Photo credit: Caleb Howell at Flickr

Bombardier is a Canadian company.  They used to be involved in recreational equipment such as Ski-Doo snowmobiles and Sea-Doo watercraft and their Transportation division is involved in light-rail transit including here in the Twin Cities.

Their Aerospace division, however, is probably their best known operating segment and is known as a leading manufacturer of commuter jets (most notably the CRJ series that many of you may have flown on) containing 50-100 seats.

As Bombardier attempts to expand its aircraft product line into medium-sized aircraft (100-149 seats), it is entering space that is getting very close to the market segment dominated by industry giants, Boeing and Airbus.  While those companies tend to focus on even larger aircraft, they may want to protect themselves by defending against Bombardier in the medium-sized aircraft segment because left unchecked, Bombardier could later expand into the lucrative large-aircraft segment.

Bombardier’s $3.4-billion bet on the market for narrow-bodied aircraft faces a potential threat: a price war instigated by Boeing Co. and Airbus SAS.

I think this could be very interesting.  In general, price wars often create only losers but this could be a case where pricing power may be a big enough weapon for Boeing and Airbus to use.  In doing so, they would be hoping to establish a barrier that would keep Bombardier from becoming a thread in the market for larger planes.  It also doesn’t hurt that Boeing and Airbus are “one-stop-shops” for the increasingly larger airlines that are often looking to do more business with fewer vendors.

“The full family of airplanes offered by Airbus and Boeing give them the ability to price the A319 and 737-700 as loss leaders (should they choose to) or to wrap discounts into larger models and … twin-aisle airplanes,” AirInsight noted.

Read more at Next hurdle for Bombardier’s C Series: cutthroat prices – The Globe and Mail and stay tuned in the months and years ahead.  Perhaps we’ll forget about this foray by Bombardier into medium-sized aircraft or maybe we’ll look back and say this was the strategic move that started something big.