Time was when the regional-aircraft industry was focused on who would win the battle to build a family of 70- to 120-seat jet-powered aircraft. Strategists toiled to demonstrate how such a family would sit beneath the fleets of the majors. Much has changed since then.

Now, the focus has clearly shifted down to the 50- to 70-seat regional jet, and possibly even further to 30 seats, raising the equally tricky strategic question of where that leaves the range of turboprops which now occupy the niche.

The debate has been bubbling under for a while, but has heated up over the last year for at least a couple of good reasons. It has been helped in part by the overdue bout of industrial restructuring which has begun to give a little more order to what has been a woefully fragmented market.

The year began with the official launch of the Aero International (Regional)venture, bringing together British Aerospace and ATR partners Alenia and Aerospatiale. A couple of months later, Daimler-Benz Aerospace(DASA) began its retreat from an over-ambitious expansion with the ending of support for Fokker and the subsequent sale of Dornier to Fairchild.

As a result, the battle between Fokker and BAe Avro centring on the 100-seat regional-jet market has faded, to be replaced with a broader contest between the growing AI(R)and Bombardier groups.

Perhaps more importantly, the success of the 50-seat regional jet has become difficult to ignore. Since its debut at the end of 1992, Bombardier has clocked up close to 200 sales for its 50-seat Canadair Regional Jet (CRJ). In 1996, the performance visibly stepped up a gear, with Bombardier taking in 60 new aircraft orders and 73 options. The outlook for 1997 is looking as strong, with another 37 aircraft ordered in the opening months.

Embraer has followed suit with another 60 orders over the year for its EMB-145, deliveries of which began towards the end of the year. The Brazilian manufacturer is optimistic that it can convert more of the 200 options and letters of intent which it still holds from the early days of the programme.

On a rough calculation, that means that the orders for the 50-seat regional jet were three times the number received by the six turboprop types still in the 40- to 70-seat market. The regional-jet sales had already nudged ahead in 1995, but, in 1996, there was a landslide.

The rush is on to launch more. Bombardier has already introduced the 70-seat CRJ Series 700, with three firm orders from Brit'Air and says that it has another 28 "conditional" orders in hand.

AI(R) is working up a case for launching a 58-seat and 70-seat AIRJet family, with the hope of a launch some time around mid-year, provided that it can convince the joint-venture partners that they can make money on the $1-1.2 billion project. Embraer is still toying with the possibility of new versions above or below the EMB-145.

Fairchild Dornier's progress towards putting turbofans on the 328 could could stir up the debate still further, taking the fight down to the 30-seat sector. Engines have been selected and a first flight is being targeted for the start of 1998.

All of which begs the question of where the turboprop goes from here - a topic of more than academic interest to Bombardier and AI(R),given their continuing commitment to the Dash 8 and ATR ranges. Perhaps, unsurprisingly, their strategic forecasts suggest that there will be room for both.

Experience from the first four years of CRJ operations gives some comfort. Bombardier's analysis suggests that around only 11% have been used as direct turboprop replacements, with another 17%to "supplement" existing turboprop operations. The largest portion has been used on new routes and to replace or supplement the existing jet-aircraft services, with a type more suited to the economics of regional operations. AI(R)'s analysis is even more optimistic, suggesting that only 20%of the new regional jets have strayed directly on to turboprop territory.

The manufacturers are also at pains to point out the difference in route length which exists between the types. Around half of turboprops are operated on routes of 370km (200nm), about the average length for a regional airline, and perhaps only 20%stray upwards of 550km. The regional jets have averaged sector lengths of 710km.

AI(R) adds that issues of economics should help to keep the difference alive in the minds of airline customers. Chief executive Patrick Gavin argues that today's 50-seat jets tend to operate on longer, higher-yield, routes with little competition, but that is likely to change as new entrants begin to mount a challenge. That will put the focus on costs and frequencies.

He adds that the issue of fuel costs, which was hardly raised a year ago, has also become more critical following the 30% hike in oil prices. A rise of 10ó per gallon of fuel would cost a 50-seat regional jet an extra $55,000 a year more than an ATR 42-500, he reckons.

New sales of larger turboprops are expected anyway to centre increasingly on developing air markets, such as Asia, which provides healthy growth rates and the prospect of young carriers which would naturally look to turboprops as their first step up in seat size.

