The United States International Trade Commission voted unanimously on Friday to prevent the U.S. Department of Commerce from imposing tariffs on Bombardier aircraft, like their new C series, of up to 300%. These taxes, if imposed, would make the initially affordable price of the C series so overpriced to the point it is uncompetitive. Boeing previously protested the C series claiming that the government subsidies given by the Canadian government towards their development caused significant harm to Boeing in the commercial aircraft marketplace. Delta Airlines, one of the largest airlines in the US, had ordered up to 125 CS100 aircraft to replace its aging fleet of MD-88 jetliners. Boeing claims that Bombardiers Canadian funding help it sell these aircraft to Delta at “absurdly low process.” Deliveries were about to begin to Delta, but this dispute between Bombardier and Boeing has stopped those temporarily and created enormous strain between the United States and Canada.
This decision is a decisive win for Bombardier and will ultimately hurt Boeing’s reputation in the long run. Boeing currently does not even offer a commercial aircraft in the 125 seats regional market that the CS100 is competing in. Boeing most likely was trying to prevent 160 seat CS300 and other planned larger C series variants which could compete against the 737 MAX series. Another huge loss for Boeing is the fact Airbus, Boeing’s direct competitor in the narrow body market, now holds a majority stake in the C series and will be marketing it and manufacturing it right here in the United States. Airbus will use the C series to supplement its A320 series and possibly replace the A319neo in its narrow-body lineup.
Both companies share prices were affected by this decision with Bombardier rising 15%. Boeing’s shares hardly changed, but they did drop by 0.4%. At least, for now, the market is investing in the Canadian company; however, Boeing seems to be able to shake off these disputes with little loss of investment. Boeing, while not developing a 100 seat regional aircraft of its own, seems to be interested in another lead manufacturer in the market, Embraer. Boeing and Embraer had been in possible merger talks last month, but as of publication, neither corporation has publicly discussed their intentions.
The Bombardier C series is capitalizing on an aircraft market that hasn’t had a new plane since the late 1990’s. The 100 seat short-range airliner market suffered the downturn in air travel following Sept. 11, 2001. Today the high-efficiency, short range market is in very high demand in US airlines, and many carriers are trying to find aircraft to fill this role. Many carriers have purchased Airbus A320’s and Embraer E190s to fill this space while others like Delta have looked to “old but gold” aircraft like the McDonnell Douglas MD-90 and Boeing 717(MD-95). Unfortunately, none of these aircraft are a perfect fit for the role airlines are trying to put them in. Bombardier has built a high-tech, high-efficiency airliner that is the ideal plane to fill this gap in the market and set to take over. This decision by the US FTC has paved the ride for Bombardier to finally achieve success with a very long and expensive project like the C series. The Canadian manufacturer is set to see progress it has not seen since the release of the CRJ series. Now, all we can do is wait to see Boeing’s next move in this new battle for the narrow-body market.
The Bombardier CS100 is already in service in Europe with Swiss Global airlines and the CS300 has started revenue flights with airBaltic, Swiss Global, and Korean Airlines. Other notable airlines that have placed orders for the C series include Air Canada, which has 45 CS300s on order, Republic Airlines, which has 40 CS300s on order, and EgyptAir, which has 12 CS300. The C-series was already having a strong start for a newcomer to the short-haul sector and the ruling by the Federal Trade Commission will only secure its place in the future of US air travel. Bombardier is here to stay.