Bombardier Eyes Emerging Markets in Asia

Singapore Air Show » 2012
ATR Q400
SpiceJet’s order for 15 Q400s has given Bombardier a firm foothold in India, where rival ATR has dominated the turboprop market segment.
February 14, 2012, 12:10 AM

For years Bombardier Commercial Aircraft claimed a modest level of sales success in Asia, selling 297 airplanes over the years to 38 operators. But its performance there has proved uneven, and the company traditionally has depended on strongholds in North America and Europe for the majority of its revenues. Unfortunately for the Canadian manufacturer, what once stood as the world’s two biggest markets for regional aircraft have become saturated.

Consequently, Bombardier’s failure to forcefully penetrate emerging markets has cost it a once dominant position in the segment. It now must play catch-up, prompting it to turn more of its attention to places such as China and India, where, until recently, it had woefully underperformed.

In fact, the company announced that last December it had signed its first CRJ customer in China in several years. The deal, involving a conditional purchase agreement for six CRJ900s, came from an unidentified Chinese airline and includes options on another five airplanes. In India, meanwhile, last year’s delivery of the first tranche of 15 Q400 turboprops on order by SpiceJet finally gave Bombardier a firm foothold in a country where rival ATR has dominated the turboprops market over the past decade.

Globally, however, the company’s commercial aircraft division has faced an undeniable struggle. Bombardier recently released figures showing that it delivered only 78 commercial aircraft during the 11-month period that comprised its last fiscal year (February 1 to December 31), while receiving net orders for just 54 aircraft, resulting in a backlog that, as of last October 31, dwindled to 52 CRJs and 29 Q Series turboprops. The previous year it drew firm orders for 93 commercial jets and delivered 97. Fortunately, the backlog for its new CSeries airliner stood at 133, meaning Bombardier has sold out all the delivery slots for that program for two years, following expected first delivery at the end of 2013. Still, the dwindling numbers of airplanes scheduled for delivery among the only two families of commercial aircraft now in production has no doubt given rise to concern at Bombardier’s headquarters in Montreal.

Nevertheless, Bombardier Commercial Aircraft vice president of marketing Philippe Poutissou said he considers last year an aberration, and that sales will rebound in the North America and Europe and accelerate in developing economies. “It has been a challenging time for many of our customers, particularly in our strongholds of North America and Europe,” he told AIN. “In 2011, of the orders we did book, we had quite a bit of success on the CSeries side, where we specifically booked 43 firm orders and, in January, we added another one from business aviation operator PrivatAir, bringing its total five.

“If we set aside the CSeries and talk about the Q400 and CRJ, we’re going to work very hard to ensure that the result from 2011 is a one-off,” continued Poutissou. “In fact, we’re taking a few steps, one of which is to ensure we have better presence and penetration in the emerging markets.”

In an effort to help reverse its fortunes in emerging economies, Bombardier recently announced two new vice presidents of sales for the Asia Pacific region and the introduction of a vice president of sales for the Middle East and Africa based in Dubai. The company has also devoted more resources to overseas customer support offices in places such as Mumbai. “As we’ve started to deliver aircraft into that market with the Q400s for SpiceJet, we’ve introduced more and more of our team into that office and we’ve grown the capabilities of that office,” explained Poutissou. In the Far East, Bombardier also maintains support offices in Tokyo, Shanghai and Sydney, all of which inevitably will become more important pieces of the company’s global network.

“I would say a couple things are changing,” said Poutissou. “First of all, we have new products that are perhaps more adapted to the needs of the airlines in the region. For example, the CSeries, absolutely has the capacity and range to allow some of the Asian carriers–and [CSeries customer] Korean [Air] is a great example of it–to expand their route networks into secondary destinations.”

Poutissou also referred to the new 100-seat CRJ1000 as a potential magnet for Asia Pacific carriers that previously rejected the smaller CRJs for their comparatively high seat-mile costs. “We know that the Asia Pacific market is one that is very much driven by low seat costs, whether it’s the LCCs in Southeast Asia or the very competitive market in India…So with the CRJ1000 now going into service we have a new tool we can offer to those customers.”

Bombardier hopes SpiceJet’s experience in India with the Q400 will convince others in the region–outside its relatively large base in Australia and Japan–to more seriously consider the 78-seat turboprop. “We see opportunities to perhaps replicate what SpiceJet has done and introduce this aircraft again to take the low-fare model into new routes and new destinations that [airlines] can’t serve with 150-plus-seat aircraft.”

Meanwhile, Bombardier still holds high hopes that its so-called framework agreement with Chinese manufacturer Comac will help it make headway into a market that, by its own reckoning, stands to account for 18 percent of the world’s demand for 20- to 149-seat airliners over the next 20 years. Entered into in March 2011, the agreement calls for the two companies to cooperate in seven major areas of development. Although Bombardier has not yet signed a firm contract with Comac, Poutissou indicated that the companies “certainly have [partaken] in a high level of engagement and [held] many discussions on areas of cooperation.”

“It’s certainly something that we’re not letting slip and we are actually putting quite a bit of energy towards,” he concluded.

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