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Airbus just presented its new A220 aircraft, formerly the "old" Bombardier CSeries, that is re-branded after a 50.01% acquistion of Bombardier by Airbus.

It's an aircraft very similar in target and characteristics to its own A320neo Family, so my question is simple... why? If they would cover different market segments this could be a logical choice but in this case, is there not the risk of creating internal competition?

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    $\begingroup$ Minor quibble, but the 50+% acquisition is not of Bombardier but of a subsidiary private holding company that owns the C series physical and intellectual assets Bombardier created to wall off the C program from the rest of Bombardier Aerospace. Airbus controls that, not the larger BA. $\endgroup$ – John K Jul 13 '18 at 16:13
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You say "It's an aircraft very similar in target and characteristics", but this is not really true. I made a quick comparison of typical number of passengers and MTOW (based on data from Wikipedia):

Typical Passengers

MTOW

You can see that the A220 is significantly smaller and lighter than the A320 and A321, more similar to the now discontinued A318 (and maybe A319).

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The A320-318/319 or the improved A320neo-319 share the market area around 107 - 160 passengers with the CSeries (now A220), two main differences are:

  • The CSeries is designed generally for carrying less passengers than the basic A320-family. The fuselage of the A320-family is stretchted or compressed, exemption is the A320-318, which has also smaller wings, but at some point strechting/compressing the fuselage becomes inefficient.
  • The CSeries is an entirley new plane, while the A320neo seems to be more some kind of improvment with new engines and some(?) modifications to the airframe.

Basically, the airframe, fuselage and engines should fit together, to make an efficient plane. The CSeries should be therefore more efficient with small numbers of passengers. The A320-318 will be not available as neo and the A320neo-319 seems to be market for special long-distance and hot-and-high (engines produce more thrust and consume more fuel) situations.

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There will be A220 stretches to take it directly into competition with the larger products, which are rapidly ageing designs, and that's the thing.

The 320 is 30 years old, and the 737 is a 50+ year old design. Sooner or later airlines are going to want something more up to date and the C is state of the art if slightly more conservative than the 787 (aluminum alloy for the fuse, and they wisely decided to stick with NiCad batteries). If design age wasn't an issue they'd still be building 707s and DC8s.

One key example of the benefit of state of the art design is maintenance. The C's maintenance program requires a fraction of the labour hours of previous generation airliners.

It's too bad. The financial strain of the C was on the verge of bringing the whole company down when Airbus stepped in to take it on for free. The experience has left Bombardier Aerospace quietly backing out of the commercial aircraft industry (it is seeking to offload the turboprop program and RJ production will slowly peter out) and in 5-10 years will be a bizjet only operation.

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    $\begingroup$ The age of a design is not as big issue. 707s and DC8s are not used anymore because back then they needed four engines where we can now do more efficiently with just two. The two engine designs didn't change that much since 737 was designed. And military still flies many 707s (C135 and KC135). $\endgroup$ – Jan Hudec Feb 20 at 6:55
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So, I dug around and this is what I could find:

Airbus and Boeing both cover mainline (130-240 pax upto 3300 nm) with their A320neo and 737 MAX lines respectively.

For regional travel, which is less than 130 passengers, there is the A220-100 and -300. Airbus now covers this section thanks to their acquisition of a majority stake in the CSeries line from Bombardier. So the new A220 variants don't quite compete with the A320neo (especially since the A319 hasn't been doing so great in terms of sales)

This article explains it in greater detail. Here is more about the CSeries/A220

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