November 3 should have been a defining date for regional-jet manufacturers. Most feared that Boeing would announce plans to develop an 80-seat derivative of the MD-95 as part of a wider declaration on the future of the aircraft it had acquired with the purchase of McDonnell Douglas. In the event, the US giant postponed any MD-95 announcement until at least January.
Uncertainty is the last thing most of the manufacturers need. Behind a facade of strengthening orderbooks, the regional-jet makers are jittery. The collapse of Fokker, closure of British Aerospace's regional-turboprop lines and the imminent withdrawal of Saab from the market had started the clearout process required to see manufacturers achieve a reasonable return on their massive investments. The threat of Boeing invading the upper echelon of the market has sent a shiver through the industry.
Nerves were evident at Palm Springs, California, in October, when delegates gathered for the Speednews regional- and corporate-aviation suppliers conference. "If an 80-seater comes out with 'Boeing' on the side, I'd hate to be a manufacturer of a 70-seater regional jet," says Jean-Mark Eloy, marketing vice-president of American Regional Aircraft Industries, the IPTN marketing and support subsidiary in the USA.
Among those waiting anxiously for a decision is Aero International (Regional) (AI(R)), which is close to a critical decision on whether to go ahead with the planned Air Jet family. Faced with losing time and market share to Bombardier's Canadair Regional Jet (CRJ) Series 700 programme, AI(R) is desperate to get the project rolling before the end of the year. With two of its major partners, Alenia and British Aerospace, expressing doubts over the wisdom of investing huge funds in the Air Jet, the company is spreading its net wide in search of new partners. Even rivals Embraer and Fairchild Dornier were contacted (unsuccessfully), along with CASA, Saab and several companies in Asia, notably in South Korea .
In efforts to bolster confidence, Air Jet programme marketing and sales vice-president Jonathan Walton says: "The Air Jet is not dead. In terms of market forecast, we agree with Bombardier's bullish forecast tinted with Saab's caution." AI(R) has given itself until the end of December to make a final decision. "The partnerships will be structured and resolved before the end of the year. We see this as an opportunity to see how European industry can be further rationalised," adds Walton.
What was a hard decision in October may be even more difficult in December, given Boeing's waiting game over the future of the MD-95. Another source of confusion, and conflict in the case of the Airbus Industrie partners, is the struggle to get the AE31X programme started.
The three partners, Aviation Industries of China (AVIC), Airbus Industrie Asia (AIA) and Singapore Technologies, are equally anxious to finalise agreements by year-end to allow pre-development to start in early 1998 - although this timeframe may be optimistic given the slow progress so far. AI(R), for its part, believes that the conflict lies between the AE31X and the MD-95-20 (the 80-seater designation), rather than between the Air Jet family and the slightly larger AE31X. AI(R)'s argument is that the new regional-jet family will provide a long-term successor to its Avro RJs and ATRs, and will fit seamlessly beneath the AE31X.
Bombardier and Embraer are adding to the pressure by capitalising on their positions of strength. Embraer has startled its detractors with the sales success of its RJ145 in the US market (with commitments from Continental Express and AMR Eagle for 267 aircraft). Bombardier has achieved combined sales of more than 260 with its equally popular CRJ and stretched CRJ-700.
While Embraer now favours the 30-seat market with its RJ135, Bombardier continues to believe in the strength of the larger-capacity market. It believes that there is a demand for a little over 3,000 aircraft in the 60- to 90-seat class over the next 20 years.
Steven Ridolfi, vice-president for marketing and product planning, is not complacent about the numbers of manufacturers the market can support. "One is great. Two may be fine. Three becomes tougher, and four tougher still," he says.
Fairchild Dornier is equally optimistic that its own 70-seater 728JET project could go ahead from April 1998 on the back of market expectations of more than 100 70-seaters a year entering service by 2006. Sales prospects for its 328JET 30-seater have exceeded its own expectations, it says, despite the threat of the proposed RJ135.
Perhaps the final word should go to Saab. The essential arithmetic, it says, is this: six regional-aircraft manufacturers build 300 aircraft a year using half of their capacity for 17% of the revenue. Two large aircraft manufacturers build 700 aircraft a year, earning 83% of the revenue and are desperately searching for capacity. As the Americans say: "go figure".
Source: Flight International
