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December 11, 2023
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Readers know that the US accounts for about 70% of regional jet use.  Consequently, what happens in the US drives the global regional jet business.  With that backdrop, here is evidence that the Embraer E-175 just can’t be beaten.

The US airline industry had a sense that the Bombardier CRJ program had a limited future, whereas the Embraer program did not.  The existence of the E2-175 was evidence of that, even though this aircraft is not US Scope compliant.  It didn’t matter that the CRJ900 had (arguably) better economics than the E-175 – it matters more the asset has a future.

Very few thought that Mitsubishi would buy the CRJ program.  Even with the CRJ program likely to transfer early in 2Q20, the CRJ future is cloudy.  What will Mitsubishi do with it?  After all, their SpaceJet program has an unsettling record, with reliable delays.  The CRJ customer base should be excited about the path going forward. But that path looks bumpy.

Since the US regional market is a brutal space to trade in, anything that reduces risk is attractive.  Lower costs are great, but crucially, operational reliability is the most important feature.  And, in that regard, Embraer offers the best option.  Which is why we see re-order after re-order from US operators.  And if the US Scope ever eases to allow a heavier airplane, the E2-175 will likely scoop up most of the business.  Then the Mitsubishi M90 might get some attention and the M100 will probably be eclipsed. But the chances of US Scope easing looks unlikely.

Our data model shows the slow but certain reduction and eventual removal of the 50-seaters.  The 50-seaters already operate at stage lengths where turboprops would beat them in economics and will nearly match them in flight times.  The future for regional jets in the US is clearly at the upper end of Scope compliance.  Economies of scale (upsizing) are the way forward. Pushing up against Scope eventually should force the rules to change. Meanwhile, US regional airlines see the Embraer E-175 as the best and only option.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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