SINCE the late 1990s airlines wanting to buy short-to-medium-haul “narrowbody” planes with 100-200 seats have had little choice (apart from some creaky old Russian aircraft) but to pick either Boeing’s 737 or Airbus’s A320. As orders for such planes have boomed in recent years, aircraft-makers in China, Russia and Canada have been working on new contenders to break this American-European duopoly. On September 16th Canada’s Bombardier got there first, launching the maiden flight of its CSeries plane (pictured).
Bombardier is duelling the duopolists because the prospects for the planes it already makes—“regional” jets of under 100 seats and corporate jets—are not as juicy as those for mainstream commercial airliners. Global passenger traffic is set to grow by 5% a year for the next two decades, reckons Boeing, and airlines are seeking ones that seat 100-200 to fill much of the new demand. In regional jets Bombardier has enjoyed a near-duopoly of its own, with Embraer of Brazil. But Japanese, Russian and Chinese rivals are moving in to the market just as operators of regional jets are going for bigger planes. Corporate jets and their owners took a knock in the financial crisis, and their prospects still look weak.
Although lots of new metro systems are being built worldwide, Bombardier’s other main business, building trains (which produced about half of its revenues of $16.8 billion last year) does not look so strong. About two-thirds of the division’s revenues come from Europe, where trains are largely bought with public purses drained by faltering economies.
Bombardier is trying to slip in under the radar, not competing head-on with its rivals. The first two versions of the CSeries will have only 100-150 seats, whereas most 737s and A320s sold are 150-200 seaters. However, Bombardier hopes airlines will be attracted by its plane’s low fuel consumption—20% less than its rivals’, it claims—and 15% lower running costs. Much of that advantage comes from a new engine, the geared turbofan, made by Pratt & Whitney, an American firm.
So far, though, airlines have held back and waited to see how the CSeries flies. Only 177 firm orders have been placed as yet. Some analysts wonder if starting out at the bottom end of the range was a good idea: Darryl Genovesi of UBS, a bank, reckons that there are 5,000 jets of 90-150 seats in operation and that only 2,000 are likely to be replaced over the next five to ten years, with another 1,000 on the borderline.
Furthermore, Boeing and Airbus are not giving up without a dogfight. Both are working on completely new narrowbodies, to be launched in a decade or so, and in the mean time their existing models are being upgraded. The 737 MAX and A320neo, out in a couple of years, will get improved engines, narrowing the efficiency gap with the CSeries. Indeed, buyers of the A320neo will be able to choose the geared turbofan. And as Zafar Khan of Société Générale, a bank, notes, the CSeries is a new airframe and a new engine, a double risk. No doubt Boeing and Airbus have been pointing this out to customers, as well as offering attractive prices to deter airlines from taking a punt on the CSeries.
Both are bound to worry that Bombardier will add a larger model carrying up to 200 passengers. Such concerns would intensify if Bombardier makes progress on its partnership with COMAC, a Chinese state firm strongly backed by its home government, which is also building a narrowbody plane. The market for the current CSeries models may be only around 100 planes a year. That may not deliver a decent return on its $4 billion development costs. But it will keep Bombardier in the skies, circling for a more vigorous counter-attack on the duopoly.