The Bombardier C Series Throttles Up — And Here’s Who Might Buy It Next
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Bombardier is mounting an aggressive sales campaign for its C Series, the newest entry in the market for small airliners. The Canadian 110- to 130-seater went very close to commercial destruction when the US government slapped a 300% tariff on it that would all but killed sales, but that dispute was resolved in January in Bombardier’s favor. Airbus swooped in last year to buy half of the program, and now, with the European giant behind it, Bombardier can go for a serious sales pitch. Its ultra-modern jet can now count on the vast Airbus sales, marketing and maintenance support network. Delta Airlines has 75 on order, and things are looking up for the Canadian twinjet.
Frequent flyers, take note. You may soon find yourself on a C Series.
The C Series is the Boeing 787 for smaller routes. Roomy, fuel-efficient, and light, it allows airlines to fly more point-to-point traffic where a larger aircraft would be too much metal, and regional jets don’t have the range or comfort. If you live in, say, Milwaukee or Austin and would love more non-stop destinations further afield, the C Series is the answer. It comes in two variants, the 110-seat CS100 and the 130-seat CS300, each in a 2-3 configuration. These planes fit squarely between tight 75-seat regional jets, and larger 150+ seat A320s or Boeing 737s.
So, just which US airlines might be seriously interested in this new plane?
With the benefit of industry experts, statements, filings and some detective work, this article freely speculates. As expected, the airlines we approached for comment generally declined. Colin Bole, Senior Vice President, Commercial for Bombardier said simply: “C Series is an extremely innovative and efficient aircraft which is particularly well-suited to North American markets as demonstrated by the prior very significant commitments from Air Canada and Delta.” It’s a tough market: Brazilian competitor Embraer is delivering soon the first E190-E2, the improved version of its E190 twinjet, a 100-seater that helped propel the company to spot #3 among the world’s biggest planemaker.
A Likely Buyer’s Profile
The airlines likely to have an interest in the C Series already fly:
- The smallest Airbus aircraft, the 100- to 140-seat A318 and A319;
- The Boeing 737-700, the competitor to the A319;
- Boeing 717s or planes in the DC-9 family, also seating 100 to 140.
- Embraer aircraft, particularly the E190;
- Diverse fleets, looking at increased demand and opportunities for point-to-point expansion.
“The rate of CS100 / E190-E2 adoption in North America comes down to whether network majors go ‘all in’ to fill the 76- to 150-seat fleet gap,” said Robert Mann, a consultant to airlines.
The small Airbuses and Boeings are doing poorly. Airbus hasn’t sold A319s, and Boeing hasn’t sold 737-700s, in some time. And, many E190s and Boeing 717s are getting on in age.
Are there US carriers that match one of these profiles? Yes. But they will be looking at two non-US carriers for insight: Air Canada and Swiss. The Canadian flagship is replacing its fleet of 25 E190s with 45 CS300s (with an option for 30 more). Swiss replaced its Avro RJ100s with the CS100 and will replace its remaining A319s with the CS300. The Swiss plan is interesting, because it lends credence to the argument that the CS300 is a goldilocks plane that Airbus will support over its own A319 product. It carries the same number of people over at least the same distance, but burning far less fuel.
Every airline will take note of the purchases and monitor how well the new planes perform. By all accounts, the C Series has exceeded expectations. These are indices of “commercial momentum” that Boeing noted in its trade dispute filings against Bombardier, “driven by orders from large, well-respected airlines.”
Large, well-respected airlines such as Delta.
Delta Strikes First
Delta will be the first US airline to take delivery of the CS100, in 2018. Delta CEO Ed Bastian said last year that Delta’s 75-jet order would be used to replace the “high demand 76-seat long range RJ markets.” He’s referring to Delta’s E175 regional jets, which you may have experienced on a flight from LGA to BOS (and wished for more leg room.)
The Delta C Series is likely to find its first home in New York. While Delta will not announce routes for the C Series until closer to delivery in late 2018, we look forward to flying LGA to Boston (BOS) or LGA to Tulsa (TUL) in greater comfort.
Painted White and Blue? JetBlue May Be Next
JetBlue must be Bombardier’s most promising immediate US prospect. The New York-based airline surprised the industry in 2003 when it added the Embraer 190 regional jet to its fleet of A320s, a departure from the Southwest model of a single type of plane. Instead, the airline was Embraer’s worldwide launch partner. By all accounts however, the E190 had persistent engine maintenance issues, which made it challenging for JetBlue.
Last year, the airline began a review of its E190 fleet, as part of a $300M cost-saving plan. At a recent JP Morgan aviation conference, JetBlue CFO Steve Priest said that “when we look at the E190, we do have headwinds from a maintenance standpoint. And that’s really triggered the review.” Priest noted that the Embraer jets were key to opening up small markets for JetBlue and to its success in Boston, in particular.
According to Priest, JetBlue is actively exploring several options: keeping the E190, or selling the sub-fleet and replacing them with either with the E190-E2 or the C Series.
“It’s been interesting to see the market evolve over the recent months,” Priest said. “My objective is to get the right deal for JetBlue and our owners in the long term.”
Reuters recently reported internal correspondence where JetBlue met with Montreal-based Bombardier to discuss the C Series. (Purely coincidental, surely, but a CS300 plane was recently spotted by an AvGeek on the ramp at the Westchester airport north of New York City, conveniently close to JetBlue headquarters.)
