Breaking in to the small single-aisle jet market is no easy task. Even established players like Bombardier had trouble gaining traction with the new CSeries in the face of competition from Airbus, Boeing and Embraer. So when Sukhoi launched the SSJ100 targeting the smaller markets the chances for success were incredibly slim. Not surprisingly the Russian airlines bought some of the planes; that’s what you do to support the home-grown field. But foreign sales were minimal. Mexico’s InterJet picked up a small order while Ireland’s CityJet did the same. And things mostly worked, at least initially.
In recent years both CityJet and Interjet have reduced their active SSJ operations. Interjet is trading them out for A320neo aircraft while CityJet appeared keen to just halt the operations of the type in favor of similarly sized regional jets. Sukhoi tried a private jet version of the type, focused on small sports teams, and even floated the concept of a shrink for the frame, signing a Letter of Intent with S7 in early 2018 to deliver a 75-seat model. Metal fatigue issues in some components and cold weather ops challenges also didn’t help the SSJ’s success. Nor did the fatal accident earlier this Spring.
All of which is to say that the SSJ is far from a commercial success and with new models from Airbus (A220) and Embraer (E2 E-Jets) plus startup competition from China (ARJ21, C919) the organic sales outlook for the SSJ100 is bleak.
But what if access to the trans-Siberian route network were tied to buying some planes? That’s what appears to be happening with Norwegian.
It is no secret that Norwegian wants access to fly across northern Russia. The trans-Siberian routes open up opportunities in North Asia, including Japan, China and Korea. And the Russians know this. The country is a notoriously tough negotiator when it comes to gaining access to those routes. Some might even claim extortionate. Reports now suggest that the carrier could pick up 40 SSJ100s and press them into operations across their global network. In exchange – or just in a conveniently timed move – the carrier might also finally receive access to the routes it so desperately wants.
Yes, Norwegian is talking about a pivot from rapid expansion towards profitability. And it is making some progress on that front. But the carrier still has a lot of 787 Dreamliners and needs more routes to operate them on. Plus, the LCC competition from Europe to North Asia remains limited, mostly because access to the efficient Siberian routes is restricted. The potential for Norwegian to establish a foothold as the long haul LCC able to operate those routes must look mighty appealing. But the company would still have to figure out where to fly the SSJs.
The initial report tipped Argentina as a likely candidate. Deregulation in that market is delivering good opportunities for growth but also significant price pressures and the demand is not fully realized yet. Flying the smaller planes might prove useful. Norwegian is also wrestling with the 737 MAX grounding, hampering growth overall. While that helps the financials somewhat a shift of some routes to smaller planes might be helpful to the operation or even for expansion into smaller markets.
In so many ways this appears a bizarre trade to make just for access to the new route corridor. But the value of that access is massive when it comes to connecting Europe with North Asia. And sometimes companies do crazy things Especially airlines.
A favor to ask while you're here...
Did you enjoy the content? Or learn something useful? Or generally just think this is the type of story you'd like to see more of? Consider supporting the site through a donation (any amount helps). It helps keep me independent and avoiding the credit card schlock.