Paul Lewis and Graham Warwick/FARNBOROUGH

The regional aircraft market has undergone a radical shake-up in recent years, during which time supply has been dramatically curtailed in the face of finite demand. The casualties have been numerous - Fokker, Jetstream and Saab to name a few. The market has shifted from turboprops to turbofans, but there is growing danger of supply once again outstripping demand.

The risk of oversupply appears greatest at the upper end of the regional jet market, with several manufacturers pursuing plans to develop aircraft ranging in capacity from 70 to 110 seats. In the 70/80-seat sector alone there is the potential for at least six different programmes.

Bombardier and Fairchild Aerospace have both launched development of new 70-seat regional jets, respectively the CRJ-700 and 728JET. ATR and Embraer are both contemplating a foray into the 70/80-seat market, with a resurrected AirJet and proposed ERJ-170, respectively. The Fokker 70 is waiting to make a comeback under the auspices of Rekkof, and British Aerospace is seeking to extend the life of its 80-seat Avro RJ with the improved RJ-X. China is also studying a 70-seater, but it is clear that the market will not support all these players "Four would be too many. Three would be a crowd," says Embraer vice-president Satoshi Yokota. "It would be good market for two."

Now Bombardier has signalled its intention to enter the 80/110-seat market with a new design, the BRJ-X. While the initial 90-seat version is aimed directly against Fairchild's 928JET, the programme will take the Canadian company into new territory - direct competition against the new 100-seaters from Airbus Industrie and Boeing, respectively the A318 and 717. Additional competition in this higher-capacity sector could come from an improved Avro RJ-X and resurrected Fokker 100.


All of this launch activity comes despite an apparent lack of sales success in the higher-capacity regional jet market. Bombardier has accumulated only limited orders for its CRJ- 700 in the 15 months since the aircraft was launched, with the 41 orders to date. Sales of the Avro RJ series have hardly been breathtaking, although BAe has deliberately focused on cash deals from blue chip customers, while Boeing is struggling to build on its single 717 launch order from three years ago.

Nonetheless, current regional jet market leaders Bombardier and Embraer, and hopeful newcomer Fairchild Dornier, remain convinced that the market for larger-capacity aircraft exists. There appears to be little chance, however, of any combination of the three emerging - for several reasons. Not least among these is the intense, and often bitter, competition between Bombardier and Embraer in the 50-seat market and between Embraer and Fairchild in the 30/40-seat market. "Cooperation with Fairchild is not practical; with Bombardier it is not feasible," says Embraer president Mauricio Botelho.

Another reason is that the three companies' approaches to the higher-capacity regional jet market do not, for the moment, match up. Bombardier is developing the CRJ-700 from its successful 50-seater, but cannot stretch the four-abreast aircraft further. The BRJ-X, therefore, is an all-new design with five-abreast seating, optimised for 90 seats but scalable from 80 to 110. Fairchild cannot stretch its straight-wing jet beyond 44 seats, meanwhile, and is planning a five-abreast family around an all-new initial 70-seater, but including versions with 50, 90 and potentially 110 seats. Although outwardly similar, therefore, the BRJ-X and 728JET have different design points.

Bombardier chairman Laurent Beaudoin believes that 90 seats is the optimum position from which to launch into the upper end of the regional jet market. "Our design point is in the middle of the 80/110-seat range. Regionals are concerned about weight, because weight equates to landing fees, maintenance costs and handling charges. Where a 100-seater weighs 125,000lb [56,750kg], our 90-seater weighs 95,000-100,000lb. The A318 and 717 are too big and too heavy for the regionals," he argues.

"Cost and price are a hell of an issue [with the 90-seater]. We know that from the start," says Beaudoin. "We have a year to look at the weight and cost, go back to our customers and get partners on board. We have to be cost and price competitive, but if we cannot make a margin, we will not make the aircraft," he warns. Beaudoin believes Airbus and Boeing will push up the price of their 100-seaters, giving Bombardier more room to make a profit. "Boeing cannot build the 717, sell it for $20 million and sustain that long term. That's what happened to Fokker - they were selling below cost."

Embraer, meanwhile, cannot stretch its three-abreast range beyond 50 seats and is looking at a new fuselage, at least, for any higher-capacity regional jet. Botelho confirms that the Brazilian manufacturer is focusing on a 70-seater, "-but if we go ahead, we will have to take into account the 90-seater".

While accepting that there appears to be demand for both a 70-seater and a 90-seater, he remains "very sceptical" of other manufacturers' claims on the market size for the larger aircraft. "We do not see a market for 2,000 90-seaters," he says.

Bombardier is projecting demand for some 2,500 80/110-seaters, but has not revised downwards its market forecast for 70-seat jets, and the reason given is the scope clauses in US airline pilot contracts. These generally limit the regionals to aircraft with 70 seats or fewer, preventing them from considering a 90-seater.

While American Eagle and Delta Connection carrier Atlantic Southeast Airlines have ordered CRJ-700s, the scope clause is no guarantee of success for 70-seaters. Continental Express has announced it will move to all-jet fleet of 37-seat ERJ-135s and 50-seat ERJ-145s, but president David Siegel rules out any move to 70-seat jets. "There are two reasons: we are limited to 59 seats by a scope clause, which is a moot point with our pilots; and our analysis of 70-seat aircraft in North America is that these are niche aircraft - and that niche does not fit with Continental."

While manufacturers hope that these restrictions will be eased when pilot contracts are renegotiated in 2000-1, the 90-seat regional jet, and the 70-seater to an extent, is seen as an aircraft for European airlines. Higher operating costs than in the USA make it more difficult for European regionals to make money with 50-seaters, and almost impossible with 30-seat jets, and are behind the emerging demand for 90-seaters.

Beaudoin admits that Bombardier has been stung into action by the "expressions of desire" from existing CRJ operators for an aircraft larger than 70 seats. "If we could have held them back, we would have," he says, lamenting: "As soon as we have a 70-seater, they want a 90-seater." The response to Fairchild's 728JET "-showed that some airlines want to have the aircraft quicker, and that has forced us to move quicker," he admits.

It remains to be seen how Bombardier's move into the 90-seat market will affect Fairchild Dornier's efforts to secure customers and backers for its 728JET family - and how it will influence Embraer's talks with ATR and others on cooperating in development of a larger-capacity regional jet family. Botelho is clear about issues facing the Brazilian manufacturer: "The market likes aircraft developed by Embraer, and we are aware that we could capture a good share of the market. The problem is at what cost? If we do it jointly, it will improve our chances of making a return [on the investment]."

If Bombardier proceeds with its $700 million programme to develop and certificate the BRJ-X by 2003, and a large-capacity regional jet venture coalesces around Embraer, what are the chances of success for Fairchild Dornier? Beaudoin is sceptical: "Developing a 90-seater is a major task for us, and we have the resources, the market base, and the reputation in the market - and we have demonstrated what we can do."

Source: Flight International