IN FOCUS: MRJ targets 50% of world's 70-100 seater regional jet market

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Skywest's commitment for 100 Mitsubishi Regional Jets will likely be locked in as a firm contract in a week's time.

Lawyers from both sides are now ironing out the details, and the deal is "on track" to be sealed, Mitsubishi Aircraft's executive vice-president for sales, Masao Yamagami, tells Flightglobal.

Giving insight into what led to the agreement in principle for 100 MRJ90s, announced at the Farnborough air show last month, Yamagami says it was ultimately the Japanese jet's spacious cabin and low fuel burn that clinched the deal.

Talks between Mitsubishi and Skywest first started in January 2011 when the latter issued a request for proposal for new jets. Mitsubishi submitted its proposal in March and after much negotiation, a letter of intent was inked in November.

"Skywest told us that they loved the Embraer cabin, but its fuel burn is not attractive. The CRJ has good fuel burn but its cabin was not attractive. MRJ has both and they also appreciate our advanced technology," says Yamagami, adding that Skywest was also convinced that Mitsubishi would be capable of providing good maintenance and after-service support.

He was also quick to point out how crucial the endorsement from the largest US regional carrier is to the success of the MRJ programme. Skywest is the holding company for Skywest Airlines and ExpressJet Airlines, and a major operator of Bombardier and Embraer regional jets.

"The Skywest contract is very, very, very important to us. If they are happy with the MRJ, we can sell more planes. This is also a reason why Bombardier and Embraer now view MRJ as a competitor," says Yamagami.

Nonetheless, he would not comment about how competitive a price Mitsubishi had offered Skywest, or whether pricing had played a key role in obtaining the prized commitment.

The Japanese manufacturer's aim is to capture half of the 70-100 seater market over the next 10 years, taking over Bombardier and Embraer's dominance in the market.

"More than 1,500 units delivered in the world today are from Bombardier and Embraer. They developed the market. Now we have used new technology to make a better aircraft. We'll take over their position maybe in 10 years," says Yamagami.

"But they will not wait, they will improve their product and it's good competition," he acknowledged, adding that Mitsubishi is also keeping a keen watch on which powerplant Embraer will pick for its planned refreshed E-Jet.

He reveals that Mitsubishi is now studying the feasibility of setting up a second assembly line or factory to ramp up production rates to meet expected future demands. The facility may be located overseas, and the firm is considering the US as an option.

Should Mitsubishi reach its goal of gaining a 50% marketshare, it would need to produce 125 jets annually, equivalent to about 10 aircraft per month.

"This is not an easy production rate. We're reviewing the potential increment capacity to meet this market requirement. A big order would definitely push us in that direction," explains Yamagami.

If a second line proves necessary, it will only be set up after the aircraft receives type certification, which is scheduled for the third quarter of 2015.

Mitsubishi is in talks with several potential Asian customers. In the US, it is also awaiting the outcome of scope clause changes, and any impact on regional operations as American Airlines emerges from bankruptcy later this year.

Delays have pushed the MRJ's first flight to the fourth quarter of 2013 and postponed its entry into service to the third quarter of 2015. When the Skywest deal is finalised, it will take Mitsubishi's backlog to 170 firm orders with 60 options.