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Regional Airliners Battle for Market Share

JonnyKnoxville

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Regional airliners battle for market share
International Herald Tribune
June 18, 2007


While Airbus and Boeing fight for market share in the large airliner sector, Bombardier of Canada and Embraer of Brazil are slugging it out no less aggressively a rung down the ladder in aircraft size.
Life in the under-120-seat segment is about to become even more competitive. Manufacturers in Russia, with Ukrainian partners, and in China are hustling new regional jets to the marketplace. In Japan, Mitsubishi is also testing the waters and says that it will decide in 2008 whether to jump in.
But as more manufacturers are eyeing the market, the market itself is going flat, said Richard Aboulafia, an analyst at the Teal Group, an aerospace consulting firm in Fairfax, Virginia. "Regional airline demand is turning sluggish," Aboulafia said in an interview last week. "Some larger regional jets, particularly Embraer's, are getting orders from Asian and Mideastern mainline carriers, which is good news. Otherwise, demand is down from its 2000-2002 peak."
Sales of regional airliners with fewer than 90 seats may total about 3,700 over the 20 years to 2026, making an average of 185 a year, Boeing, which is not active in that sector, said in global industry projections published last week.
What growth there is is mainly at the larger end of the market, in the 80- to 100-seat segment, where Embraer has taken the lead and Bombardier is now playing catch-up, Aboulafia said.
Bombardier, based in Montreal, was the true originator of the regional jet, with its 50-seat CRJ 100 entering airline service in the early 1990s. Bombardier has now delivered more than 1,400 aircraft from its CRJ family, including the stretched CRJ 700 and 900 versions, seating up to 90 passengers. The latest variant, the CRJ 1000, seating up to 100 passengers, was unveiled in February and is scheduled for its first flight next summer.
A new generation of the 700, 900 and 1000 aircraft, announced last month, will feature more use of lightweight composite materials, which will cut fuel consumption by up to 4 percent. Bombardier said the new planes, dubbed Next Generation, will start to enter service this month.
In recent years, Bombardier has considered introducing a new "C" family of larger 110- and 130-seat models. Early this year it said the program remained under active consideration, with a 2013 target for entry into service and perhaps some involvement of international partners,
The program, if it finally gets off the launching pad, would compete with the E series of Bombardier's main rival, Embraer, and would also intrude into market segments traditionally seen by Airbus and Boeing as their home turf - perhaps a risky strategy for a smaller corporate player.
Aboulafia says he believes the C program "has been effectively shelved," partly because, if it goes ahead, the planes would enter service just as Airbus and Boeing replaced their existing single-aisle offerings - a moment of maximum competitive pressure. "The C series has been a fruitless diversion for a company that really can't afford diversions right now," he said.
Meanwhile, Bombardier's current product line continues to sell, with net orders for 120 aircraft between February and May this year. Of those, 67 were regional jets, 44 of them for Delta Air Lines in the United States, and 53 were for the Q400 turboprop.
Turboprops, which are more fuel efficient than jets, "remain quite strong, thanks to oil prices and demand from emerging markets," Aboulafia said. "Many emerging markets like India see the value of Turboprops."
While Bombardier mulls its move into larger formats, Embraer is offering the widest portfolio of regional jets in terms of seating capacity. At the upper end, its E family - the E-170/175/190 and 195 models - is seen by many industry analysts as closer to full scale airliners than regional shuttles. But with seating configurations ranging up to a maximum of 122 seats, the family stays just under the seat capacity of the Airbus A318 and Boeing 737-600, keeping Embraer out of the firing line of the industry giants.
By the end of March, Embraer had delivered 229 planes in the E family since the first E-170 was delivered in March 2004, and had firm orders for another 401, with a total order book, including options, worth $15 billion.
Major U.S. customers for the E family include JetBlue, Northwest Airlines, USAirways, Republic Airlines and the leasing giant GECAS. Other customers include Air Canada, HNA Group in China and Saudi Arabian Airlines.
HNA is also buying 50 ERJ-145s, an earlier, smaller plane with seating for 37-50 passengers. Apart from the Chinese order - to be built in partnership with China Aviation Industry Corp. in Harbin, China - Embraer has firm orders for just three ERJ-145s to add to the 861 delivered since December 1996.
Meanwhile, in Russia and Ukraine, two separate regional jet projects are moving forward.
The Antonov AN148, a 65- to 80-seater that first flew in December 2004, received type approvals from both governments in late February. First delivery will be to SCAT, a Kazakh airline, late this year. Ilyushin Finance, a Russian leasing company, has ordered 28.
The second project, the Sukhoi SuperJet 100, is intended to compete with the Embraer E series and the Bombardier C series - if the latter is produced. The Sukhoi program involves broad international cooperation, with assistance from Boeing and a major role for Snecma, the French engine builder, which is working with NPO Saturn of Russia to develop the SaM146 fan-jet engines. Scheduled for first flight in September this year and for certification by October 2008, the SuperJet 100 has an order backlog of 46 planes, including 30 for Aeroflot, Russia's largest airline, 10 for Russian Finance Leasing and six for Dalavia, an airline based in the Russian Far East.
Alenia Aeronautica, an aerospace subsidiary of the Italian advanced technology company Finmeccanica, is participating in a joint venture with Sukhoi to sell and market the aircraft and provide customer support.
Not to be left behind, AVIC I Commercial Aircraft of China is developing two regional transporters - the 90-seat ARJ21-700 and the 105-seat ARJ21-900. Assembly of the first ARJ21-700 began in late March in Shanghai, and the first flight is scheduled for late this year. The first customer delivery, to Shandong Airlines, is planned for September 2009, the Chinese aircraft maker said.
U.S. and European companies will supply 40 percent of the plane's components, including General Electric CF-34 jet engines and Rockwell Collins avionics. A total of 35 firm orders are in hand from Shandong and Shanghai Airlines and Shanzhen Lease Financing, while Xiamen Airlines has signed a preliminary agreement for six more.
In Japan, the industrial giant Mitsubishi also has two designs under study - the MJ70 and MJ90, seating 70 and 90 passengers respectively. Company officials say Mitsubishi aims to decide next year whether to enter the market, a decision that will depend on its assessment of market growth prospects and likely competition. If it decides to go ahead, Mitsubishi will aim for government certification of its aircraft in 2012.
 

