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Regional aircraft market stabilizing; long-term growth projected

Forecast International has issued a new study, "The Market for Regional Transport Aircraft," that projects that 3,817 regional aircraft will be produced from 2016 through 2025. This total includes both regional jets and regional turboprop airliners. The value of this production is estimated at $135.2 billion in constant 2016 U.S. dollars.

According to the Forecast International study, the regional aircraft market is stabilizing following a period of several years of erratic swings in yearly production. The study predicts that annual output will remain relatively flat in 2016 and 2017 at just over 340 units each year. The longer-term outlook, though, is more bullish, as annual production is projected to reach more than 420 units by the year 2025.

This growth will be fueled by the production ramp-ups of such new regional jetliner models as the Bombardier CS100, the Embraer E2 family, and the Mitsubishi MRJ90. According to Forecast International senior aerospace analyst Raymond Jaworowski, "Overall demand in the regional jet market is already moving toward larger-capacity aircraft, but the overall potential of the segment continues to be hampered by scope clause restrictions in the U.S. market."

With a minor exception for a few pre-existing 86-seaters flown by American Airlines partners, scope clauses at all three U.S. legacy carriers prohibit their regional partners from operating any aircraft larger than 76 seats. Relaxation of the size and weight restrictions in U.S. scope clauses will have to wait until pilot contracts begin to come up for renewal or amendment toward the end of this decade. Jaworowski noted, "The weight restriction is even more critical than the seating limit." Aircraft are currently limited to a maximum takeoff weight of 86,000 pounds or less. While they can be configured with 76 seats, certain of the new jetliners now in development nevertheless exceed the 86,000-pound limit.

Even with the current scope clause restrictions in place, though, the market for 90-seat and larger regional jets is hardly moribund. Regional jets of this size will be acquired in quantity by regional airlines unencumbered by scope clause, low-fare carriers, and even major airlines.

Meanwhile, the persistence of low fuel prices has started to impact the turboprop market, softening demand for these fuel-efficient aircraft. Oil prices have increased somewhat since early 2016, though, and can be expected to continue to gradually rise, thus helping to buoy this segment of the regional aircraft market.

The Forecast International study also includes manufacturer market share projections. Based on unit production, Embraer, ATR, Bombardier, and Mitsubishi are projected to be the leading regional aircraft manufacturers during the 2016-2025 forecast period. Embraer is projected to build 959 regional jetliners during the timeframe. ATR is expected to produce 783 regional turboprops. Bombardier, which produces both jets and turboprops, is forecast to build 591 regional aircraft. Mitsubishi is projected to produce 437 regional jets.

Press release issued by Forecast International Inc. on September 23, 2016


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