It wasn’t long ago that Airbus finalized its deal to take control of Bombardier’s CSeries aircraft program, so to celebrate, the aircraft has been renamed in the Airbus naming convention. Say hello to the A220. (No, it most certainly does not rattle off the tongue easily.) In what appears to have been a well-choreographed effort, Airbus quickly unveiled its first big order for the newest baby bus soon after the rebranding. JetBlue will take 60 of the -300 (formerly CS300) series with options for more. At the same time, JetBlue is converting 25 A320neos into the larger A321neo. Like most airlines, JetBlue has found magic in the ability to upgauge. This particular move seems like a huge win for the airline and for travelers.
Today, JetBlue operates the Embraer 190 with 100 seats. When JetBlue ordered that airplane 15 years ago, it knew it needed to get into a smaller aircraft than the A320 to grow its focus cities to their full potential. The 100-seat Embraer was the best option available at the time, and JetBlue today has 60 in operation. But it’s long been known that JetBlue wasn’t happy with the airplane. The Embraer had reliability issues, and it wasn’t as efficient as hoped. JetBlue put out a great stat saying that though the Embraer is only responsible for 11 percent of the airline’s available seat miles, it’s responsible for 20 percent of expenses. Yet JetBlue relied on that airplane to really build the backbone of its Boston focus city. Some of the destinations from Boston just couldn’t be served profitability with a bigger airplane. So we should salute the Embraer even though it’s had one foot out the door for years.
JetBlue had already deferred 24 orders out into the end of time, and it had publicly stated it was looking at its options. Now, it’s the A220 that’s the big winner. The aircraft will be delivered between 2020 and 2025 (weighted heavily into the 2023/2024 timeframe) and the Embraers will be phased out at the same time. The remaining 24 Embraers on order have been canceled.
What’s so great about the A220? Pretty much everything. In an investor presentation, it’s shown that the A220 has direct costs per seat 25 to 30 percent lower than the Embraer including ownership. So let’s do a little math. The Embraer has 100 seats, but we don’t know how many the A220 will have. SWISS has what would be 145 in an all-coach configuration, but JetBlue is more generous with legroom. Let’s say it’s 140 just for argument’s sake. If that’s true, then JetBlue can effectively fly an A220 with 35 percent more seats for about the same trip cost as it can fly an Embraer today.
That’s pretty remarkable, but won’t that be a lot of seats? Yes indeed. I’m sure some are surprised that JetBlue didn’t go for the A220-100 (formerly CS100) with fewer seats onboard. It can convert orders into the -100 if it wants, but it makes sense to go for the -300. Think about it this way. If there are smaller markets where JetBlue thinks a 100-seat airplane is good today, then the -300 can fly those just as profitably as the Embraer can even with a bunch of empty seats. But if those markets can generate a little more traffic at lower fares, then that’ll all be gravy. The economics should improve.
More importantly, this airplane now has some serious versatility. JetBlue showed the map of Boston with the A220’s range in its investor slides.
As you can see, the -300 can cover all of North America, Northern South America, and yes, it can push into the British Isles. Throw Mint on there with a less dense configuration and maybe it can do more than that. The airplane has great short-field performance. I imagine Boston and JFK will get flights to Orange County in California pretty quickly. Having those extra seats and the extra range can make a big difference in letting this airplane do a lot. (Moxy may be unhappy about this.)
It can also step in and fill in some of the thinner A320 markets with ease. Remember, JetBlue has had the A320 with 150 seats but it recently started its upgrade program which will convert them to having 162 seats. But JetBlue wants to go bigger than that. As mentioned, as part of this order, JetBlue agreed to upgauge its 25 A320neo orders into A321neos. Here’s a delivery schedule comparison from before versus today.
Those A321s in an all-coach configuration will have 200 seats, though some will likely be delivered in the 159-seat Mint configuration.
In short, JetBlue is upgauging everything. In markets like New York to Florida, that A321 will be a rock star. It’s a bottomless pit of demand in there, and the unit costs are just so low on that airplane. But on the lower end, the A220 should be a perfect fit for the airline as well. It can handle some lighter A320 markets that are too far for the Embraer to handle today. It will also provide more seats in smaller markets that could use them. Even in those markets that don’t need more seats, JetBlue can operate the larger airplane for the same cost as the Embraer. Sounds like a great strategy to me.
Other than Embraer (and those who keep typing A320 instead of A220 every…single…time, grrr), everybody wins in this deal.
