Currently composed of a mix of Airbus and Embraer type aircraft, Air Canada has planned its future short haul fleet around a mix of Boeing’s 737 MAX aircraft and Bombardier’s technically advanced C-Series jet. These announcements have drawn a large amount of interest in Canada, in particular, the apparent “flip-flopping” by Air Canada’s senior management on the decision to order the C-Series. This is not the first time Air Canada has made headlines over its fleet planning. In the late 1980’s Air Canada, on the heels of its partial privatization, announced a major order for the Airbus A-230. While few in the industry would criticize the performance of the aircraft, the deal would be shrouded in controversy. It’s time to take a trip back to the 80’s and examine how Air Canada ended up with its current fleet of Airbus narrowbodies in the first place.
DISCLAIMER: I will not be discussing Air Canada’s mix of Dash 8’s, Canadair Regional Jets, or Beechcraft 1900-D’s which operate under the Air Canada Express banner as they are owned by partner airlines and flown under a capacity purchase agreement.
As pictured at the Calgary International Airport, this A-319 has been in service with Air Canada since July 1997. (Photo: April 2013, YYC, John Jamieson)
Flashback to the late 80’s: Air Canada, a fully owned government airline, had a short-haul fleet built around a group of aging 727’s and a rapidly maturing mix of DC-9 series aircraft. After adding the modern Boeing 767 to its long-haul fleet in 1983, the airline was set for a short haul turnaround. The options available for the Mulroney government to choose from including the technically advanced Airbus A-320, an extended and upgraded version of the DC-9 (DC-9-88, now known as the MD-88) and a re-engined upgrade of Boeing’s popular 737 series, the 737-400. The decision to order 34 Airbus A-320 aircraft, announced on July 20th, 1988, had long been expected but the press release was delayed while Air Canada underwent partial privatization. The order, which included options for an extended version (which became the A-321), would later be scrutinized as evidence of corruption and kickback payments to government officials began to emerge.
While some may question the financing of the order, which relied heavily on profits generated through privatization (NY Times 07/21/1988), those concerns would take a back seat to serious allegations of fraud and corruption which emerged 2 years after the Mulroney government left office. In 1995 the RCMP made allegations that the meetings between PM Brian Mulroney and Airbus’s North American sales agent Karlheinz Schreiber, had resulted in “kickback” payments and financial incentives to sway the government towards the Airbus contract. While the negotiations resulted in a major inquiry and brought negative attention to the order, the aircraft, and the Conservative government, the final report avoided expressing firm conclusions.
Despite the criticisms linked to the order, the A-320 and its sister aircraft have dutifully served Air Canada for the past 25 years. The carrier has used its Airbus fleet to operate a variety of routes, the most unusual being the St John’s-London Heathrow flight operated by a configured A-319. Air Canada currently operates 31 A-320’s and a handful of both the larger A-321 and the smaller A-319; with an average fleet age creeping up to/or exceeding 20 years, it’s time for Air Canada to look for an upgrade. When the A-320 NEO program (New Engine Option) was announced in late 2010, many expected Air Canada to continue its partnership with the European manufacturer; this is where Air Canada dropped a major “bombshell”.
The 737 Max can be identified by its radical wing tip, not too dissimilar from this 737-800 WestJet Aircraft with Split Scimitar wingtips; the promised fuel-saving technology is a key feature of the MAX program (Photo: August 13th/2016, YVR Airport, John Jamieson)
On December 11th, 2013, Air Canada announced their intention to purchase 61 Boeing 737 MAX aircraft. The order, which exclusively covers the MAX 8 and MAX 9 variants and includes options for an additional 48 airframes, made headlines in Canadian and North American media outlets. As discussed above, Air Canada had previously developed a successful relationship with Airbus Industries. In addition to the A-319 and 321’s operated by AC, the Canadian flag carrier also operated a handful of A-330-300’s which were employed on AC’s long-haul routes to Europe. While the carrier had taken delivery of the Boeing 777-200LR, 777-300ER, and the 787 Dreamliner over the years, the 737MAX order surprised many experts and enthusiasts. When analyzing Air Canada’s order, it’s important to consider some key points; while there are important differences between the two programs, the 737 Max and the A-320 NEO offer comparable performance over a typical sector length. While the 737 Max Program has slightly lower operating costs, both aircraft offer considerable fuel savings and improved performance over their current models. To learn more about the specifications, performance numbers, company claims and recorded orders, refer to the companies’ websites.
