VIENNA UNIVERSITY OF ECONOMICS AND BUSINESS MASTER THESIS Title of the Master Thesis: Market Perspective Assessment for MC-21 Single Aisle Aircraft Author: Alexander Korshunov Matriculation number: H1353431 Program: Professional MBA Marketing and Sales 2013-2015 Supervisor: Prof. Dr. Sven Reinecke I, Alexander Korshunov, hereby declare, 1. that I composed the on hand Master Thesis “Market Perspective Assessment for MC-21 Single Aisle Aircraft ”, page numbers, hardback, self dependent, without utilizing other than the stated sources and additives and that I did not make use of other illicit help, 2. that I have not submitted the Master Thesis nationally or internationally in any other form as examination paper, 3. that this Master Thesis corresponds to the assessed by the supervisor. 24.06.2015 Date Signature Abstract Professional MBA Marketing and Sales 2013-2015 Author of the Master Thesis: Alexander Korshunov Title of the Master Thesis: Market Perspective Assessment for MC-21 Single Aisle Aircraft Supervisor: Prof. Dr. Sven Reinecke Number of Pages: 57 University: Vienna University of Economics and Business (WU Wien) Year: 2015 Abstract: This study aims at examining the market perspective of MC-21, an aircraft produced by Irkut Corporation. In the course of the research the author made use of the indicative approach and applied the mixed methods research that encompassed qualitative and quantitative approaches. The qualitative research was used for the identification of key decision criteria on acquiring commercial jets, whereas quantitative research was applied to identify future regional demand for single aisle aircraft and to forecast production rates of the main players, namely Airbus and Boeing, using historical data and applying least squares regression technique. Moreover, other direct competitors of MC-21 were identified during the research phase and used in order to conduct SWOT analysis of the product in accordance with the derived criteria. The results have shown that currently Irkut Corporation exercises difficulties in communicating the product and the brand name to international customers and has a strong orientation on domestic Russian market, rather than international markets. The author of the research concluded that in order to ensure a market share MC-21, Irkut Corporation together with the United Aircraft Corporation, which is a parent company, must create a competitive customized product with reliable after- sales support, taking into account the political climate and diversify the network of suppliers, as well as establish joint ventures with international companies, in a capacity of risk share partners. i Table of Contents Abstract ............................................................................................................................................ i Table of Contents ............................................................................................................................ ii List of Abbreviations ...................................................................................................................... v List of Tables and Figures............................................................................................................. vii List of Appendices ....................................................................................................................... viii 1. Introduction ................................................................................................................................. 1 1.1 Background Information ....................................................................................................... 1 1.2 Aims and Objectives ............................................................................................................. 2 1.3 Approach and Methodology ................................................................................................. 3 1.3.1 Grounded Theory Method.............................................................................................. 4 1.3.2 Interview with industry experts ..................................................................................... 5 1.3.3 SWOT analysis .............................................................................................................. 6 1.3.4 Least squares regression ................................................................................................ 6 2. Analysis of the Incumbent Market Players in the Single-Aisle Aircraft Segment ..................... 7 2.1 Irkut MC-21 .......................................................................................................................... 7 2.1.1 Irkut MC-21 product overview ...................................................................................... 7 2.1.2 History and development ............................................................................................... 8 2.2 Boeing B737 MAX ............................................................................................................... 9 2.2.1 Boeing B737 MAX product overview ........................................................................... 9 2.2.2 Facts and history ............................................................................................................ 9 2.2.3 The essence of lean manufacturing .............................................................................. 10 2.3 Airbus A320 neo ................................................................................................................. 12 2.3.1 Airbus A320 neo product overview ............................................................................. 12 2.3.2 History and technological development....................................................................... 12 2.4 Bombardier CS 300............................................................................................................. 13 2.5 COMAC C-919 ................................................................................................................... 14 2.5.1 COMAC C-919 product overview ............................................................................... 14 2.5.2 Technological co-operation ......................................................................................... 14 3. Market Forecast ........................................................................................................................ 16 3.1 Drivers of Air Travel Demand ............................................................................................ 16 ii 3.2 Regional Overview ............................................................................................................. 18 3.2.1 Asia Pacific .................................................................................................................. 18 3.2.2 Europe .......................................................................................................................... 19 3.2.3 North America ............................................................................................................. 20 3.2.4 Latin America .............................................................................................................. 20 3.2.5 Middle East .................................................................................................................. 21 3.2.6 Common Wealth of Independent States ...................................................................... 21 3.2.7 Africa ........................................................................................................................... 22 3.3 Data Analysis ...................................................................................................................... 22 3.3.1 Potential regional aircraft deliveries ............................................................................ 22 3.3.2 Front runners of single aisle market segment .............................................................. 23 3.3.3 Assessment of market potential for newcomers .......................................................... 25 4. Key Decision Criteria on Acquiring Commercial Aircraft ....................................................... 28 4.1 Brand Image ........................................................................................................................ 28 4.2 Sales Representatives .......................................................................................................... 29 4.3 Web-site .............................................................................................................................. 30 4.4 Pricing ................................................................................................................................. 30 4.5 Customer Support Analysis ................................................................................................ 31 4.5.1 Initial provisioning ....................................................................................................... 31 4.5.2 Maintenance support analysis ...................................................................................... 32 4.5.3 Training and technical Support .................................................................................... 33 4.5.4 Warranties and guarantees ........................................................................................... 33 4.6 Commonality Feature in Aircraft Manufacturing ..............................................................