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A Quiet Challenge to Boeing and Airbus

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Aerospace manufacturers Boeing (NYSE: BA  ) and Airbus, a subsidiary of European Aeronautic Defense and Space Company (NASDAQOTH: EADSY  ) , claim a virtual duopoly over the large commercial jet market. With airlines in an arms race to modernize fleets, a prime position in this battle should prove lucrative for shareholders of commercial aircraft manufacturers. But while Boeing and Airbus clearly hold the top two spots, another manufacturer is firing up its engines.

Expanding product line
Canadian manufacturer Bombardier (TSX: BBD.B  ) is hardly new to the commercial jet business. The manufacturer has supplied airlines with the ubiquitous Canadair regional jets, and provided the popular Q400 Turboprop used by many carriers.

But Bombardier's latest move takes it into Boeing and Airbus territory, as Bombardier launches its C Series jet that competes with the Boeing 737 and the Airbus A319. However, the C Series is not merely a clone of one of the duopolists' aircraft; it has its own features and purpose.

Quietly moving in
Jet aircraft have a reputation for being noisy, and this has hampered the use of many jets at more urban airports. Bombardier has a strong focus on noise reduction in the C Series, marketing it as a primary selling feature.

But having quiet aircraft matters to more than just people who want to be able to sleep at night. Quiet aircraft also make it easier for airlines to operate out of urban airports where noise regulations would keep out other aircraft.

This is already being seen as privately held Porter Airlines tries to get approval for its plan to operate out of the more centralized Toronto Island Airport. The proximity of the Island Airport to downtown Toronto would be a major selling point, and flights would likely command a premium as they attract more high-paying business travelers.

Due to noise concerns, jet aircraft are currently banned from the Toronto Island Airport, but Porter is trying to use the reduced noise levels of the C Series to get that ban lifted. Clearly, the lower noise levels of the C Series work in the aircraft's favor, as approval of Porter's plan would set in motion the airline's orders for the aircraft. Additionally, Air Canada and WestJet have expressed interest in servicing the airport with jets. If noise reduction is a key factor in the decision, these two airlines may be forced to purchase C Series aircraft to operate jet flights from the airport.

Just a side effect?
As much of a benefit as the noise reduction in the C Series is, it wasn't the main goal set forth in the development of the Pratt & Whitney Purepower engines. Fuel efficiency was a higher priority; but, in creating a more fuel-efficient engine, Pratt & Whitney also created a quieter one.

Because of this, the noise reduction in the C Series is actually enhanced by a fuel-centric development rather than being an extra costing energy. Bombardier is now able to market fuel economy and noise reduction in one connected package to potential buyers.

For their own parts, the Boeing 737MAX will feature a quieter LEAP engine, and the LEAP engine will be an option on the Airbus A320neo. But with certification of the first LEAP engines expected to come in 2015, Bombardier has a slight jump on the competition for quiet jets.

Alternative airplane
Airlines traditionally have looked to Boeing and Airbus to fill all their large commercial aircraft needs. But Bombardier is making a play for a position among the big dogs with its quiet C Series jet. The noise reduction of this aircraft should make it attractive to airlines looking to open up new routes serving urban airports, or expand capacity on existing routes.

Whether or not you own shares of Bombardier, the manufacturer's move into Boeing and Airbus territory could shake up the commercial aerospace industry. If Bombardier can gain a foothold, things could get very interesting for all players should Bombardier choose to move toward even larger aircraft in the long term.

Three manufacturers outgrowing Boeing, Airbus, and Bombardier

The demand for commercial aircraft looks set to soar over the next decade, but these three companies have a new way of manufacturing set to shake up entire industries. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.

Read/Post Comments (5) | Recommend This Article (0)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 19, 2013, at 9:57 AM, prginww wrote:

    I love Bombardier and hope they can indeed break the Boeing-Airbus duopoly. But so far, they've only managed to sell 177 C-Series jet, Airbus sold more A320neos in a SINGLE ORDER to Lion Air last year. So far at least, the C-Series isn't causing too much lost sleep in Seattle and Toulouse.

  • Report this Comment On October 19, 2013, at 4:02 PM, prginww wrote:

    airbus2 is pushing into the market courtesy of guaranteed loans from the Canadian government just like euroairbus......

    socialist governments the world over are taking capitalist positions.. china,,,Russia....japan....etc.....

    what can you do when they decide to control a market segment...??? not much, just hope the USA government can help......

  • Report this Comment On October 19, 2013, at 6:20 PM, prginww wrote:

    They are good, however if they want to tackle the big boys, they need to be a little more ambitious. They have the talent and they most certainly have the technical capability. Only one thing is missing from that formula.

  • Report this Comment On October 19, 2013, at 6:20 PM, prginww wrote:

    If the C Series is as stiff, squatty, bumpy, and short as their regional jets, it won't matter how quiet the engines are. Period.

  • Report this Comment On October 20, 2013, at 9:12 AM, prginww wrote:

    rotorhead, the US govt DOES help. The US Export-Import Bank provides $8-10 BILLION dollars in financing for Boeing sales annually.

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Related Tickers

9/29/2016 4:00 PM
BA $131.03 Down -1.20 -0.91%
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EADSY $14.82 Up +0.01 +0.07%
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