Paul Lewis/PARIS
The fight for the 70/100-seat regional jet market early in the 21st century has already begun with an opening exchange of fire between Fairchild Aerospace and Embraer. Also manoeuvring into position is Bombardier, while a potential fourth player, ATR, is struggling to mobilise. The question is: will there be any winners on a battlefield already littered with the carcasses of Fokker, Jetstream and Saab?
Fairchild enjoyed success and suffered setbacks at this year's Paris air show. The San Antonio-based company unveiled a ballooning backlog of sales worth $8.35 billion, bolstered by new 328/428JET and Envoy 7 business. This could not veil Fairchild's disappointment at losing the Crossair deal to its Brazilian rival.
Crossair's order for 60 ERJ-170/190s with 100 options puts the aircraft in head-to-head competition with Fairchild's 728JET, launched in April on the back of a similar-sized Lufthansa order. Embraer has embarked on an aggressive development schedule to catch up with Fairchild's planned first 70-seat delivery in late 2002.
Embraer simultaneously has launched the 98-seat ERJ-190-100 and stretched 108-seat -200. The latter will enter service with Crossair in June 2004, 12 months ahead of the -100. Fairchild, however, "expects a 928JET order from a mainline carrier by the end of the year", says company chairman Carl Albert.
Family planning was critical in the Crossair decision, with its requirement for 15 replacement 50-seat jets. This gave Embraer the edge with the ERJ-135/145 already in service and 900 orders and options booked, while the 528JET is at least five years away. "At the end of the day it was the package deal that was important," says Crossair president Moritz Suter.
Bombardier is similarly building from the bottom up, adding the 70-seat CRJ-700 companion to the 50-seat -200 from 2001 and planning the follow-on 90/110-seat BRJ-X series for late 2003. Uniquely, it has also chosen to maintain a presence in the turboprop market with the new Dash 8-400 when others are in a headlong rush to leave. This strategy is paying dividends with airlines such as European Jersey Airways, that want turboprops and jets.
This leaves ATR increasingly vulnerable in the absence of any agreed plans for a regional jet development. This has driven a wedge between the two partners, with Alenia and Aerospatiale Matra each engaged in separate bilateral discussions with Embraer, which is looking for a "strategic partner" according to its president Mauricio Botelho. Having had no success with Fairchild, ATR's only other options are partnering Bombardier or going it alone.
Aerospatiale Matra's parent company Lagardère, like former Aero International (regional) partner British Aerospace before, opposes an all-new Airjet development without any clear return on the $1 billion investment. There are doubts that the three manufacturers already committed to the 70-90 seat market can make money, let alone a fourth contender.
Most forecasts identify a market for 2,500 aircraft of this size over the next 20 years. Botelho sees two distinct markets: smaller operators favouring regional jets; and mainline airlines wanting to maintain "brand loyalty" to Airbus or Boeing. The real battle will be for the middle ground occupied by the US national carriers.
While Embraer remains wary of the upper end of the regional market, projecting sales of only 250 ERJ-190s, Bombardier intends to push into the 100-plus seat territory with the BRJ-X-110. The contention is that the large regional jets will compare favourably to the operating economics of the "double shrink" A318, while the 717 really offers no more commonality with the mainline 737 workhorse than does, say, the 928JET.
The major barrier in the USA will be mainline carrier scope clauses, which severely constrain the number of aircraft with at least 70 seats being operated by partner regional carriers. Many are keenly watching United Airlines, one of the first of the majors to open talks with its pilots union on a new agreement.
Much rides on the talks, including United Express operator Atlantic Coast Airlines' order for 50 428JETs and 35 smaller 328JETs. Fairchild had hoped to announce the deal at Paris, but has been forced to keep wraps on the identity of the end-user for 85 orders and options it claims to have on its books for the 44-seat jet.
Until scope clauses are relaxed or revoked, the larger regional aircraft battles will be confined mainly to Europe. The USA, however, is the world's largest regional jet market. Access to this high ground is critical if Bombardier, Embraer and Fairchild are to ever see any payback on the $3.2 billion they are pumping into new 70-100-seat developments.
Source: Flight International
