15 September 2017
This new entrant challenge has induced very different reactions by the two legacy regional jet market leaders. One is reinventing itself to survive, while the other seems content to gradually fade away.
There is little about the regional jet market that inspires hope. It was the only segment of the aviation industry that did not grow during the great 2003-2008 boom market. Large commercial jetliner deliveries grew at a 7.4% annual growth rate in that period, and continued growing at a 12.4% rate in 2008-12. Yet regional aircraft grew at a mere 4.4% rate in 2003-2008, and even this was completely due to turboprop deliveries growth (regional jets stayed flat). Worse, in 2009 the regional sector declined by 13.1%, and all told fell by 34% in 2008-2012. Between 2009 and 2010 Embraer, the biggest regional player, saw its backlog drop from 375 jets to 229.
In 1989, regional aircraft deliveries were 15% of the total world transport market by value. In 2016, they were 6.9%. High regional jet seat mile costs (worsened by high fuel prices), persistent airline pilot scope clauses, and problematic relations between major and regional carriers all portend continued market flatness in real terms, and shrinkage in relative terms.
Not only is this market flat, it is also heavily concentrated. The 2,000+ jets based in North America represent about 60% of the world’s fleet. The importance of penetrating the North American market has greatly complicated the efforts of new market entrants.