After C Series setback, Bombardier turns to CRJ family for inspiratioin

 - September 19, 2006, 11:34 AM

There’s no denying that Bombardier’s commercial aircraft business has reached a crossroads, and that a still ailing airline industry will dictate the direction it ultimately turns. The 50-seat jet market–Bombardier’s bread and butter for the better part of 10 years–has collapsed, leaving the company groping for an idea that might one day prove half as fruitful as the stroke of brilliance that turned the Challenger business jet into what would become the CRJ. The latest attempt– the now all but suspended C Series–remains on the drawing board, but after Bombardier “redirected” most of its funding and human resources to other pursuits, it became clear that the company’s priorities had changed once again.

Not that the market left it with much of a choice. Devoid of orders, the C Series didn’t impress anyone enough to warrant the $10 million a month R&D drain it created. Now, as Bombardier faces a year in which it projects it will deliver only 80 regional jets, focus has returned to the tried and tested CRJ line, a platform that has certainly served the company well for more than a decade but whose further development appeared limited by a fuselage cross section originally meant for a business jet.

In fact, the slow sales performance of the 86-seat CRJ900–since its launch in 2001 it has drawn firm orders for just 62 copies–has led to questions about the wisdom of stretching the Challenger’s tube for a third time. Nevertheless, Bombardier has begun to consider stretching the airframe yet again, by another three rows, giving the so-called CRJ900X a single-class, 31-inch-pitch seating capacity of 98. The revelation certainly raised eyebrows, but according to Bombardier vice president for marketing and sales Trung Ngo, the skeptics miss the point.

“First of all, we believe the 900’s time is coming in terms of its acceptance by many airlines and in many markets,” said Trung, who pointed to the now solid-selling Q400 turboprop as another model that perhaps reached the market before its time. “It’s gaining momentum both from the standpoint of the airlines being able to deploy them, as you know for pilot scope reasons and everything else, but more importantly coming to understand some of the potential for its deployment in their markets as well.”

In fact, much of the interest in the CRJ900 has come from airlines interested in a 75- or 76-seat version of the airplane, most notably Northwest Airlines. Air Canada already fields a fleet of 15 so-called CRJ705s–essentially CRJ900s certified to carry 75 passengers–in a dual-class configuration, allowing 37 inches of seat pitch in first class and 34 inches in economy. Bombardier would like to see Northwest do something similar for its planned new Compass Airlines regional subsidiary.

“If you book on Northwest today, and you say you would like a particular seat, you know a window or aisle, whatever it is, it’s $15 [more],” said Trung. “They’re selling up seat selection. It’s gathering momentum. So this is a very interesting way of catering to the more discriminating passenger, and our sense is that the CRJ900 would be a very, very appealing product for what they are planning to do.”

By the time AIN went to press with this issue, Northwest continued to weigh its options concerning fleet type. The CRJ900’s competition–the Embraer 175–offers 14 percent more cabin volume per seat according to Embraer’s calculations, but less seat pitch and inferior fuel economy at 76 seats, according to Bombardier. “The front end I would say would be equivalent, but the back-end economy class [in the 900] would be superior…somewhere between 33 and 34 inches, whereas in the 175 it would be 31 or 32,” claimed Trung.

Embraer would take issue with that claim, however. “At a 31-inch pitch you get 86 seats in both [airplanes], at the same service level,” said Embraer vice president of market intelligence Luiz Sergio Chiessi. “We offer much more galley [space in the standard 175] than the regular CRJ900. When you adjust to the same service level, both can accommodate the same number of seats.”

Trung also claimed that due to its lighter weight and lower overall fuel burn the CRJ900 in a 76-seat configuration will cost 7 percent less to operate on a typical mission than the Embraer 175. Embraer places the CRJ900’s advantage at closer to 2 percent, due largely to a so-called performance enhancement package involving winglets and wingtip extensions. In fact, Embraer executive vice president Fred Curado claims the 175 burns less fuel during the climb phase than the Bombardier; consequently, the CRJ900’s fuel-burn profile tends to improve in relation to the 175’s as the trip gets longer.

A newer and technologically more sophisticated design than the CRJ, Embraer’s E-Jets have certainly felt their share of “teething pain,” primarily due to false error messages from their Honeywell Primus Epic avionics. In a bid to exploit some of the bad press Embraer has received from the avionics problems experienced by JetBlue’s 190s, Bombardier takes special care to emphasize its 99-percent dispatch reliability figures for the CRJ900.

Still, one could question the fairness of comparing on-time reliability rates of a brand-new airplane with those of a platform that has flown in service for quite a few years now. In fact, according to Embraer, the 170, 175 and 190 have performed better than the ERJ family jets at the same point in their development. The ERJ 135, 140 and 145 now post reliability rates of close to 99.75 percent.

Of course, Bombardier has absorbed criticism for the fact that it really has never developed a regional jet from scratch, and that its conservatism has caused it to lose ground in the race with Embraer for the upper reaches of the regional market. Again, that depends on how one chooses to look at the numbers: the Embraer 190 and 195 have gone exclusively to mainline operators; in the regional sector, where the Embraer 170 competes directly against the CRJ700 and the Embraer 175 against the CRJ900, Bombardier actually outsold Embraer last year.

Nevertheless, until Bombardier finds itself another niche where Embraer doesn’t command a presence, it risks losing its status as the world’s third largest aircraft builder to its Brazilian rival. If, as Trung insists, regional airlines are clamoring for a classically defined regional jet that carries between 85 and 100 passengers, they might indeed get one in the absence of the C Series. European scope clauses generally allow regional airlines to fly airplanes as large as 100 seats; perhaps the CRJ900X can satisfy a need that only a select subset of the world’s airlines even recognize exists.

“There’s certainly interest or we wouldn’t be giving it this level of effort,” said Trung. “We’re pacing ourselves with the evolution of scope. Right now we’re targeting those who aren’t scope limited, and also low-fare carriers. The 900 today has got seat-mile costs that are coming awfully close to those of a low-fare carrier [flying] 135- to 150-seat airplanes.”

According to Trung, existing CRJ900 operators’ seat-mile costs run from nine to 9.8 cents. The company has set a target of less than nine cents per mile for the 900X, assuming a typical regional airline’s cost structure and $1.80 per gallon jet fuel. “Once you hit the eight-and-a-half mark, boy you are going to be an attractive piece of machinery,” said Trung. “But the compelling argument here is that a regional carrier per se is a low-cost carrier. So if you combine their already low cost structure with an airplane that’s got extremely good economics, it’s amazing what they will do with it. I think it’s only limited by their imagination.”