you're reading...
Bombardier, Regional Aircraft, Regional Airlines

Bombardier counters criticism of its “sluggish” CSeries sales by claiming the “CSeries dominates the 100 -149 seat category” SERIOUSLY ? Let’s look at this Public Relations ‘spin’ on what is clearly a dismal sales performance for the CSeries program with only 203 orders since 2009 and examine where the problem really lies with the CSeries.

According to Mr. Fred Morais, Marketing Director at Bombardier Commercial Aircraft, the description of CSeries as “sluggish” is not correct, in fact according to Bombardier it “dominates” (verb: like controls, commands) the 100-149 seat market” with its 203 orders from 12 customers and 1 undisclosed since 2009, apparently “these sales figures speak for themselves” says Mr. Morais, yes they do! and after 5 years it should be very worrying, instead of sugar coating the obvious, maybe it is time to look at market positioning, the product offering, sales and marketing.

Bombardier has forecast 6,900 aircraft orders in the 100-149 seat segment by 2032 (average of 345 aircraft a year ?), and yet 5 years into the sales campaign and the segment is not living up to expectations, and I am not seeing it and the airlines are not buying it, so I think they got it wrong somewhere, and it is time for a “Mayday” call  and get a new perspective on the market and the product offering and positioning.

In fact, I do not see what is so attractive about this market today, yes lots of MD-80s and old DC-9s, B737-500’s/300’s, etc from the 1980’s/1990’s, BUT truth be told its been a graveyard for new generation airliners, only 155 B717-200’s, 79 Airbus A318’s, 69 B737-600’s, so far only 55 B737-MAX7’s and 45 Airbus A318’s, for a grand total of only 403 aircraft sold by 5 different aircraft types since 1990 ! So that is not very encouraging at all for this segment.

Only the Embraer 190/105 program has found success. at the bottom end with 713 orders to date for the E190/195 and their new E2 upgrades, I say look at what the Brazilians have done and learn from them, as they are the regional jet leader with 2,366 orders versus 1,987 for Bombardier (see table further down).



The CSeries CS100 in flight testing, a beautiful aircraft but with only 63 orders after 5 years, Bombardier has to be worried that the 100-149 passenger seat market is not what it once was.


The airlines that have aircraft in this market today are choosing to up-gauge to the next segment, which is logical, they need aircraft to accommodate for future growth and offer lower unit seat costs, in the process leap frogging the entire segment that once showed so much potential for Bombardier, and now may not show a ROI on its $4.4 billion investment any time soon, and CRJ’s are nearing the end of their life cycle as there are no planned up-grades to them like the E2 upgrades to the Embraer 175/190/195 line, which will make the CRJ line obsolete in 4 years time, and the Q400 is out sold by the ATR by a large factor, thank good the business jet side of Bombardier is doing well.

Anyway, right of the start, lets make sure we are telling the truth, Bombardier has 203 orders from 13 customers in the 100-149 seat segment, Embraer with the E190/195-E2 upgrades has 200 orders from 2 customers and Boeing has 55 order for its B737-MAX7 and Airbus has 45 orders for the A319NEO (though both have 4,669 orders for MAX and NEO family of aircraft). So today, we 503 orders in the 100-149 seat segment, Bombardier has 203 or 40% share, Boeing has 55 or 11% share, Airbus has 45 or 9% share and Embraer has 200 or 40% share, so no one DOMINATES this market segment.

In fact, if I throw in the 568 E190 (max seats 106) orders and the 145 E195 (max seats 118) orders and the 70 CRJ-1000 (max seats 104) orders, we have 1,286 orders in this market segment, and the real market share is 71% for Embraer, 21% for Bombardier, 4% for Boeing and 3% for Airbus, playing with numbers, that is what Bombardier has been doing, but here is the real picture of the 100-149 passenger seat market segment.


Embraer’s E190 operated by KLM CityHoper, the E190/105 line is its top seller with 713 orders plus 100 for the new E2 versions, the client base is over 44 airlines of all sizes, LCC’s, flag carriers, regional airlines to small operators in the 3rd world, a wonderful market penetration strategy that will bring the E2 model more success, and a lesson for Bombardier on how to broaden one’s customer base without being dependent on the US regionals pilot scope clauses for expansion and finding NEW customers.


