Bombardier CSeries flies for the first time

by Vinay Bhaskara

Earlier today at Montreal's shuttered Mirabel Airport (YMX), Bombardier's new CSeries jet flew for the first time today. The flight of CSeries flight test vehicle 1 (FTV1 - a CS100) was performed under perfect weather conditions in Montreal, and also represented the first flight for engine manufacturer Pratt & Whitney's new PurePower geared turbo fan (GTF) engine.

The flight lasted two and a half hours, taking of at 9:55 am local time and landing again at 12:25 pm. It ended more than two weeks of constant speculation over the date of the CSeries' first flight as Bombardier battled unsuitable weather conditions in the Montreal area.

The flight was crewed by Captain Charles (Chuck) Ellis, Chief Flight Test Pilot, Bombardier Flight Test. He was joined by his colleagues, Capt. Andris (Andy) Litavniks and Andreas Hartono in the roles of First Officer and Flight Test Engineer respectively.

Captain Ellis had this to say about the first flight:

The performance of the CSeries aircraft was very impressive! We couldn’t have wished for a better maiden flight,....FTV1’s state-of-the-art flight deck was responsive and comfortable, and the aircraft handled exactly as expected. Overall, we had a very productive first flight and an excellent start to the flight test program.

During its first flight, the CSeries reached a height of 3,810 meters and an airspeed of 230 knots (426 km/hr). Several test were done in-flight including flap and landing gear retractions/extensions, in-flight maneuvers including a simulated landing, and validation of the flight control system.

Onlookers raved about how quiet the CSeries was on take off and landing, one of the benefits touted by Bombardier and Pratt & Whitney. A total of five CS100 test vehicles, in various stages of completion, will join the flight test program in coming months, and according to Bombardier, it will be months before acoustical testing is finished. The total flight test program is set to be around 2,400 hours.

The first flight is good news for the CSeries program, which has suffered under the weight of a long delay, rising costs (program cost is now projected at $4 billion, up from $3.5 billion), and strong competition from rival Embraer, whose E2 re-engine of its E-Jet family of aircraft has already won more than 100 orders after being offered for less than 3 months against 177 total orders for the CSeries after six years (63 CS100, 114 CS300).

The first flight of the CSeries and the Boeing 787-9 later this week will be the last major first flights for at least the next three years, until the A350-800, the 787-10, and the Embraer E2 all have their first flights in the 2016-2017 time frame.

The following video from Bombardier shows the take-off of the first flight.

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CFM commences A320neo LEAP-1A engine certification with test run

by BA Staff

In a major milestone for the Airbus A320neo (new engine option) family jetliners, CFM International, kicked off its engine certification programme for its LEAP-1A turbofan engine which will power the new aircraft.

CFM LEAP-1A turbofan for A320neo on the GE test rig. Photo courtesy Airbus S.A.S.

The engine conglomerate conducted the first run of the engine at GE’s Peebles, Ohio outdoor test facility. The engine performed as expected and reached full take-off thrust, during these initial evaluations.

CFM's LEAP-1A along with Pratt & Whitney’s PurePower PW1100G-JM Geared Turbofan are the two new engine options being offered for the new variant of the A320 narrow body family. Boeing offers the 737 MAX as competition.

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PurePower 1100G-JM engine for A320neo conducts first flight

The Pratt & Whitney (PW) PurePower PW1100G-JM engine meant for use on the upcoming Airbus A320neo successfully completed its first flight May 15, launching the engine family’s flight test program.

Ironically, the engine which is meant for an Airbus aircraft flew on a Boeing aircraft. Pratt & Whitney’s 747SP flying test bed at the company’s Mirabel Aerospace Centre, in Mirabel, Quebec, Canada.

The engine was ground tested for 365 hours before being cleared for the first flight. Three additional engines are undergoing rigorous ground testing.

The PW1100G-JM engine is planned to be certified by the third quarter of 2014 with entry into service (EIS) planned for the fourth quarter of 2015.

The PurePower GTF (Geared Turbo Fan) engine family uses an advanced gear system allowing the engine’s fan to operate at a different speed than the low-pressure compressor and turbine to reduce fuel consumption and noise.

