You would think that some industries learned from their mistakes. Not so the regional aircraft manufacturing sector. It appears again that too many players are trying to cram into a market with more products than it can reasonably support.
At one stage, it seemed that the industry had accepted that the market was not big enough to support more than two or three manufacturers and a period of sensible, and inevitable, restructuring and consolidation began to take hold. Now the news is that Brazil's Embraer is to enter the increasingly crowded 70/110-seat market unaccompanied, after Crossair's ERJ-170/190 family order, suggesting that any restraint has evaporated and that the industry once more seems headed for some serious bloodletting.
A decade ago, there were 11 manufacturers competing in the regional market - ATR, British Aerospace, Canadair, CASA, de Havilland, Dornier, Embraer, Fairchild, Fokker, Saab and Shorts. By 1997, this list had been halved as a result of mergers, joint ventures or financial problems. Further consolidation looked likely.
BAe and ATR had got together and formed the AI(R) consortium, streamlining the product line by terminating the loss-making Jetstream and ATP turboprops, while Bombardier's purchase of de Havilland and Shorts made them stablemates of Canadair. Fairchild, meanwhile, bought Dornier, while Saab and CASA ceased regional aircraft manufacturing altogether. Fokker eventually closed after continued losses.
When the industry last met at the Paris air show, the smart bets were on AI(R) to become the first group to launch an all-new 70-seat regional jet family, dubbed the Airjet. Twenty-four months later AI(R) is no more. The venture split after BAe rejected the Airjet because of concerns over the business case for the project.
Fairchild moved quickly to fill the void, coming apparently from nowhere with its 728JET family. By last year's Farnborough air show, the temptation to join the fray had become too great for Bombardier. Although the Canadian conglomerate already had its 50- and 70-seat Canadair Regional Jet families, the company unexpectedly unveiled an all-new 90/110-seat BRJ-X project. Meanwhile, Embraer wanted to grow its jet line to follow the success of the 37/50-seat ERJ-135/145. After much deliberation amid concerns about the size of the market and the number of players it could sustain, the Brazilian company mystified the market with its all-new ERJ-170/190 unveiling in February.
BAe is keen to retain the trickle of revenue generated by the modest Avro RJ production and aims to launch a cheap, but effective, update which would assure production for at least another 10 years. For its part, ATR is still deliberating about the Airjet project after on-off talks about linking with one of its rivals. Increasingly, though, it looks to be left out in the cold.
To further complicate matters, Boeing and Airbus are committed to the small jet market with their 717, 737-600 and A318, respectively.
In its market predictions last year, Boeing forecast that, over the next 20 years, 3,700 new jets will be delivered in the 50/120-seat category. That equates to an average of around 190 deliveries a year, which could potentially have to be shared by no fewer than nine different aircraft families and six manufacturers. The rest of the jet market, estimated at about 14,000 aircraft will be fought by just two - Airbus and Boeing.
The regional forecasters' job is made more difficult by the specific unknowns, such as how the US pilot unions' attitude towards the restrictive scope clauses which cap fleet size will soften, or how quickly Europe's much needed infrastructure improvements can be implemented. With so many uncertainties, it is a brave person who is willing to launch a billion dollar project on a highly competitive sector.
It seems inevitable that the regional manufacturing industry must follow the "big jet" builders through the painful consolidation process. The regional market may yet prove large enough for at least three or four manufacturers to survive, even prosper. Logic dictates, however, that the industry will ultimately gravitate around two groups, although with it in fragmentation - rather than consolidation - mode, that prospect seems further away than ever.
Source: Flight International
