The launch of a new family of regional jets and a flurry of orders from European carriers took much of the limelight at the Paris air show. Four regional jet contenders, as well as Airbus and Boeing, now offer 100-seater jets. Is the market rich enough to sustain them all?
If the market for 100-seat jets was a grey area before the Paris air show, then as Le Bourget closed its doors on 20 June, it might at best be described as a dense fog. Regional jet manufacturers launched and sold an array of 90- and 100-seat variants, while Airbus and Boeing insisted there were healthy markets for their own offerings - even if there were no takers during the show.
But for all the smoke and mirrors, two things did become apparent. First, the fervour for regional jets is now as frenzied in Europe as it was in the USA two years ago. No-one it seemed wanted to be left out of the rush to get started on building a regional jet family.
Second, the gloves are off in the fight for that 100-seater middle ground that spans both regional and major airline territories. At the 1997 Paris air show, manufacturers were coy about this market. The regional manufacturers claimed to be wary of entry until they knew Boeing's intentions. "If Boeing sneezes, we catch pneumonia," said a previously wary Mauricio Botehlo, president Embraer. "We won't do battle with Boeing," said a senior executive at Fairchild Aerospace. Boeing was most cautious of all. Having inherited the MD-95 from McDonnell Douglas, it seemed uncertain what to do with this adopted orphan and even less sure that the 100-seat market was large enough to justify adding the MD-95 to its product line.
What a difference two years make. The MD-95 is now the Boeing 717 and, immediately after Paris, was hauled on a whistle-stop tour of European cities to demonstrate, as Boeing puts it, why this aircraft is "uniquely qualified for the regional market". Airbus also appear to have caught on to the regional jet revolution and is touting its A318 powered by the new Pratt & Whitney PW6000.
Initially Airbus had seemed intent simply on following the unexpected success of its A319 with another small A320 family member to extend the range. But Airbus proudly pointed out that the A318 has attracted interest from customers that do not operate other family members.
For years, the long-range demand forecasts from Airbus and Boeing gave little more than a nod in the direction of the regional market. But the latest round of forecasts, presented at the show, were altogether more upbeat. Boeing's current market outlook represents the biggest sea-change. It predicts that the 50/100-seat sector will account for more than 4,000 deliveries over the next couple of decades, representing 20% of units delivered, albeit only 8% by dollar value. Over half of that number (2,600 aircraft) will come from the market for aircraft with 80 seats or more, where the 717 is pitched.
Airbus, which begins its forecast at 70 seats and only looks at demand of the world's top 230 airlines, still comes up with room for over 1,900 regional aircraft. Notably, its calculations include only 31 British Aerospace Avro RJs and 115 717s over the next 20 years. The consortium's head of strategy Adam Brown acknowledges that the numbers would be a good deal higher but for the nature of the airlines analysed in the forecast.
Embraer keeps signing
But while the newly enlightened major manufacturers were talking in bullish tones about the regional market, it was Embraer that was putting ink to paper at the show. The Brazilian regional manufacturer, apparently no longer fearful of catching influenza, held court.
It started off with a $4.9 billion order from Crossair for 75 aircraft with 125 options. That not only launched Embraer's RJ-170 and RJ-190 family of regional jets, but dashed Fairchild's hopes of including Europe's largest regional in its customer portfolio. The order calls for a mix of 50-seater ERJ-145s, 70-seater ERJ-170s and a larger variant of the 90-seater ERJ-190. This version, the ERJ-190-200, has 108 seats.
Crossair president Moritz Suter says it was the package deal that Embraer could assemble, offering everything from a 30- to a 108-seater, that made the ERJ family so attractive and which will allow him to transform the Swiss airline into an all-jet carrier by 2006. Suter adds that Crossair looked at all options available - including the 717 - before making its decision.
One day later, chief executives of regional airlines across Europe lined up to guarantee their own piece of the regional jet action and to add a further $1.5 billion-worth of orders to Embraer's backlog. French carriers Regional Airlines and Proteus, Dutch carrier KLM exel, Austria's Rheintalflug and Italy's Alitalia Express each expressed similar themes. They cannot afford to be left out of the regional jet movement as they head into the next century and they need to buy into a family of aircraft that will allow them to expand in either direction.
