Daily Insight: Wednesday 29 May 2019: Will Mitsubishi’s “SpaceJet” Conquer the US Market?

News A report in Nikkei Asian Review indicates that the Mitsubishi is reworking its regional jet program to create a 76 seat jet, that it will re-brand and launch at the Paris Air Show next month. SpaceJet is the reported new brand name. Mitsubishi, however, indicated that “Our focus has not changed. The MRJ90 is the foundation of our company, and it remains our number-one priority. We are making steady progress towards type certification and we remain on track for first delivery in mid-2020.” Analysis The reports also indicated that Mitsubishi is considering moving production for this new model to the US, and using the local supply chain for some parts to lower costs. The MRJ70 is undergoing a redesign, and that redesign will be “scope compliant” with US scope clauses, but also “not scope limited”, which implies a seating capacity potentially of more than 76 seats. The culprit in the scope clause compliance is weight, as the new GTF engines that power both this aircraft and the Embraer E175-E2 are heavier than their predecessors, pushing the aircraft above current limits. With three class seating, it would not be difficult for airlines to eliminate economy seats from the MRJ90 and create a premium-class heavy cabin, particularly for heavily traveled business routes. Insight With the name “SpaceJet” there is an implication of additional room, implying seats have been removed from a larger model - which would also fit the “scope compliant but not scope limited” description of an airplane that could be suited to domestic US or international operations for which US scope clauses do not apply. Mitsubishi has endured several delays with the MRJ90, which now appears to be on target for entry into service in 2020, seven years late. The key for Mitsubishi, however, will be the establishment of an international service and support network and spare parts distribution centers worldwide. Mitsubishi has had a relationship with Boeing to support the program, but after Boeing’s purchase of Embraer’s regional jet business, they have gone from ally to competitor. The SpaceJet may be what is needed for the regional market in the US, which accounts for the vats majority of regional jet sales worldwide. The MRJ90 will not sell in the US market with current scope restrictions, so a new concept is needed. The question for Paris is whether the SpaceJet will be the right airplane at the right time. Running many years late, Mitsubishi’s reputation will be an issue in selling the airplane, particularly with respect to reliability, support, aircraft health management, and other services that need to be available with an aircraft. Selling an aircraft today simply isn’t enough, and most OEMs have comprehensive services solutions in place or planned. As a new entrant, Mitsubishi lacks a strong support network. One option Mitsubishi should consider is Bombardier, whose existing regional product, the CRJ, is nearing the end of its production life. Strong international resources are already in place for service and support, and Mitsubishi could easily acquire the resources it needs to become a world-class competitor on Day 1 through a joint venture. While Mitsubishi is rethinking its product line, a bit of outside the box thinking would be appropriate with respect to service after the product is sold.

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