Airlines lose leverage in push for replacement narrowbody

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Pressure on Airbus and Boeing to accelerate plans to develop single-aisle replacement aircraft appears to have subsided - for now - as carriers focus on the task of weathering the global economic crisis.

About two years ago, some of the world's top airlines were extremely vocal about their request for a next-generation narrowbody. While interest has not diminished, the clout wielded by carriers has eroded, suggests Teal Group vice-president, analysis Richard Aboulafia.

Airlines ended 2008 with a $5 billion loss, and expect a further $2.5 billion loss this year. Widespread capacity reduction has resulted in some delivery delays and order cancellations.

"The only way airlines can get that leverage back is if the Bombardier CSeries becomes a big success," says Aboulafia.

The Pratt & Whitney geared turbofan (GTF)-powered CSeries won a big endorsement when Lufthansa in July 2008 launched the programme with a letter of interest for up to 60 aircraft. But the carrier has still to firm up its commitment. And other deals have not surfaced. Qatar Airways, for example, was seen as a serious prospective client. But the carrier says talks have now ended.

"Airlines still need to replace aircraft in 2013 - that's the year CSeries enters service. What we are finding, understandably, is that given the current financial situation many airlines are focused on short-term issues rather than completing their fleet negotiations for the long term," says Bombardier.

If Airbus and Boeing feel threatened by the 110/130-seat CSeries, they are not showing it. Neither of the two firms has defined replacement plans for the A320 and 737.

The lack of clarity has not slowed interest from engine makers, which are working to introduce significantly more efficient products. Indeed, Bombardier sees the GTF as a big selling point for its CSeries.

"The CSeries PurePower engine will incorporate the very best mature technology available. As a whole, CSeries design and technologies are developed to offer operational benefits. In the case of the engine that will flow well into the next decade," says the firm.

With no new narrowbody airframe expected to appear until at least the last few years of the next decade, Bombardier sees "a competitive advantage to be sure, particularly as CSeries is the only current family of aircraft designed specifically for the low-end single aisle market", it says.

The company estimates the needs of the 100- to 140-seat commercial aircraft market to be 6,300 aircraft, representing more than $250 billion over the next 20 years.

Should the CSeries fail to gain traction, however, the industry "should probably mourn rather than cheer", says Aboulafia, as it will give airframers little incentive to move forward their timelines for replacement narrowbodies, especially in light of today's "major impediments" to such development - slack passenger demand, cheap fuel and pressured research and development budgets.

"This is going to have a damaging impact on the arrival of new technology," he says.

Air France-KLM has been trying to persuade Airbus and Boeing to launch a new narrowbody for years. Despite the current economic climate, KLM senior vice-president for fleet development and aircraft trading Jan Witsenboer late last year urged for quicker progress in Airbus and Boeing's narrowbody replacement projects. "We wouldn't use an interim solution. We want a definite solution, preferably much earlier."