ANALYSIS: Why regional airliner sector will remain dynamic

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Rob Morris explains Ascend's long-term thinking on the regional aircraft sector, with a 90-seat turboprop seen as a key development

In many aspects, regional aircraft markets are the most dynamic of all sectors in today's commercial aircraft sector, with multiple players offering a variety of products.

In this year's Flightglobal Fleet Forecast, which is produced by analysts at consultancy arm Ascend and projects 20-year commercial aircraft demand, regional aircraft account for only around 7% of the total delivery value. However in volume terms, regional deliveries are still expected to exceed 6,700 aircraft through 2032.

The regional aircraft tally by unit represents 19% of all airliner deliveries in the next 20 years, almost two-thirds of which will be jets. Close to 2,500 passenger turboprops will be delivered and 4,200 jets.

Significant developments are expected in the turboprop sector over the next 20 years. Having remained moribund through much of the last two decades when low fuel prices saw the rise of the 50-seat jet which replaced turboprops in many markets, turboprop manufacturing has recovered strongly in the past few years as fuel prices climbed to the $3 per US gallon commonplace today.

ATR and Bombardier have enjoyed strong sales for their ATR 72 and Q400 programmes in particular and buoyed by their competitive economics, particularly on shorter sectors around 400nm (740km) or less, these sales are expected to continue to thrive. Overall, 70-seat turboprops are expected to dominate the sector, with almost 60% of the 2,500 turboprop deliveries being in this sector.

Although ATR and Bombardier will remain the key players, the AVIC MA700 is also expected to capture significant sales in China and other developing regions. With countries in Asia-Pacific increasingly industrialising there is potential for at least one new OEM to emerge from (perhaps) India, Indonesia or South Korea, all countries that have recently been reported to have commercial aircraft manufacturing aspirations, with a new 70-seat turboprop aircraft programme.

Barriers to entry, including development cost and design challenge, are significantly lower at the turboprop end of the market, which will further serve to enable this potential new market entrant. However, demand is not estimated to be sufficient to support two or more market entrants and should this scenario emerge then one or more of the incumbent manufacturers could be forced to exit the market.

More than 750 90-seat turboprop deliveries are forecast, beginning no earlier than 2019, with Asia-Pacific representing the greatest opportunity for a new large turboprop. Both ATR and Bombardier have been evaluating higher capacity turboprops for some time, while Pratt & Whitney, General Electric, Rolls-Royce and Snecma have new engine proposals in study. Ascend expects a 90-seat turboprop will be launched by an existing player within the next year, and sees potential for a new market entrant in this sector. There is little doubt that at least one programme will come to market before the end of this decade.

Korea Aerospace recently proposed a 90-seat turboprop as part of a strategic aerospace development plan for 2010-19. While configuration and detailed design is still some way away, Western industrial participation could enable such an aircraft in the suggested timescale.

If the new 90-seat turboprop retains the performance typical of the current ATR family, it would be expected to replace existing large turboprops and potentially grow the short-haul (sub 400nm) route market typically served by such aircraft today.

And the regional jet market is no less dynamic. The duopoly enjoyed by Bombardier and Embraer today is already under threat, with Comac and Mitsubishi developing regional jets to compete alongside Sukhoi which has recently entered the market with its Superjet. Bombardier is expected to exit the regional jet market as its focus shifts towards the larger CSeries family (more than 110 seats) in the single-aisle sector.

Much of the Canadian manufacturer's market share is expected to be taken by Mitsubishi, which, despite the recently announced delays to the MRJ programme, is still expected to deliver more than 900 aircraft once MRJ90 production is established in 2017 and the larger MRJ105 is launched. However, it is Embraer which is expected to remain the dominant player in this sector, with the second generation E-Jet E2 programme likely to build on the current market success enjoyed by the E-Jet family to deliver a combined 61% market share during the forecast period.

Comac's ARJ is not expected to capture significant market volume, with sales largely limited to the domestic market. Although Superjet is expected to fare marginally better in export markets, sales volumes are predicted to total only around 380 aircraft over the whole programme.

Although relatively small scale in value terms, the regional market is likely to see the greatest competition during the next 20 years as industrialising nations increasingly seek to build their domestic aerospace manufacturing capabilities to capture a slice of the commercial aircraft manufacturing pie.

Click here for more on our forecast report, and to download a summary