1Today’s news of ordering another 34 E-Jets draws attention to the opportunity represented by the aging fleet of built by Fokker. These aircraft, even the last produced, are approaching 20 years of age, and much of this fleet will likely be replaced over the next five years.

At present there are some 339 jets in service around the world. Given that Fokker is out of the business, and the Rekkof plan seems to be gaining no traction, we see the replacement of these as a big opportunity for others.

So what does the existing fleet look like? The following chart shows the in-service Fokker fleet as of the end of 2014 by geographic region and end use. The vast majority of the fleet remains active in passenger service, with Asia being the largest market, followed by Europe, the Middle East and Africa. Only 35 Fokker jets are currently registered in North America, the majority in Canada.

1The breakdown by model and seating is as follows:

2015-03-30_11-48-11As the table shows, the replacement market in the sweet spot for Embraer, Bombardier, Sukhoi and Mitsubishi to vie for in the 70-105 seats market. The aircraft flying today are also old. In fact, as the next table illustrates, the passenger aircraft are aging rapidly. Since older aircraft cost a lot more to maintain, and utilize less fuel-efficient engines, their economic obsolescence may precede their physical obsolescence. Issues with and customer support are also exacerbated once the OEM leaves the business. The following table shows average age by type in service, and excludes the handful of aircraft (14) used as VIP transports.

2015-03-30_11-48-34Perhaps the most interesting part of the replacement market is the F70s and F100, the two most recent models. These two represent 251 aircraft, or 74% of the in-service fleet. The largest operator of Fokker aircraft today is KLM, with 25 in its fleet.   The winner there has been Embraer – this will be the third sale of E-Jets to the airline. Although the airline had a bidding process before the order, Embraer, as an incumbent, seemed the logical choice.

But what about the other 226 aircraft still to be replaced? Is Embraer the natural winner? We would say not necessarily.

  • The sweet spot is clearly replacing the 105-seat F100s. (KLM’s fleet is mostly F70s ) That seating capacity invites competition from Bombardier (CRJ or CSeries), E/E2Jets (190 or 195), Sukhoi (Superjet 100) and Mitsubishi (MRJ90), each of which have compelling stories.
  • Mitsubishi is currently hunting for deals and according to reports offers arguably the most aggressive financing package available.
  • Bombardier is becoming more aggressive with its CRJ line, especially the CRJ-1000, even though that tops out at 100 seats. The CRJ-1000 is doing well in where 80 F70s and F100s operate.
  • SuperJet is a great candidate for many of the replacements – the aircraft has proven itself at Interjet, is priced well and could easily replace F70s and F100s with significantly better economics.
  • Embraer’s advantage is that it has two F70 and F100 replacements ready now and is offering aggressive deals to fill in its line before the E2 enters production.

So although Embraer won at KLM, it may not be the natural winner in every replacement campaign. While it has a great hand to play, Embraer will likely have a fight on its hands in every campaign. With four competitors vying for customer conversions, each campaign will likely be brutal.

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