Posted on 03/31/2005 12:46:08 AM PST by Righty_McRight
For decades, Boeing looked over its shoulder disdainfully at Airbus. In recent years, Boeing has been in the wake turbulence of Airbus. Today, Boeing better be looking over its shoulder again, this time at Canada's Bombardier.
With the announcement on March 16 that Bombardier will produce a 110-130-seat jetliner, the Canadian aircraft manufacturer is moving into the big leagues. Bombardier has long been a successful manufacturer of turboprops and regional jets, all but inventing the latter market. The 110-130-seat market puts Bombardier at the lower end of the big-jet marketplace dominated by Boeing and Airbus.
Bombardier plans to seek government support for up to one-third of the development costs for the new jet. Sound familiar?
Both "legacy" manufacturers have airplanes in the small-jet category: the Airbus A318 and the Boeing 737-600. Neither has been a commercial success and neither company makes much effort to sell these planes. The aircraft are known in the industry as "shrinks" of the basic models (a double shrink in the case of the A318), and they simply aren't efficient.
Bombardier's entry into the big-jet field, a fresh design, may well only be the beginning. If successful, there will certainly be pressure to expand the product line with larger jets, a family of jets. This process may take decades, but it has happened twice before to the detriment of the dominant manufacturers.
Boeing pulled this maneuver on Douglas (later McDonnell Douglas). Boeing was a nobody in the commercial airliner business in the 1950s when the 707 was introduced. Douglas and Lockheed shared the big-airliner market. Lockheed made the decision to produce a turboprop instead of a jet, and took itself out of the game.
Douglas went head-to-head with Boeing — the DC-8 vs. the 707. But the strategies diverged from there. Boeing produced a family of planes: the 707, 720, 727, 737 and 747. Douglas had the DC-8, DC-9 and DC-10. By the time the DC-10 and 747 entered service, Boeing had already surpassed Douglas to be the dominant supplier.
The process took a mere 15 years. Douglas didn't have by then the financial wherewithal to offer a family of airplanes and was forced to merge in 1967 with the McDonnell Co. to form McDonnell Douglas. The McDonnell family didn't understand the commercial aviation market and didn't want to invest in this side of the business.
Airbus offered its first airliner, the A300, in the early 1970s. After a slow start and many early missteps, Airbus began producing a family of airliners: the A300, A310, A318, A319, A320, A321, A330, A340 and now the super jumbo A380.
McDonnell Douglas, hobbled by bad management, all but ceded the airliner business to Boeing and Airbus. By the time McDonnell Douglas and Boeing merged in 1997, Douglas had only about 7 percent of the market.
Boeing still dominated, but now the McDonnell Douglas management ran Boeing and the anti-commercial mentality permeated the once-proud company. New aircraft development all but came to a grinding halt.
Today, Bombardier is poised to move up on Boeing as Boeing did on Douglas and as Airbus did on Boeing. Bombardier has a family of airplanes: the Dash 8 turboprop, the 50-, 70- and 90-seat regional jet and soon the 110-130-seat "C-Series" jet.
Boeing's family of jets is dominated by the 737, whose basic design dates to the 1950s. The 747, brilliant as it was, is old and tired. The 777 is a great jet but struggles against the A330-A340 family market segment. The jury is still out on the new 787, and will be until well after this plane enters service.
Boeing needs a new commitment from its leadership to the next quarter century instead of the next fiscal quarter. A replacement for the sturdy, but aging 737 product line is needed. So, too, is an attitude that investment in its airliners is necessary to keep Boeing as a premier leader in commercial aviation, not a grudging make-do with derivatives of old, out-of-date planes (757-300, 767-400 and the 737-900).
Boeing, and McDonnell Douglas, made the mistake of dismissing Airbus for decades as a flash in the pan. Boeing better not make the same mistake with Bombardier, or it could find itself becoming the new McDonnell Douglas, with an insignificant market share in the next 20 years. And America could find itself an also-ran in the commercial airplane business.
Bombardier is already the world's third-largest aircraft manufacturer. If Boeing isn't careful, Bombardier could surpass it to become No. 2.
Scott Hamilton has been associated with the airline industry since 1979 and a Boeing watcher for 20 years. He is currently a consultant to the aviation industry. He lives in Sammamish.
Copyright © 2005 The Seattle Times Company
Ping
If bulding 120 seaters is so lucrative, why aren't Boeing and Airbus doing it?
Recently Russia, and this time Canada.
The 737 isn't a commercial success?? Or is the author specifically referring to the one version?
Who would want to fly in a "bombardier"?
Lots of people already fly Bombardier. Regional airlines fly more of their planes than any others Or they take Bombardier rail cars or ride Bombardier Ski-Doos and snowmobiles.
Bombardier is a smart company. They have built up from one product, the snowmobile, and advanced into new markets with well conceived and executed products. Then they enter a market, they play to win, and they often do.
And if you want to buy Bombardier stock, you can't. They are privately held family company. They finance their own expansion from previous sales.
In Canuckistan it's pronounced "bom-BAR-dee-ay".
Boeing bought DeHavilland a number of years ago for the 50-100 seat market. From what I understand, they gave it up after a few years when they realized they couldn't deal with the militant unions in Toronto and elsewhere.
IIRC, Boeing sold Dehavilland to Bombardier.
Wonder where the author came up with this. There are more 737s in the air than any other plane, period.
I can't document or link to this fact, but I do read a lot and am a big Boeing fan.
As a Bombardier employee, I can let you know that Bombardier stock is currently available, though it can only be purchased on the Canadian exchange. I'm also a little dismayed at your statement tht Bombardier is a smart company, as their stocks have plummeted in the last couple of years, going from a cost of about $25.00 per share for class B stocks in 2001 to somewhere around $2.75 per share today.
Toronto Exchange: BBD.MV.A
www.bombardier.com
They also build railway locomotives and cars, as well as airport monorail systems.
Pretty savvy bunch of engineers and manufacturers.
I love flying on their regional jets (when I have to),they seem to be strong and very powerful and good handling.
Sounds like instead of Boeing taking over McDonnel Douglas, it was McDonnel Douglas that took over Boeing using Boeing's money.
Sounds like it is time to buy...
Let it be known that Bombardier owes a lot to the Canadian government for supporting it. The company name has politics written all over it.
"....the Boeing 737-600. Neither has been a commercial success...."Wonder where the author came up with this. There are more 737s in the air than any other plane, period.
The author was talking about the 737-600 not the 737-700, 737-800, or 737-900. The 600 is the shortest plane in the picture below of all the "Next Generation" 737s. The 600 is a shrink of the 700.
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