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Bombardier's CRJ - Rumors Of Its Demise Are Greatly Exaggerated

New Report Shows Strength Of The Aircraft For Regional Carriers

A new report has been released by Markets and Reports addressing rumors that the Bombardier CRJ may be on its way out.

The research conducted by Markets and Report concludes that the Bombardier CRJ program, considering the various equipment advances and technology improvements, remains an effective and credible regional jet option. The CRJ will certainly be effective through 2019, and if US scope clause size limits do not ease, will be effective through 2024. Rumors of its premature demise are therefore overstated.

The CRJ is the best-selling regional jet in history, and continues to have market success. While the CRJ has been in service since 1991, newer models and continuous improvement enable the aircraft to retain industry-leading economics, particularly for aircraft that meet US scope clauses.

The CRJ remains an effective competitor in the US market because of scope clause restrictions on aircraft capacity and weight, and internationally because the CRJ-1000, too large for US markets, has competitive trip costs for short-haul routes. While the Embraer E-175 has gained market share in recent years, the CRJ remains a popular regional aircraft, particularly in the US market.

Since the US represents about 70% of the global regional jet market, it exerts tremendous influence on regional jet OEMs, with US scope clause restrictions impacting aircraft programs and designs. Embraer deferred its E175-E2 due to its perception that scope clause changes will not be coming by 2019. No regional jet OEM can create a successful program if it cannot sell the aircraft in volume, which requires selling in the US market. The CRJ-700 and CRJ-900 meet US scope clauses.

Scope clause restrictions on the number of aircraft a major US airline regional partner can fly constrains regional jets sales in the US. Absent scope clauses, we believe regional airlines would serve many more communities with higher frequencies and require additional regional aircraft. While the restrictions on aircraft size may help the CRJ against its competitors, the overall restrictions on the number of regional aircraft harms the entire market.

The US scope restrictions on aircraft size will be a factor in the economic life of the CRJ program. If the E175-E2 is allowed, its newer technology will place significant market pressure on the CRJ. If new aircraft are not allowed, the CRJ remains competitive with the existing E-175 model. The firm produced alternative scenarios around four critical issues facing regional jet operators in the US, and it is scope clause restrictions that act as the joker in the pack.

(Source: Research and Markets news release. Image from file)



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