The Regional View

By Ed McKenna | May 1, 2009
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The volatile oil market and financial meltdown have wreaked havoc on the regional aviation market.

Tumbling traffic numbers and rising operating costs have forced U.S. regional carriers to follow the lead of their major airline partners and slash capacity. Following suit, many of the world’s largest aircraft makers have scaled back production plans and laid off employees.

After predicting a growing if not booming regional aircraft market last fall, Forecast International now expects 3,500 regional aircraft to be built between 2009 and 2018, a 6 percent decline from the previous 10 years.

"We have really cut back in the near term," said Raymond Jaworowski, Forecast International senior aerospace analyst. "The problem is access to finance for everyone — customers, manufacturers, suppliers. Until that is straightened out things aren’t going to turn around."

Fewer new aircraft and tight financing mean lesser sales for avionics manufacturers, at least until the launch of new aircraft programs such as the Bombardier CSeries in about four years. In the meantime, regional operators are focusing squarely on the bottom line, looking at existing and next generation avionics to boost efficiency and safety and meet looming operational requirements.

The situation is "probably going to get worse; it is going to be awhile before it gets better," said Michel Merluzeau, managing partner of G2 Solutions, Kirkland, Wash. With fewer aircraft being manufactured, avionics companies will be "putting in fewer boxes for the next two to three years for sure."

At the same time, Merluzeau noted the "interesting technology trends" developing in the regional market. "In the middle of the next decade, there will be the entry of the CSeries (into the market) and a possible Embraer response," he said. "This should yield a pretty dynamic market space."

The current downturn is affecting the retrofit as well as the forward-fit market. "My dealer network is seeing a significant slowdown in avionics work," said Dan Reida, vice president of marketing with Universal Avionics, Tucson, Ariz. "There has been a drop-off in demand for the larger retrofits — complete cockpit upgrades including new displays, radio control units and synthetic vision and all that."

Reida said he knew of no regional retrofit programs taking place. "There were some discussions last year but those have halted," he said.

For now, economics is driving the regional market. It has always played a key role in decisions when it comes to the fleet, and "economics is probably an even more intense concern in these times," said Chad Cundiff, Honeywell Aerospace vice president for crew interface applications. There is "a lot of focus on being able to conduct operations in a very cost-effective manner."

This focus puts a premium on functions in the aircraft flight management system (FMS) aimed at improving operations "from a fuel burn and time perspective," such as calculating the most efficient climb, said Tim Rayl, Rockwell Collins senior director, business and regional systems. In addition, regional operators are using diagnostics and maintenance systems designed to improve turnaround times for aircraft entering scheduled or unscheduled maintenance.

Standardized suites offered by avionics OEMs are abetting these efforts. For example, Embraer uses Honeywell’s Primus Epic suite across its family of E-Jets. Bombardier has selected Rockwell Collins to equip the CSeries with its latest Pro Line Fusion integrated avionics suite. Also to be deployed on the Mitsubishi Regional Jet (MRJ), Pro Line Fusion promises to provide operators commonality with widebody aircraft since it is using displays derived from the Boeing 787 program.

Esterline CMC Electronics this year launched a $202 million research and development initiative, which includes a $52 million investment by the Canadian government, to build its own new generation integrated avionics suite. Under the "FronTier 25" effort, the company is upgrading and integrating individual offerings, such as enhanced vision, GPS, FMS and electronic flight bag (EFB) systems, said Bruce Bailey, CMC Electronics vice president, commercial aviation.

CMC Electronics already is "very strongly embedded in the regional sector," providing GPS receivers for Honeywell’s Primus Epic system, said Bailey. Its PilotView EFBs are used on a variety of Bombardier, Dassault, Gulfstream and Embraer aircraft.

Performance-based navigation also is being touted as a source of operational cost savings. Using area navigation (RNAV) and Required Navigation Performance (RNP) procedures, operators can gain "conservatively, a 5 percent fuel savings per segment with a little help from ATC," said Cundiff. "It is a very active area right now. The next few years are going to be very interesting."

Honeywell has issued a new software release for Primus Epic systems that provides an opportunity for operators to move to RNP capability, Cundiff said. That update could be applicable to systems installed on the Embraer fleet. Along with providing equipment, Honeywell can help operators get operational approval as an FAA-designated RNP consultant.

GPS receivers certified for Wide Area Augmentation System (WAAS) accuracy can guide an aircraft in all phases of flight and provide support for RNAV, RNP and Automatic Dependent Surveillance-Broadcast (ADS-B) operations. There is demand for WAAS capability right now, said Reida. Universal Avionics provides its "W" series WAAS-FMSs for the Bombardier Q400 turboprop.

While there is growing demand for NextGen navigation capability, actual performance improvements from advanced communications and ADS-B remain years away. The push in the United States for controller pilot data link (CPDL) communications, for example, is not expected until "the end of the teens," Rayl said. On the other hand, Europe should begin deploying data link communications in about two years and complete retrofits by 2015, he said.

"Right now ADS-B is not where we would like to see it," said Cundiff. The technology has the potential "to have a big impact," providing improved routes and safety, but needs wider deployment to generate surveillance data, he said.

