In 2007, CM suggested that the Mitsubishi Regional Jet (MRJ) was doomed to failure at the concept stage.
All the tea leaves were there to be read. A simple study of the widely available Boeing & Airbus 20-yr commercial market forecasts at the time revealed how the regional jet market was set to shrink 40% in favour of larger jets.
Yet the Mitsubishi Aircraft Corp (MAC) pushed on ahead regardless hoping for a 20% share of a collapsing market. What would possess a company to target a dying segment with a product that wasn’t a game changer? A plane that promised to use composites to reduce weight yet was forced back to conventional alloys and to resize because customers had no demand for the original design.
With 90% of the regional market occupied by Bombardier and Embraer, airlines get great efficiencies by sticking to the same brands during upgrade cycles – minimal marginal costs required to train ground staff and pilots. For airlines to pursue a brand new aircraft that offered little in terms of superior economics nor extensive after sales services, it was always going to be the Achilles’ heel for MAC.
Airlines would not only take on extra costs to train existing staff, but would run huge financial risks with leased MRJ’s (now called the Spacejet to rebrand the failure) if they needed to downsize fleets because there would be next to no other airlines to sell or release them to unlike Bombardier & Embraer. Pilots who chose to be certified to fly the Spacejet also risked limited career options if an airline collapsed.
So it is refreshing to read this great summary on Wolf Street of how terribly the aircraft program is (not) progressing in 2019.
It would make a great Harvard Business Review study on how not to crack into a market.