Two may be company, but three is a crowd. It is a message on which the world's three main aircraft engine manufacturers have had cause to dwell. They know only too well the damage that a three-cornered battle can do to margins in highly competitive but low-volume aero-engine markets.
The scramble to power the latest generation of widebodies is a case in point. General Electric, Pratt & Whitney and Rolls-Royce were already pitted against each other on the Boeing 747-400 and 767 when, in the early 1990s, each rushed to develop a new engine offering for the "big twins", in the shape of the Airbus A330 and Boeing 777. The result was a fierce battle for supremacy from which some painful lessons have been learned.
No single manufacturer has achieved an overall dominant share (see market share statistics over page), yet on individual airframes the race has tended to come down to a couple of leaders with a third company lagging the field. GE, for example, has struggled to match P&W and R-R on the A330 with a share barely in double figures. In turn, R-R is a clear third on the 767 and 747-400, yet its new Trent family has helped it steal a march on the 777 programme. P&W is in pursuit with GE lagging.
But if three rivals mean too much competition, is a single supplier too little? On its proposed long-range 777X versions, Boeing plans to make GE sole supplier. It explains this as an economic necessity given the scale of the engine development programme against the relatively modest target for deliveries - up to 500 over 20 years. The prospect has garnered a lukewarm response from many airline customers faced with adding a new engine type to their fleet. Boeing and GE have had to go to new lengths to guarantee that there will be no extra costs.
Airbus had already taken the sole source route on its Airbus A340. CFM International, a joint venture between GE and France's Snecma, started with exclusive rights to the initial models, while R-R and its Trent is the only option on the larger A340-500/600 - although Airbus was keen to avoid the term "exclusive".
The next two major widebodies now on the drawing boards - the Airbus A3XX and stretched 747 - are due to provide a choice. But that will be between two not three, with GE and P&W in alliance against R-R. A happy compromise perhaps, limiting the cost of developing new engine variants, but handing airlines room to negotiate.
Single-aisle battles
At the single-aisle end of the market, Boeing appears to have demonstrated with the 737 that exclusive deals can succeed provided that the overall package remains competitive. Ever since 1981 and the launch of the Boeing 737-300, customers have been able to choose any engine as long as it was the CFM56. That exclusivity proved unshakeable even with the launch of the 737 New Generation. CFM has so far equipped close to 2,400 737s with another 900 on order. CFM president Gerard Leviac says the production rate for the CFM56 reached five a day over the summer, although that is gently winding down.
While CFM has kept the 737 business to itself, the venture has had to stay sharp in its tough battle over the Airbus A320 family with International Aero Engines (IAE), a venture controlled by P&W and R-R. In that contest the spoils have been fairly evenly matched. Yet another contender appeared a year ago with the launch of the family's smallest member, the A318. That was initially not offered with either incumbent engine, but rather P&W's new PW6000.
As a second shrink of the 150-seat A320 airframe, more than the normal tweaks were required to make the economics of the 107-seat A318 stand up to scrutiny when pitched against more specialised rivals like Boeing's 717 (itself offered only with the R-R BR715). The A318 provided Airbus with a quick and easy counter to the 717, and offered P&W the ideal launch application for the PW6000. This important new engine not only represents P&W's intense effort to re-enter the 100-seater engine market on its own account, but also provided the core for the company's next generation geared fan development, dubbed the PW8000.
P&W's hunger to be on the A318 effectively drove the airframe programme through the pre-launch phase during 1998, and ensured that both Airbus and customers received competitive offers. This helped drive down the airframe's direct operating costs and offset the lack of engine commonality with larger versions.
Although IAE made noises about offering an engine for the A318, in the end it was only CFMI that came forward with a rival offer, after much lobbying by Air France which planned to place a 10-aircraft order. As a result, the A320 programme is in the curious position of having three engines offered on it but only one of which, the CFM56, is available across the entire range - similar to the 777X. If the PW6000 could have been incorporated as part of the IAE product-line even if only by brand, it would perhaps have created a tidier alternative to the CFMI offering.
Regional boom
The fastest moving market has been for the regional jet. In this high output but low margin business, GE has cleaned up as manufacturers turned to the company to provide powerplants for their new airframes. GE's CF34 turbofan, which already had a large slice of the 50-seat business, has won every engine competition in the 70-100 seat sector. After being selected by Fairchild for its 728JET family and Embraer for its RJ-170/190, the company has underlined its strength by with a place on Bombardier's planned 90-seat Canadair Regional Jet (CRJ) stretch, the -900.
That GE now holds such a dominant position in the regional jet market is ironic, given that its presence in the sector happened almost by accident. The CF34, a derivative of a military powerplant, happened to be the engine on Canadair's Challenger business jet, and was therefore the natural choice when the airframe was used as the basis for the original 50-seat CRJ. Canadair, now part of Bombardier, has delivered 360 CRJs, and holds orders for 350 more, all powered by GE. P&W could also get in on the act if Bombardier launches its proposed all-new 110-seat BRJ-X with the PW6000.
R-R's Allison engine also has a strong niche on Embraer's fast-selling 37-50 seat RJ-135/140/145 family. P&W Canada meanwhile has pinned its hopes on Fairchild's 30-40 seat jet family as it searches for new applications for its PW300 turbofan. To date, the overall market share picture for the regional sector is a familiar two-horse race: GE in pole position with over half the market, R-R a second challenger with 28% of aircraft orders and P&WC still in single figures. Perhaps, the aviation industry prefers its competitors in pairs.
Scource: Airclaims CASE database
Source: Airline Business
