Bombardier's big push to the front of the Q

With the shiny new Bombardier CSeries rolling off the production line, you would expect the aircraft’s proud parent to be firmly focussed on selling its new baby. However, Bombardier Commercial Aircraft VP sales, Middle-East & Africa, Jean-Paul Boutibou, believes the Q400 is what Africa needs most.
“When I took over the region in April 2016, there was too much focus on the CSeries and not enough on the core products, which really help airlines to grow. In Africa, the aircraft which I would say brings most value is the Q400,” he said.
Every African country has a proud vision of creating its own flag-carrier, particularly on long-haul flights. Fledgling carriers often fly the nest too early and fail, opening the market to European and Gulf rivals. To overcome this fragmentation, Boutibou said it makes sense to team up with bigger airlines like Ethiopian, which is currently evaluating projects in the two Congos, Ghana and Zimbabwe.
“To be able to compete [on long-haul], you need to be able to fill seats. If you don’t have the proper network and infrastructure to fill those seats, you lose money. If you lose money, you return aeroplanes and you leave the floor open to the big boys. Before running, [African] airlines should walk. To walk, you need the proper tool to address your domestic market and your prime regional market, and fill those seats. The Q400 is definitely the aircraft that we see as the entry level that will help airlines unlock their domestic market,” Boutibou said.
Bombardier thinks the Q400 is the right tool to unlock Africa’s potential because it has “long legs”, which fit well with the continent’s truly vast domestic markets – like Congo – and can operate in difficult conditions. However, Boutibou said the Q400 and its rival, the ATR 72, have different capabilities.
“If you have a huge network in the one-hour range and you don’t have to go beyond that, then you would definitely take the ATR – why take a more expensive aircraft that you will not use? But, if you need flexibility, speed and want to go further, then the ATR will not do the job. Each product has their limitations. The ATR 72 and the Q400 are two completely different products,” he said.
The renewed focus on the Q400 has triggered discussions – typically for two-to-four aircraft – with several airlines, including Air Cote d’Ivoire, Air Madagascar (subject to its new partnership with Air Austral), the new Air Senegal, Ethiopian Airlines and embattled LAM Mozambique.
“When I started, we had very few opportunities in Africa. When I look at the traction we are getting around this, it’s amazing. We are busy and it’s super exciting,” he said. “There’s no magic. If you don’t go and talk and explain, then the entry level becomes Airbus A320 or 737 family aircraft, but that’s too big.”
This excess capacity leads to empty seats, lower yields and a struggle to cover costs, meaning the airline is not strong enough to support long-haul expansion. Instead, airlines like RwandAir have started with Q400s, moved on to CRJs and are now looking at the CSeries.
“If we want to be successful, we need to focus on the entry level, the Q400. We need to get there, get present, help the airlines grow and become profitable. Then you give them the next tool, the CSeries, then they can grow into the 737 and long-haul,” he said.
Several African narrow-body fleets, which typically favour the 737 over the A320, are coming up for renewal, creating potential opportunities. The 100- to 130-seat CSeries sits between the Q400 and the 150-seat capacity of the A320/737, so Boutibou does not see Airbus and Boeing as direct rivals. “Yes, we are eating away at the bottom end of their product line, but this is not where they get their money. We see ourselves complementing them; this is what happened with Delta, where the CSeries has been brought in to complement the A321.”
Existing Q400 operator, Air Tanzania, has already signed up for two CS300s, beating Ethiopian Airlines to become Bombardier’s African CSeries launch customer. “Ethiopian is definitely an airline we want to have on board,” Boutibou said.
The Addis Ababa-based carrier is currently looking at more Q400s and a potential order for up to 15 CSeries. But, while Ethiopian would undoubtedly be a flagship customer, Boutibou stressed there is a bigger-picture angle to securing Ethiopian on the CSeries programme.
