The early successes of regional jet upstart Fairchild Dornier are undoubtedly spurring a surge in excitement among the more established regional players. But perhaps before everyone rushes headlong into launching a raft of new aircraft in response to the market upswing, considerable thought needs to be given to the factors that will determine long term survival in what promises to remain the most cutthroat of all commercial aircraft markets.
The time seems right for an all-out attempt to capture market dominance - something which many regional aircraft manufacturers have failed to do in the past - but the winner(s) will be those with pockets deep enough to sustain the business through boom and bust cycles and with the technical expertise to ensure both cost-efficiency and credibility.
Arguably, regional jet makers are faced with the same issues now that confronted the Airbus partners when they joined forces in 1969. Co-operation was seen then - as today - as the only way to survive for the long term. It took 10 years before Airbus was recognised as a credible counterforce to Boeing and 20 years, to 1990, before the enterprise was established and efficient enough to report profits.
Cost-efficiency is even more critical in the market for 100-seater aircraft and below, given the narrow margins dividing profit and loss in the regional airline sector. A successful manufacturer is now being asked to deliver the cost benefits of Airbus- and Boeing-style fleet commonalities, but at bargain basement prices traditionally associated with the regional market.
Fairchild Dornier appears to be set to ride the crest of a wave which previously came crashing down over mature, highly capable manufacturers such as British Aerospace, Dornier, Fokker and Saab. All had a strong technical pedigree but for one reason or another failed because they just could not adjust to the pressures of the market.
All thought they could press on regardless pursuing their own market niches within the regional sector, when in hindsight they should have learned the brutal lessons of the large airline market where aircraft families with high type commonality had become dominant as a result of airline demand.
Previous attempts to consolidate in the regional market, for example ATR and BAe's short-lived marriage as AI(R), only saw partner companies join forces to continue to market disparate product lines.
In what was considered a risky move, Fairchild acquired struggling Dornier from Daimler-Benz Aerospace and converted a turboprop loss-leader into a pioneering 30-seat regional jet - in response to an emerging market demand. Fairchild's strategic coup was to follow this immediately with a larger regional jet family addressing the foremost needs of airlines bracing for fleet renewal programmes early in the next decade. Given that Fairchild Dornier has set out its stall so clearly in the 30- through to 110-seat arena, those manufacturers which remain committed to this market have no choice but to respond.
They can either attempt to debunk Fairchild Dornier's strategy or emulate it. So far, Embraer is positioned to build upon its 37-seat RJ-135 and 50-seat RJ-145, which have together already racked up over 240 firm sales. Meanwhile, Bombardier will complement its 50-seat Canadair RJ in 2000 with the 70-seat Series 700 variant. However, it will have to design a new airframe if its wants to play in the larger aircraft market. ATR is now thinking of reviving the Airjet concept, while its former partner BAe shows little sign of pursuing anything beyond an upgrade to its existing Avro RJ range.
Any of these rivals which want to match Fairchild Dornier's ambitions and stay in the business for the long haul will have to invest heavily in new programmes or risk being forced out of the market. It is difficult to imagine, given the experience of the large airliner manufacturers, that any of them can afford to do this alone.
The US-German company is spreading the cost of its programmes by bringing in a Boeing 717-style, international group of risk-sharing partners. The other manufacturers must establish their own financing plans, and, recognising that the market is limited, must conclude that the choice is to co-operate or die.
Source: Flight International
