Bombardier has a solution to airplane passenger woes.
On its spacious, fuel-efficient CSeries airplane, everyone can bring a carry-on. Plus, seats are wide, the cabin is quiet, and windows and washrooms are large.
But, as Bombardier has learned, that hasn’t been enough for a quick takeoff or soaring sales.
Bombardier initially aimed to have 300 firm orders by the time it was certified for commercial service in early 2016, but it wasn’t until earlier this year that it surpassed its goal, with 360 orders reported in June.
However, 75 of those were from Delta Air Lines, an order that was thrown into doubt last week, when the U.S. Department of Commerce announced it was imposing a preliminary tariff of 220 per cent on the CSeries. The ruling was a result of a complaint made by U.S.-based Boeing, which claimed the CSeries was being sold to Delta at abnormally low prices because of government subsidies.
The CSeries airplane program, which at one point was two years behind schedule and plagued by cost overruns, cost Bombardier $5.4 billion (U.S.) over eight years. In 2015, the Quebec government stepped in with a $1 billion cash injection for an equity stake in the CSeries, around the same time Bombardier wrote off $3.2 billion in development costs it didn’t expect to recoup.
This year, the federal government committed $372.5 million in interest-free loans to Bombardier.
Bombardier estimates it will not start generating cash flow from the CSeries until around 2020, but remains adamant it’s on to something that will change the aviation industry for the better.
“The CSeries is the first single-aisle aircraft to be built from scratch in the last 30 years,” said Bombardier spokesperson Nathalie Siphengphet. “We understand the industry and airlines make decisions about their fleet with a long-term view.”
In terms of competition, Airbus and Boeing offer single-aisle planes, but Bombardier maintains they’re not “direct competitors.” Unlike the CSeries, Airbus and Boeing’s planes were first developed as larger jets, then “stretched or shrunken” to accommodate up to 150 passengers, and are therefore less efficient, Siphengphet said.
“The CSeries is the only airplane designed specifically for the 100- to 150-seat market, with optimized aerodynamics and advanced technology for that size,” she said. “It’s a market disrupter.”
CSeries customer Swiss International supported Bombardier’s claim that the jet is unique.
“Back in 2008, when Swiss was looking for a new aircraft, market leaders Airbus and Boeing were showing no signs of developing a suitable airplane for the 100-seater segment,” said Swiss spokesperson Stefan Vasic in an email. “They were both saying they would not develop a new aircraft before 2020.”
According to Bombardier, the CSeries is the greenest airplane in its class. At up to 5,400 kilograms lighter than its competitors and with less drag, it has a 20 per cent fuel burn advantage. That reportedly translates to a 20 per cent reduction in CO2 emissions and 50 per cent fewer nitrogen oxide emissions. It’s also the quietest commercial airplane in its class.
“The CSeries is a great aircraft, not just for passengers, but also for cabin and cockpit crews,” Vasic said.
Swiss pilots say the aerodynamics are “great” and the engine is powerful and quiet.
“With state-of-the-art technologies, the Bombardier CSeries sets new benchmarks in terms of both its operating economics and environmental credentials,” Vasic said.
The CSeries has performed beyond airBaltic’s expectations and enabled the airline to open 12 new routes this year, the airline said. It also said it will start flying CSeries airplanes to Abu Dhabi in late October.
But analysts say Bombardier needs more large customers. “It would be great to have someone willing to buy the CSeries for a large portion of their fleet,” said George Ferguson, senior airlines and aerospace analyst with Bloomberg Intelligence. “That, I think, would be a real turning point.”
Part of the problem is timing. The CSeries airplane has fewer seats than other airplanes such as the Boeing jets that Air Canada uses, which fit 200 to 400 seats. That means airlines would sell fewer tickets per flight of the CSeries.
However, when Bombardier was developing the CSeries, fuel costs were higher – a barrel of oil in 2010 cost $95 (U.S.) as opposed to today’s rates of around $50. Because the CSeries is fuel efficient, Bombardier believed fuel savings would offset less ticket revenue.
“Back in 2010, we thought there was a real shortage of oil, and fuel prices were going to continue to rise,” said Ferguson. “At that time, the best edge an airline could get was to be more fuel efficient.”
Airlines also can’t raise ticket prices simply because the CSeries is more comfortable. “For most people, the ticket price matters a huge amount,” Ferguson said.
Figuring out this dilemma will be critical for Bombardier’s flying future, despite the news Friday of what may turn out to be a $1.7 billion order for the company’s Q400 turboprop, built in Toronto.
The company’s future is “absolutely wrapped up in the CSeries,” Ferguson said. “To give up on this airplane would be like walking away from commercial aerospace altogether.”
For Bombardier to succeed, it will need to find the right market, which Ferguson says lies south of the border. Due to its size, the CSeries is best suited to fly within continents like North America and between mid-sized interior cities, of which there are many in the U.S.
The population density means U.S. airlines don’t need to fly large planes between these cities, like their Asian counterparts do, but there’s still enough demand to fill the CSeries airplane’s seats. North American fares aren’t as low as those in other parts of the world, making it easier for airlines to turn a profit using the CSeries airplane.
Canada’s regionally focused and discount airlines also have the potential be good candidates, Ferguson said. WestJet has said it isn’t interested in the CSeries, although it currently uses Bombardier’s Q400.
Airlines could also use the CSeries to design new direct routes across the Atlantic Ocean.
“The CSeries is the only plane in its category that could fly out of London City Airport (with a short runway) to New York City,” Siphengphet said. “It’s the perfect aircraft for challenging airports.”
With last week’s tariff announcement, and a further U.S. anti-dumping ruling expected Wednesday, Bombardier’s hope to land Delta or any other American airline has become less certain.
“For now we will monitor the situation and it’s too early to speculate, but there’s a strong demand for our aircraft. It will likely be operated around the world and in the U.S.,” Siphengphet said.
Bombardier has said it is pushing hard in Europe, Africa and the Middle East, as well as in China.