Bombardier (BBD) expects demand for commercial airliners in the 20- to 149-seat range to reach 11,000 deliveries, valued at $370 billion, between 2006 and 2025, according to the forecast it just released. A tenth of that market will be in the 20- to 59-seat segment, representing a demand for 1,100 aircraft. The 60- to 99-seat aircraft will account for 4,100 aircraft, to fill the current evolutionary phase of regional airline operations. The larger aircraft, with 100 to 149 seats, account for 5,800 aircraft as mainline operators replace aging equipment with more fuel-efficient airliners.

Meanwhile, Boeing predicted recently that commercial airliner demand for aircraft 90 seats and below would be 3,450 jets and account for 13 percent of the commercial airliner market in the next 20 years. (RAN, July 17, p.1) Bombardier noted the regional airline segment has experienced a consistent annual growth rate of 11 percent over a 25- year period, with 83 percent of flights feeding the major carriers and 17 percent in point-to-point operations.

Expanded growth opportunities are being fueled by the advent of new regional jets in the 60- to 99-seat segment. In its early stages, according to the company, the evolution to larger aircraft will accelerate with the introduction of new-generation jet and turboprop regional aircraft as airlines replace 50-seat RJs, now plagued with rising operating costs, mostly driven by fuel increases. In the decade between 1995 and 2005, fuel's share of direct operating costs rose form 16 percent to 36 percent. Larger RJs will also benefit as mainline carriers outsource narrow body routes.

The manufacturer noted that over 1,800 50-seat regional jets are in service now worldwide and predicted they will continue as the predominant aircraft in low-volume, medium- distance markets. Used 50 seaters will enjoy a healthy market for their potential to bring low-cost capacity to routes around the world now being served by older narrow bodies.

The 60- to 99-seat aircraft will be a key production driver over the next 20 years as lower unit costs and scope relaxation become catalysts for growth. Likewise, the reduction in unit costs allows for expanded capabilities in non-traditional roles such as route development, including new point-to-point service opportunities now seen across North America. (RAN, July 17, p. 1) Fuel and the imposition of more stringent environmental regulations will quicken the retirement of current narrow body equipment. The new technology - composites, integrated systems, and engine technologies - will drive replacement. Bombardier expects the 100- to 149-seat segment to offer significant growth opportunities as well.

Low-cost operators, which now carry about the same number of passengers as U.S. regionals, are expected to play a significant role in the growth of this market segment, as LCCs either operate independently or in affiliation with mainline carriers, said Bombardier. LCCs will also drive mainline carriers to outsource more routes to regionals, especially the short-haul and low-density routes.

Turboprops

Bombardier expects turboprops to remain a key component of the 20- to 59-seat segment and to play a strong role in the continued growth of the 60- to 99-seat. Fuel costs represent about 45 percent of the total aircraft cash operating costs, said the company. Fuel costs for 70-seat RJs are 19 percent higher than turboprops at $1.50 per gallon and 21 percent more expensive at $2.50 per gallon. Fuel is now at about $2.12 per gallon, according to Regional Aviation Partners. At the mainline level, fuel costs have largely offset the gains mainline carriers have achieved in labor savings.

Bombardier said retirement of 30-seat turboprops delivered in the late 1980s will create a steady stream of replacement opportunities for new aircraft in the 20- to 59-seat market. Larger turboprops, it noted, have accounted for the lion's share of the recent turboprop resurgence and achieved more orders in 2005 than their RJ counterparts. It is likely that segmentation of short and long routes will cause turboprops to play an even greater role in the U.S. market as network carriers strive to reduce costs per seat. The company sees a demand for 1,200 aircraft to replace aging turboprops between now and 2013, with turboprops accounting for 17 percent of orders.

Bombardier reiterated its contention that scope clauses will continue to trend toward 100-seat aircraft as the demarcation point between regionals and their mainline partners. (RAN, June 5, p.1).