If we quickly look at the regional airliner market, Embraer today has the delivered or sold 2,366 regional and mainline jet airliners (see below);

ERJ-145 family = 890 (ERJ-135 x 108, ERJ 140 x 74, ERJ 145 x 708)

E170 = 188

E175 = 375

E190 = 568

E195 = 145

E175-E2 = 100

E190-E2 = 50

E195-E2 = 50

Bombardier today has delivered or sold 1,987 regional or mainline jet airliners (see below):

CRJ-100 = 226

CRJ-200 = 709

CRJ-440 = 86

CRJ-700 = 350 (inc. 16 x 705’s)

CRJ-900 = 343

CRJ-1000 = 70

CS100 = 63

CS300 = 140


Note, I am sure the CSeries will be a good aircraft once certification is complete, but as I will discuss further down the 100-149 seat segment is not as big as Bombardier thought, nothing worst than having an aircraft built for a market segment that is a lot smaller than the 6,900 units over 20 years, and in NO WAY will Bombardier challenge Boeing, its barely a blimp on the radar, I will discuss why further down.

I thought I have seen and heard it all in my 30 years in this industry, so now I have to put my two cents worth in on this PR (public relations)”spin” that just discredits Bombardier even more after the many false promises of first flights and not being fully open in regard to the flight test program’s progress. I will examine the current 100-149 seat market, and how Boeing and Airbus have been doing in this segment and then look at the regional market as well, as it is from that market that Bombardier is coming as is Embraer with its new EJet-E2 line (E175-E2, E190-E2, E195-E2), and new competitors like Mitsubishi MRJ and Sukhoi SSJ100 coming from below and squeezing Bombardier between them and Airbus and Boeing.


Sukhoi’s Superjet SSR 100/95 regional jet, a rising competitor with seating up to 108, has sold 20 to Mexico’s LCC InterJet and is eyeing the low end of the 100-149 seat market very enthusiastically.


Yes, the CSeries was designed for the 100 to 130 seat market back in 2004 as follow up to the previously cancelled BRJ-X program, with a new generation of fuel efficient engines aimed at the lower segment of Boeing and Airbus product line. At the time it was believed that both Airbus and Boeing will launch new models of their highly successful B737 and A320 lines, and ideal time for Bombardier to move into their lower end market segment, the Airbus A318/319 and Boeing B737-600/700.

The first OEM to sign on for the PW1000G high bypass geared engine was Bombardier, and this family of engines (14,000 to 33,000 lbf) is now going to be on the A320NEO line, Mitsubishi Regional Jet (MRJ), Irkut MS-21 and Embraer for its new E2 line and now everyone is using the new generation fuel efficient engines, so fuel and engine maintenance costs will be relatively equal to the size of aircraft, a BIG competitive advantage all but gone now. Right now the CSeries has a time to market advantage over the E2’s but a few delays here and there and that can erode very quickly.

Side note, having passed on the BRJ-X program in 2001, Bombardier continued to stretch the original CL-600 Challenger business jet past the CRJ-100/200 50 seat aircraft into the CRJ-700, CRJ705, CRJ-900 all the way to the above CRJ1000 which have done well thanks to new pilot scope clauses, but are inferior to the new E-170/175/190/195 in passenger comfort and performance. Even today we see major airlines splitting their orders between the two manufacturers only because they want quick deliveries.

Soon the CRJ-900 and CRJ-1000 will find it very difficult to compete with the new E2 family with new PW1000G engines, avionics, fly by wire and aerodynamic improvements, their days are numbered and Bombardier knows it, its why it needs the CSeries asap.

The CRJ line is in the declining phase of its life cycle and Embraer has found a way to keep its product line going into the future without massive investment ($1 billion versus $4.4 billion) and risk, so while the CRJ line has another 3-5 years at best, the E2 will have 12-16 years of continued success.

