Bombardier’s CSeries beats the Airbus A318/A319, A319neo and Boeing 737-600/700 on cost per available seat mile, according to a new study issued this week by AirInsight.
The CSeries also beats the competition on a plane-mile cost.
The conclusions, reached by AirInsight’s own analysis, are illustrated in the chart below.
Source: AirInsight. Click on chart to enlarge.
The data is contained in a new Study issued by AirInsight December 6, “The Business Case for the CSeries.””
The Study is a follow-on to a Report we did in December 2009 about the prospect of Airbus and Boeing re-engining the A320 and 737 families. As Airbus and Boeing ramped up studies this year, and particularly inspired by the Airbus assertions that if it re-engined the A320 family “there would be no business case for the CSeries,” we decided to take a fresh look at the re-engining prospect and the emerging competition to the A320 and 737. We were especially interested in affirming or refuting the persistent Airbus assertions.
We’ve concluded Airbus is just plain wrong, as illustrated in the chart above.
I’m looking at the CASM costs – from the chart it looks like CS300 .0583 vs. .0588 A320N, CS100 .0639 vs. .0645 A319N – an advantage of less than 1% in each case. Gauge aside, are these compelling economics to jump into a totally new, unproven fleet type?
The more relevant comparisons are CS100 (.638) versus A318 (.755), and CS300 (.587) vs A319neo (.650). If Bombardier produce a larger version, the CS500, it will have a similar advantage over the A320neo as the CS300 has over the A319 – a double digit advantage in total operating costs. To an airline, operating with razor thin margins, operating cost advantages of this magnitude have traditional caused a migration from older models to the new aircraft, and we see no reason for that trend not to continue.
While this is a new unproven fleet type, by the time neo becomes available the CSeries will have 2 years of operations in service – so it won’t be unproven at that time. The tradeoff is between economics and risk, and whether you believe Bombardier can deliver on their promises.
Airbus couldn’t with their A380, Boeing couldn’t with their 787, and their failures have somewhat jaded market opinions as to whether Bombardier can really pull of a new technology aircraft on time. So far, the project is on target, and their risk mitigation strategies are quite robust.
With a 20% improvement over existing A319 and 737-700 models, the CSeries has the same magnitude of improvements as the 787 over 767 and A330, which is quite compelling.
Bruce, seat mile costs typically go up when you compare smaller planes against bigger ones. You can see this in the chart with the A318->A319->A320; 737-600->737-700->737->800 and so on. Which is why the ovals are slanted top left to bottom right on the chart.
Operators normally must trade off having to fill bigger planes at a lower cost against the possibility of extracting larger fares from fewer passengers.
What this chart shows is that the while the CSeries is smaller than other planes, the seat-mile costs are similar. Operators of the CSeries don’t have to make the trade off I described.
The trend over recent years has been towards bigger single aisle planes. Airbus used to sell as many A319s as A320s. Now it’s only a fraction. The chart shows that the CSeries should at least capture a large part of the market for small planes. The question is whether they can reverse the trend so that operators who were planning to size up will go for small CSeries planes instead.
Some questions to the study (if I may…). I am no aircraft system guy, working with engines I do have some knowledge.
1. Why do Airbus face a larger threat than Boeing (from the C-series)? It seems from the charts that the A319 and the 737-700 are quite equal, and the A319 will be re-engined.
2. What do you mean by the W designation to the 737 models?
3. It seems to me the A320 in your analysis is quite high in seat-mile costs. I is of the understanding that it is the baseline aircraft in the family, and should thus have the best operating economics? In the chart, it seems to be quite a bit higher than the -800(W). Also, the trendline for the A320 family levels of for the A320 indicating that the operating economics do not get much better for the A321 either, which I would have a hard time believing.
Your answers would be much appreciated.
1. It’s in the Report– Airbus needs the cash flow from the A319 more than Boeing needs it from the 737.
2. “W” = Winglet.
3. The A320 CASM is higher because (1) it has 150 seats vs 162 and it does have higher fuel burn.
Thanks for the comment. 1. Airbus faces a larger threat because its neo, the product for the next decade and a half, does not provide the economic step change that the CSeries does. Boeing will have a 737 replacement in the 2020 time frame, while Airbus will likely not replace the A320 family until 2027 or so. Airbus is therefore more vulnerable.
2. W means with winglets
3. The current A320 has, in reality (see Form 41 data) higher in seat mile costs than the more recent 737-800. Boeing re-designed the 737NG with entry into service in 1998, 10 years later than the A320, with the technology enhancements during that period factored in.
While the A320 is the baseline model for the program, stretched models tend to have lower seat-mile costs, as the increment in cost is typically lower on a percentage basis than the increment in seats. For Airbus, the A321neo becomes a very interesting plane in that the extra range from better fuel efficiency will enable new missions and bring it closer to a 757 replacement.
The 737NG is outselling the current A320 family for a reason – it IS more efficient. But the A320neo does leapfrog the 737-800W and will have slightly better seat-mile costs, as the game of leapfrog continues. But Boeing will have a significant advantage with an all new aircraft in 2020. In the interim, Bombardier will have six years as the most efficient aircraft in the narrow-body segment, which should provide a strong marketing opportunity.
Ernie Arvai – co-author
Regarding 1. Your response is true provided that Boeing comes out with a new a/c around 2020. So far, they have done nothing apart from talking about it. Airbus have at least launched a refreshment, so until Boeing do the same and put some numbers to the a/c in question, I would say that Boeing are more vulnerable.
As for cash flow, Boeing currently have an upper hand in the 777, but that might not last until 2020 (and Boeing are also providing Airbus with cash through the A330, getting a boost through the 787’s schedule mishaps). This is not my area though, so I do not have so much input here.
Correct me if I am wrong, but at some point JetBlue stated that their E190 has the same economics per seat as their A320.
In the chart is a lot more, which begs the question, what data were you looking at when you made your analysis?
Many thanks.
Is there an update to this sheet?
Not yet.