March 19, 2015: C. Leeham Co. Bombardier’s current challenges don’t end with the CSeries. The company has seen its once-dominate positions in the regional jet and turbo prop markets decline precipitously.
The CRJ struggles in its sales against the Embraer E-Jet. The Q400’s market share of the turbo prop sector has declined to a mere 10% of the backlog vs ATR.
Still, Ross Mitchell, vice president of Business Acquisition and Commercial Aircraft for Bombardier, gave a spirited defense and upbeat outlook of both products during last week’s ISTAT conference in Phoenix. In a one-on-one interview the next day, we posed a series of questions about the CRJ and the Q400. Today’s report is about the Q400. Tomorrow’s will be about the CRJ.
“What you have to remember about the Q400 is that for a while, ATR was capturing a lot of larger market share that was largely driven by Asian customers,” Mitchell told us. “The Asian economy was hot and the Asian customers were buying airplanes.”
One such customer last year was LionAir, which placed an order for 100 ATR72s.
“There are now more North American customers placing orders, including WestJet [Canada], Horizon [USA] or Air Canada. In North America, as the economy improves, we’re going to benefit from that, because ATR hasn’t won an order in North America for quite some time.” Mitchell said. “That’s because the ATR isn’t suitable for the North American environment the way ours is. The range is generally longer in North America. [Airlines] will use the speed. The Q400 benefits from that.”
Mitchell’s point about ATR sales is true, but in our interview with ATR CEO Patrick de Castelbajac March 3, de Castelbajac said he’s going to target North America to win sales here.
Mitchell said that Bombardier has been “very successful” with the Q400 in the emerging African markets.
“African customers are looking for a couple of things that we can deliver that ATR can’t,” Mitchell said. “That’s the business class interior and the dual lav interior. ATR can’t offer that. We can offer 74, 76 seats with a nice business class in front and a forward lav and a lav in the back.”
The Q400 has a well-earned reputation in the industry of being considerably more expensive to operate than the ATR, if the Q400 is flown at high speed as designed. Less well known—in fact, it’s a pretty well-kept secret—is that if the Q400 is flown at a cruising speed similar to the ATR’s the per-seat economics are fairly close.
“For a long time, we were messaging speed,” Mitchell agreed. “Now you have to think about the airplane as a more flexible airplane. We can match what the customer needs. If the customer needs a high density, extra capacity airplane, we’ve got that. We published a fuel manual earlier this year which came out with a number of techniques, including slowing the airplane down, which result in better fuel burn numbers. It comes to the point where the trip costs are very close.
“You’ll always have the benefit of extra seats for the Q400. You’ll always have the benefit of the speed should you need it,” he said.
Mitchell noted that the Q400 could be scheduled at a low-speed cruise but if it’s late, “you can speed the airplane up” to maintain schedule. “You can’t do that with the competitor’s airplane.”
Mitchell also said that the Q400’s more powerful engines give the airplane an advantage over the ATR in hot-and-high and mountainous environments. The Q400 also has drop-down oxygen equipment.
“We’ve had to migrate away from just selling speed,” Mitchell said. “Speed doesn’t work for everybody.”