Jetrader - Winter 2015 - 32

State of the Regions: Asia & Middle East

The future of regional jets

F

By Ameya Gore and Amit Kumar Tyagi, Appraiser Candidates, Acumen Aviation

For many decades, regional jets (RJs) have
provided worthy support in the aviation
industry, enabling flight connections that
otherwise would not have been feasible
or possible. For their size and operational
capabilities, regional jets have been a reliable alternative put to good, profitable
use by airlines catering to a combination of long-haul, medium/short-haul and
regional routes.
North America and Europe have been
the hot beds for regional jet operations,
owing to advanced infrastructure and consistent passenger demand. But the scene in
Middle East, Indian subcontinent and Far
East is changing, and there are tell-tale
signs, good ones at that, for the regional
jets market.

Expanding Demands Need
Expanding Product Lines
Historically, the regional jets market
was clearly demarcated between the turbojets and the turboprops. ATR, Bombardier
and Fokker with their ATR 42/72, Q300/
Q400 and Fokker 50 offerings, respectively,
have been popular choices in the turboprop markets. Embraer and Bombardier with
their ERJ140/145 and CRJ200/700 were
market leaders in the turbojet markets.
Improvements in economic conditions -
especially in India and China - have had
a domino effect on the passenger demand
and air traffic amongst smaller tier two and
three cities in these regions. As the world
moves toward advanced narrowbody aircraft
that boast of higher passenger capacity,
longer range and better fuel efficiency,
there is a pressing need for a proportionate
advancement in the regional jets technology, as well. The gap between these two
market segments needs to be bridged for
the regional jets market to co-exist and
subsequently, thrive. Taking note of this
shift in demand, Embraer's E-Jet E2 program and Bombardier's CSeries program,
combined with Sukhoi Superjet 100, and the

Passenger traffic alone will not be able to
fuel the growth, as the infrastructure on the
ground - airport facilities, industrial expansion,
supporting resources, tax implications, political
and financial governance - continue to pose
challenges to revenue generation and profitability.
much-anticipated Mitsubishi Regional Jet
MRJ 900/1000-series aircraft seem to offer
just the right mix of products for operators
to choose from. ATR 72-600, the latest
offering from their stable, also promises
better performance and efficiency.

Niche Opportunity
At a macro level, the regional jets market and the narrowbody/widebody aircraft
market in these regions may not seem to
be of comparable competition. But at a
micro level, there is a large ecosystem of
sub-routes that can be served profitably,
provided the airlines seize the opportunity and also employ the right equipment.
Regional jets offer airlines options to operate routes that attract moderate to low
demand and connect sub-routes between
tier one and tier two/three cities without

32 The official publication of the International Society of Transport Aircraft Trading

having to under utilize the narrowbody
assets. Combination of factors like large
land mass, number of sub-metro cities,
short range operations, infrastructure
limitations, lower landing and parking
charges for regional jets, etc. make this
region conducive for regional jet operations. Many airlines, convinced with the
scope of this opportunity, are venturing
into the market with a single-minded focus
to succeed in this segment. To validate this
scope, please refer tables on p. 33, which
represent the number of connections possible in and around major metro cities in
India, China and Middle East (mainly covering UAE, Oman, Yemen and Saudi Arabia).

Challenges That Lie Ahead
Both Embraer and Bombardier, in their
respective 20-year market forecast reports,
Jetrader - Winter 2015

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