the aviation sector is not exactly the most competitive sector in the world
basically two companies dominate the market Boeing and Airbus
two heavyweights two giants that control more than 90% of all aircraft sales
worldwide we're talking about a sector that is also rapidly expanding
as you can see in this chart over the next 20 years the number of air
passengers is expected to grow at a rate about five percent every year and
between this growth and the need to replace old fleets the forecasts suggest
that over the next two decades at least 39,000 new aircraft will be required
it's a huge demands that will largely come from developing countries
and don't forget what we already told you in a previous video that I'll link
to in the description the aviation sector of the future is going to change
a lot in the coming years many of the so-called dense routes based on gigantic
hubs will be replaced by new thinner routes by direct routes with longer
flights operated by smaller aircraft
and that shift together with increasingly demanding environments or
regulations explains why Airbus and Boeing are in the process of adapting to
these new paradigms but let's not get distracted the fact is that a lot of
this promising future is particularly centered in Asia and I'm not only
referring to China but also to other interested parties who are already
making a strong impression look at this
the sweepers can afford to fly India opens 34 airports in 18 months as
aviation market booms The Washington Post
but here's the question what does this all really mean well given the juicy
growth forecasts in the aviation sector the increasing importance of smaller
aircraft and the emergence of China as the technological and economic power
we're now starting to see some companies that want to become the new players in
the aeronautical industry that is there are relevant manufacturers making a bid
to compete with the larger ones the question is all they managed to achieve
this or will it just be yet another frustrated attempt in this video we're
gonna tell you about what's new in the world of aviation so listen up
in the aviation sector we find two important pieces of news
on the one hand China's emergence in the aeronautical industry bends on the other
the demise of former regional aircraft manufacturers but let me start at the
end this time and tell you what happened to Bombardier and Embraer the world's
two largest small commercial aircraft manufacturers well the facts canada's
Bombardier with its CRJ series is built more than 1,800 aircraft and Brazil's
Embraer even more about 2,700 in this way between the two companies they have
controlled most of the regional aircraft market in the world in recent years
however it is not been easy for them during this period both Bombardier and
Embraer have had serious difficulties reinventing themselves adapting to a
mature and very different market than existed when these companies first began
to exploit their business that is their planes simply stopped selling well and
the companies were financially hamstrung as they made Titanic efforts to keep up
to date we'll see the reason for this later but for now let's just stick with
our story the blow was especially hard for Bombardier which saw its star
program the CRJ series that came into operation in the 1990s ending in
collapse with losses of approximately 600 million dollars in 2018 brazil's
embryo also began losing money about 180 million dollars in that year alone and
of course these financial blows coupled with increasing pressure from Airbus and
Boeing to control the regional aviation segments and thus get rids of the few
competitors still standing created the ideal scenario for the big fish to
gobble up the small ones
Airbus made the first move by announcing the purchase of the CSeries program the
latest aircraft model developed by Canada's Bombardier and soon after that
Boeing announced its merger with Brazil's Embraer a merger or rather a
purchase that is set to be completed this year 2020
Airbus has taken over and renamed the Canadian jet that Boeing tried to keep
out of the u.s. Business Insider Embraer soars in South Paulo as bolson arrow
approves Boeing deal bloomberg now did he think that the changes in the
aviation sector would end here well though nothing could be further from the
truth in fact this was just the beginning any idea where the main action
will be taking place exactly I'm sure many of you have already guessed it it's
of course China our China with their fingers in just about every pie but it's
not just about the big Asian giant it's also about its neighbour Japan who is
making a bit however these two cases represents two models and two ways very
different ways of doing things you see on the one hands we have the Chinese
state-owned manufacturer Commack which is trying to compete directly with
Airbus and Boeing in the short and medium-haul aircraft market this is a
really consolidated market we're trying to compete is a challenge that takes
real entrepreneurial boldness and on the other hand we have Japan's Mitsubishi
Heavy Industries one wing of the former Mitsubishi Ambar that today is engaged
in the construction of ships aircrafts and large industrial assemblies such as
nuclear reactors
but hold on just a minute is it realistic that these companies start
competing from scratch in 2020 do they really have enough capacity to develop
aircraft capable of competing with the fleet's of two aviation giants because
at the end of the day if Boeing is having so many difficulties with its
Jynx 737 max project a subject which we covered in a previous video imagine how
much more complicated and must be to start practically from scratch and the
best example is probably the case of China's carry Mac you want to know how
things are going for the Chinese and what we can expect from this risky
venture well listen to this Cormack bogged down by toun ambition if there's
one hazard that's common to any business venture it's that sometimes aiming too
high can mean shooting yourself in the foot before you've even begun and this
is precisely what might be happening to Commack let me explain to date the
Chinese state manufacturer has introduced two different aircraft models
the arj21 and the c919 the first of these co max AR j21 is a 90 seat plane
intended for regional routes after a decade of delays in commissioning and
six years between the first test flight and its eventual entry into the market
the arj21 is already crossing the skies with some Chinese airlines in fact there
are just over 20 planes currently in service the problem is that with so many
delays and such slow developments the plane is already outdated this is why
the United States and European markets consider it far far more inferior to the
regional aircraft made by Bombardier and Embraer
and it's a similar story with the latest and largest model the c919 a medium haul
aircraft with the capacity for almost a hundred and seventy passengers which
intends to compete directly against the current kings of the skies the Boeing