The fuel efficient engines are now being used by everyone, Airbus launched it A320NEO (new engine option) in December 2010 using new generation engines including the same PW1000G family of engineas the CSeries and the CFM LEAP-1A and then November 2011 Boeing launched its B737MAX line with the CFM LEAP-1B with both manufacturers making aerodynamic changes that will result in fuel savings of around 15% over previous models and around 8% less in operating costs, and here begins the problems for Bombardier, its ambitions to move’up’ the market with the CSeries has been checked, as the economical argument that lead to the program’s launch has lost a lot of its argument. As well, the fact be that the 100 to 149 passenger seat market has not done well for any recent manufacturer, once only has to look at some of the recent failures: B717

In all sectors of the airline industry we see growing interest in the higher capacity models of all OEM’s from ATR-72 over ATR-42, E190/E195 over E175/170, CS300 over CS100, B737-8MAX over B737-7MAX, A320NEO over A319NEO, A330-300 over A330-200, A350-900/1000 over A350-800, etc.  the smaller models in some cases are being orphaned, Boeing cut the B737-600 from its MAX upgrade, Airbus cut the A318 from its NEO upgrade, Embraer cut the E170 from its E2 upgrade and the A350-800’s diminishing order book may see it never built.

The CSeries is now a $US 4.4 billion program and growing as is the capacity of the CS300 which is now up to 160 seats to cater to the LCC (low cost carrier) market where CASM (cost per seat mile) is everything, in fact the whole airline industry is about cost control today, when global airline net profit is only $5.94 per passenger, and the CSeries and its why Bombardier designed two models:

1. CS100 a 110 passenger version (1 class standard seating) up to 125 passenger version (high density), list price $US62m ($563k to $496k per passenger seat), though surely no customers are paying list price now. Presently has 63 orders (31% of total CSeries orders).

2. CS300 a 135 passenger version (1 class standard seating) up to 160 passenger version (high density), list price $US71m ($525k to $443k per passenger seat). Presently has 140 orders (69% of total CSeries orders).

Let’s start with a look at the existing order book for the CSeries after almost 5 years of sales. As of June, 2014 the CSeries has 203 orders from:

1. 10 x CS100’s for Air Baltic, a Latvian based airline that was bankrupt in 2011 and now 99.8% government owned with ex-Malev CEO Martin Gauss as CEO, and in 2013 it made its 1st profit since 2009 ($1m) after loosing about $270m from 2010 to 2012. Presently runs 13 x B737-300/500’s and 12 x Bombardier Q400’s (Martin Gauss brought in 4 x Q400’s to Malev before it went bankrupt in Jan/2012). These small airlines should not be ordering unproven aircraft, you leave that to the big airlines like Lufthansa, as you let others work out the ‘bugs’ for better reliability.

2. 16 x CS300’s  for SaudiGulf Airlines, a new start-up in Saudi Arabia, not yet operating and where competition is tough against local state carrier Saudi Airlines which is supported by the Government, again a new airline in my opinion has no business ordering unproven aircraft.

3. 5 x CS100’s and 5 x CS300’s for Braathens Aviation (owner)/Malmo Aviation of Sweden, to replace its 9 x Avro RJ100’s and 3 x Avro RJ85’s which do need replacing.

4. 30 x CS100 for Germany’s Deutsche Lufthansa, one of the industry’s premier airlines and a long time launch customer for Bombardier going back to the DHC-8’s, CRJ-200’s, CRJ-700’s, CRJ-900’s as Bombardier is well connected in Germany. The CS100’s will be going to Swiss European Air Lines a subsidiary of Lufthansa Group and Swiss International Air Lines, to replace its 20 x Avro RJ100’s. The most credible airline customer Bombardier has at this time, though Lufthansa is in the middle of a major restructuring as it copes with LCC’s and problems with Austrian and now even Swiss, just handed over most of its non-hub P2P flying to its new LCC subsidiary Germanwings, which operates 70 aircraft going to 90, but noteworthy for Bombardier, operates 23 CRJ 900’s, which are potential CS100 replacements.

5. 10 x CS100 for Bahrain’s Gulf Air, an airline struggling for years to renew itself, it used to be a large multi-nation owned airline in the Middle East, but slowly one nation after another left to go their own way (2002 Qatar, 2006 Abu Dhabi and in 2007 Oman), now operating 28 aircraft, 16 x A320’s (with 16 x A320NEO’s on order), 6 x A321’s and 6 x A330-200’s and has 16 B787-8’s on order, not sure where the CS100 will fit in, the strategy has changed a lot at Gulf Air as CEO’s have come and gone (Mr. Bjorn Naf in 2009, Samer Majali in 2012 now Mahel Al Musallam is acting-CEO), the A340-300 were sold off in late 2012 and the CS100 was ordered in June 2013. Gulf Air struggles between Etihad Airways, Emirates, Qatar Airways.

