As more signs of air transport recovery rise out of a global economy still hampered by geopolitical unrest, regional airlines continue to parlay their cost and flexibility advantages into steady gains in traffic and profits, even while their mainline counterparts struggle to reverse the near disastrous effects of 9/11, the invasion of Iraq and the outbreak of SARS in the Far East. In a twist of irony, the crises freed the majors from restraints long imposed by their own employees, a development that accelerated an inevitable shift in the role of regional airlines in the U.S. In fact, only the threat of even more massive layoffs and ultimate bankruptcy finally forced union leaders to accept looser regional jet fleet restrictions–perhaps the most important factor in the industry’s most recent surge of growth.
But despite the regionals’ robust traffic gains over the past three years, a virtual full-time emphasis on supplementing or replacing grounded mainline narrowbodies placed many plans for new market development on hold. Meanwhile, private funding sources virtually disappeared, contributing to a period from the end of 2000 through early last year that saw little more than order cancellations and delivery deferrals.
Over the past year, however, suppliers have begun to see a reversal in the lull that forced companies such as Germany’s Fairchild Dornier and BAE Systems out of the airliner manufacturing business, and Embraer and Bombardier into their first production cuts since regional jets hit the market in the early 1990s.
With hindsight, Embraer and Bombardier can attribute the accelerated shift in emphasis to larger regional jets to the air transport industry’s downfall, as major airlines more and more use RJs to solve their overcapacity and cost-structure predicaments. A perfect case in point involved last year’s landmark order from US Airways for 85 Embraer 170s to complement a deal for an equal number of smaller Bombardier jets. Meanwhile, the rise of the discount fare sector–again largely a product of the difficult economic environment–produced another target of opportunity for the world’s third and fourth largest airframe builders.
Just weeks after US Airways placed its order on May 13, another of Embraer’s new products–the 98-seat Embraer 190–logged a firm order for 100 airplanes from New York-based JetBlue, shattering the air of invincibility projected by Boeing and Airbus. This year, Air Canada became the latest to commit to the new generation of 100-seat-class airplanes, when, ahead of another split order for Bombardier and Embraer jets, it signed an MOU that calls for delivery of at least 45 Embraer 190s. No one doubts those deals rekindled Bombardier’s interest in a 100-plus-seat aircraft of its own, a project the company apparently considers important enough to create a new executive position dedicated to leading the studies.
Of course, major airlines have long played an active if not dominant role in negotiating RJ acquisitions for their regional partners, so the likes of Embraer and Bombardier selling jets directly to US Airways and Air Canada came as no surprise. But differing opinions about the direction of the airline industry led to varied approaches to new product developments, ranging from completely new, “clean-sheet” designs to less costly derivatives. In any case, little doubt remains that the future of the remaining regional aircraft builders lies with larger airplanes, as demonstrated by the preponderance of 70- to 110-seat jets among the new designs featured in the following report.