Even in these early stages, testing has yielded an optimisation in the engine fan’s configuration. Airbus and PW agreed to simplify the propulsion system by removing the Variable Area Fan Nozzle (VAFN) from the A320neo nacelle after the fan blade demonstrated better performance across the flight spectrum.

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Exclusive interview: Giorgio De Roni - CEO GoAir - Part 1: GoAir is profitable

Over the last 18 months, the soft spoken Giorgio De Roni has been quietly turning around the Wadia family promoted GoAir. From a rock bottom position, dismal market share, and reputation for frequent cancellations, De Roni has grown GoAir to surpass Kingfisher Airlines and JetLite in market share, and made GoAir a contender in the Indian airline industry, with the confidence to place large orders for 72 Airbus A320neo aircraft.

In a broad ranging two-on-one interview, Devesh Agarwal and Vinay Bhaskara spoken to De Roni. During the interview, De Roni dispelled the misconception that IndiGo is the only profitable airline in India.

GoAir is profitable, and this profit is achieved purely by operations, without the income from sale and lease back of aircraft.

In the first of this two part report, we cover the financial and strategic aspects of the interview.

Q: In March this year, at India Aviation, Mr. Dinesh Keskar was saying that India is having "profitless growth." Airlines were experiencing growth in passenger numbers but profits were very hard to come by. In less than 3-4 months, growth has stagnated, but profits are there. What are your thoughts on this odd situation?

My thoughts are that the industry should not operate below cost of production. Unfortunately the situation in the past in India was that most competitors were more interested in market share rather than profit. So I more than welcome the shift in strategy from most of my competitors. And this has brought fares in line with costs, and in fact we have been able to deliver a profit for the first quarter.

Q: Any numbers you could share?

No, not really, we are not a listed company and as a policy, we do not share our results. I can say, that I am relatively satisfied of the results. The net profit was in percentage terms higher than IATA average, and differently from some of my competitors, it was purely reached by operational factors; so by revenue from passengers, and not from non-operational sources [referring to sale and leaseback income and other non passenger sources of revenue]. I never comment on my competitors, I try to learn from them…. And it’s [Sale and lease-back income] not something that only happens in India.

Editor’s Note: The IATA figure is 1.4%. Since GoAir’s figures came purely from passenger revenues, they outperformed the passenger figures at both SpiceJet and Jet Airways.

Q: You were mentioning your fellow competitors. If you look over the past year at your fellow LCC competitors, both SpiceJet and IndiGo have pursued a rather aggressive growth in their own form. SpiceJet has been going into virgin territory withthe Q400 in to Tier II and Tier III markets, and IndiGo has been adding a new A320 literally every 3 weeks; and they have gained a lot by the implosion or the contraction, of Kingfisher. However, GoAir has pursued a very modest growth path. In fact we think you’ve added only one aircraft net in the last year.

In this financial year we added two net aircraft. One in April and one in August, with a third one coming in January 2013. Yes, we have a more cautious approach to growth. We are exclusively targeting profitability and not really market share. We do have an ambitious expansion plan, and in fact last year we ordered 72 A320neos.

So we are committed to better serve the country. I think that we had some advantage in being a small carrier last year. Our losses were limited. It’s an airline 100% owned by the [Wadia] family . They are committed to the airline business, but I feel personally that we can grow only if we deliver profit. So I would prefer to deliver a profit and remain small as opposed to growing rapidly and having challenges on the bottom-line.

Q: Could you describe what trends you’ve seen in the unit PRASK revenues (passenger revenue per available seat kilometer) in the past several months, because we do know that SpiceJet recorded PRASK growth of more than 17% and Jet Airways recorded PRASK growth of more than 15% on its domestic network. Are you seeing similar numbers?

Yes, I would say that we are pretty satisfied of the [PRASK] growth. What is inconvenient is that the cost structure also suffered a significant increase. Airport charges increased due to the devaluation of the rupee against the dollar, fuel prices increased heavily. Since September 1st, I think we reached the historical peak of the cost of fuel in India, which is not the case in other parts of the world. So I just wonder how we structure the cost of fuel in India versus other geographical areas.