6. 32 x CS300’s for Russia’s Ilyushin Finance Company, its a leasing company and well they say Vim Airlines will lease 5 x CS300’s, we’ll see, I have been in Eastern Europe for 17 years, and what the Russians say, sign and do can be 3 totally different things, I wonder if this is just not part of the plan to produce Q400’s in Russia, which to anyone who knows the region is just too far fetched to be real.

7. 5 x CS100’s and 5 x CS300’s for Iraq’s national carrier Iraqi Airways. There was a messy $398m deal here on the 10 ordered CRJ-900ER’s back in 2008, when after delivery of the first aircraft, Kuwait Airways sued Bombardier over a lawsuit that Kuwait Airways won against Iraqi Airways going back to the Gulf War. Anyway, fleet planning is non-existing at Iraqi Airways, they have 26 aircraft and 10 different aircraft types in service and that does not include the CS100’s and CS300’s still to come plus 10 B787-8’s ! With 6 CRJ-900’s the door was open for the CSeries deal, but the political situation is very bad, as I write this Mosul collapses to rebels and Iraq may be facing major turmoil including a split up of the country.

8. 10 x CS100’s and 10 x CS 300’s for Korean Air of South Korea. A good Asian airline customer, which has 155 aircraft and currently the smallest is the B737-800.

9. 3 x CS100’s and CS 300’s for Lease Corporation International a small Dublin based Irish lessor, with only 15 aircraft in its portfolio and 20 on order (17 x CS100’s/300’s) ?

10. 10 x CS100’s for UK based start-up Odyssey Airlines, planning to operate from London City Airport ? talk of flying non-stop to Toronto’s Billy Bishop Airport ? OMG they raised $5 million through crowdfunding ! they will need whole lot more if they plan to take to the air, this is a highly questionable order that should not even be listed, shows Bombardier is scrapping the barrel for orders.

11. 5 x CS100’s for Swiss based PrivatAir, a high end VIP operator, presently running 6 BBJ (Boeing Business Jets) and 2 B757’s all in VIP configuration, its good customer, but for me its pretty early in the program to be marketing VIP versions of the CSeries, again, seems that Bombardier is really in need of a customer base at any cost.

12. 40 x CS300’s for US based Republic Airways, which made the $2.8 billion (list price) order back when it owned LCC Frontier Airlines, but it was sold last year to Indigo Partners, and now as a regional airline flying under CPA’s (capacity purchase agreements) through its subsidiaries like Chautauqua Airlines flying for AA/US/DL/UA, Republic Airlines flying for US/YS/YX and Shuttle America flying for DL/UA with 23 x ERJ-170’s, 38 x ERJ-175’s, 17 x ERJ-190’s (as of 2013). Now Mr. Bryan Bedford, CEO of Republic Airways Holdings has said recently he has no idea what he will do with the CS300, obviously ! its too big to fly in the US for any major, since pilot scope clauses are now only up to 76 seats and he’s out of the airline business so there is NO plan for the aircraft now. The only reason that order stays is because Bombardier cannot afford to loose an order for 40 x CS300’s right now, its stock would take another dip, but the reality is this order in my opinion is dead, but it looks good on the small order book, its 20% of Bombardier’s orders at this time, and it will be cancelled just WHEN not IF.

13. 5 x CS300 Undisclosed.

So Bombardier’S CSeries has 5 national airline orders, 2 regional airlines (Republic is a dead order), 2 lessors (Russian and small Irish company), 2 start-ups (1 won’t take to the air the other may not last too long against Saudi), 1 private VIP operator for a VIP version of the CS100 (?) and 1 undisclosed, that is the 203 aircraft on order, Other than the 5 national carriers and Braathens, I am not convinced the others will come through, in my scenario there are only 75 really serious orders on the table, the others are very risky orders that for one reason or another may not materialize come time for delivery.

