Archive For June 29, 2011
Last week’s Paris show saw Indian airlines accounting for a third of orders. This is a $23bn bet on the future of an industry that suffers from state meddling and support for a dinosaur national airline. Taking such a big bet is very brave.
India does not have the ability to handle all these planes. When the nation will have the infrastructure in place is a great question – we would bet plane deliveries come faster. Which is going to be a huge pain for the airlines. Kishor Ostwal, chairman of Mumbai’s CNI Research, made an interesting observation – the orders amount to between 300 and 400 slots. They don’t have enough slots now, so imagine what is coming.
The 9% growth in the economy alone is taxing the state’s ability add infrastructure. Of course the state could sell airports to overseas firms, which would immediately solve part of the problem. But imagine India selling anything to “foreigners”? Not easy because these investors will not tolerate state meddling on India’s levels.
Another data point worth pondering – India has a 300 widebody fleet for 1.2bn people. China has 1,400 widebodies for 1.3bn people. You can see that Indian airlines are more focused on the future than the state. It is up to the state to catchup – fast. Can it? Note this catchup process requires not just infrastructure development, it also means providing an environment that does not over tax airlines and travel (airlines pay taxes of between 35% and 50% on fuel) and also needs to provide a banking system that can lend the airlines money to pay for the fleets. At present it is foreign banks who are funding the fleet growth and all the money leaves India to pay for the planes – not too smart.
At the Paris show there were a seeming unending flow of words via PR releases that battled for media attention. Given the retail price of the equipment on sale, the stakes were high. But not necessarily as high as some of the egos. But that’s another story. If there is one series of PR that deserves its own chapter, this would be releases from CFM and Pratt & Whitney.
On the one hand you have the CFM story – source of the benchmark, reliable engine, the CFM56. It has been around for a long time and CFM keeps making it better. It is the sole engine on the 737 and can arguably be pointed to as one of the primary reasons so many LCCs like the 737. The engine fires up after landing within 30 minutes, does a segment, lands and then 30 minutes later it does it all over again. This engine has now reached levels of reliability that could see an original engine stay on the same wing for 20 years. Such a performance is simply outstanding and the reason why so many A320 family operators also select the CFM56. The key sales point for CFM is reliability – which essentially means predictable schedules. For a short hop operator (typically an LCC) this is probably issue #1. It is more important than fuel burn. With a reliable engine and airplane combination, airlines can reduce spare engines and airplanes. For a good technical background on what CFM has to accomplish with its new LEAP to stay within CFM56 performance, check out this link to AeroTurboPower.
Bombardier today announced an order for 10 aircraft from an unidentifed European customer for the CSeries. This order is for 10 CS100 models, the smaller of the two variants that will enter service in 2013. This is the eighth customer for the CSeries, three of whom remain unannounced. As Bombardier identified this customer as being from Europe, can we infer that the other two unidentified customers may be from another region? (more…)
It’s an age-old technique in aviation: running down the Other Guy’s product. Airbus and Boeing have done it for as long as we can remember, and now Bombardier is the target of both companies because the Canadian firm has the temerity to offer a product the threatens the duopoly.
The corporate sniping gets tiresome. (more…)
John Leahy couldn’t be prouder, and he has every right to be. It’s his best air show order tally ever, and he’s been in selling Airbus airplanes for more than 20 years.
Throughout the 20 years, it’s been one constant verbal battle between Airbus and Boeing. And to be sure, this continues unabated, with as much vigor as ever.
But Leahy has a new fight with the “B” and it’s not Boeing. It’s Bombardier. And this took on a new dimension at the Paris Air Show, with Leahy taking shots before the world’s press covering the event.
At the Paris show, which is now in its final business day, we can expect Team Airbus to roll out their biggest deals. We have been hearing of a blockbuster AirAsia deal for 200 neos plus 100 options. Until its announced it is just a rumor. But other sources triangulate to make us feel confident Mr Leahy is in for a busy day. (more…)