Q: Is it possible for you to share in percentage terms roughly the breakup of costs at GoAir?

Fuel costs are about 50%, more precisely it might reach around 55% of our total cost now with fuel at Rs. 72 per litre? That is the figure I remember most clearly, because it is a huge amount. I would say that the cost of personnel is pretty efficient, also because the most expensive community, the pilots are pretty well utilized with more than 900 hours per year, the cap being 1,000 per year in India. Certainly we are suffering from the weakness of the Rupee as far as lease rentals and maintenance costs are concerned; due to the fact that maintenance is performed primarily with US dollars.

Q: And you did mention airport charges?

Of course airport charges are huge. You are aware that Delhi Airport increased charges by 334%. It was a number that did not meet their expectation of a 700% increase. But I’m challenging anyone to find any other airport in the world with such a huge increase year by year.

And this is a serious concern.

Of course when we say that fares have increased year over year, we have to consider that we have to shift to the customer the burden of increasing costs. Because we cannot absorb any increase in costs, we have to transfer them to the customer. What is the result? The result is that volume and demand have decreased, as the data in June and July have shown.

So I don’t think that the way airports keep growing their costs and increase their inefficiency is smart. At the end of the day, they suffer due to a decrease in demand.

Q: Can you give us a brief financial outlook for the next year, and then maybe 3 years out?

Well I can tell you that we forecast to achieve a profit at the end of the year. Of course the first quarter was positive. The second quarter was the weakest from a cyclical point of view of the financial year, so we are definitely suffering. That said, for the entirety of the year, I am relatively confident that we will deliver a profit.

Q: What do you assume will be your revenue growth over the next one and three years, relative to 2011-12?

Well what is important to us is to remain flexible. Although we have a purchase order for roughly 80 aircraft between today and 2020, we should bear in mind that if the market is not growing, if there are turbulences, we have to be more flexible and be cautious. Or if the market offers more opportunities, we have the flexibility to take more aircraft and our part of the growth.

Q: Do you currently have any purchase options for the A320neo?

We don’t have options at the moment. 72 A320neo and the 7 remaining A320 classic orders are all firm. Anyway you know that there is a sort of over-production of narrow-body aircraft. And it’s not really a problem to add aircraft if the market requires.

Q: How do you think valuations in the used market are looking as both the 737MAX and A320neo are coming closer to delivery? Are you finding any impact on the secondary markets?

The residual value will be impacted definitely. We still have to see whether those manufacturers will deliver as per the schedule, or if, as it is normally, there might be some delays. But the impact on the present values might be negative.

Q: GoAir has selected the PurePower (Pratt and Whitney GTF) engine for the A320neo. And we’ve heard that CFM has not quite been able to deliver on the performance parameters of the LEAP-X?

I would disagree. First of all, we are very satisfied with CFM engines for the current fleet. Then, as I told you a few minutes ago, I don’t want to go for over-promising. And I don’t like my providers to over-promise. And since I’m not commenting on my competitors, I don’t understand why my provider comments on their competitors. They are free to do whatever they like.

[Editor's note: Our source of information on the LEAP-X engine is not Pratt and Whitney]

Q: So can you talk about some of the factors that drove your decision to purchase the PurePower engine?

So we did an overall evaluation from a financial and technical point of view and in the end we found Pratt and Whitney’s proposal to be better. But this is not to say that we are not satisfied with the present [CFM] engines that we have on our fleet.

Q: You did mention aircraft program delays briefly. And since both Boeing and Airbus have had trouble with delays recently on the 787 and A350 programs respectively, how concerned are you about delays [on deliveries].

We are among the first carriers in the world to receive the A320neo in the first quarter of 2016. So far, I do not expect any delays. But we aware that in new aircraft, some delays might happen. Although, considering that 95% of the airframe is common to the current airframe, and considering that the same engine technology will be utilized on other aircraft in the next year, I feel relatively confident that Airbus will be able to deliver the aircraft as per schedule. You are aware that anyhow that we have current engine A320s on order, and so we are not really planning for an environment with delays. But it might happen.

Q: Will GoAir be adding Sharklets to its A320 classic fleet?

