LONDON — Mitsubishi Aircraft Corporation (MAC) provided a wide-ranging briefing about the state of its MRJ regional jet program at the Farnborough Airshow Tuesday, a day after it announced its first deal of the airshow.
On Monday, the Nagoya-based aircraft manufacturer announced an order for 10 MRJ90s (with 10 purchase options) from Rockton Aviation, an aircraft lessor based in Stockholm, Sweden. The order marks the MRJ’s first from a European customer and second from a lessor.
Rockton is a niche aircraft lessor in business since 1998 that specializes in operating leases for regional jet and turboprop aircraft. Its current portfolio numbers around 35 frames from a variety of manufacturers, and it is notably the largest owner of the Saab 2000, a 50-seat turboprop that operates at a higher speed (370 knots) like Bombardier’s Q400.
The order for up to 20 MRJ90s is Rockton’s first placed directly with a original equipment manufacturer (OEM). Reckon CEO Nicklaus Lund was ebullient in praising the MRJ, calling it a “game-changer,” and nothing that it “fits very well in the European market where noise and emission requirements are very stringent.”
MRJ development smoothens after earlier delays
At the press conference announcing Rockton’s order, MAC CEO Hiromichi Morimoto reiterated that the MRJ is on track for certification and entry-into-service (EIS) in 2018. The target of mid-2018 was set in December of last year when MAC announced a one-year delay for EIS on the heels of the MRJ90’s maiden flight in November.
The EIS delay due to insufficient wing strength and a required redesign of the landing gear for improved safety was only the latest delay in a moving target EIS that has slipped from 2014 to 2016 to 2017 and now 2018.
Happily for MAC, the flight testing program is now on track and will cross the Pacific from Japan to the United States later this summer. “We have 2 airplanes in the flight test program,” said Morimoto, “which have flown more then 40 flights and 1,000 hours.”
These initial figures have been achieved with solely flight test aircraft (FTA) 1 and 2, which are being readied for ferry to the US for the remainder of flight testing according to Hideyuki Kamiya, Director Head of Strategic Marketing for MAC.
Within the initial test hours, functions including autopilot and instrument flying, ILS, and TCAS have all been tested, and Kamiya expects flight testing to number 2,500 hours when all is said and done. Two additional flight test aircraft, FTA 3 and 4, are being readied for their first flight currently, and will join the flight test program when it moves over to the United States.
MRJ testing will be spread all across the US, based in Washington with the Seattle Engineering Center and Moses Lake Flight Test Center at the base airport (Grant County Int’l). But flight testing will also take place in Gunnison, Colorado, Roswell, New Mexico, and McKinley, Florida.
Back home in Japan, the MRJ’s final assembly line hangar is now operational. The new hangar will be able to accommodate 10 aircraft per month, including 8 at one time in a single building. At the implied production rate of 120 aircraft per year, MAC’s current MRJ backlog encompasses just over two years of production.
MRJ order book robust, but scope clause battle in US looms
To date, the MRJ has won 223 firm orders, 20 MoUs, and 204 purchase options from 8 customers, including 47+10 from Japan’s two main carriers (15 + 10 for ANA, 32 for Japan Airlines), 50+50 from US regional carrier Trans States holdings, 100+100 from US regional carrier SkyWest, 20+20 (MoU) from American startup Eastern Air Lines, 6+4 from Burmese carrier Air Mandalay, 10+10 from American lessor AeroLease Aviation, and now 10+10 from Rockton.
This is a significant tally for an aircraft nearly two years before EIS, though MAC has not yet sold enough MRJ’s to guarantee that the program will break even. When pressed on how many aircraft would be required to reach breakeven, Morimoto was vague, merely characterizing the figure as “several hundred airplanes.”
Back in 2008 (before a firm configuration was even planned) MAC had planned for breakeven at 300-400 delivered aircraft, though it is unclear whether that figure will hold after cost overruns.
All of the orders to date have been coded as MRJ90s, the larger of the two variants seating about 80 passengers in a standard two-class configuration. However Morimoto revealed that some of the existing orders processed as MRJ90 are actually for the smaller MRJ70 variant seating approximately 69 passengers in a two-class configuration: “The majority of orders are for the MRJ90 thus far, but we are not breaking out numbers for now.”
Kamiya’s presentation indicated that MAC sees a market for 5,137 70-100 seat regional jets over the next 20 years, a more bullish figure than either Boeing or Embraer presented on Day 1 at Farnborough.
The strongest market for the MRJ is projected to be North America, which represents 36% of total expected orders followed by Europe (16%) and Asia-Pacific/China (12% apiece). But a key risk that both Morimoto and Kamiya alluded to in the US market is continued uncertainty over aircraft scope clauses for aircraft larger than 76 seats.
The current scope clause won’t affect planned operations of the MRJ70 or mainline operators of the MRJ90 like Eastern or Air Mandalay. But in the US, where the type’s two primary customers Trans States and Skywest (together representing about 60% of the MRJ’s order book) reside, current scope clauses at mainline carriers would not allow the MRJ90.
To be fair, rival Embraer’s E175-E2, the smallest variant in its E-Jets E2 family after having shed the E170, would also be blocked by similar concerns and there is little risk of one jet being approved without the other.
Both MAC and Embraer are confident that the scope clause issues will be worked out and while we initially shared their confidence, a recent resurgence in pugnacious activism by pilot groups at US airlines ranging from Atlanta-based Delta to Dallas-based Southwest has made us more concerned. We now believe that there is real risk of both the MRJ90 and E175-E2 being blocked from the US market.
The good news for MAC is that it can at least preserve orders from US carriers by flipping them to the MRJ70 which can be used to replace E170s and CRJ-700s.
Embraer has no such outlet for the E175-E2. And the MRJ family is the most successful pure next-generation regional jet family in the market at present, outselling the E175-E2 by a factor of more than 2 to 1 with a much larger customer base (SkyWest, with an order for 100 E175-E2s is the only buyer to date).