Sunday, July 31, 2005

Hiding in clear view

Recently Jet Blue announced that 1) it would inaugurate service from Newark airport beginning in Oct, and 2) that it would begin taking delivery of the Embraer 190 regional jet. Both of these events are rather puzzling, given that they have taken place right in plain sight in-front of the established leaders in these market areas.

First, Jet Blue at Newark. It's both scary and disgraceful that Continental would allow Jet Blue carte blanc to enter into their most important base. ("Hello, Mr. Continental! This is your wake-up call"). How may such intrusions from the low-cost carriers will it take to motivate the current legacy carriers to change their fundamental business model?!

Secondly, the Embraer 190. This aircraft represents the latest in the so-called "regional jet" aircraft line. The Embraer 190 seats about 100, and this size -- placing the 190 above the 40-50 passenger regional jet and below the 150-seat Airbus 320 that Jet Blue currently operates -- is significant. It will allow Jet Blue to operate over many routes that are well beyond the "feeder" level, but not quite up to a full-scale route as defined by the legacy carriers and served by the larger Boeing 737, et. al. This market sector is gigantic, and will lead to more routes, more point-to-point options, and will once-and-for-all put the death knell to the "hub-and-spoke" business model. Future successful airlines will operate an increasing portion of their fleet with these mid-size aircraft, opening new market and new business models.

In general, customer response to the regional jet craze has been enthusiastic; a much quicker way to make the run from White Plains to Dulles than the previous turbo props; and the turbo prop manufacturers have suffered accordingly. But for the slightly longer runs, such as New York to Lexington, KY, the 50-passenger regional jets are simply too small, too cramped -- but the traffic load is simply too light to justify a Boeing 737 or an Airbus 320/319 (and thus perhaps why Southwest has not yet appeared...).

Enter the 100-passenger regional jet category, of which the Embraer 190 is the first. In a year, we will see a broad, rapid emergence of passenger jets of the 90-120 passenger level, fueling a solid market for the manufacturers - Embraer and Bombardier. And that is the point -- neither of these manufacturers is Boeing or Airbus.

How could Boeing and Airbus have missed this growing aviation aircraft sector? (...and missed it they have, not having a single offering in the entire category). Boeing and Airbus, having emerged as large-body aircraft companies, were unable to see the aviation opportunity offered by the regional jet. The idea of a small, commercial jet simply wasn't in their corporate DNA, and this is inexcusable. Boeing in particular. They, almost single-handedly, brought commercial air travel to where it is today -- an indispensable part of our society.

How could they have not monitored the air traffic sectors and identified the need for the regional jet?! Difficult to explain. As the old saw goes, "when the only tool you have is a hammer, all problems look like nails". Thus it is with Boeing and Airbus; a huge opportunity missed.


Anonymous said...

I found this site using [url=][/url] And i want to thank you for your work. You have done really very good site. Great work, great site! Thank you!

Sorry for offtopic

123 123 said...

Great post as for me. It would be great to read a bit more concerning that matter.
BTW look at the design I've made myself Young escorts