That I have introduced the CSeries current orders and customer base, let’s take a look at the current size and make up of the 100-149 seat market. Bombardier forecast has the size of this segment at 5,100 aircraft, and between 2012-2031 this segment is suppose to grow by 6,900 deliveries, with 3,000 retirements and by 2031 the size of this market is to be 9,000 aircraft. This equates to 345 deliveries per year on average, 150 aircraft retirements per year and a 20 year growth in this segment by 3,900 aircraft or +76% over current fleet, which represents a 2.9% CAGR (compounded annual growth rate). With what is happening in the industry today, these Bombardier predictions do not pass the reality check, the segment was a success 20+ years ago, but all the latest attempts by major OEM’s have been a disaster from MD-90, B717, B737-600, B737MAX7, A319, A319NEO, all major players and even they could not make this segment work in past 14 years.

MD-83 AA

American Airlines still operates 181 MD-82/83’s with 140 passenger seats, a future replacement will be needed, who will it be ? Boeing, Airbus, Bombardier, Embraer ?


The Current 100-149 passenger market (as of Jan, 2014) by my numbers is 4,987 aircraft, close to Bombardier’s 5,100, I have taken out freighters and I have broken them down between pre-2000 built and post-2000 built to get a better feel for the ageing of this segment :

Pre-2000 built = 1,952 aircraft (39% of the existing 100-149 seat market)

BAe-146-300 = 22 (with 53 as freighters)

BAe Avro RJ100 = 48 (big operator is Lufthansa’s Swiss European Air Lines subsidiary with 20 and which has 30 CS100’s on order to replace the RJ100’s, many remaining aircraft are freighters)

B737-200 = 140 (no large operators left, largest Indonesia’s Sriwjaya with 11)

B737-300 = 547 (Southwest is largest operator with 121 replacing with B737-MAX8, with 1,113 delivered only 49% remain, a sign if you are paying attention)

B737-500 = 216 (largest operator is Russia’s UTAir with 33 and Lufthansa with 20 but those are being phased out with A320’s/319’s of Germanwings, 389 were delivered only 55% remain). It suffered from being too big and heavy fr regionals and too small for the majors, shortening a fuselage is the payload range and power to weight improvement, but its size put it at the bottom of the 100-149 seat range, where so many other failed (B717, B737-600, A318 and then on the higher side of the seat range the B737-MAX7 and A319NEO), same seat range of the CS100 and CS 300. ? hmm.

MD-80 = 511 (still going strong, with 77% in North/South America, largest operator is American with 181 (82’s/83’s), Delta with 117 (82’s/83’s/87’s/88’s), Allegiant Air with 57 (82’s, 83’s, 88’s), in fact those 3 operators have 69.5% of global MD-80 fleet, and American is going with B737-800’s/MAX8 and Delta will hold on for awhile as it just got rid of its older DC-9’s, lastly 1,191 delivered so 43% remain).

MD-90 = 72 (Delta has 60 or 83% of global fleet, only 116 were built)

DC-9 = 53 (after Delta stopped operating them in early 2013, the numbers went down, 10 x DC-9-10’s, 35 x DC-9-30’s and 18 x DC-9-50’s)

B717-200 = 148 (Southwest largest operator after it acquired Air Tran’s fleet but selling all 88 to Delta, 155 built and another failed program in the 100-149 category, all the latest models have failed: B737-600, A318, B717 now the B73-MAX7 and A319NEO, warning bells should be off in Montreal !)

Fokker F100 = 157 (only 18 in North/South America, largest operator is Tyrolean Airways part of Austrian Airlines which is part of Lufthansa Group, which has 30 X CS100’s on order, then there are 30 in Iran with Iran Air (13 )and Iran Aseman Airlines (17) as the airframe and engines are European it is a good aircraft to by pass US sanctions), new Fokker 120NG being launched with PW1X17G the same engine used on the Mitsubishi MRJ, seating 125-130, we shall see.

Yak-42 = 38 (only Russian aircraft in the category, a 3 engine fuel guzzler on its way out), I had one for summer charters at Skoda Air in Czech Republic, barely had 1,200 nm range and limited to FL 250 !


