Demand shifting upward in regional jet market

Citation

(2006), "Demand shifting upward in regional jet market", Aircraft Engineering and Aerospace Technology, Vol. 78 No. 1. https://doi.org/10.1108/aeat.2006.12778aaf.013

Demand shifting upward in regional jet market

Demand shifting upward in regional jet market

Keywords: Aircraft, Aircraft industry

The market for once-dominant 50-seat regional jets is cooling, while demand is increasing for regional airliners that seat 70 passengers and more, according to Forecast International's recently released study, “The World Market for Regional Transport Aircraft.”

More than 3,380 regional aircraft worth some $80 billion will be produced in the 10-year period from 2005 through 2014, according to the report. An estimated 2,731 jet-powered regional transports will be produced during the 10-year time frame, while 650 turboprop-powered aircraft are forecast.

While regional jets are expected to dominate the market during the next 10 years and beyond, turboprops will not entirely disappear. According to Forecast International senior aerospace analyst Raymond Jaworowski, “There will continue to be room in the regional aircraft market for turboprops, especially among smaller carriers that serve niche markets.”

In the past few years, the dominant types in the regional airliner market have been 50-seat regional jets. However, the 50-seaters are now slowly giving way to new 70-seat regional jets. Continuing traffic growth and the easing of scope clause restrictions are among the factors driving this trend. Scope clauses in airline pilot contracts restrict the size and number of aircraft that a carrier's regional airline partners can operate.

Eventually, demand in the regional aircraft market can be expected to move past the 70-seaters and ratchet up to 90-120 seat regional jets. Scope clauses remain a big obstacle to this, but competitive and financial pressures could force further relaxation of these scope clauses.

Bombardier and Embraer are presently the two dominant players in the regional aircraft market. Of these two, Embraer is currently the better positioned to take advantage of the long-term trend toward larger aircraft. Bombardier's product line currently tops out at the 90-seat CRJ900 regional jet, while Embraer has in its product line the 94-106 seat Embraer 190 and the 106-118 seat Embraer 195.

Bombardier is looking to address this situation with its proposed CSeries family of aircraft that would cover the 110-130 seat market. The CSeries program has not yet been formally launched. “Development of the CSeries would be a bold, but perhaps necessary, move for Bombardier,” Jaworowski said. With the CSeries, Bombardier would not only match Embraer in the 100-115 seat market, but would begin to take on smaller Airbus and Boeing narrow body airliners in the 115-130 seat range.

The Forecast International study projects that, during the next 10 years, Embraer will produce 1,357 regional jets, a market share of 40.1 percent. Bombardier is projected to build 1,244 regional aircraft, a share of 36.8 percent. No other company is projected to have a unit production share exceeding 10 percent. When the market is measured in dollars, Embraer again leads the way with forecast production value of $33.4 billion, a market share of 41.8 percent. Bombardier production is estimated at $32.4 billion, a 40.5 percent share.

Details available from: Forecast International, Tel: +1 203 426 0800, e-mail: monty.nebinger@forecast1.com; web site: www.forecastinternational.com