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Surviving in the aftermarket

Growth in the regional jet market has created multiple opportunities for new aircraft programmes, but as Keith Mwanalushi reports, there are still some challenges ahead

Russia, China and Japan are three countries that have recently, or are cin the process of, introducing new aircraft programmes with some very interesting entries available now or coming soon. “The main impact, particularly for Russia’s Superjet and China’s ARJ21, will be in their domestic markets, where there will likely be more national and political encouragement for airlines to buy locally,” notes David Stewart, the Global Head of the aerospace and MRO advisory at ICF International.


Stewart says as regional jets, these aircraft are not part of the larger churn of replacements or fleet growth happening in the narrowbody sector, so they will not be significant in terms of overall global fleet renewal. He adds that in the regional segment, the big driver of demand has historically been North America.


“Bombardier and Embraer are the primary incumbent jet suppliers to this market, though the obvious current exceptions are the wins in North America by Mitsubishi MRJ, with orders totalling 170 aircraft from Sky West, Trans States Holdings and Eastern Airlines. With so many different airframe OEMs chasing the regional market, each will need to seek out its particular niche and target strategic customers to ensure a build-up of orders and operators. In the meantime, for operators this represents a great variety of choice and plenty of opportunity to use competition to drive good deals,” Stewart continues.


Dirk Winkler, Senior Sales Executive at Lufthansa Technik, says as they are targeting more or less the same, relatively small, market segment we will not see the big picture completely changing on a midterm basis. “The significance of the low oil price for a postponed fleet renewal should not be underestimated, as well as the ability Embraer and Bombardier have to protect their current market share,” Winkler states.


“Without doubt, the introduction of new regional jets will have a positive impact on the development of the market,” according to Zilvinas Lapinskas, Chief Executive Officer at FL Technics. “The more aircraft models there are, the higher the competition. This in turn provides either more flexible pricing conditions or better non-financial advantages; for instance, better aftermarket support. But that’s only true in a long-term perspective.”


In the short-term, Lapinskas notes that Chinese and Japanese regional jets are yet to start commercial operations. “It will take some time before these aircraft will be able to prove their reliability and economic efficiency. With regards to the SSJ100 however, this aircraft is already flying. Though it requires some additional development with regards to the after-sale support, the aircraft still proved to be a viable alternative to the existing regional types.”


Effectively it will still come down to cost per seat and how well operators can plan their aircraft utilisation. “The new platforms will have to shape up commercially against cheaper purchase or lease rates for older fleets, then really push the fact that lower direct maintenance costs, and maybe fuel burn, produce enough savings to convince of the upgrade,” says Joshua Goring, Business Development Director at AJW Technique.


The US market remains the biggest buyer of regional jets, with the rest of the world favouring a combination of narrowbodies and turboprops, so this is where the most uptake is expected to be seen.


“It will be important for aircraft manufacturers from regions such as Russia, China and Japan to ensure furnished equipment can be maintained in countries with different airworthiness approvals. As can be seen, apart from MRJ, the other OEMs have struggled to gain many, or even any, orders from outside their own country’s air space, this is obviously down to incentive based sales imposed at government level,” states Goring.


Mitsubishi predict that demand during the next 20-year period is projected to be more than 5,000 units for the regional jet market. By region, the folks at MRJ are projecting 30% of sales in North America, 20% in Europe, 20% in Asia-Pacific, with 30% in the rest of the world. “We are targeting more than 1,000 orders,” a spokesperson tells Low Cost & Regional Airline Business.


New OEMs may have to face challenges, with the creation of a global maintenance network being among the most important.  >>

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