The old school
Europe can more or less claim to have invented regional jets with the original 100-seat offerings from Fokker and British Aerospace. Both battled it out for years before the current wave of interest, slipping their aircraft beneath or alongside the bottom end of mainline fleets. All but three of the top 10 European regionals are still on the BAe customer list for either the Avro RJor its BAe 146 predecessor. Crossair, Lufthansa CityLine, KLM uk, Eurowings, Jersey European, British Regional and Sabena's DAT are all there.
Fokker is gone and BAe remains philosophical about the future, hoping to keep the programme fresh for another decade with its re-engined RJX revamp, and betting that the market will ultimately prove too small to sustain a new programme. But it concedes it is maintaining a niche rather than joining the regional jet revolution. Crossair makes a telling comment in its Embraer order announcement that BAe did not have a "basically new" aircraft family to offer.
ATRtoo is still officially "investigating"the 60/100-seat Airjet family. But it is close to a decade since the Franco-Italian joint venture began the search for a regional jet programme. The disintegration of the latest talks with Fairchild Aerospace suggests that a conclusion is little nearer. At the air show, ATR president Antoine Bouvier seemed keener to reaffirm the consortium's commitment to the turboprop market than push the progress towards a jet. "Our market is in turboprops and we will not be pushed outside this market," he said, adding that jets were a separate project.
The onslaught of the regional jet in North America has clearly taken its toll. Bouvier says ATR will begin scaling down its sizeable sales operation in North America to concentrate on new markets such as Asia and the Middle East. There is still talk of production in China and also in India, where ATR estimates potential for 100 aircraft over the next 15 years.
Together with the core European market, Bouvier is banking on a market for between 60 and 80 turboprop deliveries a year over the next decade, with more than half of that in the 70-seat sector. He says the aim will be to keep turboprop direct operating costs at 15-20% below those of competing jets on a range of 460-650km (250-350nm).
Yet even the most reliable turboprop customer in ATR's European heartland are keen not to be left out of the regional jet bonanza. One of the few ATR orders signed at the show came from Eurowings, ordering five new ATR-42s - albeit as replacements rather than additions to its 27 ATRs. Chairman Reinhard Santner points out that there is still room for turboprops on "some thin routes or small airports where jets can't operate". He also shrewdly adds that a sudden rise in the oil price, or the much-feared fuel tax, could yet shift the economic advantage back towards propellers. Yet he still expects to see no more than 10 turboprops remain at Eurowings as the fleet is replaced over the next five to seven years. The airline, which operates four Airbus A319s and 10 BAe 146s, could make an aircraft decision soon.
Fairchild undaunted
Fairchild president Carl Albert was left empty-handed at the show for regional jet sales, having already announced its coup in capturing the Lufthansa CityLine business earlier this year. But his confidence is undiminished in the prospects for the 70-seat 728JETand its 90-seat 928JETcounterpart. Like Botehlo, he seems less daunted at the prospect of competing with the big guys.
"In our business plan we are forecasting much greater orders for the 728JET than for the 928JET," he says. "We believe the airlines will operate mainly 728s with some 928s, so commonality will be important. With the 928 we are much lighter and smaller than the 717. But I think there is less of a distinction now between the regionals and the majors - and we see the major carriers now looking at this product."
Bombardier, meanwhile, announced a North American launch order for its Q400 turboprop - from Seattle-based Horizon Air - alongside some 70-seater CRJ-700 orders from the carrier. Industry observers attribute Bombardier's relatively small regional jet show announcements mostly to the fact that the company's order book is full to capacity until 2003, as the company secured a massive order from Northwest Airlines.
But if the Canadian manufacturer goes ahead early next year with a formal launch of its planned 90/100-seat regional jet, the BRJ-X, then it could be Bombardier's turn to grab the headlines at next year's Farnborough air show. Bombardier predicts a market for 2,500 aircraft in the BRJ-X category over the next 20 years and its large, five-abreast cabin mock-up has "airliner" written all over it.
Source: Airline Business
