15 October 2017

The New Generation of Regional Jets

Author: Richard L. Aboulafia, Drawn From: World Military & Civil Aircraft Briefing

The New Generation of Regional Jets

Despite the challenges associated with entering this market, three new regional jet producers have thrown their hats in the ring. The biggest success, and a major surprise, has been the Mitsubishi Regional Jet (MRJ) Powered by Pratt & Whitney’s Pure-Power PW1000G Geared Turbofan, (GTF).

In October 2009, the MRJ scored a notable breakthrough with a tentative order for 50 firm and 50 option planes from Trans States Holdings, the parent company of Trans States Airlines and GoJet Airlines. A firm contract was expected by the end of the year, but did not arrive until February 2011. Also, in July 2012 Sky-West announced a tentative commitment for 100 MRJ90s. This order, for 100 firm and 100 option planes, was firmed up in December 2012.

Unfortunately, program execution has not matched market success. In April 2012 Mitsubishi announced a delay to the MRJ program, with deliveries re-scheduled to summer 2015, or as late as early 2016. This was attributed to technical problems with documentation, meaning that manufacturing for the first plane would need to begin again. It has since been delayed again, until 2018. Thus, any advantage the MRJ may have enjoyed by being first on the market with next-generation engines has eroded.

The second new player is Superjet. While offering relatively little that’s new from a technological standpoint, Superjet has one key attribute the other regional players don’t enjoy: a potentially strong home market. There are hundreds of aging regional aircraft in Russian airline service, and if the Russian Government can help finance replace¬ment aircraft for just a third of the fleet, that’s a respectable home market.

The biggest challenge will be moving beyond the former Soviet market, which offers theoretically respectable replacement demand but no growth and an uncertain ability to finance new plane purchases. The best hope here is Mexico’s Interjet, the first Western airline to order Super-jets. There have been issues associated with product reliability and sup¬port with Superjets delivered to the Russian and former Soviet market; these need to be rectified before the plane can prove itself with Interjet and any other Western carriers that order the new plane.

At the bottom of the new regional jet heap is China’s COMAC ARJ 21. Originally scheduled to enter service in 2007, the ARJ 21 is now still slowly going through flight testing. The fourth aircraft flew in April 2010, but extensive design changes and technical problems have continued to delay the program. Yet the ARJ 21’s problems don’t end with mere schedule delays. The aircraft is 15% heavier on a per-seat basis than any of its competitors, a problem that appeared even before design tweaks began to add additional weight. It looks very much like the DC-9, a classic example of re-inventing the wheel. It’s also quite likely to prove too heavy and inefficient to enter service anywhere, even with Chinese Government subsidies.

There are two curious aspects of this new wave of regional product development. The first, of course, is the sheer disproportionality of development funding to market size. In other words, the regional aircraft business is seeing more new aircraft program development, relative to the size of the market, than any other aircraft industry segment.

The second curiosity is that all of this new product is pursuing the regional jet market, which has actually shrunken over the past ten years. By contrast, there have been no new turboprop transport developments, even though that market segment has more than tripled in size over the past ten years. While ATR and Bombardier continue to propose new 90-seat designs, there have been no firm product launches. Clearly, corporations and governments don’t regard props as exciting as jets. The result is a mismatch between producer strategies and market needs.

About the Author

Richard L. Aboulafia

Richard L. Aboulafia

Richard is Vice President of Analysis at Teal Group. He manages consulting projects in the commercial and military aircraft field and analyzes broader defense and aerospace trends. He has advised numerous aerospace companies, including most prime and many second- and third-tier contractors in the US, Europe and Asia. He also advises numerous financial institutions on aerospace market conditions.

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