WestJet operated 13 x B737-600’s (119 seats) by the end of 2013 and all should be gone by the end of 2014, only 69 were built as sales were low, now the 700 and the 7MAX (55 orders) are showing similar demand drops as the now smallest members of the B737 line, which could mean that Boeing may exist the 100-149 seat market all together in a few years and concentrate on the B737MAX8’s and B737MAX9’s. If Airbus and Boeing struggled in that segment, then it raises some serious questions about the viability of the segment, as their products are well proven and economical, and therefore it has to be the segment demand side, just not what Bombardier thought it was, changed too much as the industry itself is changing.


Post-2000 built = 4,987 aircraft (61% of the existing 100-149 seat market)

Airbus A318 = 47 (a disastrous program, a shrink to far, only 4 operators Air France, British Airways, Tarom (Romania) and Avianca, of 79 built only 59% still exists, no NEO model off course)

Airbus A319 = 1,263 (rather successful with 1,514 orders, so 83% of built 319’s still in service, but out sold by larger A320 4.4 times with 6,694 orders, the sad reality that this size aircraft is not very interesting for airlines today, in fact only 45 A319NEO’s ordered as of today (1.7% of NEO orders) out of 2,652 NEO’s (2,056 A320’s and 551 A321’s), I think when only 2% of the NEO’s are ordered in this market segment, it says novels about the market IF you are paying attention to the market and reading between the lines ?)

B737-600 = 53 (not a success story, just like the A318, of 69 delivered only 77% remain of what is a rather new aircraft, off course no MAX version, but again, airlines are NOT going for aircraft in this segment, WestJet just got rid of its aircraft, this aircraft when it came out in 1998 was to replace DC-9s, but again this market segment has changed over the years, its not that big any more)

B737-700 = 1,053 (has done rather well early on with 1,238 orders, but like the A319NEO, the B737-MAX7 has been a disaster with only 55 orders as of today (2.7% of MAX orders) out of 2,107 MAX’s ordered (1,750 MAX8’s and 212 MAX9’s), again what does this say about the market ? commonality is a BIG selling point, but airlines today have little need for the small family orphans and this raises many questions about the 100-149 seat market)

CRJ-1000 = 34 (its barely a 100 seat airliner but it touches the bottom end of the segment, interesting here is that there are none in North America, too big for regionals too small for FSC/major airlines, this I will discuss in more detail but the regional market below below 99 seats has been driven not by airline economics, but by pilot scope clauses, and artificial market constrained by what pilot unions of major airlines will allow regional pilots to fly, now its 76 seats, few years back it was 44 or 50 thus the boom in CRJ-200/EMB-145 orders then, now its a race to see who can dump their 50 seat jets quicker !)

E190/195 = 585 (this Embraer model has done very well at the smaller end of the market the E190 has up to 106 seats and the E195 up to 118 though the new PW1000G powered E195-E2 version will have 3 extra rows for up to 132 seats, these aircraft have done well as they were positioned properly and did well without counting on US regional airline scope clauses, this is the one bright spot in this market segment, so far 568 orders for E190’s, 145 for E195’s plus 50 orders for E190-E2’s and 50 orders for 50 E195-E2’s, that is 813 in total, 4 times more than the CSeries)

Airbus A318

Airbus A318, only 79 were built, it was a commercial disaster and now the Airbus A319NEO is following in its footsteps with only 45 orders after 4 years, is it the plane or is it the market segment that is the problem ? Bombardier needs to know.

 So Bombardier predicts 6,900 deliveries 2012 to 2031 in the 100-149 seat market yet its hard to see where 345 aircraft order per year will come from. We have seen above that the A319NEO (45 orders) and B737MAX7 (55 orders) are not doing well at all, only 100 orders for both aircraft, and you have to wonder what is going on, obviously the B737/A320 family are well known and respected aircraft, so what is going on ? The B737-700 is prices around $71m or $476k per passenger seat and the A319 is $86m or $577k per passenger seat in the same range as both the CSeries100’s/300’s, it is starting to look like a demand problem in this category.