Based on such factors, the manufacturers' long-term forecasts are reasonably upbeat on the future of the turboprop. The consensus is that there will be in the region of 8,000 regional-aircraft deliveries over the next 20 years and that somewhere around half should be for turboprops.

Bombardier suggests that the crucial 60- to 90-seat market will grow to around 150-200 aircraft deliveries a year, divided almost evenly between the long-range regional-jet and the short-range turboprop. AI(R) predicts a slightly lower rate of around 100 orders a year - of which, incidentally, it plans to win half - with the regional jet taking a slight edge.

Both manufacturers appear to be standing by such predictions. Bombardier has launched the Dash 8-400 70-seater alongside its new regional jet. AI(R), which admits that it has been distracted by the process of setting up the joint venture, promises to step up the marketing effort on its revamped ATR range, with 12 new sales in January.

AI(R) has also been obliged to add into its calculations the likely fate of the 90- to 120-seat regional-jet market. The demise of Fokker has left its Avro RJ family as the sole survivor, although still competing at the top end with the smaller offerings from Boeing and Airbus.

There is no immediate danger of an overlap with the proposed AI(R) Jet family, which will deliberately have the shape and feel of an ATR. The RJ's sales are targeted at the regional operations of major airlines and for higher seating capacities. All the orders of 1996 were for the RJ85, and the smallest RJ70 appears to have quietly disappeared. De- spite Fokker's de- mise, Avro is making no plans to step up production above the underlying rate of around 20 aircraft a year, to which it has been held since the dark days of the early 1990s. The emphasis remains on cash deals with blue-chip airlines.

Overlap could eventually emerge, however, since AI(R), mindful of Europe's past mistakes, intends to build the new jet-powered family with room for a stretch possibly reaching up to 90 seats. That would potentially meet the Airbus range coming down to 100 seats. Notably, the AE100 Chinese venture, which is the only new 100-seater project, is in the hands of Airbus, not AI(R).

Many within the company admit that the divide between AI(R) and its larger neighbour at Toulouse will emerge at around 90 seats, marking the boundary between the major and the regional customer.

Yet, even after the latest wave of rationalisation, serious questions remain over the ability of the regional-aircraft market to sustain the existing number of competing products and manufacturers. Deliveries of virtually none of the turboprop products has managed to be sustained at a rate of better than a couple of month, and backlogs have tended to hinge on a handful of critical deals.

Much of the gloom can be blamed on a universal recession in the airline industry but, even as some stability returns, the current outlook is less than overwhelming.

The market for new 19-seaters has all but dried up over the past couple of years, with attention switching to managing used-aircraft portfolios. Raytheon's Beech 1900 deliveries are still at record levels as it works off a few major orders, but the backlog is falling.

Demand for 30-seaters also appears to be tailing off, at least in Europe, with prices still under intense pressure. The Jetstream 41 is down from an annual production peak of 50 aircraft to only ten this year, and the backlog would have started the year at zero, but for a commitment from Atlantic Coast for 12 aircraft, which has since been signed into a firm order. Even then, only half of the aircraft are for delivery this year. Although BAe says that it has no plans to shut the line, the J41 remains under review.

Fairchild Dornier is hedging its bets, seeking to apply the arguments that Bombardier and Embraer have employed in the 50-seat market with the rebirth of the 328 in turbofan form alongside the existing variant. If Fairchild can roughly match its turboprop rivals on economics, including keeping the price tag at the $10 million market, its arguments may prevail.

While Saab appears to be keeping a steady output of 340Bs, the 50-seat 2000 has continued to stutter, perhaps adding further evidence of the difficulties in tackling the 50-seat regional jet head on. Saab says that the high-speed long-range turboprop will be "-competitively repositioned" and may hope to find sales in markets such as Asia for operations where regional-jet operations are problematic.

Saab has also taken the precaution of writing off the development costs of the Saab 2000 programme, in a move which it says is designed to help the repositioning. Although the Swedish group fervently denies the implication, the write-down would also help clear the books for any future merger or disposal of the business.

The pressure for some further consolidation seems inescapable. Bombardier's relatively upbeat forecast, for example, puts the value of the 20- to 90-seat market in the order of $110 billion over the next 20 years, or roughly $5 billion annually. That is not much to share between a dozen regional-jet and turboprop families.

Source: Flight International