With the advent of the Sukhoi Superjet 100 and the China’s ARJ21, residual values of western equivalents will likely feel the pressure, according to RAN’s sister publication Aircraft Value News. The new aircraft are designed to gain Western acceptance and even have Western participation, such as Boeing’s role in the Sukhoi project. In addition, they are less expensive and thus have lower operating costs than their Western counterparts. Mesa has already expressed interest in the AIR21 for KunPeng Airlines, its new operation in China, and rollout of the Superjet is set for next month. Related Story www.aviationtoday.com/ran/categories/commercial/13290.html
These new aircraft come at a time when Russia and the Commonwealth of Independent States (CIS) will require 1,060 aircraft worth $70 billion, according to Boeing (BA) in its updated annual forecast of the commercial aircraft market which, for the first time, includes the region. Related Story  U.S. regionals, many of which are exploring overseas ventures, may turn their sights toward Russia and CIS as China forestalls opportunities for new airlines, except those flying domestic Chinese aircraft. Related Story  Air traffic within Russia and the CIS is expected to grow six percent per year over the next 20 years. Related Story
First flight for the Superjet 100 will come before year’s end. With Boeing providing market planning, certification, customer support and project management and 10 of its 71 orders going to ItAli Airlines of Italy already under its belt, the Superjet has the potential to, at last, become a viable player and competitor for the Bombardier (BBD) CRJ700/CRJ900 and Embraer (ERJ) ERJ170/190, said AVN Editor Paul Leighton
He indicated that its performance is designed to surpass the new Western aircraft and provides the additional benefit of being less expensive. The list price of the Superjet 100-95 is quoted as being just under $28 million. This represents a considerable saving compared to the list price of nearly $35 million for the Embraer 190 and a similar amount for the Bombardier CRJ900. The 70-seat Antonov AN-148 has an even more attractive price of around $20 million. While Embraer and Bombardier are offering modest discounts, the Superjet list price of $28 million is likely to be heavily discounted such that a price of $20-24 million is possible depending on order quantity and the nature of financing.
“The discounting is no longer a function of poor quality and lackluster interior equipment,” said Leighton. “Instead, the ability to offer a lower price is a function of lower labor costs. Discounting should produce a lease rate of perhaps $170-190,000 per month which compares extremely well against the $240-260,000 being paid for a new ERJ 190. With possibly better operating costs than the competition albeit with only a burgeoning support infrastructure, the SSJ 100 would still seem to represent a viable competitor to the Embraer and Bombardier products. The residual values of the Embraer and Bombardier regional jets are largely based on the expectation that they will remain the leading protagonists for the medium to long term. “Projections that extend for 10, 15 and 20 years will have to possess a greater appreciation that competent and even superior products are emerging to challenge and upset the status quo.” Leighton continued. “Once the SSJ enters service, and support is proven, then residual values of existing products need to be reassessed. It is powered by the all-new SNECMA SaM146 engine, due for certification in early next year. The engine is scheduled to remain on the wing for 16,000 hours before first removal, a far cry from the days of Soviet engine building, which saw engines being scrapped after only a few thousand hours. The airframe has a design life of 70,000 hours and 70,000 cycles which compares very favorably with Western competition.”
The aircraft is also reportedly of interest for service by SAS and Malev as well as two Western leasing companies. An Indian airline is also expressing interest in the aircraft. “Such orders would normally have been secured by Bombardier and Embraer,” he said. “However, S7 Airlines recently cancelled an order for 50 SSJ 100 aircraft.”
Production of the Superjet 100 is scheduled to increase to 35 as of 2009 with perhaps as many as 70 annually after that. The anticipated market for the SSJ 100 is projected to be 1000 over 20 years. As with other regional aircraft programs, operators in this sector prefer to wait for the aircraft to become a reality before placing orders. Sukhoi expects production of 300 to breakeven.
Leighton also pointed to the Japanese MR190, scheduled to enter service in 2012 as another competitor. However the ARJ21 is scheduled to begin flight testing next year with certification in the latter part of 2009.
The production capitalizes on Aviation Industries of China’s long participation with McDonnell Douglas. In fact, the ARJ21 uses of the jigs used for the Chinese-built MD90 program. In addition, the structure is similar to the U.S. product. The ARJ21 is also powered by Western engines with GE’s CF34-10A that are used on the ERJ 170/190. The Chinese regional jet just received its first order from a non-Chinese customer when Lao Airlines ordered to ARJ21-700 for delivery in 2010.
“While further orders from non-Chinese customers will be needed to validate the relevance of the type outside of China, the ARJ21 has considerable merit,” said Leighton. “The list price of the ARJ21 is reportedly $30.5 million, compared with the $35 million for Western products. However, the company is offering substantive discounts, which again suggests that the selling price will be less than $25 million.