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April 21, 2024
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Southwest Airlines fired a warning shot across Boeing’s bow when its #2 executive said the carrier is open to a third aircraft type, after the 737 and incoming 717. This opens prospects for Bombardier and its CSeries, but it’s not likely the Airbus A319neo has much of a chance.
At an investors’ day in December, Mike Ven de Ven, the chief operating officer, told the crowd, “at some point a new airplane is going to come out, whether it’s the CSeries, or whether Boeing replaces the 737. And at some point in time, Airbus is going to replace the A320,” according to FlightGlobal.

Southwest has 175 Boeing 737 300s/500s that are aging and need replacement. Some leases expire as early as 2013-2014. Additionally, Southwest has 86 incoming Boeing 717s with the acquisition of AirTran. The 737-300s seat 137, the 737-500s seat 125 and the 717 will seat 117 in Southwest’s configuration. The 737-700 is the same size as the -300 but this is aging and doesn’t fit Southwest’s need for a fuel-efficient replacement. The 737-600 is the same size as the 737-500, but Boeing hasn’t sold one of these since 2005 and is also aging and not up to Southwest’s fuel efficientcy requirements. Boeing has no replacement for the 717.
There is just one airplane that can replace the 717 and 737 Classics with the fuel savings that Southwest demands in the timeframe (by 2015-16) that Southwest wants: the Bombardier CSeries. The CSeries promises entry-into-service of its 110-seat CS100 by 2013 and its 130-seat CS300 by 2014. Given the performance of Airbus and Boeing of its A380, A400M, 787 and 747-8 new airplane programs, and of BBD’s own CRJ-1000 derivative, one naturally has to be skeptical of these dates, but for the moment, let’s assume they are met. The CSeries promises 16% lower fuel burn and 20% lower cash operating costs due to lower maintence expense on top of the fuel burn reduction than today’s airplanes. The net present value savings between 2013/14 and the 2019/20 or 2025/27 new airplane dates being talked about by Boeing and Airbus respectively is huge.
The problem is that in Southwest’s configuration, the CS100 and the CS300 are slightly smaller than the 717 and 737-300; BBD needs to enlarge the airplane to 149 seats at 32 inch pitch, and it will have a nice family of aircraft in the 100-149 seat range to dominate this market segment, which represents 25% of the 100-200 seat market in the next 20 years.
Furthermore, the CSeries is 21st century technology.
Let’s talk about a few “ifs.” If BBD produced a 149-seat “CS500” with an EIS of 2014, if Southwest ordered a combination of CS300s (to upgauge the 717 and 737-500) and CS500s (to upgauge the 737-300) and if Southwest accepted 26 airplanes a year from BBD (this assumes another 26 from Boeing for 737-700s/800s), then Southwest could have roughly 78 CSeries in service before the A319neo is available and 130 before the 737 replacement is available, assuming a 2019 EIS. The cost savings is huge.
What of the Airbus A319neo? This competes with the 737-700 (and -300) and the CS300 and it offers–according to Airbus–a 15% fuel savings compared with the Boeing products, and by the numbers, Airbus claims it comes close to the CS300.
Even if it does–and we’ve seen no numbers from Airbus to convince us this is the case and AirInsight’s analysis suggests otherwise–the A319neo isn’t slated for entry-into-service until 2017, three years after the CS100 (717 replacement), two years after the CS300 (737-300/700 replacement) and two-three years before the date Boeing suggests it might replace the 737 family with a new airplane. Furthermore, the NEO is a compromise technology, combining a new engine with “old” airframe and systems that by Airbus’ own plan says will be superseded in 2025-27 by a new airplane from the European company. We simply don’t see Southwest buying an interim airplane that will be superseded in as little as two years by Boeing or in as early eight years by Airbus.
Suggestions that Southwest’s recent order for 20 737-800s means a death blow for Bombardier’s CSeries are simply ridiculous. The 737-800 and its 175-seat+ capacity is needed for the slot-controlled Washington Reagan National Airport and New York LaGuardia Airport, capacity-constrained airports like Newark and to allow Southwest to efficiently serve long-haul overwater routes to Hawaii. The 737-800 serves a different market than the CSeries. Such suggestions also display a complete lack of understanding of Southwest’s internal thinking.
Will Boeing relent and re-engine the 737 by 2016, as Airbus believes will be the case? It’s possible, providing Boeing decides it cannot proceed with a new airplane by 2019-2020. If Boeing does this, then it has the likely prospect of keeping Southwest instead of seeing it defect to another manufacturer.
Mike Van de Van’s warning shot across Boeing’s bow is a powerful message. It will be interesting to see what Boeing does in response.

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