Bombardier reacts to evolving size demands

Paris Air Show » 2007
June 12, 2007, 7:00 AM

Bombardier Aerospace is responding to demand for bigger regional jets with its 100-seat CRJ1000 and continues to mull a 90-seat stretch of its Q400 turboprop. Regional airlines are thriving, but constant pressure on operating costs means their equipment is getting steadily bigger, the company’s top executives agreed at a pre-show briefing in Belfast last month.

Michael McAdoo, vice president for strategy and business development, said Bombardier’s latest market forecast shows deliveries of 11,200 aircraft with 149 or fewer seats over the next 20 years. But only 1,000 of them will have 20 to 59 seats, and the 4,300 with between 60 and 99 seats will be outnumbered by the 5,900 with 100 or more seats.

“The regional airline industry has shown double-digit growth for more than 20 years,” said Bombardier Regional Aircraft president Steven Ridolfi. “It’s been a story of continuous product improvement along with a real focus on operating costs. The regional airlines thrive because they produce the lowest cost seats in their markets.”
In fact, the regionals’ growth has averaged 11 percent since the onset of deregulation in the late 1970s. “I don’t know any industry that has been able to grow like that for such a sustained period of time,” he said.

Yield Squeeze
However, despite worldwide increases in airline load factors in recent years, margins continue to be squeezed. “The yield pressure has been there for the same two decades, and in the last few years we’ve seen a new plateau in terms of fuel prices,” Ridolfi said.

Between 1976 and 2000, Ridolfi’s figures show, the average number of seats regional aircraft delivered grew steadily from the low 30s to nearly 50. Since then, though, the graph has spiked sharply to pass 70 seats. “The average new regional airplane is about a 75-seater and we think that trend is going to continue,” he predicted.

The reason it will continue, he said, is that while mainline or network carriers can reduce seat-mile costs by using bigger airplanes, they have responded to shrinking yields and competition from low-cost carriers by outsourcing many of their thinner, lower capacity routes to regional partners. “The regional airlines are more entrepreneurial; they have lower labor costs and very efficient equipment, so they have lower seat-mile costs, especially in low-capacity networks and point-to-point networks,” he said.

The regionals, consequently, have outgrown their network counterparts significantly over time, Ridolfi said, pointing to the fact that in both the U.S. and Europe one out of every two passengers flies on a regional airline. “That’s a phenomenal number when you think about our airplane capacity being 50 to 100 seats when the mainline fleet has much larger capacity,” he reflected.

The trend that has seen regionals increase their share of U.S. domestic passengers from just 5 percent in 1980 to 22 percent in 2005 is set to continue, he predicted, until the regional and low-cost carriers have 30 percent each and their network counterparts just 40 percent.

Bombardier has ridden this growth, delivering its 1,400th Canadair Regional Jet last December and having shipped more than 750 Dash 8/Q-series turboprops. And despite the decline in the 50-seat market, only 26 of the 136 CRJ200s that hit the market after three near-simultaneous airline bankruptcies last year are still available.

The 50-seater “has been the backbone of the regional fleet for a long time and it will continue to be the backbone for a long time,” Ridolfi said. Of the other 110 CRJ200s, 73 had been redelivered to customers and 31 were undergoing inspection or delivery by the beginning of May; another six had been permanently decommissioned.

It is the CRJ1000 that represents the future, however. “We have a good platform which we started off with the CRJ700 which was virtually a new airplane compared with the original 50-seater,” the Bombardier executive commented. “The CRJ1000, we believe, will take us to the next level in costs, passenger comfort and operating economics for the airline.”

The new model was launched early this year with 61 orders and options from MyWay, Brit Air and an undisclosed third customer. It is due to fly next year and Bombardier hopes to deliver the first example in the fourth quarter of 2009.

Common Engines
For Ridolfi, “this is the start of a new strong family with unbeatable seat-mile costs and unbeatable characteristics.” A continuation of the 700 and 900 platform strategy, it seats 100 passengers at 31 inches pitch, enjoys significant commonality with the 700 and 900 and uses the same CF34-8C5 engine. Changes include a strengthened main landing gear with upgraded carbon brakes, wing trailing edge and tip extensions, and two fuselage plugs, one of 65 inches forward and another of 51 inches aft.

Cost is the most important consideration, of course. “The 1000 will have a 15-percent cost advantage over our competitor [the Embraer 190]” as a result of lower operating weight and lower maintenance costs.

“A few years ago there were a lot of people writing off the turboprop,” reflected Ridolfi. “We’ve been strong believers that we should have both jets and turboprops, and I think history has shown we were correct.”

The “fastest, quietest and lowest cost” Q400 “is leading the way in the turboprop renaissance,” he said. “In the last few years we’ve added a number of carriers. We’re very gratified that we’ve seen significant re-order activity, and now the Q400 orders have reached about 215.”

Like the CRJ700, though, the Q400 is just the beginning of a new family. “Just as the 700/900 was a new platform, the Q400 is a new platform, and we think it is the beginning of a new product line.” Currently the project is in what Ridolfi terms the first phase. “We’re trying to look at the technical design, feel out some customers about it–it’s early days yet.”

The only derivative the company is talking about so far is the Q400X. This would seat 90 passengers at 31 inches pitch and have a range of 1,000 nm.

It would retain the Q400’s Pratt & Whitney Canada C150A engines with a 15-percent thrust boost and have a strengthened main landing gear with strengthened carbon brakes and larger tires. The airframe would feature a strengthened wing and fuselage plugs measuring 58 inches forward and 62 inches aft, along with an increase in aft baggage capacity.

“Clearly there are potential opportunities to do more than that,” Ridolfi added, “but where we take it from there is just speculation.”   

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