The increasingly bitter dispute between Bombardier and Embraer over alleged regional jet sales subsidies is set to come to the boil again as Northwest Airlines nears a decision on new 44-seater aircraft for its Airlink operation.

Bombardier and Embraer are competing for a Northwest order for an additional 75 regional jets, with the airline indicating it hopes to make a decision within the next two months. Northwest is looking at either the ERJ-140 or a 44-seat version of Bombardier's CRJ200, of which it already has 54 on order for Airlink carrier Express I.

The competition raises the prospect of Bombardier again calling on Canadian state financing, which it contends is needed to compete fairly against Embraer's Proex 3 financing and which was critical in Air Wisconsin's recent CRJ200 order. Embraer claims Proex offsets lower interest rates not available to Brazil and has complained to the World Trade Organisation over the Air Wisconsin sale.

"We're in discussions with Northwest," confirms Bombardier chief executive Robert Brown. "We're following the dossier very closely on the financing that could be provided by our competitor and with the government on how we might react," he adds.

Express I's present fleet of 50-seat CRJ200s, of which 29 will be in service by the end of the year, would appear to give the aircraft the edge. Northwest has options on another 70 CRJ200s. But delivery of all 54 aircraft brings Northwest up to the maximum permitted in the Airlink fleet under the current scope clause agreement.

The scope clause does permit unlimited numbers of 44-seat and smaller jets. This would appear to favour the shrink ERJ-140 which is tailored to just such a restriction. The agreement is not amendable until September 2002, but the airline and its pilots have agreed to advance the start of talks.

The prospect of additional jets puts further pressure on Airlink carrier Mesaba's owners to sell the rest of the business to Northwest. The airline currently owns 29% and wants to acquire the remaining stock. It has so far not allocated any new regional jets to Mesaba.

"Northwest owning us would ensure that other wholly owned Airlink carriers would not have any advantage over Mesaba in the future allocation of jets," says an executive.

Source: Flight International