Monday Update – June 22, 2020

Before We Start…

Southwest. Spirit. Sun Country.

Joining Aviation Leaders At the IAFS

On August 23-25, the first post-Covid aviation event will take place at Cincinnati, USA.

The 25th International Aviation Forecast Summit is on, and it’s going to be exploring the new realities – and new opportunities – the industry faces in the aftermath of the CCP-Covid global pandemic.

We will be discussing the future with the industry thought-leaders and innovators.

The leisure sector is the first to see a rebound. And we’ll be hearing from CEOs and top executives from airlines across the globe as well as from other sectors of the industry.

We are excited to announce that Mr. Ted Christie, CEO of Spirit, Mr. Jude Bricker, CEO of Sun Country, and Mr. Andrew Watterson, Executive VP & Chief Commercial Officer of Southwest will be with us, each with their perspectives of the future.

The IAFS will be looking over the horizon, not rehashing the past. The sessions will be incisive and direct, and we’re planning a pre-Summit Workshop session to be illuminated shortly. Click here to reserve your space.


Just One More Thing… Before We Start…

Announcing the new aviation channel on YouTube…

Boyd Group International is implementing a new access point for clear and incisive perspectives of the future. Aviation Unscripted will have a new video each Friday morning, covering topics that will be thought-provoking, fun, and interesting. All intended to be about ten active minutes or less. No holds barred.

This week, we’re tacking the changes expected as the airline industry continues to rebound… so log on and join in.


Okay – The Monday Update

The Pandemic:

It’s Put D.O.A. On Russian & Chinese Airliner Hopes

The CCP-Covid pandemic has sent a volley of torpedoes into the global airliner manufacturing industry.

One unexpected consequence is that these changes have completely left the global airliner business in the solid hands of just Boeing, Airbus, and depending on corporate decisions, Embraer.

Take this to the bank: any potential for new players has been now put to bed. Specifically, this now eliminates the infinitesimal chances of either Russia or China getting into the market.

Some background…

In the past year, dozens of orders for 737MAX variants have been cancelled, and while there hasn’t been a corresponding hit to the A320 platform, the fact is that with the economic damage of the CCP pandemic, they both face new de facto competitors from available orphaned 737-800s, and even some A320neos that are all dressed up with nowhere to go.

Flickers Of Hope… On the surface, there recently are some positive indications. Last week, one leasing company “confirmed” previously unannounced orders for 16 737MAX units. Looks great, but just a dent in the order for 80 that was cancelled by the same customer back in March. In the meantime, Airbus continues to deliver A320 and A350 aircraft across the globe. Emerging changes in new fleet needs have not been fully registered – yet. As we’ve pointed out earlier, the multi-mission capabilities of aircraft such as the A321XLR and A220-300 will be a major factor in fleet planning at global airlines.

Russia & China: Cadaver Programs On Life Support, Still, unnoticed in all of this is now the certainty in regard to new-entrant airliner platforms from Russia and China. They are dead.

Long before China’s CCP did its handiwork in allowing the corona virus to spread across the globe, it was already pretty obvious that the airliner programs from both countries were political pipe dreams. Just me-too designs, and me-too performance and me-too economics, with backlogs relegated to mostly forced orders from domestic captive airlines and financial institutions.

The platforms under development are strictly retro-1980s upgraded to glass cockpits. In China, we have the 70-seat or so ARJ-21. It came out of the factory in 2008. Today, a dozen years on, there are only about 25 flying with Chinese airlines. Not exactly a line of carriers in front of the sales office.

A decade late and a lot of yuan short, it’s entering a market sector that’s already died out. The CRJ series is winding down, and it appears that the Mitsubishi M90, nee MRJ, has been iced.

Then there is the Chinese COMAC C919, a very rudimentary attempt to build something approximating the A320 or B737. The certification process has been a circus. That’s not surprising, when politics, not market need, drives airliner programs. Then we can get into the allegations of intellectual theft – which, if accurate, would indicate the stuff stolen wasn’t of much value, based on the projected performance of the C919.

If the manufacturer, COMAC, had actually been left to its own devices, the world might have seen another disruptive new entrant – such as was the Bombardier CSeries (now A220)  – an airliner designed from the start to swing for the performance fences. Didn’t happen.

Russia has the Sukhoi SuperJet – a one-off platform – in the same dead segment as the CRJ and M90. It did have “success” outside of Russia – with a fleet of hangar queens sold to Interjet of Mexico. The fact that the crack Sukhoi sales team flew a demo into an Indonesian mountain a few years ago didn’t do much to get the phone ringing at the sales department back in Mother Russia.

Russia and China have the CRAIC 929 – a joint venture seeking a 2025 debut to compete with the likes of the Boeing 787. Nothing like being a couple years late and a platform short, since the initial market demand bubble for the 787 has already come and gone, and the supposed superiority of the 929 isn’t anything to get excitement going in the front offices of IAG or American or any Western operator.

Russia has the United Aircraft MC-21, which is another attempt to grab share from the 737 and A320. The potential success of placing another aircraft type that is only marginally better than incumbents (which the MC-21 has no guarantee of being) is not likely.

With the structural changes in the airline industry now unfolding, these airplanes from Russia and China are somewhere just beyond Mars in regard to market need. It was a snowball’s chance before. Now, it’s zero chance.

Dedicated To Political Vapor Holes. One comforting factor for Boeing and Airbus is that the airliner projects in both China and Russia are economic flytraps that will keep these countries engaged in dead-end programs for years to come.

Politically, they cannot easily reverse paths, admit these are dog programs and start over. With all the hype and financial investment, they are now wedded to going forward in futile efforts to make good on obsolete airliner programs.

Conclusion: There will be lots of stories about how these new airliners will be a threat to the major duopoly of Boeing and Airbus, and to Embraer.

One look at market realities paints a different picture.