Oil Shock No Threat to Japan's First Passenger Plane Says Mitsubishi

President of Mitsubishi says increased fuel costs could increase demand for fuel-efficient carriers.

The president of Mitsubishi Heavy Industries on June 11 brushed aside the threat soaring oil prices could pose to a project to build Japan's first passenger jet, saying it might actually be a boost. Rising aviation fuel bills could stimulate demand for fuel-efficient carriers such as the Mitsubishi Regional Jet (MRJ), which is expected to take to the skies in 2013, said Hideaki Omiya.

"I believe that if the economies of the world expand, then demand for aircraft will not decrease," he told a press conference. "Of course there is always a possibility that aircraft operators could go under and that the demand for aircraft does decrease. But I think if something like that does happen then oil prices would certainly begin to drop."

Runaway oil prices topped $139 per barrel last week, putting increased pressure on the world's airlines. But Omiya said he was optimistic that oil prices would not rise beyond $200 a barrel. "I think actually they will start to drop. As long as oil prices don't drop drastically then actually this is an advantage for MRJ because our jets are highly fuel efficient," he said.

The state-backed project, which was official launched in March, will build a 70-90 seat next-generation regional airliner that aims to meet growing demand for fuel efficient planes. It has already received an order from All Nippon Airways for up to 25 aircraft.

Industry experts say that the project will be up against tough competition from rivals making small passenger planes, such as Canada's Bombardier and Brazil's Embraer, as well as jets designed by Russian and Chinese firms. Omiya said Mitsubishi did not expect to sell any of its planes in Russia or China and is concentrating its sales efforts on Asia, Europe and the United States.

Japan has in the past developed a turboprop plane, the YS-11, which was the only Japanese airliner built since World War II. It made its debut flight in 1962 but had limited success with production ending in 1974.

Copyright Agence France-Presse, 2008

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