Wither Regional Aircraft Deliveries?

Regional jet aircraft deliveries have continued their year over year decline from their peak that occurred in 2001. RJ deliveries in 2010 will likely be less than 125 units, the lowest since 1997.  50-seat RJ deliveries distorted the market and were simply a result of pilot scope restrictions which artificially drove the entire market.  Long gone are those days and they are not likely to return.  Today, larger and more efficient RJs are being delivered but you can't say that they are delivering in large numbers.  Scope provisions are also driving--and restricting--these deliveries. 

The larger RJ aircraft have considerably better unit costs but even at 70 to 90 seats, their unit cost performance may not be sufficient in a world where yields are being driven down by low-cost providers.  There clearly is a need for larger RJs, but just how many is debatable--as is the number of manufactures who are producing these types.  The sweet spot for aircraft size is in the area of 120 to 160 seat aircraft.  These types tend to do well in hub flow networks and in a low-cost carrier networks.  No surprise then that Bombardier launched the CSeries and it is my belief that Embraer will follow.  The market is too fertile for mid-size single aisle aircraft to pass up particularly when the market for 70-90 seat aircraft is---and keeping with my garden metaphor---getting a little bit dry.

Wither regional airlines and aircraft?  I know, I know...this is blasphemous to some, but consider: today's RJ backlog for Embraer and Bombardier is down 35% over levels at the beginning of 2005; today's backlog for Airbus and Boeing narrow body aircraft is up 131% over that same period.