Air Transport World

Bigger and Better.(Industry Overview)

For years, regional jet manufacturers fought an uphill battle for legitimacy. Now airlines are lining up for the rapid 50-seaters and ordering smaller and larger RJs as part of a strategic plan to snare more high-yield travelers and shrink capacity where necessary

Later this month, Bombardier Aerospace will roll out the first Canadair Regional Jet Series 700, a 70-seat follow-on to the highly popular 50-seat CRJ-200 twinjet that has become an integral part of the airline scene. With the rollout comes the validation of the RJ's value in today's commercial airline industry. More importantly, the event signals the coming of a second phase of the RJ concept that will, yield small and large siblings for Bombardier and its competitors.

Bombardier also is in the conceptual design phase of a new airliner in the 90-seat class, the BRJ-X, which was first revealed at the Farnborough Air Show last September. Following the findings of its Airline Advisory Council, working in conjunction with Bombardier engineers, the company could launch the BRJ-X later this year.

Not far behind Bombardier is Embraer, which has become a fierce competitor, posting significant orders for its ERJ-145 and smaller, soon-to-be-certified ERJ-135 from prominent U.S. Regionals American Eagle and Continental Express, and several European carriers.

Like Bombardier, Embraer sees a viable market for larger regional aircraft, predicting a need for approximately 2,500 units of 70/90-seaters in the next decade. So confident is the Brazilian manufacturer in the potential market that it announced in February the pre-launch of 70-seat and 90-seat RJs--the ERJ-170 and ERJ-190. While some viewed the pre-launch as chest-thumping bravado and a begging-for-partners exercise, others saw it as a clear sign that Embraer intends to be a long-term player. A net profit of $103 million for 1998 compared with a loss of $30 million in 1997 adds fuel to this claim.

Embraer President and CEO Mauricio Botelho said development costs for the two programs will be around $750 million. Launch of the ERJ-170 is expected during this year's second quarter, with initial deliveries around 2002. Botelho said Embraer welcomes risk-sharing partners in the venture but is prepared to build the aircraft alone.

Among its features, Embraer claims the ERJ-170 will have a roomier cabin than other similarly sized aircraft, with a two-by-two seating configuration in a cabin 6 ft. 7 in. high and 63 ft. 7 in. long. Projected prices of the ERJ-170 and ERJ-190 are $21 million and $24 million. But even with an imminent launch, Embraer is far behind Bombardier, whose CRJ-700 will begin air trials soon.

Still, some prominent airlines are interested in what Embraer has to say. Moritz Suter, president and CEO of Swiss Regional Crossair, which also is considering the 70-seat Fairchild Dormer 728JET, has visited Embraer's facilities in Sao Jose dos Campos to confer with officials on the proposed 70-seat and 90-seat transports. …

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