The 130 seater market

The launch of the CSeries in July 2008 initiated many discussions about the market those two aircraft are placed: the 110-130 seater market.
Let's have a quick look in the 130 seater market,

LEAP-X striking back?

CFM said over the weekend that they have four announcements on every of the first four days of this years Paris Airshow regarding LEAP-X customers. It is not clear, whether these are all for the A320neo or some of them will also be for the C919, but apparently CFM is strongly coming back from behind and it remains to be seen if the PurePower GTF engine can hold it's No.1 position on the A320neo.

According to a Bloomberg report, SAS will order the LEAP-X for their 30 A320neo. A few days ago I expected them they will go with the GTF - apparently I was wrong and I will speculate about the reasons a little bit later.
But let us look at the possible reasons of this comeback: if you read the blog entry behind the first link of this, article, there are two interesting things to note: CFM just lately changed the design of the LEAP-X engine:
1. The fan diameter got larger, from 75" before to 78" now.
2. The LPT got an additional stage - now it has seven, just as the GEnx-1B for the B787.

Both changes are good for about 1% in SFC - each. Additionally, I guess CFM changed to size of the core and made it smaller, what could yield in another 0.5% in SFC.
On the other hand, the engine gets larger, produces more drag, gets added weight and the added LPT stage produces extra maintenance costs.
Because of the added drag and added weight, the fuel burn benefit will end up in the range of 1.5-2%. Operating costs could end up being somewhere between 1-1.5% better.
If you study this site, CFM now claims a 1% better fuel burn against the GTF. Is this credible: a few weeks ago, before the design changes were made official, Bernstein, AirInsight and others said (with obviously good knowledge about the situation), that LEAP-X would trail the GTF by about 3%.
So if CFM now claims to be better by 1%, then they probably project their best possible SFC without regarding any development risk. This is not engineering practice, but as it seems, CFM can convince quite a number of customers with that strategy.

Now to the story about SAS and why they might have turned to CFM:
First, they are a flying a lot of  B737NG, thus having a number of CFM56 in their fleet and possibly a good relationship to CFM. A few weeks back they dedided to lease 2nd hand B737-700 and with that opting against the CSeries.
Easy question: who is most interested in CSeries failing in the marketplace:
1. Airbus
2. CFM
For that reason, I could see a campaign to fight all possible CSeries deals in a joint effort from Airbus und CFM. The litmus test for this thesis will be the CSeries' fate at Republic: if Republic now orders the A320neo with the LEAP-X and (sooner or later) cancels the CSeries, I would see this thesis is "proven". Also watch for Qatar...
The thriller just starts here!

Boeing creating a new market?

Air Transport World today reports that Buckingham Research expects Boeing to forego reengining the 737NG, a move still anticipated by a "meaningful number of investors" in the case that a Boeing customer would defect to Airbus.
But Buckingham noted that Boeing might be so capacity constrained in terms of orders that it might not have the possibility to reengine.
Instead of reengining Boeing would move to an all new aircraft, probably a new light twin-aisle. As I laid out before, such an aircraft would not make sense starting in the current lower capacity end of the 737, so I would guess (if true) that this aircraft would start where the 737-800 is today. The upper end then could be where the  757-300 is, just below the 787-8. That would then fill a niche, because today there are no new aircraft build in this segment - well, one could consider the Tu-204, but this aircraft is almost dead and even not competitive with the 757.
Buckingham says that Boeing would continue to improve the 737NG and is internally convinced that the 2016 737NG is competitive with the A320neo. Boeing earlier stated that the 737NG line could be open until 2026.
A move described by Buckingham would be both smart and risky:

• Risky as it is not clear if customers really will think that a more than 40 year old design will be competitive. Until then the CSeries is in the market, a similar Embraer aircraft could be on the way to the market, making the 737-700 obsolete - the backlog of the -700 is shrinking anyway (as well as the A319). The cabin diameter will still be the 737's problem, as people tend to get larger - vertically, but even worse: horizontally.
• Smart as it opens a new market field for Boeing and by that getting out of the competition with Bombardier, Embraer, the Chinese, the Russians and, to some extent, Airbus. Although for now it remains unclear if the new aircraft will have transcontinental or transatlantic range, the aircraft could be (with the right level of technology) better than the A321neo even if it is designed for more range to enable all 757 missions flown today.

But is there a huge market for these aircraft? At the lower end for sure, as the 737-800 shows - but there would be the problem. If I have two aircraft in my shop, which one should I sell the customer. The same problem appeared when Boeing bought McDonnell Douglas and the MD-95 became the B717. The B717 had to die, as it was a stand-alone aircraft, not part of a family - Boeing sold the 737-600 to SAS although the B717 would have been much better in costs for the SAS missions.
And what about Southwest, by far the largest Boeing customer today? They just ordered the 737-800, but all of their other (500+) aircraft have less than 150 seats and they also like the B717 as an addition with even lower capacity. I cannot imagine Southwest going to an all 180+ seater fleet in the future just to keep being a Boeing customer. And I cannot imagine that incremental improvements to the 737-700 are enough to keep them from defecting to Bombardier (they might one day decide to build a CS500, although saying differently, Embraer or even Airbus.
There were "just" about 757's build - for sure Boeing counts on creating a new big market segment when they really build that small twin-aisle. The question is, if that market segment will be there when the aircraft appears...