Wednesday, June 25, 2003

A lot of people have never heard of Embraer. It’s a Brazilian company, in business for 33 years, that makes airliners.

People who have heard of Embraer will probably say, “No, Fred. Embraer makes little regional jets. Or corporate jets. It doesn’t make real airliners.”

That’s changed. The company just signed a deal with JetBlue, the econo-airline, for 100 E190s. The E190, a twin-engine, 100-seat craft with a range of 2,500 miles, will be available in 2005.

That’s not a corporate jet. That’s an airliner. I’m not sure Boeing and Airbus want to hear about this. Actually, I’m sure they don’t want to hear it.

In May, Arlington-based US Airways purchased 170 regional jets, 85 from Embraer and 85 from Canada’s Bombardier Corp.

In the words of aviation journalist Ed Stephens, “Embraer has made a huge leap from making big, little jets to making little, big jets.”

Mr. Stephens and others see this as a challenge to the big boys.

Economy airlines are a growth market. Think Southwest, Frontier, Air Tran and Jet Blue. They typically are no-frills outfits that cut costs to the bone, fly one kind of plane to avoid complexity and expense, and act as if they actually wanted to attract customers. Their Web sites are easy to use. They avoid jerk-around pricing.

And they’re cheap. I just priced on the Web a round-trip fare to Denver, from Baltimore-Washington International, with United Airlines and Frontier. United wanted $618, Frontier $388. The econos are a service, not a shell game.

Until recently, the airliner business has meant Boeing Co. and Airbus, with Airbus slowly eating Boeing’s lunch. Now, according to a lot of aviation watchers, we suddenly seem to have four major airplane makers: Boeing, Airbus, Bombardier and Embraer. If the E190 works out, you can bet Embraer will sell bigger aircraft.

A country like Brazil isn’t supposed to be able to do this. A funny-looking math nerd at Harvard wasn’t supposed to outsmart IBM and start Microsoft. Europe wasn’t supposed to be able to make Airbus work, or the euro. Well, guess what?

Why did JetBlue, which has an Airbus fleet now, order Embraers? Usually the last thing a low-cost airline wants is a completely different airplane requiring different simulators, different logistics chains, two flavors of mechanics and so on.

The answer is money. Aviation Planning puts it this way: “JetBlue has over 100 A-320s [an Airbus craft] in operation and on order. From that perspective, the A-318 was the slam-dunk choice when it was looking for a smaller airliner, right? Wrong. The relative economics between the A-318 and the E-190 apparently more than made up the difference.”

In the airline business, small efficiencies, in fuel consumption for example, amount to big money over thousands of flights. Econo-airlines especially want to keep costs down.

The selling of aircraft is a notoriously complex and crooked business. The salesmen make a New York alley cat look like Mother Teresa. You get bribes, disguised bribes, offsets, coproduction agreements, technology transfer, hidden governmental subsidies, buybacks and weird lease agreements. Governments care, if they’re smart, because we’re talking huge money, balance of payments and national prestige.

All of them would seem to favor the big manufacturers. Yet Embraer got the order.

Aviation once meant the United States. Today, the United States is down to Boeing, and Europe, busily turning itself into something resembling a huge country, has achieved at least parity. Now Brazil wants some of the action and appears able to get it.

Will America be reduced to a minor player in a game it once owned? We shall see.

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

Click to Read More and View Comments

Click to Hide