Déjà vu: 50-seat RJ glut appears to loom large

It seems like only yesterday that a big, nasty glut of 50-seat regional jets was being predicted, and then didn’t quite come to fruition. The threat foretold around the middle of this decade seemed to dissipate last year, as Independence Air’s RJs found homes, and as reported in May 2007 by Darren Shannon at Flight International. Now that threat appears to be back with a vengeance.

One outspoken observer, consultant Mike Boyd of Colorado-based The Boyd Group says that in light of sky-high fuel costs, the current 50-seat market cannot be sustained. His firm has a very interesting news brief on the subject, the long and the short of which says there are “just over 1,600 RJ cabined airliners operating in the USA, all within the well-defined segment of small jet providers”. Mainline airlines today “are leasing out fleets of RJs that today represent several hundred units in excess of what the market can support”.

Based on the firm’s 2008-2017 “Fleet Demand & Trend Forecast”, there will be over 800 fewer of these RJs in the US skies.

Richard Aboulafia, VP analysis at Teal Group notes that with fuel prices so high, “even depreciated aircraft look quite expensive”.

There are lots of recent indicators of a 50-seat squeeze (Continental Airlines talking “better economics” with ERJ-145 operator ExpressJet, Delta/Northwest looking to optimize and rationalize, Chautauqua’s culling of CRJ200s for Continental, and Delta’s decision to drop a Mesa contract for ERJ-145 flying etc, etc).

Let’s look again at that May 2007 article, and its final paragraph.

Yet the apparent attractiveness of the secondary market has yet to entice more investors, notably lessors, despite efforts by Bombardier. “The 50-seat market just isn’t of interest,” says John McMahon, chief of Irish start-up Genesis Lease, a company with close ties to GECAS and the owner of two Embraer E-Jets. “We really want to look at the larger end of the regional jet sector.”

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