Regional aircraft are becoming increasingly popular within the CIS
The basic aviation business theory states that in order to effectively harness the increasing passenger flows one should alter capacities with great caution. In many cases it is much wiser to operate an aircraft with fewer seats yet more frequently rather than a bigger airplane but less often. According to the latest developments, it seems that the majority of large air companies from the CIS region are eager to imply the strategy.
An opportunity for large regional jets
Carriers from the CIS region are increasingly optimizing their fleets by reconsidering the currently operated mainline Boeing and Airbus airplanes in favour of smaller yet more efficient regional jets. For instance, in the beginning of September 2012 the national carrier of Belarus received its first Embraer 175, and the company almost immediately followed the acquisition with the delivery of the second aircraft in October 2012. Furthermore, Air Astana, the national carrier of Kazakhstan, received its fifth Embraer E190 in the end of September 2012. Other air companies from the CIS region, including several carriers from Ukraine and Moldova, have also received new Western-built regional jets during the year.
Table 1. Dynamics of Regional jets in service, operated by the CIS carriers; Source: Ascend
‘The CIS carriers are very fond of 80-120-seat regional jets. This helps them to improve the seat load of the fleet and increase the number of flights thus significantly optimizing their performance. Moreover, a new E-195 with 120 seats costs approx. $34 million, while the bidding for Airbus A319 with 150 seats starts from $40 million. The Brazilian Embraer and Canadian Bombardier are firmly positioned in their niche of regional jets, and with the demand for regional 60-100-seaters to increase by almost 4000 in the upcoming 20 years, these manufacturers are sure to take the larger portion of the future orders and deliveries,’ comments Gediminas Siaudvytis, the Deputy CEO of AviaAM Leasing.
Table 2. Regional jets in CIS region by manufacturer; Source: Ascend
Increasing competitionEmbraer and Bombardier are not the only manufacturers which can offer efficient solutions with regard to short and medium range flights with moderate passenger loads. The Chinese COMAC is planning to present its 80-to-100-seat ARJ21 in the end of 2013, while the Japanese Mitsubishi Aircraft Corporation is aiming to deliver its first MRJ during the summer of 2015. Meanwhile, the Russian SSJ100 is already being introduced and operated by commercial airlines both in Russia and the surrounding areas. The Russian Sukhoi with its newly introduced model has the potential to get a bite of the forecasted demand though the manufacturer will have to do its best in order to be competitive with the already proven and trusted market giants such as Embraer E-Jets and Bombardier CRJs.
The main advantage of operating E-jets and CRJs is that they have been operated for some time already, meaning that the industry had the time to develop the technical support network for the aircraft types. Meanwhile, the latest Russian SSJ100 is still in the process of forming its system of global MRO providers and suppliers.
Table 2. Global Deliveries and Order Backlog of large regional jets
Restricted accessAt the same time, the major SSJ100’s competitors like Embraer 170/190 or CRJ 700 series are yet restricted from entering the most promising CIS market – Russia. Considering the aforementioned airplanes as the main competitors for the latest Russian aircraft, the Russian authorities are reluctant to provide the necessary certification for the Brazilian and Canadian regional jets.
However, Russian carriers operating on domestic short to middle range routes are actively looking for ways to renew their fleets. Though the Russian authorities provide subsidies for local operators to acquire new small (4 to 20 seats) and mid-size aircraft (20 to 70 seats), many carriers are still in need of bigger new generation regional jets for achieving more effective operations. Fortunately, the development of the inner-Russian air travel sector has recently become one of the main industry priorities for the Russian officials. While the production rates of SSJ100 are yet incapable of satisfying the local market, as a result of the growing demand from local carriers the Interstate Aviation Committee finally decided to issue certificates for CF34-8 (CRJ700 and E-175) and CF34-10E (E-190) engines in September 2012. It has since sent a clear signal to the industry players that the Western made 80-110-seaters are likely to be granted the green light to enter the Russian market sooner rather than later.
‘It is only natural for the Government to support local manufacturers and their products, but they are also interested in stimulating the development of regional air travel. And the latter is impossible without newer aircraft with efficient supply chain and aftermarket support. Of course, SSJ100 has all the potential to gain carriers’ trust and popularity, but it still needs time. And then there are the yet-to-be delivered Chinese and Japanese regional jets to consider. Meanwhile, carriers from the CIS will keep looking for alternatives on their short and middle range routes, in order to replace their large Boeings, Airbuses and other mainline aircraft with smaller and more efficient models. With the forecasted demand in mind, Bombardier and Embraer will definitely attempt to make the most out of the situation,’ commented Gediminas Siaudvytis.