Jetrader - Winter 2015 - (Page 32)

State of the Regions: Asia & Middle East The future of regional jets F By Ameya Gore and Amit Kumar Tyagi, Appraiser Candidates, Acumen Aviation For many decades, regional jets (RJs) have provided worthy support in the aviation industry, enabling flight connections that otherwise would not have been feasible or possible. For their size and operational capabilities, regional jets have been a reliable alternative put to good, profitable use by airlines catering to a combination of long-haul, medium/short-haul and regional routes. North America and Europe have been the hot beds for regional jet operations, owing to advanced infrastructure and consistent passenger demand. But the scene in Middle East, Indian subcontinent and Far East is changing, and there are tell-tale signs, good ones at that, for the regional jets market. Expanding Demands Need Expanding Product Lines Historically, the regional jets market was clearly demarcated between the turbojets and the turboprops. ATR, Bombardier and Fokker with their ATR 42/72, Q300/ Q400 and Fokker 50 offerings, respectively, have been popular choices in the turboprop markets. Embraer and Bombardier with their ERJ140/145 and CRJ200/700 were market leaders in the turbojet markets. Improvements in economic conditions - especially in India and China - have had a domino effect on the passenger demand and air traffic amongst smaller tier two and three cities in these regions. As the world moves toward advanced narrowbody aircraft that boast of higher passenger capacity, longer range and better fuel efficiency, there is a pressing need for a proportionate advancement in the regional jets technology, as well. The gap between these two market segments needs to be bridged for the regional jets market to co-exist and subsequently, thrive. Taking note of this shift in demand, Embraer's E-Jet E2 program and Bombardier's CSeries program, combined with Sukhoi Superjet 100, and the Passenger traffic alone will not be able to fuel the growth, as the infrastructure on the ground - airport facilities, industrial expansion, supporting resources, tax implications, political and financial governance - continue to pose challenges to revenue generation and profitability. much-anticipated Mitsubishi Regional Jet MRJ 900/1000-series aircraft seem to offer just the right mix of products for operators to choose from. ATR 72-600, the latest offering from their stable, also promises better performance and efficiency. Niche Opportunity At a macro level, the regional jets market and the narrowbody/widebody aircraft market in these regions may not seem to be of comparable competition. But at a micro level, there is a large ecosystem of sub-routes that can be served profitably, provided the airlines seize the opportunity and also employ the right equipment. Regional jets offer airlines options to operate routes that attract moderate to low demand and connect sub-routes between tier one and tier two/three cities without 32 The official publication of the International Society of Transport Aircraft Trading having to under utilize the narrowbody assets. Combination of factors like large land mass, number of sub-metro cities, short range operations, infrastructure limitations, lower landing and parking charges for regional jets, etc. make this region conducive for regional jet operations. Many airlines, convinced with the scope of this opportunity, are venturing into the market with a single-minded focus to succeed in this segment. To validate this scope, please refer tables on p. 33, which represent the number of connections possible in and around major metro cities in India, China and Middle East (mainly covering UAE, Oman, Yemen and Saudi Arabia). Challenges That Lie Ahead Both Embraer and Bombardier, in their respective 20-year market forecast reports,

Table of Contents for the Digital Edition of Jetrader - Winter 2015

A Message from the President
Calendar/News
Q&A: John Grant, Senior Analyst, OAG
ISTAT Europe: A High-Flying Success
The ISTAT Quarterback
State of the Regions: Asia & Middle East
Old Guys Rule
ISTAT Foundation Sponsors Herb Kelleher Trophy
Trend Watching
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser.com
Advertiser Index

Jetrader - Winter 2015

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