"I'm leaving on a jet plane." Popular folk musicians Peter, Paul & Mary sang those lyrics to appreciative audiences three decades ago. These days, however, it's business executives, once the captives of cramped, turboprop-powered "puddle-jumpers," who take particular delight in the words. Across North America and in Europe regional passenger jets (RJs) are taking off -- literally. With as many as 100 seats, navigable aisles, and respectable headroom, the RJs are welcome and more comfortable alternatives to turboprop commuter planes on flights in and out of smaller markets. They're providing business fliers with more schedule options and, in many cases, more competitive fares. The RJs also are sending the fortunes of their manufacturers soaring. For example, market leader Bombardier Aerospace Regional Aircraft, Toronto, a unit of Bombardier Inc., is flying particularly high at the moment. In a transaction valued at US$2 billion (C$2.92 billion), two wholly owned subsidiaries of Delta Air Lines Inc. on March 29 inked letters of intent for 94 CRJ200 and CRJ700 regional jets and took options on 406 additional CRJ-series aircraft. The aircraft are slated for delivery between 2001 and 2010, and they'll join the 412 50-seat Bombardier Aerospace CRJ regional jets currently being flown by 25 airlines in 14 countries on five continents. In the U.S. alone some 560 regional jets are expected to be operating by the end of this year, compared with 394 at yearend 1999, and only 78 at the close of 1995, figures Deborah C. McElroy, president of the Regional Airline Assn., Washington. The statistics are similarly impressive in terms of total regional-aircraft fleets and seats. In 1999 RJs accounted for 18% of the 2,187-aircraft U.S. regional airline fleet and 32% of the seats available. Five years earlier regional jets constituted just 3.6% of the fleet and 9.8% of the seats. These numbers promise to continue to rise dramatically. Between now and the year 2020, nearly 8,000 RJs -- jet planes seating between 25 and 110 passengers -- will take to the skies, forecasts Fairchild Dornier Corp., Oberpfaffenhofen, Germany. In contrast, demand for turboprop-powered regional aircraft during the next 20 years is expected to total only 1,174 aircraft. "Right now, new turboprop orders in the size below 50 seats have virtually dried up," observes San Antonio-based Barry Eccleston, executive vice president for sales, marketing, and customer support at Fairchild Dornier, another of the world's "big four" regional-aircraft producers. The quartet also includes Empresa Brasileira de Aeronautica SA (Embraer), So Jos dos Campos, Brazil, and BAE Systems Regional Aircraft SA, Toulouse, France, a unit of Britain's BAE Systems PLC. Fairchild Dornier currently offers a 32-seat RJ, had a 44-seater nearing production, and is developing three other RJs. Its order book totals 469 RJs-both firm orders and options to buy. Fairchild Dornier displayed cabin and cockpit mock-ups of its 70- to 85-seat 728JET during last month's Farnborough (England) Air Show, south of London. First flight of its new 728JET is expected in the first quarter of 2002, with deliveries to begin in the spring of 2003. Bavaria International Aircraft Leasing, Sol Air, General Electric Co.'s GE Capital Aviation Services unit, and launch customer Lufthansa CityLine have placed orders for 276 of the 728JETs. In addition to increased passenger comfort and convenience, RJs' recent takeoff in North America is a result of higher revenue for the airlines that operate them, typically through subsidiaries and franchisees. As RJs have been put into service, "they have attracted high yield, which means better profitability," emphasizes Nick Godwin, vice president of marketing for BAE Systems Regional Aircraft. With "so many unexploited markets for point-to-point service" the air carriers "have been frightened not to be on the [RJ] bandwagon," he adds. Some 381 of his company's Avro RJ and BAe 146 regional jets, seating 70 to 100 passengers, are in service. And BAE Systems expects the first of its new RJX series aircraft, seating 70 to 100 people, to go into service next year. Brazil's Embraer has delivered 263 ERJs, including 83 being flown by Continental Express, a subsidiary of Houston-based Continental Airlines Inc. The fourth largest commercial-aircraft producer in the world and Latin America's leading exporter and only major aircraft manufacturer, Embraer got a big boost in June for its RJ business when Stamford, Conn.