ATW Editor's Blog

Why Air Canada’s CSeries deal is good news for all airlines

by Karen Walker
Feb 19, 2016

Air Canada’s announcement this week that it intends to buy up to 75 CSeries aircraft is good news that extends beyond the airframe maker Bombardier and engine supplier Pratt & Whitney. It’s also good news for airlines.

While Bombardier still has a critical year ahead, this letter of intent – albeit from a Canadian airline – is significant. The number of aircraft, the aircraft type it will replace, and the fact that the customer is a major, international network carrier that has already committed to buying Boeing 737 MAXs, add up to a deal that could be a tipping point for the CSeries.

For the first time in far too long, airlines will have a third option in the all-important narrowbody market. It’s an option that is solid – the CSeries is a well-designed and well-built aircraft; highly fuel efficient with excellent seat-mile costs; and it’s produced by an OEM that is highly experienced in delivering and supporting airliners on a global basis.

Airbus and Boeing are agreed on the importance and future growth of the narrowbody market. As Boeing says in its 2015 Current Market Outlook, “over the past 20 years, the single-aisle airplane has become the mainstay of many airlines fleets, composing 65% of all commercial airplanes flying.”

Emerging markets and low cost carriers are driving much of this demand, which Boeing describes as the “fastest-growing, largest overall segment, requiring 26,730 airplanes over the coming two decades. These aircraft are the foundation of the world's airline fleet, carrying up to 75% of passengers on more than 70% of the world’s commercial aviation routes.”

So while it is understandable that Airbus and Boeing would like to maintain a duopoly – and are competing aggressively for neo and MAX sales – it is better for the world’s airlines if there is a third choice. ATW is convinced this desire for a third competitor was an important strategic factor in Lufthansa Group’s decision to urge Bombardier into CSeries development.

To be clear, Bombardier (and Pratt) are not blameless in the CSeries’ tepid sales performance. The program has been beset with delays and cost increases that have undermined confidence and prompted even keen potential customers to wait and see. But ATW also believes that Airbus and Boeing have contributed to the CSeries weak orders list, working behind the scenes to keep out a third competitor in the lucrative single-aisle market.

If the Air Canada deal helps to turn round the CSeries’ order book and secure Bombardier’s place in the efficient, 110-135 seat-range narrowbody market, then the winner will be the airline industry.

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