We see that the B737-800 out sells the B737-700 by 3.8 times (4,667 vs 1,234) and we saw that above with the dismal sales performance of the A318 (79) and B37-600 (69) and both have been dropped (148 sales in total for both), and you know Boeing and Airbus would not abandon a market segment if it felt it had promise, but when you add the B737-MAX7 and A319NEO to the 600/A318, you get a jaw dropping 248 aircraft sales in the 100-149 passenger seat category for the world’s 2 biggest manufacturers !

Boeing and Airbus have to be thinking that the MAX7 and 319NEO are facing the same fate as the B737-600 and A318, as airlines grow and replace the older aircraft in this category, have leaped from this segment to the 150-220 seat market (B737-800/900 and A320/321), which is understandable, larger aircraft have lower seat mile costs (CASM) and today its all about cost control, when margins are tight and yields are decreasing, and airline still can control some of its costs. The market dynamics have changes since the launch of the CSeries, as airlines are moving from smallest members of the narrow body families as they do have the highest CASM (cost per seat mile).

As an example, Delta’s A320 (150 seats) CASM was $0.1178/ASM while its DC-9-50 (121 seats) was $0.1450/ASM (23% higher), more seats, more fuel efficient aircraft and you get a big difference in unit costs, so the DC-9/MD-80 operators are going to B737-800’s or A320’s outside the 100-149 seat market. I think Bombardier underestimated the impact of up-gauging trends in the industry.

I have reviewed this trend to up gauge when it is available to airlines, not only in respect to the B737’s and A320’s where it is obvious that the 150-220 seat market segment is more attractive than the 100-149 seat market segment at the expense of the B737-600/7MAX, A318, A319 and A319NEO all of which were aimed at exactly that segment, and for awhile the B737-700 (1,238) and A319 (1,516) did very well combining for 2,754 in orders but as we are now seeing, the market has turned the and the 100 orders for the MAX7 and 319NEO are dismal but 4,569 orders for the MAX8 (1,750), MAX9 (212), A320NEO (2,056) and A321NEO (551) in the 150-220 category are off the chart.

The same story with the bigger aircraft, the B777-300 and 300ER has 781 orders, the smaller B777-200’s have 569, B767-300/400 has 621 orders the B767-200’s only 249, while Airbus has a problem with the A350-800 with only 34 orders, it is so bad that rumors are spreading that it wants to avoid the 800 all together and just go with the A350-900 (589 orders) and the even larger A350-1000 (189 orders), again the smallest member of the family is not doing well. The same is with the CSeries so far with the CS300 out selling the CS100 by 2.2 times (140 vs 63).

Market fundamentals are changing the industry and Bombardier needs to examine these changes, or the CSeries will be in big trouble.

A quick look at the regional jet market shows there are 2,976 regional airliners in service today, from the 32 seat Dornier 328Jet to the 118 seat E-195, let’s quickly look at this market and how it has developed:

Dornier 328JET = 14 (used by Calm Air in Canada (2) and Sun Air (8) in Denmark, high wing, 37 seats, short field performance, great for Canada’s north)

Bombardier CRJ-100/200 = 723 (562 in Nort/South America or 78%, now being quickly replaced as too uneconomical as pilot scope clauses have gone to 76 seats, aircraft numbers down 10.2% from last year))

Bombardier CRJ-700 = 331 (283 in North/South America or 85%, sales slowing down)

Bombardier CRJ-900 = 235 (143 in North/South America or 61%, sales improving with new orders to replace 50 seaters and the pilot scope clause lifted to 76 seats, some good times ahead for awhile)

Bombardier CRJ-1000 = 34 (none in North/South America, too big for US regionals, too small for majors, something the CS100 may experience too big or too small for airlines)

Embraer ERJ-135 = 52 (20 in North/South America or 38%, with 37 seats its too small)

Embraer ERJ-140 = 74 (ALL in North America made for US regional requirements – scope clause)

Embraer ERJ145 = 596 (479 in North/South America or 80%, being phased out like the CRJ-100/200’s, too small at 50 seats, but life in it for other regions)

Embraer E170 = 177 (84 in North/South America or 49%)

Embraer E175 = 155 (106 in North/South America or 68%, new life with E2 upgrades)

Embaer E190/195 = 585 (287 in North America or 49%, very successful for airlines around the world, large customer base flag carriers, LCC, regionals and now new life with E2 upgrades)

The above shows that most models of regional aircraft are pre-dominantly in North/South America, had their success due to pilot scope clauses, the E-190/195 shows there is a market for a 118-132 seat jet airliner below Airbus and Boeing, not a regional airliner but a mainline airliner that can right size the airplane for the particular market and with the new E2 improvements with the new PW1000G line of engines and aerodynamic changes the E195-E2 offers 23% less fuel burn per seat than the E195.