“They are really technically advanced and we will need a very strong technical partner to support that aircraft. On the CSeries, the objective would be to grow training facilities on the continent using the different campaigns we are engaged upon. Ethiopian has a very strong technical and training base. We are considering basing a simulator there to cover the east part of Africa.”
Another flagship target is EgyptAir, which has a request for proposals out for 45 aircraft, including 12 in the CSeries size range. Like Ethiopian, this represents a bigger opportunity than a simple – if comparatively large – aircraft sale.
“If we win there, we would be considering EgyptAir as a future base to support the requirements that could come out of Algeria and Tunisia, for instance, which would see smaller fleets. Due to the proximity and the relationship between these countries, we could look at a lot of synergies in that part of the Middle East and North Africa.”
This is particularly relevant as Royal Air Maroc is potentially in the market for more than 15 CSeries to replace its 737s, following a request for information that went out in 2016. Likewise, Tunisair is another potential customer as it ponders its narrow-body replacement. “We see a lot of potential there,” Boutibou said.
He added that it is not an either-or decision between Ethiopian and EgyptAir when it comes to CSeries support. “It could be both,” he said. Bombardier already has its own regional technical support office and spares facility in Johannesburg, Samco has line and heavy maintenance facilities in Ghana, Kenya and Nigeria, plus Ethiopian is an approved Q400 repair and training provider.
This type of regional support consolidation also applies to the Q400. “Because of market fragmentation, you don’t have large fleets, but its strategically important for us to be present everywhere. This way, you can really bring economies of scale between countries and by region. If you look at Ethiopian, they have 19 Q400s today, so we have a dedicated technical team on site. But if you have four or five neighbouring countries with two, three or four aircraft, you can base one person there and you can be present and be with them, really benefitting from that scale.”
One of Ethiopian’s strongest assets is the absence of government intervention, despite the airline being state-owned. Boutibou said he has seen the same approach in other countries, such as Rwanda.
“We had discussions with [Rwandan president] Paul Kagame. He said he relies on his people. If they tell him this is the aircraft they need, and if it makes sense in the global picture, then he will support them. He’s not going to tell them ‘you need to take this, this and this’. This is great and I hope that we will see this more and more in other countries.”
RwandAir already operates two CRJ900s and is looking for two more, plus it is evaluating the CSeries to feed its newly acquired long-haul fleet.
In the slightly longer term, Bombardier is hoping to get involved in the 737-300 renewal at Kenya Airways low-cost carrier Jambojet, as well as its Embraer 190 replacement, which is due to come up around 2020 covering up to 20 aircraft. However, Boutibou said this will depend on Kenya Airways’ on-going restructuring.
Finally, Boutibou is looking at the potential emerging from the new Air Senegal, which is considering launching operations with Q400s. In total, the fledgling carrier is considering two Q400s, around six CSeries-sized aircraft and two wide-bodies under a fleet plan, which consultancy firm Seabury is helping to develop.
“Among the first products they wanted to look at was the CSeries, and at the bottom end they were looking at the ATR,” Boutibou said. However, Bombardier managed to get the Q400 in the mix and submitted its proposal in February. The turboprop decision is expected first, followed later by the CSeries decision.
Timelines for the project are ambitious, with a planned launch in the third quarter of this year or in early 2018, ideally to coincide with the opening of Dakar’s new airport. Boutibou said Bombardier could deliver the Q400s in December at a push, or in early 2018, or offer an interim wet-lease solution before then.
“In Senegal, their prime business is Paris, Washington and New York, so you could start with a 787 or an A330 and you’re going to have your market.” This might lead to load factors of 70-80%, but domestic and regional feeder flights will help fill the remainder. “I think there’s a real need and the potential is there,” Boutibou said.
A new Air Senegal would help the west African market, which is characterised by vast, underserved markets. “We met recently with the new aviation minister of Ghana, which has tremendous potential. Again, we tried to explain that the regional market is what you need to capitalise on to grow.”
Hopefully, all this growth will be slow and steady, creating sustainable economies of scale for Africa.