The US Regional Airline Market needs something new

Over 70% of the world's regional airline flying is within the United States. This requires any regional airliner to be US-compliant. That means, Scope Clause compliant. This odd rule has led to the cancellation of the Embraer E175-E2 and the Mitsubishi SpaceJet. Mitsubishi (MHIrj) went on to acquire the CRJ line from Bombardier and now offers MRO support to this aging fleet. The recent news about the MaeveJet at the Paris show prompted us to reassess the state of the US regional market. The following data points are crucial to comprehend where the industry is headed. CRJ200 / CRJ100 (50 seats):Roughly 250 remain in US operation—down from about 1,200 in 2007. This segment remains attractive if a better economic and technical solution becomes available. CRJ700:Approximately 242 are currently active globally. These aircraft are primarily in US service, and operators won't give them up. CRJ900:Around 392 in service worldwide. This model is the most popular of the CRJ family in US service. CRJ1000:Only 29 are in active operation globally (e.g., with Air Nostrum, Hibernian), but none operate in North America. The lack of any new technologies is frustrating for US regional airlines. The E175 is a fine aircraft, but why buy a new E175 when it offers very little improvement over the original, which was introduced in 2004? Embraer has improved efficiencies by about 7% and tweaked the cabin. But this isn't enough to excite operators. New orders, such as the one recently announced by SkyWest, reflect that this is the only new build model available. Then there's the CRJ line as described above. MHIrj briefly looked at restarting the line, but it didn't have enough upside. This aircraft soldiers on, and the fleet of CRJ900s is now approaching its half-life. Operators are going to stick with it, but voice frustration over the lack of an update. Regional airlines operate in an awkward segment. They depend on majors for most of their business, meaning their enterprise is subject to another's plans. The majors also regularly raid their pilot pool. Regionals, therefore, are always looking for new pilots. Forecasts and Potential Embraer forecasts 10,500 aircraft in 20 years under 150 seats, including regionals and turboprops. The regional market is down to ATR (turboprops) and Embraer. Several startups have yet to certify an aircraft, at the earliest, by the 2030 timeframe for EIS. Until then, there is no choice. To meet the Scope, there are ATR42 and ATR72, as well as E175. That’s it. Turboprops have not been an attractive option in the US for several years. The following chart shows the amount of traffic and average stage length for regional flights in the US. The average range is 257 miles. As the balls illustrate, there are some big markets, though. Certainly big enough to warrant more attention from OEMs. [caption id="attachment_91807" align="aligncenter" width="1048"] US DOT; AirInsight[/caption] Working inside the Scope Clause The Scope Clause has an upper limit of 86,000 pounds MTOW and 76 seats. What is missing is a replacement at this size with modern economics. MaeveJet There is some hope for a new aircraft. At the recent Paris show, we gained more insight into Maeve, a Dutch startup. The most significant advantage Maeve currently has is that it has MHIrj helping to refine its plan. The MHIrj team knows the US regional market as well as anyone. Moreover, they know every customer. MHIrj's success in getting Japan Airlines to collaborate is a critical win. Bear in mind, Japan Airlines is an Embraer customer. So, Maeve is one potential answer. The MaeveJet uses a novel engine from Pratt & Whitney Canada (P&WC). The open rotor offers a significant improvement in fuel burn. There is talk of up to 40% over the CRJ. The challenge is that PW&C is not discussing the engine with anyone. We understand the PW&C engine is expected to reach TRL 6 next year, marking a crucial milestone in proving the technology. Certification comes later. How long from then until it gets bolted on a MaeveJet? The questions currently have no answers. Does the MaeveJet look promising? For sure, and Japan Airlines is the proof. Embraer Scope and 76 seats plus weight limits are key in the US. What if Embraer stops E175 production and instead offers the E175-E2? There is a market need, but will the market respond to it? Playing Russian Roulette with the US pilot unions would be hazardous. While the unions want regionals to go away, the major airlines don’t. While the US environmental movement may not be significant, it is outside the US. Within the US, the key driver is economics. , and a 15% fuel burn improvement over the E175+ and a 22%+ difference over older E175s carries weight. The fact that Embraer has chosen not to tangle with unions tells us the US majors have no stomach for this fight. ATR US regional flying has tried turboprops, and every time it failed. The economics are right. But the"look" isn't. Open rotors are making an entrance and have the same "look." Yes, but we need to see how this plays out. The DeHaviiland Canada Dash 8 should be able to deliver the right economics, and it did at Horizon/Alaska until it didn't. WestJet is also retiring its Dash 8s, which are being repurposed for use in Australia or converted into water bombers. ATR's most recent US customer, Silver Airways, is in financial trouble. ATR now has a deal with JSX that leaves many in the industry pondering its likelihood of success. JSX is not strictly within the regular regional model and ordered two pre-owned ATRs. Summary The sub-100-seat segment needs help. The market exists and many communities have seen regional air service wither or disappear. The chart below offers a near quarter-century's worth of history. Aircraft carry more people per flight in regional service, just as we see with mainline flights. However, flight frequencies are declining because the economics of these loads necessitate a shift away from older technologies. [caption id="attachment_91809" align="aligncenter" width="640"] US DOT; AirInsight[/caption]

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

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