Honeywell is looking at rolling ADS-B data into systems to enhance safety. The position data, for example, could provide additional information to pilots for collision avoidance, Cundiff said.

The Honeywell Runway Awareness and Advisory System (RAAS), a software upgrade to the company’s Mk V and Mk VII Enhanced Ground Proximity Warning System (EGPWS) computers, already is available. Developed in 2003, RAAS provides aural alerts to the flight crew during taxi, takeoff, final approach, landing and rollout.

RAAS advisories are based on the aircraft’s GPS-derived position when compared to airport locations stored in the EGPWS Runway Database. The system is especially helpful to "regional guys who operate into a lot of smaller airports," said Cundiff. Honeywell also plans to add a stabilized approach monitor feature to the EGPWS.

Rockwell Collins cites its WXR-2100 MultiScan weather radar and Head-up Guidance System (HGS) for improving situational awareness on regional flight decks. "We can superimpose all kinds of information onto" the HGS, from landing guidance to TCAS alerts and windshear warnings, Rayl said.

Synthetic Vision Systems (SVS), currently centered in the business aviation market, are expected to eventually make their way into regional airliners, avionics companies say.

"We have some opportunities to deploy (SVS) in the regional market based on what we have done in the business aviation market," Cundiff said. "Obviously, they have a very strong desire to have a very positive cost-benefit analysis with the technology, so we have got to show that SVS leaps those hurdles with customers."

New Regionals On The Horizon

Despite the economic downturn, the launch of the Bombardier CSeries and a handful of new entrants under development in Russia, Japan and China have created openings for avionics OEMs in the regional aircraft segment.

Rockwell Collins is providing avionics for four new regional aircraft programs — the CSeries, Mitsubishi Regional Jet (MRJ) and Chinese ARJ21 and MA600.

The CSeries, consisting of the 110-seat CS100 and 130-seat CS300, was officially launched last July at the Farnborough Airshow with just a "letter of interest" from Lufthansa. But the long-delayed program received the needed boost this year with Bombardier’s March announcement of a firm purchase agreement for 30 CS100s from Lufthansa, a contract valued at $1.53 billion based on list price. Slated to enter service in 2013, the aircraft will be operated by Lufthansa subsidiary Swiss International Air Lines Ltd. The purchase agreement includes options for 30 additional aircraft.

The CSeries represents a challenge to the Boeing 737 and Airbus A318/319 airliners as well as to Brazil’s Embraer, which has occupied a central position in the regional market with the E-Jet family.

Will Embraer respond? Michel Merluzeau, managing partner of G2 Solutions, thinks it will. And a new Embraer jet could be a plus for Honeywell since E-Jets are equipped with the company’s Primus Epic avionics suite.

Mitsubishi Heavy Industries officially launched the 70/90-seat MRJ in March 2008, reporting a firm order for 15 aircraft from All Nippon Airways Co. As with the CSeries, the MRJ is expected to enter service in 2013 and also will be powered by Pratt & Whitney’s new PW1000G PurePower Geared Turbofan engine, designed to be more energy efficient.

The MRJ will "be a respectable niche player here that may very well get a decent footprint," said Merluzeau. "We are talking about a few hundreds of aircraft."

The ARJ21 Advanced Regional Jet, which could have several variants seating up to 95 passengers, is being built by the ACAC consortium composed of several Chinese companies. The aircraft "is starting the flight test program. They flew it last fall and came back for a number of modifications and updates," said Tim Rayl, Rockwell Collins senior director, business and regional systems. The aircraft is expected to be sold mainly in the Chinese domestic market.

The 60-seat MA600 turboprop, being built by Xi’an Aircraft Industrial Corp. of China, will be sold to the small regional aircraft market and developing countries, Rayl said. Recently another supplier, Becker Avionics, of Miramar, Fla., reported that certification flight tests had begun, with deliveries planned this year. Becker Avionics is providing the aircraft’s Digital Intercom System and Cabin Intercommunication and Passenger Address system.

Thales is supplying the A380-inspired avionics suite of the 75/95-seat Sukhoi Superjet 100, which will fly with the CMC Electronics CMA-9000 flight management system. A joint venture of Russia’s Sukhoi Civil Aircraft Co. and Italy’s Alenia Aeronautica, the Superjet first flew last May 16. The first aircraft will be delivered to Aeroflot in December, Viktor Subbotin, head of Sukhoi Civil Aircraft, told reporters in March.

Most Superjet sales will probably be in Russia and Eurasia, although the company has announced sales to European operators, noted Raymond Jaworowski, Forecast International senior aerospace analyst. Sukhoi has said it hopes to control 15 percent of the regional aircraft market by 2024.

Thales is providing the avionics suite of the new ATR 42/72-600 series turboprop, featuring five 6-by-8 inch LCD multifunction displays. The upgraded aircraft contains a battery of new technologies, including the CMC Electronics PilotView Class 2 EFB and an integrated maintenance computer.

ATR last December announced the start of ground tests of the 600 series preseries aircraft, with testing of the "New Generation Avionics Suite." The first flight of the preseries aircraft, configured as an ATR 72-600, is planned this summer. Entry into service is slated for 2011. — Ed McKenna

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