Bombardier CSeries program vs. A320/737 duopoly? Closed by 2017.

In a few days (March 7th) Bombardier will provide a CSeries program update. I do not normally follow very closely this program, but I was reminded of it twice during the last month.

The first time was when a colleague shared the following article: “Bombardier CSeries: How will Boeing/Airbus Duopoly Respond?“.

The article is interesting as long as it tries to make a strategic analysis of the possible moves that Airbus would arguably have to make because of the entry into market of a new entrant (taking Boeing 737 strategy as similar to Airbus’). That theoretical exercise is… an exercise.

I found some arguments difficult to sustain:

  • “Assuming that Bombardier effectively executes its 50% market-revenue capture“.
  • Bombardier CSeries aircraft is positioned as value advantaged in the commercial airplane manufacturing market space.  Since the CSeries offerings deliver superior value to customers relative to competitors at lower list prices, Bombardier’s go-to-market pricing strategy is consistent with a penetration pricing methodology.  Bombardier’s aggressive entry tactics for the CSeries aircraft offers a credible threat to existing Boeing and Airbus revenue.”
  • “With over 382 commitments for CSeries aircraft“.

I must say that I am no expert in commercial aviation market, but from my point of view, here are some rebuttals:

  • To start with, I would take as commitments only firm orders, of which the CSeries hasn’t got 382 to date, but 180 a/c (less than half).
  • I would say that an aircraft is positioned or perceived as “value advantagedwhen the market actually responds to that statement. See in the graphic below the market response to A320, 737 and CSeries since the launch of the CSeries program:
CSeries, 737 & A320 net orders and market shares.

CSeries, 737 & A320 net orders and market shares.

In the table and graphic you can see that since the CSeries launch it started piling orders in 2009. If we compare its net orders to Airbus and Boeing ones in these years, the CSeries has captured a 3.2% of the market share, in contrast to 50.5% of Airbus A320 family and Boeing 737 46.4%. I would not derive from these figures that the CSeries is perceived as value advanted product.

It is curious to note how 737 and A320 families have been alternating market share lead year by year in the recent years.

“Price will go up also when delivery dates are confirmed, and we’re flying the aircraft. Whether we like it or not there is a Boeing discount. We’re being told [by our customers]: “We want 100 [aircraft], but because you won’t be on time, we want a discount.” I say, “Listen, we will be on time. We will be performing as promised. So, if you want to wait, wait.”

If I take that statement as truthful, and having myself estimated for years Boeing Commercial discounts, I would not describe Bombardier as “aggressive”.

As I said to my friend, rather than doing this strategic analysis about CSeries versus A320, I would have done it in the past about A320neo and 737, and now about A350 vs. 777 (where there must be really going this kind of analysis), take bold assumptions and check in a few years how the strategy of each company has evolved.

The second time was after this tweet from the aerospace analyst Scott Hamilton:

My impression, despite of Bombardier’s earnings webcast information, is that:

  • if now firm orders stand at 180 a/c,
  • if the plan to deliver 20-30 a/c in the 1st year and 120 a/c after 3.5 years
  • if the customer interest, in comparison to A320neo or 737MAX, stays as it has been in previous years…

… the programme is closed by 2017 (1).


(1) A bold statement for my forecasting career, this one to be checked with some colleagues down the road.



Filed under Aerospace & Defence

7 responses to “Bombardier CSeries program vs. A320/737 duopoly? Closed by 2017.

  1. Paolo

    I would totally agree that the CSeries orders, against the TOTAL A320/737 orders are minimal.
    But You cannot compare a 100 to 150 seat aircaft to a 120 to 220 seat aircraft!
    If we take a close look at the orders we have that the CSeries has outsold by far the new models by Boeing and Airbus in that seat sector: A319neo and B737MAX7 which gathered respectively 26 and 0 orders since launched (respectively in december 2010 and august 2011).
    If, otherwise, we compare the CSeries orders to the current models (A318, A319 from Airbus and 737-600, 737-700 from Boeing) we have that the smaller models have gathered around 70 orders each (in total) while the bigger ones have seen a significant market reduction.
    I’d address You to this article by Leeham news which also analized the topic:
    My final comment would be that the Bombardier aircraft is actually threatening the survival of the smallest members of both the A320 and 737 families.

  2. I would partly agree in that CSeries market is not squarely the same as A320 and 737 families. But it is of A318/A319 and 737-600/700 of which each family has sold thousands, though now the backlog and orders has diminished in comparison to what it was years ago (still higher than CSeries numbers): Let’s see how the niche evolves, it might not be enough to sustain so many players, in which case I believe the threatened players wouldn’t be Boeing/Airbus but those players who have dedicated lines for the segment.

    • Paolo

      That’s exactly the point… the A&B (smaller) models sold thousands…. until the CSeries came to the market…
      I think the orders for the A320 (ceo&neo) and 737 (NG&MAX) will gradually (are already) shift to the bigger models….

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