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Additional tarriffs on the CS100...ugh...

Additional tarriffs on the CS100...ugh...

Old Oct 7, 2017, 8:55 am
  #16  
 
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I thought it was fairly normal in business to sell the first off the line at a lower price in order to get market traction. Since our leader is supposedly a businessman, you would think he would understand that.
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Old Oct 7, 2017, 10:05 am
  #17  
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Originally Posted by SJC ORD LDR
I thought it was fairly normal in business to sell the first off the line at a lower price in order to get market traction. Since our leader is supposedly a businessman, you would think he would understand that.
I think you meant "charlatan."
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Old Oct 7, 2017, 10:13 am
  #18  
 
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Originally Posted by WWads
At this rate, Boeing is never selling another aircraft abroad. Hope they're willing to accept that.
Indeed, British government has already threatened to cut back military spending with Boeing in retaliation for this US move. Canadian military indicated similarly IIRC.

http://www.bbc.com/news/uk-northern-ireland-41397181

Bombardier is major employer in UK.
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Old Oct 7, 2017, 11:01 am
  #19  
 
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Originally Posted by WWads
Boeing is truly on something if it thinks that DL would have purchased 737 MAX 7s if not for the CS100 deal.
It's not just limited to the MAX 7. Ask yourself a question. If the CSeries wasn't available to buy (would have been the case without the government aid), or was too expensive for DL's liking (if sold at a profit), would DL not order any airplanes at all? In other words, if this tariff stays, do you think DL will not order a substitute?
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Old Oct 7, 2017, 11:08 am
  #20  
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*I'm uneducated on the subject so go easy*

My question is - why is it wrong for for Bombardier to sell these planes at below cost, but airlines like Spirit can sell seats for $9, which is well below costs and it be okay? Why doesn't DL or other airlines go after them like Boeing is going after Bombardier. I know Boeing says it's because Bombardier is getting unfair subsidies, but so does Boeing. So why isn't okay that Bombardier does?

Last edited by FSUnole03; Oct 7, 2017 at 11:15 am
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Old Oct 7, 2017, 11:52 am
  #21  
 
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Originally Posted by iaflyer
Umm.. do you recall the US administration changed in January? I'm not trying to get political here, but were people not paying attention during the last year? Most of what's happening here was promised in the run up to the election.
This. Elections have consequences.
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Old Oct 7, 2017, 12:39 pm
  #22  
 
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Originally Posted by minnyfly
It's not just limited to the MAX 7. Ask yourself a question. If the CSeries wasn't available to buy (would have been the case without the government aid), or was too expensive for DL's liking (if sold at a profit), would DL not order any airplanes at all? In other words, if this tariff stays, do you think DL will not order a substitute?
The likely substitute would be E195s, or expanding reliance on RJ operators. I don't see where Boeing aircraft would at all fit into this picture.
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Old Oct 7, 2017, 2:01 pm
  #23  
 
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Originally Posted by FSUnole03
*I'm uneducated on the subject so go easy*

My question is - why is it wrong for for Bombardier to sell these planes at below cost, but airlines like Spirit can sell seats for $9, which is well below costs and it be okay? Why doesn't DL or other airlines go after them like Boeing is going after Bombardier. I know Boeing says it's because Bombardier is getting unfair subsidies, but so does Boeing. So why isn't okay that Bombardier does?
Without commenting on the validity of the justifications given, there are a few schools of thought here:

(1) You could argue that Spirit is using the $9 fare as a loss leader on the seat, with the expectation that you'll end up actually paying $50-75 once all sorts of fees are attached (thus the $9 is intended as an advertising gimmick, not an actual sale price). This is sort-of like the storage facility that offers you a $1 first month's rent...and then charges you a set of fees for the first month that more than equal subsequent months' rents. In the case of Spirit you can usually dodge most of those fees, but Spirit is likely banking on you not managing to do that. An equivalent for Bombardier would be selling the first ten planes to an airline at half-price (to hook a base order), but with the expectation that the order would be sufficiently profitable if it exceeds 50 planes (40 at full price).

(2) You could argue that what Spirit is doing is a dumping practice and is therefore not OK and shouldn't be allowed. Here, the analogy is the ME3 (where it has been increasingly obvious that they're losing money on lots of routes in an attempt to force other carriers off), but this would imply that Spirit wasn't making up for it on the back end somehow (e.g. baggage fees, buy-on-board programmes, etc.). A dumping argument would apply if Spirit was selling the whole plane for $9 and doing so on a continual basis in an attempt to force other airlines off a route (or if Megabus was selling the whole bus for $1). I'm sure this is a line of argument that a lot of airlines would like to cudgel one another with, but it's also something of a WMD. There's also the complicated question of what the minimum price "should" be.