Most importantly, JetBlue’s CEO Robin Hayes put forward a full-throated defense of the plane, in the recent trade dispute. “First, the C Series is the only aircraft offering a newly designed five-abreast interior. The aircraft’s interior has won praise from commentators and our competitors alike, which aligns with our history of product differentiation,” he said. “Second, the C Series has the potential to reduce an airline’s operating costs through a more efficient geared turbofan engine, which aligns with our strategy of maintaining a low cost structure.”
This statement, coupled with Priest’s remarks on the E190, make clear that JetBlue is happy to have the C Series option in the mix, and not simply as a negotiating tactic to get a better price on an Embraer plane. For example, the C Series options would allow JetBlue to expand its Mint service on more routes.
Embraer will fight tooth and nail to keep JetBlue, the largest operator of its E190s worldwide. The Brazilian regional jet king could sweeten a deal for the E190-E2 by taking back JetBlue’s older E190 aircraft and modifying an existing JetBlue order for the E190 for the new E2. JetBlue would further benefit by not having to retrain pilots for the C Series. Those costs, however, may not be enough for an airline focused squarely on margins, and where the larger and more fuel-efficient C Series would shine.
“Assuming the C Series is well-received and achieves expected total cost of ownership (reliability and maintenance costs included), and especially if they can get ‘Delta pricing’ and terms, I could see JetBlue interest, replacing E190s,” airline consultant Mann said.
United flies 40 Boeing 737-700s and 67 A319s, which put it squarely in the camp of potentially interested buyers. However, United’s potential interest in the C Series is unclear. In October 2017, United seemed to close the door on the C Series, but on the sidelines of an aviation conference, Andrew Levy, United’s Chief Financial Officer, told FlightGlobal that it “is evaluating the Bombardier C Series and Embraer [E2] family, as well as the Airbus A319neo and Boeing 737 Max 7, for its future fleet needs.” Airbus will likely offer the C Series to United, rather than the A319neo. We reached out to United for comment on whether it’s looking at the C Series or not, but have yet to hear back.
American flies a mixed fleet. In the 100 to 150 seat segment, this includes 125 A319s, 50 ancient MD-80 aircraft, and 20 E190s. Over the medium term, American must be Bombardier’s best prospect in the US. It simply has the most target aircraft that are getting old and aren’t particularly fuel efficient. An American Airlines spokesperson said simply that “as a general matter of policy, we don’t talk about aircraft that we don’t currently have on order.”
Not yet. Watch this space closely.
Nope. Pity the Bombardier/Airbus salespeople that call on Southwest. To paraphrase: if it’s not a Boeing 737, Southwest ain’t going.
The C Series is a good candidate for the ultra-low-cost airline: its business model focuses on underserved markets without much competition, flying point-to-point. Spirit currently flies the Airbus A320 family and may not be willing to mix in a second aircraft into its fleet, like JetBlue. However, in a letter to the International Trade Commission in support of Bombardier, Spirit CEO Edward Christie said that “a highly efficient smaller aircraft would encourage enhanced service to smaller and midsize cities, which have tended to lose service in the wake of recent industry consolidation.”
Christie also said that “should Spirit decide it needs an aircraft in the 100-140 seat class, it would not consider Boeing or Airbus, as neither of those manufacturers makes an aircraft in that size.”
The island carrier currently operates 20 Boeing 717s. The plane used to be called the McDonnell Douglas MD-95, and you’ve probably flown one on Delta. The planes are into their second decade of service. Hawaiian can’t fly them to the mainland — unlike the C Series, they do not have the range for long overwater flights. Accordingly, Hawaiian only flies them for inter-island hops. The airline could conceivably pick up the C Series to fly from the West Coast of the US to the islands, as well as between islands. Instead of trying to fill a 150+ seat A320, Hawaiian could choose smaller markets/airports and make great margins with a C Series. This becomes more interesting as Southwest contemplates trying to drink Hawaiian’s Mai Tai. When asked for comment, a Hawaiian spokesman said: “Beyond our recent B787-9 announcement, we have no near-term plans to add new aircraft to our fleet, but we continue to monitor a variety of aircraft types.”
Sun Country, the Minnesota-based charter operator, came to Bombardier’s defense in the trade dispute. In a letter to the Trade Commission, CEO Jude Bricker wrote: “Sun Country would greatly benefit from additional options for narrow body aircraft with significant range. Aircraft that are able to operate efficiently from Minnesota to the Caribbean or Mexico would fit well in Sun Country’s service offerings.” Those flyers deserve some sun.
Seattle-based Alaska Airlines has historically operated an all-Boeing fleet, but with the acquisition of Virgin America, Alaska brought in ten A319s into the fold. The more likely option is for Alaska to maintain its Boeing fleet and sell off the A319s. In addition, Alaska has committed to the E175.
Allegiant has historically bought older aircraft. In 2016, Allegiant bought 12 new A320s, its first purchase of new planes. And finally, Frontier Airlines was widely believed to be the recipient of C Series aircraft purchased by Republic Airlines. However, Republic spun off Frontier Airlines and kept the orders. Then, bankruptcy loomed. The planes were removed from the Bombardier production schedule.
What Airbus Brings To the Table
Bombardier and Airbus announced their partnership in October 2017, and the transaction has not closed yet. Said Scott Hamilton, of leading trade publication Leeham News: “There is real potential heft and synergies of the Airbus-C Series deal. Imagine, for example, Airbus offering JetBlue, Spirit, United or even American a combination of A321neos and C Series.”
The airlines will get their choice of planes, and likely at very attractive prices. Backed by Airbus and with the latest technology in the C Series, the airlines are bound to like the offer. It was enough to spur Boeing and Embraer to work on a joint venture, rumored to be announced within two months.
Mike Arnot is the founder of Boarding Pass NYC, a New York-based travel brand, and a private pilot.
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