way competition puts on the 150-240 seat narrowbody market.
4. UTC aren’t playing ball on PFS2. UTC are major suppliers to CSeries, Boeing would like to compromise them a bit so they are more amenable to PFS2.
Probably a few more, but they are the main ones.
But the CS500 is a long way off. Concern about the MAX8 erosion, if plausible, only goes to show how compelling the CS300 must be. Either way its awkward for Boeing. They do not look strong in this fight. And the MAX8 order numbers give precisely the opposite view.