JonnyKnoxville

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I wish Boeing would participate in this market. I guess if they have not started by now, they never will.
 

BoilerUP

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I wish Boeing would participate in this market. I guess if they have not started by now, they never will.

They have - with the 737-500/600 and later the 717. The latter was the quintessential modern "regional jet", but was killed because it posed a "risk" to 737 sales.

There likely isn't enough margin to justify the design of anything smaller than the short guppy.
 

JonnyKnoxville

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They have - with the 737-500/600 and later the 717. The latter was the quintessential modern "regional jet", but was killed because it posed a "risk" to 737 sales.

There likely isn't enough margin to justify the design of anything smaller than the short guppy.

Does the 737-500 only hold 90 pax? What is the lowest seat configuration operated on a pax version 737? It is well above 100 is it not?

I could see your point on the 717 if they still made it.

The margin is obviously there otherwise embraer and bombardier would not be in this business.
 

Guitar Guy

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Enough

BoilerUP

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JonnyKnoxville said:
The margin is obviously there otherwise embraer and bombardier would not be in this business.

Embraer and Bombardier are in the 50+ seat business with a clean-sheet flagship design built in a third-world country and a super-stretched business jet, respectively. Besides, both are "RJs" and pay accordingly. It would be naive to think Boeing could shorten the 736 to a 90-100 seat airframe (even with two classes) and have it be economical for airlines to purchase and operate as it would have the same weight and crew pay issues as Airbus has with the A318.

Failing that, Boeing is so wrapped up with the 787 that they seemingly have conceded the sub-737 market to the foreign small jet manufacturers.

No I'm not an analyst, but I did stay at a Comfort Inn last night!
 
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