Despite their similarities, there are 2 main points which make the Airbus A-320 NEO program standout out compared to the 737 MAX; for further reference check out Vinay Bhaskara’s post on airwaysmag.com. Firstly, the Airbus program was built around a proactive strategy which was able to get the jump on its Boeing counterpart. Boeing had been expected to launch a clean slate replacement for its commercially successful 757; however once Airbus launched the 320 NEO and secured a major order from American Airlines (a long established Boeing 737 operator), Boeing was forced to be reactive and opted to re-engine the 737NG instead of investing in the Y1. Additionally, Airbus chose to create the A-321 LR (a lengthened version of the base A-320) as an option to help airlines satisfy the “Middle of the Market” (MoM) route; for reference, a MoM route is typified by a flight approximately 6 hours long handling an average of 170 passengers. This is a crucial difference between the two programs. Boeing’s 737 MAX 9, the natural competitor to Airbus’s A-321, doesn’t even come close to the A-321LR in either operating costs or maximum range. By addressing the MoM market, the European manufacturer has been able to cater to airlines looking to efficiently manage their fleet and route network. However, despite the logistical benefits provided by the A-320 NEO, the Boeing negotiators were able to offer Air Canada an important caveat to their 6.5 Billion dollar order: the commitment to purchase 20 of Air Canada’s aging Embraer 190 fleet.
The Embraer 190 has been a part of Air Canada’s short-haul fleet since 2006; however, the aircraft are being phased out and replaced by the more efficient Bombardier C-Series 100 and 300. (Photo: February,21st,2016, YVR, John Jamieson)
As mentioned above, Boeing agreed to buy 20 of Air Canada’s older E-190s. Boeing was intent on finding a customer for the 737MAX 7, an aircraft which was beginning to lose orders to Bombardier’s C-series and Embraer’s E2 Jets. However, Air Canada had no apparent interest in purchasing the MAX 7 variant from Boeing and instead looked at its North American network to find a better-suited replacement. While the E-190 provided Air Canada the ability to operate medium haul-thin routes (eg. Toronto-Denver), the 90+ seat aircraft began to be outpaced by the technology in the new C-Series. Additionally, unlike the smaller Embraer 175’s operated by Sky Regional (an AC Express partner), the aircraft can’t be transferred to Air Canada Express routes because of restrictions negotiated by the Air Canada pilots association (pages 7&8 under Capacity Purchase Agreement). Given Air Canada’s previous partnerships with Bombardier and Embraer (the two largest Regional Jet suppliers), the choice between the C-Series and Embraer E2 Jet (the C-Series’ most noteworthy competitor) was always going to be difficult. However with the eyes of Canada on Bombardier, given the number of high-profile setbacks with the C-Series program, there was an expectation that Air Canada would lean towards the home built product. The C-Series offers Air Canada considerable benefits including cabin improvements over the E-190 and E2 Jets, an extended range to open up new markets, fuel efficiency, and negotiable discount price. With Air Canada still regarded as Canada’s flag carrier, the potential contract with Bombardier was viewed by the public as a litmus test for the success of the aircraft. While the unit price was not provided, it’s possible the Montreal based company offered financial incentives to secure the order with Air Canada. On the 17th of February 2016, Air Canada announced a letter of intent to purchase 45 C-Series 300 Aircraft with options on an additional 30 airframes (includes the option to purchase the smaller CS-100). The order breathed new life, albeit temporarily, into the C-Series program and eliminated the possibility of a competing order. The C-Series is expected to enter service with AC in 2019, by which time the airline will be ready to retire the remaining E-190’s in its fleet.
These two recent orders (relative scale) by Air Canada, highlight the carrier’s commitment to future growth, fuel savings, and a positive passenger experience. While Air Canada could have opted for the A-320NEO and proceeded like American, a carrier which also has a large Boeing based long-haul fleet, the 737 MAX will allow Air Canada to feel a greater sense of competition with its close rival WestJet Airlines; an airline which also ordered the MAX as a replacement for their 737NG’s. The choice to order the C-Series is a relief to many Canadian aviation enthusiasts and gives the manufacturer a chance to build momentum and additionally rally around the successful EIS (entry into service) of the CS-100 with Swiss International Airlines. While I eagerly anticipate seeing these new aircraft enter Air Canada’s fleet, I will miss the both the Airbus and Embraer jets and hold onto the memories of flying them throughout my time at university. As always, thanks for taking the time to read, feel free to comment and engage in discussion; I’d love to hear your perspective.