April 28th, 2016 was the day that Bombardier would land a significant order from Delta Air Lines.
Unfortunately, this big order from Delta would kick off a series of events that would eventually
lead to intervention from Boeing and ultimately, acquisition of the aircraft program by Airbus.
So for those unaware of this major deal, what was it so significant?
First off, we’ll begin by letting you know that this is a summarized version of the story.
While we’ll cover the key points in today’s video, a more detailed account
and analysis of the saga will be featured on our long-form channel: Long Haul by Simple Flying.
The Delta CSeries deal was critical for Bombardier and its newest aircraft program-
which was hoping to make inroads in the US market.
However, a year later, Boeing would file a complaint against the deal.
To understand why, we need to go back in time a little bit.
Despite the rewards of lower operating costs and higher efficiencies,
there are many risks in producing an aircraft with a clean-sheet design. With all of the potential
risks and required investments, Bombardier had significantly “gone out on a limb” in developing
its CSeries jet. As a result, racking up orders would be critical for the company.
Being one of the world’s largest aviation markets, landing sales in the US market would have been
huge for Bombardier. If one airline were to take a risk and go big on the CSeries, it would signal
to other operators confidence in the type. This is why Delta’s 2016 deal so critical.
In late April of 2016, Delta would commit to a firm order for 75 CS100s with options
for another 50. The deal was just what Bombardier needed to regain momentum
as it worked towards ramping up production. However, in April 2017 Boeing filed a
complaint with the US International Trade Commission (USITC), accusing Bombardier of
quote-unquote “dumping” the jets- that is to say, selling them at below production cost.
Boeing also asserted that Bombardier’s subsidized sales of its CSeries in the
US was at the detriment of its 737 program, which would soon see the 737 MAX enter service.
The US Department of Commerce would then impose a 219.63% tariff on every Bombardier CSeries
airliner brought into the country- effectively tripling the cost of each aircraft for Delta.
As reported by Bloomberg, Delta issued a statement saying:
“We are confident the USITC will conclude that no US manufacturer is at risk
because neither Boeing nor any other US manufacturer makes any 100-110 seat aircraft
that competes with the CS100…Boeing has no American-made product to offer because it canceled
production of…the 717 — more than 10 years ago.” According to Delta, Boeing’s only proposed
alternative to the CS100 at the time was to offer Delta a batch of second-hand
Brazilian Embraer E190 regional jets. The Canadian Minister of Foreign Affairs
at the time called the situation and Boeing’s “protectionist nature”
deeply troubling, saying in 2017: “It is beyond all reason that
Boeing could be threatened with injury in a market segment it exited over a decade ago,”
The comments came at an even worse point for Bombardier as the US Department of Commerce
had hit it with an additional 79.82% anti-dumping duty while “generously”
adjusting its 219.63% tariff down to 212.39%. This turmoil over tariffs would see Airbus swoop
in to throw the CSeries program a lifeline. With Airbus having a production facility in Mobile,
Alabama, the jets meant for Delta would be manufactured within the US,
thus avoiding the hefty tariffs. With the cards seemingly stacked
against Bombardier, it looked like the deal was in real jeopardy. However, the USITC would
eventually overturn the tariffs and rule that the CSeries jets did not quote “injure U.S. industry,”
Of course, by this point Airbus already had a controlling stake in the program.
Since then, the A220 has become a fairly well-respected aircraft.
Praised for its low operating costs and extensive range and efficiency.
Despite still losing money on the program, Airbus is hoping to ramp up production
and make its output more efficient so that it can finally turn a profit.
It’s difficult to know what would have happened to this jet had Boeing not gotten involved,
driving the program into the hands of Airbus. Ultimately, what’s done is done,
and from the looks of it, Delta - as well as other airlines, have done well with the A220.
Do you think the A220 would be as popular as it is now if Airbus didn’t takeover the program?
Let us know by leaving a comment. AND, just a reminder that this is
a shorter version of our report on Delta’s CSeries deal. For more details and analysis,
subscribe to our Long Haul channel to be notified of the release of the lengthier companion video.