Bombardier Sees Return to Prominence for its Regional Lineup

 - June 26, 2018, 4:45 PM
Bombardier Commercial Aircraft president Fred Cromer predicts the CRJ900 will regain at least 50 percent of the market for 76-seat category regional jets. (Photo: Bombardier)

Now that Airbus has assumed effective control of Bombardier’s resource-consuming C Series program, the Canadian manufacturer sees a grand opportunity to re-focus its efforts and investment on what, to many, had become an almost forgotten segment of its portfolio. In fact, the Bombardier CRJ regional jets have enjoyed something of a sales renaissance, most recently evidenced by Delta Air Line’s firm order this month for 20 CRJ900s and American Airlines’ order in May for 15. The orders effectively doubled Bombardier’s CRJ sales backlog, which stood at just 36 on March 31.

Bombardier’s Q400 turboprop, too, has begun to recover some momentum after several years of dominance in the turboprop market by rival ATR. Most recently, a firm order for 10 airplanes in an 82-seat layout from Ethiopian Airlines in April perhaps showed that a firm order for 50 ninety-seaters last September from India’s SpiceJet amounted to more than a temporary reprieve for the big propjet. Speaking with reporters on June 21 at the company’s main jet assembly plant in Mirabel, Quebec, Bombardier Commercial Aircraft president Fred Cromer predicted a bright future for the Q400 and endeavored to erase any lingering notion that the company’s recent sale of its turboprop assembly site in Downsview, Ontario, could signal a waning commitment by the company to the Toronto area.  

While the sale contract with Canada’s Public Sector Pension Investment Board calls for Bombardier to vacate Downsview in three years with an option to remain for another two, Bombardier has already agreed to a lease deal at Toronto’s Pearson International Airport for the relocation of Global business jet assembly. However, it hasn’t yet announced plans for a site for the Q400. Bombardier has also talked about lowering program costs to improve its market competitiveness, raising questions about possibly outsourcing the manufacture of certain subassemblies, even though the company has expressed a broad commitment to the Toronto area.

“We have opportunities to look at some of the components and think about lower cost opportunities to bring the entire cost structure of the Q400 down,” acknowledged Cromer. “We have between three and five years to figure out what makes the most sense from an industrialization standpoint for the Q400, and it’s all about being as competitive as we can be.”

Of course, Bombardier’s efforts to remain competitive extend to advances in the products themselves. In the case of the Q400, it managed to increase capacity to 90 seats with some relatively minor modifications to the positioning of the rear bulkhead and replacement of the starboard side baggage door with a passenger door. The company says the increase in capacity from 78 to 90 seats results in a 15-percent reduction in operating cost, a major draw for low-fare airlines such as SpiceJet.

In the CRJ, various incremental improvements in engine performance and maintenance intervals have lowered operating costs as well, and since 2010 have resulted in a fuel-burn reduction of some 6.5 percent. Most recently, Bombardier has addressed perhaps the biggest perceived deficiency in the airplane compared with the Embraer E-Jets—its interior—with last year’s launch of the Atmosphere cabin. Scheduled to enter service by the end of the year in Delta’s first newly ordered CRJ900 and scheduled to appear at the Farnborough Airshow in an aircraft painted in the airline’s livery, the new interior features bins that measure 50 percent larger in business class and 40 percent larger in economy, allowing for “wheels first” placement of oversize roller bags. Other features include a wider entrance and a six-inch-wider aisle leading to the business class section, 4.5 inches of additional shoulder space at the window seats, larger windows, and full LED lighting. Finally, the larger lavatory allows for a full PRM (passengers with reduced mobility) access option, three inches of additional headroom and 90 percent more floor space.

Cromer said that Bombardier will next look at the possibility of applying the Atmosphere cabin to the Q400.

Market Outlook

Addressing the competitive environment, Cromer cited the Delta and American orders as evidence of a growing need to replace aging regional jets in the U.S. But while Bombardier promotes the CRJ as the industry’s lowest-cost option in the regional jet segment, Embraer statistics show that the E175 has gained 80 percent of the sales in the 76-seat market in the U.S. over the last five years. Cromer, nevertheless, said with the improvements in the CRJ and the company’s rejuvenated marketing and sales effort, Bombardier expects its share to return to at least 50 percent, regardless of whether or not the current weight limits in pilot union scope clauses remain in place.

As things stand, scope clauses limit the regional airline affiliates of all three U.S. majors to a capacity of 76 seats and an mtow of 86,000 pounds, effectively excluding the heavier Embraer E175-E2 and Mitsubishi MRJ90 from operating with the country’s regional airlines. Of course, Bombardier’s competitors hope American, United, and Delta can negotiate higher weight limits in their next round of contract talks in 2019 and 2020.  

Although logic would dictate that Bombardier would rather not see the E2 or MRJ90 enter the competition in the U.S., Bombardier Commercial Aircraft marketing vice president Patrick Baudis would not accept the premise that those aircraft, even with their latest generation engines, pose an existential threat to the CRJ. In fact, Bombardier has studied replacing the engines on the CRJ, he said, but decided that the engines on offer today do not provide sufficient fuel burn savings to recover the costs associated with the extra weight they bring.

“When you look at the economics of a re-engined airplane in that segment, the problem with the new engines is that it comes with a weight cost,” explained Baudis. “When you look at the equation in terms of fuel burn, there’s a cutoff. For the missions that most regional aircraft are doing, you don’t recover the fuel benefit with what you’ve lost with the weight. So the equation is not positive for putting new engines on a platform such as the CRJ.

“Whether there’s a scope clause or not, the economics are still the same,” he added. “That’s why I was referring to our competitive position even outside the U.S., outside the scope clause. Our competitors have not been able to sell the re-engined plane they have outside the U.S. in that market segment...That would probably be exactly the same in North America should the scope clause get relaxed. Airlines will still fly the best plane out there in terms of economics.”