VALUJET EFFECTIVELY (and finally) launched the McDonnell Douglas (MDC) MD-95 on 19 October, with an order for 50. The deal will be seen by some as the launch of the last of the old-style regional jets, but its pricing appears to be all too modern. Either way, ValuJet's order will have a profound effect on the market, and on the prospects for other projects.
The MD-95 has had a difficult birth. MDC has come close to launching it several times, but it has always failed to secure a big launch order - most famously when Scandinavian Airlines System opted for Boeing 737s instead to replace its MDC DC-9s.
For many operators, the MD-95 did not offer enough of a step forward, despite its new-generation BMW Rolls-Royce engines and avionics and systems based on those of the larger MD-90. Regional operators, like their longer-haul brethren, are looking for quantum leaps in operating economics for their next-generation aircraft. They talk of seat-kilometre costs 15-20% lower than those of current aircraft and they want lower acquisition costs.
MDC has probably been able to deliver on the acquisition-cost front to ValuJet. The airline's existing DC-9-30s cost only $5 million and ValuJet made clear that it would only take on a new aircraft if the price was right.
Whether other operators will receive such apparently advantageous prices is another matter - after all, Airbus senior executives are rumoured to have blanched at the prices that ValuJet was willing to pay them for their A319. On operating costs, it will have been able to do less for ValuJet. The new engines will be much more fuel-efficient that those of its old DC-9s, and the modern systems should be more reliable than the old ones, but MDC would have to have thrown in a new lightweight structure and advanced aerodyamics to offer a real breakthrough.
Undoubtedly, the MD-95 will be an attractive product - not as good as the customer would hope for, but better than the customer now has. Its greatest attraction is that its limited technical advance carries the advantage of limited technical risk, which, in turn, means that its advances can be delivered quickly.
It is an argument which Boeing has used to good effect in marketing its new-generation 737s in the next class up. Even though they incorporate more new technology through a new wing, they offer the same sort of advance from a proven base, which has appealed to many operators.
That places a greater burden on those in Asia and elsewhere who would rather build a totally new aircraft to satisfy the demand for new100-seaters. Any such aircraft will carry a development tag many times that of the derivative MD-95, but will have engines and avionics, which are no more advanced. Any new aircraft will have a better structure and aerodynamics, but much of its advantage will be lost, making each operating economic benefit more expensive and difficult to justify.
Especially at the lower end of the market, acquisition cost is more of an issue than it is further up. Reducing standing costs - even if it implies accepting slightly higher running costs - is the key. Many operators are faced with replacing older, noisy and uneconomical aircraft, which cost them very little to buy secondhand, with new types which they can ill-afford.
The only hope for a manufacturer wanting to introduce a totally new type it seems, is to cut that first cost effectively to the point where the operator pays for flying hours only. That implies massive financial investment and risk for a manufacturer or lessor. Without it, however, the MD-95 might not just be the last of the traditional regional 100-seaters to be launched, but the last of any sort of 100-seater to be launched for a very long time.
Source: Flight International
