Short-Term Chaos; Long-Term Growth, Says Forecast International

Forecast International's "The Market for Regional Transport Aircraft" projects that a total of 3,754 regional aircraft will be produced during the next 10 years (2009-2018).  This forecast includes both regional jets, which account for about two-thirds of the forecast, and regional turboprops.  As calculated in constant 2009 U.S. dollars, the value of the forecast production is estimated at some $115 billion.

According to the Forecast International study, the top three regional aircraft manufacturers during the forecast timeframe will be Bombardier, Embraer, and ATR.  Combined, the three manufacturers are expected to account for more than 70 percent of the regional aircraft built during the 10-year period, and more than 80 percent of the monetary value of worldwide production.  However, the study also points to a number of newcomers entering the regional aircraft market that will challenge the established players for sales and market share.  These include the Chinese firm AVIC with its ARJ21 regional jet, the Japanese company Mitsubishi with the Mitsubishi Regional Jet (MRJ), and the Russian firm Sukhoi Civil Aircraft with the Superjet 100.

AVIC ARJ21

Meanwhile, Bombardier, Embraer, and ATR are not sitting still, as all three are looking at refreshing and expanding their current product lines.  Besides bringing its new CSeries family of 100-145 seat airliners into service, Bombardier may introduce a stretched, 90-passenger version of its 70-seat Q400 turboprop.  ATR is studying the possibility of developing an all-new turboprop family in the 70-98 seat range.  Embraer is considering several possible options to enhance its product line, including a new jetliner sized above 120 seats.

All these products are intended for use by a regional airline industry that is currently in the midst of a prolonged downturn.  The robust growth that characterized the regional sector in the past several years has come to an end amidst declining air traffic and passenger enplanements.  Many regional carriers are struggling in the current business environment, and are beginning to question some of their traditional methods of operation.

There are some bright spots in the industry, though.  According to Forecast International senior aerospace analyst Raymond Jaworowski, "A handful of regionals have managed to remain financially strong, often through adept strategies involving some combination of operational efficiencies and proper sizing of the types of aircraft that they fly.  A number of these carriers are replacing smaller, relatively uneconomical aircraft with larger, more profitable aircraft."

Bombardier C300

Generally, this strategy involves grounding 50-seat regional jets in favor of 70-seat or larger transports.  Once air traffic on regional routes rebounds and resumes its growth, many more regional carriers will follow suit in acquiring larger-capacity aircraft to replace smaller jets in their fleets.

FMI: www.forecastinternational.com