New Study Projects Over 4,000 Regional Aircraft To Be Built In Next Nine Years

In a new study, “The Market for Regional Transport Aircraft,” Forecast International projects that 4,198 regional aircraft will be built from 2011 through 2020. The Connecticut-based research firm estimates the value of this production at $130 billion in constant 2011 U.S. dollars. The forecast includes both jet-powered and turboprop-powered regional aircraft, with jets accounting for just over 60 percent of the total unit production.

The study indicates that Bombardier, Embraer, and ATR will be the leaders among regional aircraft manufacturers during the 2011-2020 period. Bombardier, with a product line that includes jets and turboprops, is expected to build 1,278 regional aircraft during the timeframe, representing a 30.4 percent share of the market. Embraer specializes in jets, and the study predicts that the Brazilian company will produce 992 regional jets for a 23.6 percent market share. Turboprop manufacturer ATR is expected to build 668 aircraft, representing a 15.9 percent share.

According to the study, the regional aircraft market is entering a period of transition and transformation. The regional airline industry is consolidating as large holding companies gain control of multiple carriers. This is especially true in the large U.S. market, where companies such as Pinnacle, Republic, and SkyWest each control a number of airline brands. According to Forecast International senior aerospace analyst Raymond Jaworowski, "The size of the large regional powerhouses affords better economies of scale, more diverse teaming arrangements (and increased negotiating leverage) with the major airlines, and, potentially, greater revenue streams."

Meanwhile, opportunities for growth in the regional airline sector will be somewhat limited, especially in mature air travel markets such as the U.S. and Europe. The majors themselves are consolidating, and regional carriers will be competing for a shrinking number of opportunities to provide hub feeder service to the majors' networks.

One way for regional carriers to grow revenue in the years ahead will be to fly larger aircraft. In the U.S. in particular, though, scope clauses generally prevent regional carriers partnered with major airlines from flying jets larger than 70 or 76 seats. Nevertheless, other regionals, low-fare carriers, and even major airlines can be expected to acquire 90-125 seat regional aircraft in quantity.

FMI: www.forecastinternational.com