Embraer’s forthcoming turboprop is set to reinvent the way the world views this type of air transportation. Taking the cabin from the popular E2 and adding new generation engines gave Embraer reason to believe it could sell as many as 500 units. But the planemaker is contemplating doubling that estimation – here’s why.
The market could be doubled in size
When Embraer released its most recent market outlook, it estimated a demand for 1,080 turboprops around the world. This demand was seen to be led by Asia Pacific and China, with 490 aircraft allocated there. Europe was the next largest segment, with 190 aircraft forecasted. For its own aircraft, due to enter into service in 2027-2028, it estimated demand of around 500 units.
That’s enough to make a business case for the aircraft on its own. But Embraer is gearing up to double this estimation, for one key reason. Speaking to Simple Flying, Rodrigo Silva e Souza, VP of Marketing and Strategy at Embraer, explained why the United States market is now considered to be much stronger than it was at that last market outlook. He said,
“Those regional jets with 50 seats … they don’t have new generation replacement. But the smaller member of the Embraer turboprop family, the one we call the TP70, is actually an excellent aircraft configured in three classes with 50 seats.”
Configuring the turboprop with 50 seats would allow airlines to create true distinction between three classes of fare. This would allow for a much more cohesive journey for the passenger, stepping out of business class from a mainline jet and into business class on the regional aircraft. That’s better for passengers, and better for the airline too.
Realizing that the turboprop can plug this gap in regional airlines’ fleet renewal pathways, Embraer is feeling bullish about its offering. Indeed, the planemaker is eyeing an upwards revision of its demand forecast by 500 planes – doubling its initial outlook – with all of that extra demand coming from the United States.
The size of the market
Although the number of regional aircraft in the USA have declined in recent years, there are still a significant number in operation. Statista estimates that in 2021, there are just short of 1,800 regional aircraft operating, down from a peak of 2,780 in 2007. But there’s a problem with this fleet, and it relates to the scope clause.
The scope clause is part of a contract between major airlines and their pilots union that limits the number and size of aircraft that can be flown by the airline’s regional partner. Typically, the limitations become greater the larger the aircraft gets, and with no current replacement pathway for the smallest jets, that puts regional operators in a sticky situation.
Take SkyWest as an example. Operating flights for a variety of mainline airlines, including American as American Eagle, Delta as Delta Connection and Alaska as Alaska SkyWest, it flies entirely jet aircraft, and has the largest fleet of any regional airline in the US. Its current fleet is made up of CRJs, from the 200s to the 900s, and Embraer’s smallest regional jet, the ERJ 170.
Limited by the US scope clause requirement of its mainline carrier partners and their pilot unions, the airline has to divide its fleet into three distinct groups – aircraft with no more than 50 seats, aircraft with no more than 70 seats and those with no more than 76 seats. In the 50 seat category, it flies the CRJ200, a plane that hasn’t been built since 2006. SkyWest’s CRJ200s average around 20 years of age.
The 50-seater airplane market has no clear replacement pathway. Bombardier has attempted to solve this with a modified version of its CRJ700, known as the CRJ550. This premium-heavy 50 seater had a lower MTOW to bring it in line with the scope clause, but only 51 have been delivered to customers, all to GoJet. Mitsubishi Heavy Industries bought the CRJ line from Bombardier in 2020, built the outstanding models on order, and then shut it down. It is mulling reviving the product line, but nothing concrete has emerged to date.
Overall, there are some estimated 700 50-seater regional jets that are aging and in need of replacement. The Embraer turboprop could prove to be a clean, efficient and cost-effective replacement, given its passenger-friendly cabin attributes and its turboprop fuel efficiency. As such, Embraer is readying to up its demand outlook by as many as 500 aircraft, all in the United States. As Rodrigo put it,
“The turboprop is an excellent tool that can replace this those 50 seater jets with better costs, better revenues, and a much better passenger experience.”