Japan, Brazil battle for jet buyers in ‘amazing’ Asian market

SINGAPORE / Bloomberg

Mitsubishi Aircraft Corp. and Embraer SA are battling for customers in Asia as the Japanese maker aims to break into a market expected to account for a quarter of global regional jet demand over the next two decades.
The market for smaller jets currently is dominated by Canada’s Bombardier Inc. and Brazil’s Embraer. Emerging economies like Indonesia offer an “amazing” opportunity for Embraer, which also expects its only Indian customer to place repeat orders, Chief Commercial Officer John Slattery said in an interview Wednesday with Bloomberg Television at the Singapore Airshow.
Mitsubishi Aircraft, maker of the world’s newest regional jet, also is talking to potential customers in Indonesia and India, and expects 20 percent of its orders to come from Asia excluding Japan, Vice President Yugo Fukuhara said in an interview at the show on Wednesday. The company won its first Asian order outside Japan in 2014 from Myanmar’s Air Mandalay Ltd.
“The airlines are very confident of the fuel efficiency of the new MRJ,” Masao Ueno, a director at AlixPartners consulting firm said by phone from Tokyo. “The plane is very competitive versus Bombardier and
Embraer.”

Bombardier’s Share
Bombardier now is focused on building its larger CSeries jets, which will be able to carry as many as 160 passengers, rather than renew its line-up of planes with under 100 seats. Bombardier has 243 firm orders for the CSeries — including, in Asia, from Korean Air Lines Co. — with delivery due to begin later this year.
Embraer, for its part, is upgrading its jets with new engines to an E2 family to take advantage of rising demand. The company expects Asian airlines to take delivery of 1,570 jets seating 70 to 130 passengers over the 20 years to 2034, representing 25 percent of global demand.
Mitsubishi Aircraft on Tuesday said it had signed a letter of intent with Aerolease Aviation LLC from the U.S. for as many as 20 planes. It was the first deal since the company said in December that delivery of the MRJ would be delayed by a year, to mid-2018.
By the end of last year the Nagoya-based company had received 407 orders, including options and purchase rights, for the MRJ, which made its first flight in November. Mitsubishi is making two versions of the plane, which can seat 78 to 92 passengers, with the larger one selling for $47.3 million at list prices.
China’s Entry
China also is seeking a foothold in the regional-jet market. Commercial Aircraft Corp. of China’s ARJ21 was delivered to first customer Chengdu Airlines last year but has yet to start commercial flights. The company has more than 300 orders for the jet, which seats as many as 90 passengers.
Most of Comac’s orders have been domestic but it also has received orders from customers in Indonesia, Myanmar and the Republic of Congo. In comparison, the MRJ’s two biggest customers are North American airlines SkyWest Inc. and Trans States Airlines Inc. The ARJ21 was expected to have its first flight in 2005 and begin commercial service 18 months later — meaning it’s already nearly 10 years behind schedule.
“The ARJ21 is shockingly obsolete,” said Richard Aboulafia, a vice president of Teal Group, a Fairfax, Virginia-based consultant. “It’s just arriving with decades-old engines that everyone else is phasing out over the next few years.”
The project faces challenges as China works to improve its aviation research and development.
“One of the issues for Comac is that a lot of the world does not perceive China as a quality manufacturer,” said Olga Razzhivina, the London-based founder of Oriel, an aircraft appraisal consultancy.