Yes, our next [A320] delivery in January will be with Sharklets. In fact, I think we will be among the first airlines to have sharklets; most probably the first in India, though it’s not really a race against IndiGo.

[Editor's note: Sharklets are new wingtip devices fitted on the A320 family aircraft]

Q: Has Airbus indicated the possibility of retroffiting sharklets?

Yes they have. There is no clear picture on the cost involved and the time-frame of grounding the aircraft. As soon as they come out with a final picture, we will evaluate. We are keen to reduce fuel burn, both for savings and for the pollution reason.

Q: What sort of numbers are you looking at in terms of fuel burn reduction from the Sharklets?

Based on our network, we are looking at something around 1.5% savings.

Q: And what about the A320neo?

On paper, they [Airbus] say that there will be a saving in the range of 15%. That would be a great achievement.

Q: Your order for 72 A320neos have a list price of almost $5.6 billion dollars, which will require around $280 million in upfront financing costs. How is GoAir planning to pay for this order?

[De Roni laughs] Your calculation is pretty precise.

We are well funded. If there are opportunities in the market we will consider them carefully, but there is no concern [about paying for the aircraft].

Q: So there is no feeling at GoAir that it is time to turn to the public market with an IPO?

Well inside the company last year, there was a project to develop an IPO. It was not pursued due to the overall position of the market. We are open, but that is a question that needs to be asked of the chief shareholder. I will say that overall we are comfortable with the funding for the next set of deliveries.

Stay tuned for Part 2 of this interesting interview. Comments and feedback are always welcome.

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IndiGo firms up its contract with Pratt & Whitney to power its Airbus 320neos

The first day of the Farnborough Air Show has been relatively quiet on the orders front. But Pratt & Whitney has announced a slew of engine deals for Airbus' A320neo, and included in the deal was a firming of the contract between P&W and India's largest low cost carrier (LCC) IndiGo Airlines to provide PW1100G-JM (otherwise known as the Geared Turbofan or GTF) engines for IndiGo's A320neos. The selection of Pratt & Whitney engines to power the A320neo was first announced at last year's Paris Air Show, but a fully firm contract was not signed until today at Farnborough.

IndiGo had this to say about the deal.

“With oil prices on the rise, we are more satisfied than ever with our selection of the Pratt & Whitney PurePower engine,” said IndiGo President Aditya Ghosh. “As a result of the lower engine operating cost, we are confident that we can maintain our competitive low fares while simultaneously offering our customers the most environmentally friendly way to fly.”

Meanwhile Pratt & Whitney, which currently trails its rival CFM (a joint venture between GE Aviation of the US and Snecma of France) in market share in the engine battle for both the large narrowbody segment, and specifically on the Airbus A320neo, was happy to sign the deal

“This IndiGo order represents one of the largest engine orders in Pratt & Whitney’s long history," said Todd Kallman, president, Commercial Engines & Global Services for Pratt & Whitney. “We are excited by the opportunity to power IndiGo’s A320neo fleet and fly its customers with the dependable Pratt & Whitney PurePower engines.”

IndiGo has 150 A320neos on order and is one of the earliest customers for the aircraft, which will enter into service (EIS) in 2015 with Virgin America.

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Boeing faces major challenges on the 737 MAX

Earlier this week, Boeing released some of the confirmed design details for its re-engined 737 MAX narrow-body program. The new series of aircraft is expected to retain significant commonality with its predecessor, the Boeing 737NG program, however unlike Airbus' competing A320neo re-engine program, there are tangible changes being made between the 737NG and 737MAX due to the increased engine diameter and weight.

"The 737 MAX is on-track to deliver substantial fuel-savings to customers starting in 2017," said Beverly Wyse, vice president and general manager, 737 program. "We've made several design decisions that support the performance targets for the MAX and evolve the Next-Generation 737's design within the scope of the 737 MAX program."