The whole Embraer line E175-E2, E190-E2 and the E195-E2 will be very strong competitors in the 80-130 seat market for years to come. Embraer has shown that it can have great success in the market without counting on the US regionals, the manufacturer has had tremendous success with many airlines (44+) from LCC JetBlue, Azul to large regionals like FlyBE, national flag carriers like Air Canada, KLM Cityhopper, Lufthansa, COPA to small airlines like TAME and Air Moldova.

The E175/E190/E195’s successful market penetration will put Embraer in a great position with the E2’s. I think Bombardier needs to look at Embraer’s game book for the E190/95 as there are very good lessons there on how to position your product in the market.

Southwest air

The Boeing 737-700 was a success with 1,234 orders, BUT the new B737-MAX7 has only 55 orders (2.7% of the MAX order book), have the market fundamentals shifted so much that the 100 to 149 seat market has been over estimated by Bombardier ?


The battle in the 100-149 seat market will be between Bombardier, Embraer and Sukhoi with its new SSR 100/95 (108 seats max), and we may see the Boeing and Airbus offerings fade away, the sad fact is that this market segment is not as attractive as it once was when the segment had many different OEM offerings. The market is not going to produce anywhere near the Bombardier forecast 6,900 deliveries (345 a year) over 20 years, I think that Bombardier will need to downgrade its forecast and sales expectations.

The market has changed, airlines are up-gauging their fleets when it comes to replacements as the industry fundamentals are changing very rapidly and with strong competition everywhere from LCC’s (low cost carrier), low unit costs are a must and airlines are looking for larger capacity aircraft to help them lower those unit costs, hence the boom in B737-800/900 and A320/321 sales at the expense of the B737-600/700’s and the A318/319’s.

Here lies Bombardier’s problem, it is boxed in at the top by the new MAX and NEO variants that will lower fuel and cash operating costs significantly over previous B737/A320 models, taking the steam out of the CSeries low economics and fuel argument, while from below, Embraer’s new E2 models will be more fuel efficient and with lower operating costs than earlier models and Sukhoi will just add another player to the game which will increase airline’s bargaining powers with OEM’s when it does come time for a big deal.

Squeezed in from the top and from the bottom, Bombardier needs to re-think its strategy, positioning, pricing and offering, but it won’t be easy, certification is still far out and anything can happen, I do wish them much success, but they need to make changes fast.

The recent decision by Air Canada to keep its 25 E190’s instead of replacing them with the CS100 are a red flag, the airline has done an extensive economic analysis and even with lots of political pressure to help Bombardier out with a large order, they choose not to, yet it says novels about the economics of the aircraft, as it would have been used E190 vs new CS100, and the E190 won.

IF the 100-149 passenger seat market has truly changed and it is not as big as Bombardier thought it was, then the CSeries has big problems making the kind of sales that they expected. We are seeing a fundamental changes in the airline industry, for large airlines the starting point is now at the 150 seat level and that means a bigger battle battle between Bombardier, Embraer and Sukhoi for market share in a smaller market between several OEM’s, good for buyers but not sellers. Its a lesson for all, when forecasting do not assume the past sales will mimic today, for instance how can you forecast the 76+ seat to sat 120 seat market today, as much of that will depend on what US pilots unions will allow their regional airlines to fly.

The CSeries is a wonderful aircraft, and it will sell, and as a proud Canadian I hope it sells a lot, but the reality is that the market is too small for a totally brand new aircraft, and Embraer will have it easier with its E2 program, spending $1b versus $4.4b on the CSeries.

Till next time, thank you.








About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 30+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (50+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems in the business for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com I write a lot of Articles and Posts on LinkedIN: https://www.linkedin.com/in/tomas-chlumecky-3200a021/


Comments are closed.

%d bloggers like this: