Regional Jets: Rivals line up for a share of the market

written by John Walton | November 2, 2019

This story from the October 2019 edition of Australian Aviation by John Walton looks at how the key players plan to meet the demand for regional jets.

In the context of 20-plus hour ultra long-haul flying, and even the prospect of spending 10 hours travelling on an Airbus A321XLR, the world of regional aircraft and small airliners risks being overlooked.

But this crucial segment has never been as exciting, with new aircraft, new names for existing aircraft,
and – in the case of De Havilland Canada’s purchase of the Dash 8 from Bombardier – old names for existing aircraft too.

This year, the Mitsubishi SpaceJet, Airbus A220, Embraer E-Jet E2 and ATR have all seen fascinating new developments, with the Dash 8’s future yet to become clear under its new owner, part of the Viking-Longview group.

To start with, the Mitsubishi Regional Jet is no more; long live the SpaceJet, the new name for the program with its new aircraft sizes, new cabins and new appeal to a much wider series of markets. The SpaceJet also has a new stablemate, the CRJ, acquired from Bombardier and, before that, the Canadair from which it takes its first initial.

The ex-Bombardier C Series, now Airbus A220, is surging forward with momentum in new sales, prospects for more, and a remarkable strength given the opportunity for near-term deliveries available in the context of it being hard to get an A320neo for love or money, or a Boeing 737 MAX at all.

Boeing’s worries are maxed out on its flagship narrowbody, so it’s perhaps understandable that the Boeing Brasil-Commercial deal with Embraer for the Brazilian manufacturer’s commercial aircraft business has not made much progress. Neither, however, has the Embraer E2 order book, with MAX customers perhaps wondering whether their compensation for the nightmare might include a hefty discount on a future order.

Plucky little ATR, meanwhile, is being inventive with an impressive new 800-metre runway takeoff and landing version of the smaller ATR 42-600 heading for Air Tahiti if it is approved, capitalising on the smaller turboprop niche that has remarkably few competitors.

The SpaceJet, nee MRJ, looks increasingly promising

As far as the market at the upper end of “regional jet” and the lower end of “small airliner” goes, there are two sweet spots, largely external to the natural design of the aircraft.

The first is a 76-seat two-and-a-half-class configuration for the US market, where the three biggest players have specific agreements called “scope clauses” (on which more later) with their pilot unions to reduce the scope for larger aircraft to be operated by “connection” or “express” subsidiaries or contracting airlines.

The second sweet spot, and perhaps a more natural one, is at 100 seats, given that at 101 seats a third flight attendant is required.

Until just before the Paris Air Show, the Mitsubishi Regional Jet did not hit either of these sweet spots. Like its competitor Embraer, it was working under the assumption that its airline customers would be able
to renegotiate the scope clauses.

But the landscape changed when the MRJ was renamed the SpaceJet. Its smaller version was stretched slightly to hit that 76-seat nail right on the head, and plans for a stretched 100-seater version started to crystallise.

Mitsubishi is banking on selling quite a few closer to home as well, but more likely a new larger version called the M200. Australia, New Zealand and the south-west Pacific are sizeable markets, not just in new demand but in the need to replace existing aircraft within this size category.

As for Mitsubishi’s Asia Pacific operations: “We see it as a growth market and we see it as a strong market. It’s actually the third largest market we see, after the US and Europe,” says Alex Bellamy, Mitsubishi Aircraft Corporation chief development officer.

Within Australia, Bellamy notes, “there are obviously a lot of turboprops in the market, and I think that would bring an opportunity at some point in time if those airlines are looking to move on to jets. So I think that really is the biggest opportunity.”

The SpaceJet’s new names reflect, somewhat, new sizes

The first thing to note is that the new names for the two proposed sizes of SpaceJet are confusing. “We’re moving away from the seat count numbering system,” notes Bellamy wryly.

One version will remain the same: the M90, previously MRJ90, which is the version currently undergoing flight tests based in Moses Lake in Washington State, and which will be the first delivered to launch customer ANA.

It’s the smaller version of the aircraft where the number crunching starts. The nominally 70-seater model that was previously called the MRJ70 is no more, with its designation “now retired”.

Instead, it is being replaced by a slightly larger version, the M100, 110cm longer and optimally sized for the US market, where the agreement with pilot unions at the three largest full-service airlines (American, Delta and United) mean that there is a cut-off at 76 passengers and 39t of maximum takeoff weight.

(It should, crucially, be noted that to achieve that 39t weight limit with its heavier, newer engines, the aircraft cannot be fully fuelled and its range will thus be restricted in these markets.)

The American 76-seat size model for the M100 would split into four rows of three “domestic first” seats at 36-inch pitch, three rows of extra-legroom economy at 33-inch and then the rest of the aircraft at 30-inch. It would, in an all-economy version, give some 84 seats at 31-inch pitch and 88 at a more low-cost-esque 29-inch.

Bellamy explains that, “before, we had the MRJ70, nominally 70 seats, and the MRJ90, nominally 90 seats. What we found in our studies, as we began to design this aircraft, (was that this) aircraft will replace two aircraft. So today we’ll have better economics than, say, a 65-seat aircraft and the 76-seat aircraft.”

Jokes Bellamy “we did have a small debate. Should we call it the MRJ65-88, but we ruled that out.”

The old numbering system around seat count “didn’t work anymore because the economics of the aircraft are so compelling across a very large number of configurations. So it became immediately apparent we have to number in a different way.

“The M100 was really, for many reasons, kind of Japanese-inspired in that it symbolises the next step: from 90 to 100 was making progress,” Bellamy says. “100 kind of shows an improvement as well, symbolically, that we’re improving and we’re improving the passenger experience. So it’s an upgrade, and the number has been upgraded.”

New cabins for the SpaceJet are truly impressive

Also upgraded are new cabins for the SpaceJet featuring a substantially more modern and spacious feel, as well as new bins from Safran Cabin.

These bins are the swing-down clamshell type that add a substantial amount of extra space, which is important anywhere but particularly crucial for an aircraft aimed at the US market, where carry-on bags seem even more popular than assault weaponry.

The cabin ceiling has also been upgraded to match, giving an updated and remarkably impressive feel to the space inside the aircraft mockup.

The future for the SpaceJet

Even as it builds the M100 and specs out the M200, Mitsubishi is still focused on certifying the M90 and delivering it to its customers.

“We all get to where we are today through the journey that we’ve taken, and the M90 is a very fundamental part of that journey. We’re still on track to deliver that next year to ANA, and it’s very important to do so,” Bellamy says.

“Why? Because we want to start operations with an aircraft. We want to finalise building the certification system for Japan. We want to continue to improve dispatch reliability with the aircraft in real operations. Doing so builds us a lot of credibility which allows us to build on to bring the next set of aircraft.

So there are really many strong reasons why continuing with that path is important.”

That said, the overall feeling seems to be that the M90 is likely to be the pathfinder aircraft for the family, but is unlikely to be its best-selling member.

“The M100 needs the M90 as its foundation because it’s a derivative,” Bellamy explains. “You need to have certified the M90 to deliver the M100, and the reality is when we started this with the M90 we expected scope clause to change. It didn’t. So the market has reduced, significantly.”

“We’re still confident with the M90 in the family, but the M100 of course will capture most of the demand just because of the market conditions,” Bellamy notes, before moving on to the prospective M200 model, expected to be the 100-seater.

“The M200 then comes into play in markets which require larger aircraft. There are some markets in Europe which require that, certainly. Japan has some demand there too. As does South East Asia. We think that the split of demands goes somewhere along two thirds, so 66 per cent will be the M100, 33per cent will be the M200, roughly breaking it down.”

There is, of course, a market demand size question for the SpaceJet, as there is for any new aircraft and particularly for any aircraft that is exploring new combinations of size, weight and performance.

Historically, this sort of regional jet-sized market has been dominated by the US, with its somewhat incomprehensible love for the narrow tubes of the Bombardier (previously Canadair and soon Mitsubishi) CRJ and the Embraer Regional Jet (not to be confused with the wider and much more pleasant Embraer E-Jet).

Airlines in other markets have generally preferred to use turboprop aircraft to serve most routes under 100 seats, given that the cabins are very similar and the additional speed of a jet does not amount to much over flights of around an hour.

There’s a real question – particularly in the context of the global pilot shortage – over just how large the sub-100-seater market can grow, not necessarily because the demand is not there but because the supply of airport space, pilots and crew may not be able meet the demand at a point on the cost curve that is acceptable to many airlines.

Crucially, though, the next step on the MRJ path is the M200, which is something of a poorly kept secret.

“The opportunity (for) the M100 and certainly the M200 is the compelling economics that it’ll bring, which will likely open up new routes which weren’t seen as feasible before,” Bellamy says.

That includes distant communities which could be served by a jet delivering greater speed and economic viability compared with a slower turboprop.

A220 picks up speed with big sales wins

Airbus’s A220, created by Bombardier as the C Series, continues to gather momentum.

The interest in the A220, says Airbus senior vice president for marketing François Caudron, is that “it is not regional only. It is really the size that fits or sits in between the regional market and the mainline. It’s an all-new design aircraft, so obviously it brings some really great economics compared to the current generation, and obviously previous generation.”

Caudron says: “If you look at our competitor, particularly one of the regional ones, it is really a long thin tube. And when you walk into that aircraft, the feeling is very different than you get on an A220. It tells you wow! I’m in a regional machine. That feeling, you don’t get it on an A220, and this is why airlines are really looking at (it at) the bottom of the single-aisle market.”

Airbus has scored an impressive list of orders this year, including bumper orders at the Paris Air Show thanks to Air Lease Corporation, Nordic Aviation Capital, JetBlue and Delta. The backlog, Caudron says, is now “600-plus”. Since June, Air France has also given a massive boost to the program with commitments for 60 aircraft.

“In terms of Australia and the south-west Pacific,” Caudron says.

“I feel like you have two key markets. One is the lower demand, high-value mainline: that’s Brisbane to places in Queensland, too far or too slow for a turboprop. Not a huge distance but still quite lucrative. And there is the Air Vanuatu example, where the economies of the aircraft allow you to do really long, really thin, national carrier” sorts of routes.

As far as up-gauging goes, “we’re seeing it in Australia a lot. You’re seeing Virgin Australia Regional Airlines taking an A320. You’re seeing a lot of what were turboprop flights being moved to the 100-seaters: presently, Fokker 100s. Obviously that’s the same size as the A220, right?”

Air Vanuatu became the first A220 customer in the South Pacific with an order for two A220-100s and two-300 variants. (Air Vanuatu/Airbus)

Airbus is also in a very fortunate position in that it has the A220 programme sitting underneath the A320neo family in its product lines. With the A319neo suffering from the “too much airplane” problem relatively common to smaller members of a re-engined aircraft family, the A220-300 is a natural fit.

That’s especially true if an airline can punch downwards from the -300 to the smaller -100, which sits towards the top of the regional jet market.

There is also something of an argument that the A320neo and ill-starred 737 MAX families are sold out for quite a number of years. Manufacturers always keep a few slots available as sweeteners for large orders, but significant constraints in the supply chain, notably around engines and the more premium longer-haul cabin equipment, mean that adding more A320 family aircraft is a hurdle that Airbus has not yet successfully cleared.

Boeing, meanwhile, fell at the previous hurdle and the 737 MAX groundings are stretching on so long that a key problem now for airlines is how to incorporate the backlog of ready aircraft into their fleets if and when they are eventually ungrounded. And with every month the 737 MAX cannot be delivered, it’s another month until a new 737 MAX customer can get aircraft.

As a result, with two final assembly lines in Mirabel near Montréal and Mobile in Alabama, the A220 can spin up relatively swiftly with the Pratt & Whitney geared turbofan engines the only crucial constraint.

The Embraer E2 needs more orders – and some strategic clarity

With the pact for the Brazilian airframer’s commercial operations to become Boeing Brasil-Commercial yet to be concluded, Embraer has not had the same large airframer sales assistance as the jet formerly known as the Bombardier C Series.

Perhaps, as a result, it has not seen a similar sales success. There is an order backlog for 124 E195-E2s and 38 E190-E2s. Existing customers of the current generation seem most content to purchase late-model aircraft from the E1 generation, including from United Airlines and Fuji Dream Airlines at the Paris Air Show.

KLM made its intent clear at Le Bourget to buy up to 15 E195-E2s with purchase rights for 20 more, but this order, the only E2 order in Paris, has not yet been confirmed.

One problem for Embraer is that the E175-E2 falls into the “too much airplane” bracket and the new Pratt & Whitney geared turbofan engines are high-performing but heavy. Based purely on its majority of orders, the E195-E2 appears to be the centre of the target for this generation, as the E175 (and to a slightly lesser extent the E190) was for the E1s.

Fortunately for the manufacturer, it has now received the type certificate for the E195-E2 from safety regulators in Brazil, the US and Europe.

E190-E2 orders have come from lessors (27 split across ICBC, Aercap and Aircastle) plus 12 from Helvetic in Switzerland, three from Norway’s Widerøe, and two from Air Kiribati.

There are also only three airline customers for the E195-E2: hometown carrier Azul (51), Nigeria’s Air Peace (10) and Binter Canarias from the Canary Islands, which belong to Spain (five). Lessors Aercap (45) and Aircastle (13) round out the list.

How fast can Embraer – or Boeing – spin up the E2?

The question for Embraer focuses on its forecasts for 3,000 aircraft worth of demand in Asia Pacific alone over the next 20 years. Australian Aviation talked with Cesar Pereira, the airframer’s vice president for sales and marketing in the region, to learn more.

The 3,000 deliveries over two decades are, Pereira calculates, “150 per year outset. Roughly speaking 50 per cent is China. So I’d say 70 to 75 airplanes per annum go to China. So what’s that for Asia Pacific? Around 75 airplanes. Embraer has around 30 per cent marketshare globally speaking. So then we do some projections. We can of course grow our marketshare. This is just a forecast.”

The problem is that, since the launch of the program, Embraer has only sold two aircraft into Asia Pacific, the E190-E2s to Air Kiribati.

“We are working on the development and the airlines are now getting more interested as it’s progressing, to see our plane flying, to see deliveries and things like that. So we expect a positive trajectory to meet this forecast which is achievable. It’s pretty reasonable,” Pereira argues.

Pereira suggests that the versatility of the platform will be particularly advantageous for the Asia Pacific, for example Air Kiribati planning long-range operations with demand under that of a mainline narrowbody.

“They can have operations like this, long and thin, because the regional jet has the range capability to do that but also multi-hops, multi-frequency, short distance. Global average utilisation per sector for the E-Jets is one and a half hours.

“Globally speaking: we have 15,000 airplanes flying, the global average sector length is one and a half hour. But somewhere like (Air) Kiribati is like three, four, five hours (in planned sector length). The aircraft has this capability.”

“I think it’s the most versatile platform. A lot more than a narrowbody,” Pereira says.

“For example, a regional jet can operate feeding the hubs for long-haul flights. They can operate point to point, shuttle services, multiple frequencies. So there are several applications, maybe, for low-cost carriers: they can employ a larger version to open new markets. For example, when the market grows in a sustainable
way they could replace (the E2) with a narrowbody no problem and put the regional jet to open new markets elsewhere.”

Within Australia, Pereira says he believes “it’s the country with (the most) regional jets in our segment in the Pacific, excluding China. Between Fokker 100, BAe 146 and the 717s, they’re all around 100 seats. There are more than 100 planes flying in Australia in that segment.”

“We have the planes for fly-in/fly-out, the mining companies or doctor services, with carriers like Cobham and others, but we also have Air North regular services,” Pereira explains.

“So there are plenty of airplanes in our segment flying in Australia, and if you look at the names they’re all old jets. The Fokker 100 is not even in production anymore. BAe 146, Boeing 717 – the E-Jet E2 is the best and most efficient platform to replace those airplanes. That’s what we see. That’s the future.”

So what, according to Pereira, is the advantage of a regional jet over a turboprop?

“First, it’s a better match between capacity and demand. Why deploy a regional jet? Because it can fly more point to point. You don’t need a huge demand to pay for the cost. You can fly to secondary cities, so not necessarily to all big metro airports with their congested lack of slots, and things like that.

“We can be versatile, because it’s flexible, because you can fly short sectors, can fly for long sectors with a regional jet. The turboprops, they cannot offer this flexibility. Speed allows for more productivity, so (E2 operators) can have more flights a day.”

ATR adds short field performance to its smaller turboprop

On the subject of turboprops, Franco-Italian airframer ATR has a new short field performance version of its venerable ATR 42: the -600S version. Air Tahiti is to be the launch customer for its Marquesas Islands routes.

“The ATR 42-600S is a STOL (Short Take Off and Landing) version of the ATR 42-600 enhanced to reduce the required takeoff and landing distances, down from 1,050 metres at present to just 800 metres,” the airframer explains. “Thanks to this upgrade, several hundred more airports will be accessible by ATR.”

For Air Tahiti, according to general manager Manate Vivish, “The ATR 42-600S will enable us to use higher-capacity aircraft for destinations which until now had only been accessible with much smaller aircraft. This is excellent news, both for the inhabitants of the archipelago and for the tourists who visit us.”

ATR head of Asia Pacific Christophe Potocki confirmed to Australian Aviation that the aircraft does still require approval to launch.

“ATR continues working on the STOL project and expects a final decision to launch by the board with support of our shareholders by year-end 2019,” Potocki said.

“In the meanwhile we are starting to take orders from customers, subject to launch. The first deliveries are expected no later than 2022. Air Tahiti has just confirmed a commitment for two aircraft.”

ATR is currently the only aircraft manufacturer offering a 30-seater turboprop, and the addition of a short-field performance version is a smart one.

“The concept of the STOL version was designed to be simple,” Potocki says. “We wanted to reach the customer’s requirement, taking off and landing on 800m runways without requiring big changes to the structure or the configuration of the aircraft.”

Demand is high, ATR believes.

“In general for the 30-50 seat regional market we see a huge market – nearly 1,200 30-50 seat regional turboprops will soon need to be replaced – and we see demand for the ATR 42 picking up,” Potocki says.

“In addition we see a strong interest from our customers for a new 30-seater product capable of operating in more constrained conditions. Many more airports could welcome the aircraft, meaning increased business opportunities for ATR operators.”

One key wildcard for ATR and indeed the rest of the market is De Havilland – yes, the De Havilland brand is back in business in commercial aviation with the Viking-Longview group picking up the Dash 8 from Bombardier which
is getting out of the commercial aircraft business.

The Dash 8’s ability to fly nearly as fast as a jet has made it a firm favourite among many airlines. But its narrow tube has restricted its passenger appeal.

And elsewhere, the electric revolution is coming: Eviation clinched a deal with large US commuter airline Cape Air for nine-seater versions of its all-electric Alice, while Airbus continues work with Rolls-Royce on a hybrid system aboard a BAe 146 in this regional jet/small airliner segment.

With so many changes, it will be fascinating how the future unfolds for this most interesting of markets.

VIDEO: A look at the ATR 42-600S from the manufacturer’s YouTube channel.

(Postscript: In October, ATR said its board had formally approved the launch of the 42-600S short takeoff and landing turboprop.

This story first appeared in the October 2019 edition of Australian Aviation. To read more stories like this, subscribe here.

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