(3) There's also the free-market position of "Who cares what Spirit is doing as long as they're acting on their own?" Here the question becomes one of "improper" government aid (which is a sticky matter in general) as the difference (e.g. is Bombardier simply a better business or are they being enabled by some government entity in undercutting their competitors' prices?). Here the analogy would be if Spirit got a "sweetheart" deal from a given airport/city to come in that enabled it to then dump those $9 fares on the market (and that deal was on a continuing basis).

I think that sums up three sides of the argument on something like Spirit.

Edit: I wonder if Airbus has a product in this market? I don't think so (Airbus also skews larger IIRC) but I can't help wonder. Also, were I in DL's shoes I'd be getting mighty tempted to start going after Boeing for this in some sort of long-term manner (for example, working with other carriers to start a domestic competitor to Boeing).

Last edited by GrayAnderson; Oct 7, 2017 at 2:08 pm
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Old Oct 7, 2017, 2:09 pm
  #24  
 
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Originally Posted by FSUnole03
*I'm uneducated on the subject so go easy*

My question is - why is it wrong for for Bombardier to sell these planes at below cost, but airlines like Spirit can sell seats for $9, which is well below costs and it be okay? Why doesn't DL or other airlines go after them like Boeing is going after Bombardier. I know Boeing says it's because Bombardier is getting unfair subsidies, but so does Boeing. So why isn't okay that Bombardier does?
I believe part of the issue is that the United States and Canada are members of the World Trade Organization. Countries don't have to sign the agreement, but if they do, then they get benefits to trade I think. Part of that is that selling goods below the cost of manufacture (dumping) is not allowed by that agreement. The agreement has a manner of dealing with dumping, and we are seeing the process play out right now.

https://www.wto.org/english/thewto_e..._e/agrm8_e.htm
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Old Oct 8, 2017, 5:59 pm
  #25  
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Given that the Embraer E195 will haul 100+ passengers, is this really such a problem? I'd much rather fly in one of the newer Embraers than in a stretched-out Canadian beer can.

Double those tariffs again!
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Old Oct 8, 2017, 6:11 pm
  #26  
 
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Originally Posted by MikeMpls
Given that the Embraer E195 will haul 100+ passengers, is this really such a problem? I'd much rather fly in one of the newer Embraers than in a stretched-out Canadian beer can.

Double those tariffs again!
From what I've read and seen online, the C-100 is supposed to be really nice and comfortable. It's not stretched CRJ. Other than the CRJ, I think everything else built by Bombardier, like rail cars, has been fairly comfortable from a passenger perspective.
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Old Oct 9, 2017, 8:48 am
  #27  
 
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Originally Posted by SJC ORD LDR
From what I've read and seen online, the C-100 is supposed to be really nice and comfortable. It's not stretched CRJ. Other than the CRJ, I think everything else built by Bombardier, like rail cars, has been fairly comfortable from a passenger perspective.
I've flown the CS-100 on Swiss, and really liked it. I say this as someone who thinks the E-170/5 is the best narrowbody around from a passenger point of view.
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Old Oct 9, 2017, 9:35 am
  #28  
 
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Boeing is protesting a standard industry practice to basically stop the sale of a type of jet they don't make, for an order they wouldn't get. And it's likely to potentially cost them UK/CA government business.

Is Boeing doing this to really prevent the maybe someday still entirely hypothetical C-500 which even if they started today is minimum 5 years away and might compete with the smaller 737's?

This leads me to believe one of three things is happening:
1) they wanted to file the protest on the C100's to ensure they're on record when/if a C500 ever does happen and they fully expected this case to get thrown out, but they underestimated the protectionism of the current administration.

2) Boeing is being leaned on by someone in the administration to file this as a bargaining chip for further NAFTA negotiations.

3) Some in the administration are super jealous of Justin Trudeau's hair, and are hoping that blocking the deal with muss it all up.
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Old Oct 9, 2017, 11:27 am
  #29  
 
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It is a habit of Boeing to contest EVERYTHING they lose. In other sectors they constantly claim they are the best/largest/blah blah and someone else getting the business was an unfair trade practice. Look at all the military contracts they have initially lost then won on appeal in court. I was not surprised in the least bit when they cried foul in this one.
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Old Oct 9, 2017, 1:36 pm
  #30  
 
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Originally Posted by WWads
Boeing is truly on something if it thinks that DL would have purchased 737 MAX 7s if not for the CS100 deal.
I don't think any of this is really aimed specifically at the CS100, it just happens to be subject on which Boeing is levering its real goal: avoid the CS300 from becoming a competitor to the 737. Whether that is by having the US impose actual tariffs on those (or any CS) frames, or to simply knock away enough footing from under Bombardier that makes its aircraft division go belly up before the CS 300 gains real traction (side note: if this happens, guess who will likely swoop in and buy up the program assets...).

Protectionism happens everywhere, but as mentioned up-thread, Boeing better be a bit careful what they wish for.
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