-based GE Capital Aviation Services placed an order for 150 ERJ 170 and ERJ 190 airplanes. Potential value of the deal, which includes 50 firm orders for the 70-seat ERJ 170 and options on 100 ERJ 170s and 90-seat ERJ 190s, is about US$3.6 billion. "Just 18 months short of the ERJ 170's first flight, this new Embraer regional-jet family has logged 325 orders, and I think that clearly shows the market's confidence in our products," said Maurcio Botelho, Embraer's president and CEO. Indeed, huge order backlogs already exist for RJs among the jets' manufacturers, with the U.S. accounting for an estimated 65% of the 50-seaters yet to be delivered around the world. To help meet the demand, Bombardier Aerospace's regional-jet unit, for example, is increasing the production rate of its CRJ200 to 12.5 per month from 9.5 per month. It is adding 600 employees in Montreal-and its Montreal-area suppliers are adding another 400 people. Also, Bombardier Aerospace Regional Aircraft is investing US$20.4 million (C$30 million) in expanded facilities. Even as they seek to meet current demand, RJ manufacturers also are looking to the future. And they're betting that bigger aircraft will be better. For example, beyond the 70-seat CRJ700 regional jet that Bombardier Aerospace expects to begin to deliver in early 2001, "We also have on the drawing board aircraft between 80 and 90 seats that we would be looking to launch later this year," reveals Trung Ngo, marketing vice president at Bombardier Aerospace Regional Aircraft's operations. "Further down the road . . . we are . . . looking at even larger" regional aircraft to replace some old-technology, mainline 100-seaters "like the Boeings and DC-9s," he adds. Between the years 2011 and 2020, forecasts Fairchild Dornier, 3,354 regional jets with 50 to 110 seats will be delivered, compared with 677 RJs having 25 to 44 seats. In the meantime Bombardier Aerospace's soon-to-be-delivered CRJ700 illustrates how bulging order books for regional-jet manufacturers also are translating into substantial business for a world of suppliers. Bombardier's Canadair unit in Montreal is producing the full wing assembly and the cockpit for the CRJ700. Belfast, Northern Ireland-based Short Brothers PLC, Bombardier's European unit, supplies the midfuselage. Japan's Mitsubishi Heavy Industries Ltd. produces the rear fuselage, and British Columbia's Avcorp Industries Inc. builds the RJ's vertical and horizontal stabilizers. General Electric Co.'s Aircraft Engines business supplies the CF34-8C1 powerplants. Rockwell International Corp.'s Rockwell Collins unit supplies the aircraft's avionics. And Honeywell International Inc. makes the auxiliary power unit for the CRJ700. However, as friendly as the skies now seem for RJs, some turbulence may lie ahead. For instance, a U.S. economy that suddenly goes sour could cause some air carriers to postpone their purchase plans. "We always hope there will be a soft landing, but one never knows," acknowledges Bombardier Aerospace's Ngo. And in North America restrictive "scope clauses," tough rules limiting the number and size of aircraft and, in some cases, the terms under which pilots fly, continue to crimp RJ sales, indicates BAE Systems' Godwin. "What it effectively means is that the market for anything up to 70 seats in jets is extremely limited by the power of the scope clauses, which in our view are actually getting stronger," he says. "To sell anything of above 70 seats is virtually impossible," he adds. Indeed, to be able sell its nominal 85-seat Avro RJ85 regional jet to Northwest Airlines Corp.'s Mesaba Aviation Inc. subsidiary, BAE Systems had to configure the plane with only 69 seats. Despite these caveats, and the quite different RJ market needs of the U.S. and Europe, "For the next several years, the big names in aircraft won't be Boeing Co. and Airbus Industrie, but Bombardier Aerospace, Embraer, BAE Systems, and Fairchild Dornier," predicts Robert W. Moorman, who formerly reported on regional aviation for Air Transport World magazine.
|Year||Number of regional jets||% of fleet||% of seats|
20-year forecast: 7,271 RJs delivered
|Aircraft size||Number of aircraft|