Challenger 3500 Changes Were Due As Competition Rises, Analysts Say

MONTREAL-The time was right for Bombardier Aerospace to introduce its Challenger 3500 super-midsize business jet, a refreshed Challenger 350 planned to enter service in late 2022, the company and analysts say, as competition in the segment continues to stiffen. 

Bombardier unveiled the revamped aircraft during a celebration at its Dorval, Quebec, facilities, Sept. 14, a month ahead of the National Business Aviation Association Convention & Exhibition, with a revamped cabin. 

“We had clearly a dominating position in the super midsize (market),” Bombardier president and CEO Eric Martel told The Weekly of Business Aviation directly following the unveiling of the Challenger 3500 mockup. “We’ve been roughly 50% of the sales since 2014 ... So, we’re dominating. I think we wanted to preserve that, and we’re listening to our customer also all the time.”

The design was an outgrowth of discussions with customers, Martel says. 

“The improvements were around the cabin, the comfort–to have a more comfortable airplane–the altitude they have on board ... the sound system,” he says. “So, I think at the end from feedback (by the) customer, we wanted to preserve that leadership position in that market segment. And we thought that we should do an improvement now. So, this is what was the trigger for those changes.”

Are the changes enough, Robert Stallard, Vertical Research Partners analyst, asks in a note to investors.

“Most of what Bombardier is doing is a cabin refresh, while the rest of the aircraft is largely unchanged,” Stallard writes. “The Challenger has enjoyed a great run in its category in terms of market share, but the midsize and super midsize category has become increasingly competitive. If Gulfstream comes out with a clean sheet replacement for the G280, then the Challenger 3500 is likely to have a fight on its hands. But at the moment, there is more than enough demand to go around– and the new Challenger variant is likely to further stimulate demand in new bizjets.”

While the changes were due, Rolland Vincent, a consultant and president of Rolland Vincent Associates, says he didn’t think Bombardier had the access to capital to do it.

Bombardier set aside $200 million to $250 million for ongoing investment in its products, Vincent says. “So this is great that they’re doing it. I don’t know what this aircraft is going to absorb of that amount-probably a little under $100 million–total guess.”

But the Challenger 350 was getting a little “long in the tooth,” Vincent says, and at risk of losing market share with the growing popularity of the Citation Longitude, Embraer Praetor 600 and speculation that Gulfstream may be planning a refresh of its G280.

“Gulfstream is not backing away from this space,” Vincent says. 

The Challenger 300/350 has always been the volume leader in the space, he says. It is built for reliability, dispatchability and high cycles and has done well with fractional and fleet operators. 

The super midsize segment is going to become more relevant going forward. “Supply chains are being pulled back in, and we’re not going to be as global,” Vincent says. “I think that bodes well for airplanes that can go 3,000 to 4,000 miles. How far and how often do we have to go further?”

The refreshed aircraft will be attractive to buyers, especially those buying an aircraft for the first time, he says.  

Today, it is near-impossible to find a preowned Challenger 350 for sale, Vincent says. “There’s no availability,” Vincent says. “Even if you found one, you’re going to have to pay top dollar.” As a result, buyers will look to buy new with the Bombardier warranties and benefits.