The major design decisions and changes are as follow:

• Aft body aerodynamic improvements - The tail cone will be extended and the section above the elevator will be thickened to improve steadiness of air flow, thereby eliminating the need for vortex generators on the tail. 
• Engine installation - The new CFM LEAP-1B engines will be integrated with the wing similar to the aerodynamic lines on the Boeing 787 Dreamliner, and on a more pronounced manner than the 737NG's aerodynamic lines. A new pylon and strut, as well as an 8 inch nose gear extension will allow the 737 MAX to maintain similar ground clearance to the 737NG despite the integration of the larger LEAP engine, which is planned to have a fan diameter of 68.4 inches versus the roughly 61 inch diameter of the CFM56 family of engines that power the 737NG. 
•  Flight control and system updates - The flight controls will include fly-by-wire spoilers (the Airbus A320 "classic" is primarily a fly-by-wire aircraft, while the 737NG eschews the use of such computers). "The MAX also will feature an electronic bleed air system, allowing for increased optimisation of the cabin pressurisation and ice protection systems." 
• Additional changes include, "strengthening the main landing gear, wing and fuselage to accommodate the increase in loads due to the larger engines."

The rationale for the aerodynamic and flight control changes are that they are relatively simple, and reduce the 737MAX's drag, thereby decreasing the aircraft's block fuel burn.

Meanwhile the changes on engine installation and structural strength arise because the 737MAX needs a larger engine fan diameter to accrue the maximum reduction in specific fuel consumption (sfc) from the newest generation of engines.

Doubts remain on the 737 MAX, CFM LEAP Engine Despite this continuous progress on the part of the 737MAX, there remain several doubts about its position relative to its biggest competitor, the Airbus A320neo. From a pure numbers perspective, the A320neo has outsold the 737MAX by roughly 1.5 times (please note that we are counting Boeing's "commitments" for the 737MAX as sales because they will in all likelihood become sales) overall. But even more impressive has been its ability to win former 737NG customers. To date (by our count), Airbus has won over 3 customers for the A320neo that had previously only operated 737NGs, whereas in comparison, Boeing has made no such deals.

This interesting dichotomy has sparked speculation in the industry over the 737MAX's actual positioning relative to the A320neo. Conventional wisdom says that because the Airbus aircraft is able to take advantage of a much larger fan on the engine (up to 81 inches versus 68), its specific fuel consumption (sfc), and by extension (in this fuel environment) operating costs, will be tangibly lower than those of the 737MAX. In real terms however, there is a trade off between more effecient sfc and the additional weight of a larger and heavier engine, with the extra weight from the latter offsetting the gains of increasing fan diameter ( simple physics; a larger fan yields more propulsive efficiency). Thus there is a certain "sweet spot" in engine size, where the net effect on block fuel burn (ultimately the most important measure) turns negative; i.e a point above which, increasing fan diameter adds so much weight that the sfc improvement is more than offset. Where this sweet spot lies only time and years of service for these engines can tell, but at the moment, it appears that this puts Boeing at a competitive disadvantage.

Which is why my colleague over at Aspire Aviation pointed out that:

While Boeing and CFM have spent months refining the configuration of the Leap-1B engine since the 737 MAX’s launch in August 2011, given Pratt & Whitney’s experience and work done on the similarly-sized PW1524G engine with a fan size of 73 inches powering the Bombardier CSeries, the world’s third-largest engine-maker could easily design a downscaled PW1524G with a 71 inches (180.3 cm) fan sizes indicated by Aspire Aviation‘s sources at Chicago-based airframer that fit the 737 MAX with minimal investment and programme risk. In addition, the downscaled PurePower engine could easily incorporate any lessons learned and improvements from the post-EIS (entry into service) flight hours amassed on the PW1524G under Bombardier CSeries’ wings that makes the downscaled PurePower engine on the 737 MAX more fuel efficient.

From a performance standpoint, a 71 inches downscaled PW1524G engine could feasibly provide a 15% reduction in engine specific fuel consumption (SFC), which lost around 1% SFC saving due to a smaller engine fan from 73 inches to 71 inches, not taking into account the reduced weight and drag that are compensated on the aircraft’s block fuel burn separately. In comparison, the CFM Leap-1B will contribute a 12% lower engine SFC towards the 737 MAX’s 11% lower fuel burn per seat than the 737-800.

The potential for a geared turbofan (GTF) on the 737MAX is very intriguing, especially when one considers that the GTF is  projected to offer significant maintenance cost reductions versus the LEAP.

