The Opportunity between 150-180 seats |

An opportunity is emerging in commercial aviation, ranging from 150 seats to 180 seats. There was a time when the "gap" was below 150 seats, and Airbus and Boeing seemed to be ignoring the segment. This sub-150-seat gap created an opportunity. The first mover in this segment was Embraer, with its E190 and E195. Embraer was so successful that it updated these models with more advanced E2 models. Bombardier entered this segment with the CSeries, the arrival of which prompted Airbus to develop its NEO and Boeing to respond with the MAX. Airbus acquired the CSeries, and now we have the A220, which accommodates 100 to 145 seats. The new gap, which spans from 150 to 180 seats, is a consequence of upsizing towards the middle of the market. Airbus has the A3219neo, but market demand for the aircraft is driven by its ACJ and Nepal Airlines. Boeing has the 737 MAX 7, but its certification has not yet occurred. Demand for the MAX 8 is where the market is, not the MAX 7. As Airbus and Boeing look to the upmarket, where demand has shifted, how does this gap get filled? Upsizing Fleets Watching US airlines update their fleets is remarkable. First, there was seat stuffing. The days of the A320 and 737 being 150-seaters are long gone. Now it's 170 seats. Second, because seat stuffing didn't solve the capacity problem, it was necessary to upsize the aircraft outright. The new "standard" is 180 seats and more for the A321 and 737-900/MAX 9. The 757 previously filled this space. It was called "Middle of the Market" (MOM) by Boeing, and it remains an excellent description. Boeing used to describe the MAX 8 as the "heart of the market. Arguably, Alaska Airlines is the poster child for entering the MOM segment. Alaska used to be a west-coast-focused operator with 150-seat aircraft and a small fleet of regional aircraft and turboprops. Not anymore. Of its 237 aircraft, 73 are MAX 9s and 85 737-900s. Seventy-two percent of the fleet is middle of the market. Alaska recently bought Hawaiian, and its ambitions are now far beyond the West Coast. Meanwhile, ULCCs have also upsized. MAX 8- 200s are now going to Allegiant. Spirit and Frontier are standardizing on the A321. American, Delta, and United have also moved towards the A321 family. Delta and United have also got big MAX 10 orders. The Emerging Gap The US big three airlines all use the A319/A320 and 737NGs, which offer from 130 to 170 seats. But these aircraft are aging. Delta moved early on the A220 and has several 717s, which are slated for replacement. If market conditions justify the upsize trend from the usual 170-seater to the middle of the market, then the same growth trend is occurring lower down. The emerging gap must be filled. Competitive pressure is such that the US Big Three cannot afford to allow a competitor to catch a customer early on at a small origination spot and lose that business. After Delta transitioned to the A220, United opted to protect its franchise with the CRJ550. Now Delta is also going to deploy CRJ550s. There is a lot of juggling going on between the upper limits of the Scope Clause and small mainline single-aisles. Examining the US market for small-sized single-aisle models, we selected the current active models. The 2025 decline is because we don't have data for a full quarter yet. [caption id="attachment_91709" align="aligncenter" width="640"] AirInsight[/caption] The market leader is the 737-700 (73G), followed by the A319, and then comes the 717. These are previous-generation models that are no longer in production. At the bottom, we see the A220s. They have made hardly any impact. It's worth noting that Boeing has abandoned the sub-150-seat market; its MAX 7 is expected to seat 153. The chart shows that this segment of sub-180-seat single-aisle aircraft is huge. There are 900+ aircraft in US service, and most of them are outdated. This appears to be a segment that should be highly attractive due to its size and growth. Bear in mind that the typical single aisle is now in the middle of the market, starting at 180 seats. Airbus is unlikely to update the A320, as it focuses on the A321. Plus, it has the A220, which has stretch potential. Boeing's MAX 7 has far less market interest than its MAX 8. Upsizing among US airlines has created a yawning gap. An opportunity that is likely to be sized well over 1,000 aircraft, when factoring in markets outside the US. More Perspective What do we know about the US market that helps provide more guidance? [caption id="attachment_91731" align="aligncenter" width="882"] US DOT; AirInsight[/caption] Traffic has recovered from the pandemic. Stage lengths continue to decline. Therefore, aircraft performance is less stage length-driven and more capacity-driven. Breaking it down by aircraft models, we see the following in US service. [caption id="attachment_91732" align="aligncenter" width="640"] US DOT; AirInsight[/caption] The 757 impact is shrinking as the A321 impact rises—the A321neo in particular. The impact of A319/320 is declining. The A220's impact is marginal, accounting for under 6% of the market. The 737-700 (mainly operated by Southwest Airlines) is declining. The 737-800 is an industry workhorse, but it, too, is declining. The MAX 8 impact is growing. The MAX 9, though a much smaller fleet than the MAX 8, is also growing. In essence, the newer, more fuel-efficient models are busier, as expected. These newer models seat 170 and up. Summary Airbus has a solution in a stretched A220. This model does not require any wing tweaks because the market is not seeking additional range. Such a stretch would slot perfectly in the 150-170 seat segment. Airbus has said it is not a matter of if, but when, regarding this stretch. The potential of over 900 aircraft in the US is surely as attractive an opportunity as Airbus could want. Moreover, Air France has also signaled that it wants such an aircraft. What about a response from Boeing? The best offering they have is the MAX 7. It has a lower seating capacity and would struggle to compete with a stretched A220 in economics. We don't see Boeing offering anything else. How about Embraer? Their challenge is that the E195-E2 cannot be stretched. So they would need to develop something new. The rumormill says Embraer is toying with something bigger, in the 200-seat category. Perhaps dialling down this ambition to the sub-180-seat segment is far less risky. We recall how Bombardier's ambitions came to an end when it confronted the duopoly. The cost for a new design is prodigious, though. The risk is significant, but among the OEMs, Embraer is the most likely to challenge a stretched A220.

US Flight Planner	Airbus vs Boeing
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