737 series and Airbus is a320 however the reality is that it seems an almost
impossible mission for this aircraft even get certified by aviation safety
agencies such as the United States's FAA or the European EAS a of course this is
a fundamental requirement for the craft to be able to fly in both of those
regions designing developing and manufacturing airplanes is one of the
most complicated tasks anywhere it takes an average of five years for Boeing and
Airbus as new models to be certified by aviation security agencies to imagine
what the timeframe might be for a Chinese model manufactured by a company
with no track record or established reputation today the c919 is in a very
difficult position as it may never be certified by either the United States or
Europe and that's the reality of it in other words faced with the situation
one thing seems certain Chinese manufacturer Accomack has a chance to
get ahead and compete against a Boeing and Airbus but only in China and perhaps
with a bit of lark in an Asian or African country
in other words globally the American and European manufacturers will be able to
sleep peacefully at night at least for a few years so now let's switch to Japan
to see what is happening with Mitsubishi's greatest aviation adventure
which we mentioned at the very beginning of this video well by all appearances
the Japanese have opted for a much safer way forward with fewer hurdles
Japan's return to the aviation race if mr. bushy is highlighting anything in
its drive to enter the aviation market fully it is to be much more prudence and
maybe smarter too and as you'll see in Mitsubishi Heavy Industries aeronautical
division they don't mess around with small change in addition to spending a
whopping seven billion dollars developing their own models that space
jet series they have also splashed out by buying Bombardier xyq Onix CRJ
program which we were talking about at the beginning of the video
everything's probably making a bit more sense now right while Airbus purchased
the C Series program it's a vicious or an opportunity in Bombardier CRJ program
and secured it for 550 million dollars
in this way Bombardier one of Canada's largest industrial groups has completely
unloaded its commercial aircraft business which was a real money losing
machine meanwhile Mitsubishi achieves a dual goal on one hand it will be in
charge of maintaining the hundreds of CR J's flying around the world and on the
other it manages to position itself as the natural substitute for these
aircraft went companies need to renew their fleets and that is precisely how
the Japanese company hopes to introduce its space jet series worldwide this
series is already in its final development phase after having made
nearly 900 modifications to suit the requirements of the United States's FAA
take notes of this very important detail Mitsubishi has prepared two versions of
this model one the main one for eighty-eight passengers and another a
little smaller for seventy-six and this is not a trivial move in fact it's a
decision that makes a great deal of sense
but why why on earth is the small version so important
well once again it goes back to regulations and limitations that aren't
difficult to understand usually because they are the result of political
negotiations where public interest is in the backgrounds and as you'll see in
order to make sense of these rules we have to know a couple of things first
that US law prohibits foreign carriers for operating domestic flights on its
territory that is the u.s. aviation market is protected and reserved
exclusively for US carriers and secondly of course this ban also includes
regional flights
and how is a regional flight defined well it's a flight connecting one of the
major airports the really important ones such as New York's JFK the George Bush
Airport in Houston or Los Angeles International Airport with other small
airports that is with small airports that do not have much passenger demand
and are operated by small aircraft and there are hundreds and hundreds of these
regional local airports throughout the United States and the thing is these
regional flights usually operated by subsidiaries and franchises of major
airlines such as American Airlines or United why because these subsidiaries
are not subject to the same labor agreements that affect large ones that
is they have different working conditions and lower wages and it is
precisely for this reason to prevent large airlines from outsourcing too many
routes and traffic that the trade unions agreed with the major airlines that the
routes operated by these subsidiaries can only be operated with aircraft with
a maximum of 76 seats and 86,000 pounds of weight
in other words smaller planes than the ones that the current market conditions
would need thus if the big airlines want to use larger aircraft with more than 76
passengers to have to operate the routes directly by themselves so trade unions
protect the jobs of employees in these large companies which as we have already
told you a subject to more generous labor agreements and yes we're talking
about the United States not Argentina here you see that things can be
complicated everywhere the fact is that it was for this reason the Mitsubishi
continued at vital to take over the CRJ program as well as to develop a smaller
and even lighter version of its original aircraft pretty clever
what do you think in fact this is what is allowed Mitsubishi to secure its
first confirmed orders from US companies specifically 160 aircraft and if we add
the other orders from Japan and other countries the model seems to be popular
despite having been developed by a company that has never built a
commercial aircraft on its own before
but it's not quite that simple the launch hasn't been without problems it
is actually riddled with delays
to give you an idea initially the Japanese company intended to put the
plane into service in 2013 but with all the design modifications it has had to
make to obtain FAA certification the delays have been ongoing and prolonged
moreover the slowness of Japan's own Air Safety Agency jcav to certify the model
is not helping them meet the deadlines as it stands today the entry into
service is now slated for 2021 following the latest delay announcement at the end
of 2019 all of this has increased the cost of developing the space jet program
from 5.5 billion dollars to more than 7 billion
like I said developing an airplane from scratch is neither cheap nor fast nor
straightforward now arms with all of this information what do you think is
the Boeing Airbus duopoly under threat is the arrival of new competitors
feasible in the future given how complicated it is to develop a
commercial aircraft can Commack be an alternative to traditional manufacturers
in China and other parts of the world I'll leave your answer in the comments
below and I really hope you enjoyed this video please do hit that like button if
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