It has become clear in recent weeks, that the pure performance of the LEAP is not up to snuff vis a vis the PW-1000G even on the Airbus A320neo, where Pratt & Whitney's product holds a commanding 60-40 market share. Some reports place that figure as high as 4% advantage to the GTF, but we feel that that is a little bit on the high side. Remember, existing operators of CFM powered A320s are likely to choose the LEAP-X on the A320neo for commonality purposes, but even the combination of commonality and favorable pricing cannot usually outweigh a 4% long term deficit in performance. But even if the performance is 2-2.5% worse (our best estimate for a "worst case scenario"), this is still a serious problem for Boeing, as the LEAP-1B used on its MAX will be less optimized than the LEAP-X for the A320neo.

On the other hand, part of the allure of a 737MAX would be commonality with the current generation of CFM engines, but if Boeing keeps offering the CFM option, then allowing P&W in on the MAX race is a relatively low-risk proposition, especially if it would equalize the fuel burn improvement on the MAX models with that of the Airbus' A320neo family.

Regardless, things are not all bad for Boeing's cash cow 737 program. Even as 737MAX development costs are likely to double those of the A320neo, Boeing will still maintain its heavy edge in profit margin. Plus, even in its current form, the 737MAX could win many more orders thanks to greater availability and heavy optimization of the base 737 MAX 8. For example, the consensus of our sources now indicate that the United Airlines order for 200+ narrowbody aircraft that will be announced next month is leaning towards Boeing over Airbus and the competing Bomabardier C-Series. Major players like Turkish Airlines, and many of the Chinese carriers have yet to place orders for the next generation of aircraft as well.

And at this point, there is no turning back for Boeing; the MAX will likely be the backbone of their narrowbody offering at least into the 2020s.

“Our intention is that we will build the MAX until the market doesn’t want to buy any more and we don’t know when that’s going to be. I wouldn’t predict 2025 or 2035, at some point, either something better will come along or the marketplace will decide they won’t continue to take it. We’ll make it until it runs out of gas and that could be a long, long time,” Boeing Commercial Airplanes (BCA) senior vice president (SVP) of marketing Mike Bair said.

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ILFC's big bang order for Airbus A320neo, A321neo, and Boeing 737, a big boost for PW1100G GTF

For the last few years, thanks to the well known financial problems at its parent AIG, the world's largest aircraft lessor by value, International Lease Finance Corporation (ILFC), was on the quiet.

Yesterday, ILFC announced its comeback with two big orders. One with Airbus S.A.S. for 75 A320neo and the first orders for the A321neo for 25 aircraft. From the 100 aircraft, 60 are firm commitments and 40 are on option. ILFC also signed a firm agreement with Boeing to purchase 33 737-800s worth about $2.6 billion at list prices, though discounts can range up to 50%.

In the NEO orders, ILFC also announced an eye-popping boost for the Pratt and Whitney Geared Turbo Fan (GTF) program, when it announced a confirmed agreement for 120 firm PurePower PW1100G engines to power the 60 confirmed NEO's and an option for up to 80 more engines for the 40 optioned A320neo family aircraft.

This is the first order for the NEO with a confirmed engine choice. Earlier orders from IndiGo, Virgin America, and TAM, were announced without an engine choice.

In addition to the PW1100G, customers have the choice of CFM's LeapP-X engine to power the A320neo family.

Also as expected and long overdue, ILFC announced it was cancelling its order for ten A380 superjumbos in an effort to rebalance it order books. Henri Courpron, ILFC Chief Executive Officer said

"With 104 wide bodies on order and fewer than a dozen single aisles it makes perfect sense to rebalance our order book and position ILFC strategically on the fuel-efficient neo,”

A321neo can replace the Boeing 757
The A321neo is expected to be an ideal replacement for the venerable but ageing, Boeing 757-200 used by many US carriers for trans-continental and trans-Atlantic flights.

Boeing does have the 737-900ER which has a similar seating capacity, but this aircraft has not appealed to airlines. Only about 75 737-900ERs operate compared to 613 A321-200s.

AirInsight has produced a great study on this option. The accompanying PDF report can be downloaded here.

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