Maximum takeoff weight concerns could impede MRJ90 and E175-E2 sales in U.S. market
Airlines have high hopes for the next generation of regional jets, which are larger and promise to have much lower unit costs than earlier and smaller models. But U.S. carriers have to face the question of whether their pilots will actually allow them to fly some of these aircraft types.
Mitsubishi Aircraft andface a potentially hefty problem in the U.S. market with the new regional jets they are developing: a maximum takeoff weight (MTOW) that could prevent regional carriers from operating the jets for their major airline partners.
To boost—and protect—their sales in the U.S., manufacturers will have to either trim the weight, change the certificated weight for the U.S. market or hope for a change in pilots' union collective bargaining agreements.
Almost all of the union contracts with the major U.S. carriers—withbeing one notable exception—forbid them from outsourcing flying to any aircraft certificated in the U.S. with an MTOW exceeding 86,000 lb. But the specifications Embraer just unveiled for its E175-E2 show an MTOW of 97,731 lb. Mitsubishi Aircraft's specifications for the MRJ90 indicate an MTOW of 87,303 lb. for the standard model, 90,378 lb. for the extended range and 94,358 lb. for the long range, and its MR70LR is about 2,600 lb. over the contractual maximum.
That could be a big problem, because regional carrier operations are the manufacturers' target market in the U.S. Even St. George, Utah-based SkyWest Inc.—which has placed firm orders for 100 Mitsubishi MRJ90LR and 100-E2 jets, plus 100 options on each—acknowledges the importance of the issue.
North America has historically been by far the largest regional jet market, and even with other regions catching up it remains the leader. In its 20-year forecast of demand for 70-100 seat regional jets, Mitsubishi Aircraft predicts 31% of the 5,280-aircraft market will be in North America. It expects 20% of sales to be in Europe, 20% in Asia Pacific and 14% in Latin America, with the remainder in the Commonwealth of Independent States (7%), Africa (6%) and the Middle East (2%).
There are scope clauses or similar restrictions made in collective bargaining agreements in many parts of the world, but the limitations are probably still strongest in the market that otherwise liberalized first: U.S. mainline pilots are very reluctant to give ground on scope because they believe outsourced flying costs them jobs. Some U.S. airlines still have pilots on furlough, which can make extracting more concessions to allow such expansion of outsourcing even more difficult.
In years past, pilots' unions in the U.S. agreed to loosen scope clauses only under pressure, either when their airline was in dire financial straits or in Chapter 11 bankruptcy protection, allowing carriers to void union contracts with judicial approval if the pilots failed to make enough concessions. That is how the relaxation to allow 76-seat aircraft—up from a 50-seat cap—started, when Northwest Airlines used its bankruptcy court leverage to force that change.
More recently, however, some pilots' unions have given ground on outsourced flying for larger aircraft in exchange for a new cap on the overall number of regional jets or other “sweeteners,” such as a guaranteed ratio between mainline and regional carrier operations. That is a tradeoff the airlines are willing to make because they are eager to unload their 50-seat regional jets and replace them with the larger-capacity aircraft.
Airlines also can use pay increases or other benefit or work rule improvements to try to win concessions from the unions on scope.
SkyWest currently is planning to operate the MRJ90 in a 76-seat, two-class configuration to comply with scope clause restrictions on seating capacity for outsourced flying. But the airline retains the option to convert its order to the smaller MRJ70, and SkyWest CFO Michael Kraupp says Mitsubishi will need to “thin” the MRJ90 to certify it at a lower MTOW.
“This is an open item and we will have to see how things develop with scope clauses over the next four years,” Kraupp adds.
As for the E175-E2 order, Kraupp reveals only that “we sought the protections we believe were necessary to address the issue.” He will not provide more details.
St. Louis-based Trans States Airlines, which has placed an order for 50 MRJ90 aircraft with 50 options, did not respond to a request for comment.
Yugo Fukuhara, Mitsubishi Aircraft's marketing director, says it will use “paperwork changes” to overcome the union contract restrictions. The Japanese manufacturer initially will certify the aircraft to their highest MTOW, which exceeds those restrictions, but then plans to recertify the aircraft to the MTOW limits that apply to each customer, he explains. The launch customer for the MRJ90 is.
Embraer's strategy is different. The Brazilian manufacturer, which notes that weight increases are typical for many newer-generation aircraft because of their heavier, new-technology engines, says it “believes that major carrier airlines in North America will be able to negotiate new contracts with their pilots unions to allow them to operate higher weight, but much more economical, aircraft in their fleets.”
There is ample time for that to happen for the new Embraer jets, but less so for the, which Mitsubishi plans to begin delivering to Trans States in 2016 and to SkyWest in 2017. Embraer does not plan to start delivery of its E175-E2 to SkyWest—or any other customer—until 2020.
Collective bargaining agreements with pilots become amendable atat the end of 2015, at in early 2017 and at the beginning of 2019. pilots are still working under a contract that became amendable years ago, and will negotiate a new joint collective bargaining agreement alongside American pilots if those carriers merge.
Airline managements and unions do not necessarily need to wait for contracts to become amendable; they often negotiate interim letters of agreement on specific issues. But scope is a very contentious issue for pilots, and they likely would not relax it easily, or without receiving some benefit in exchange.
Asked about the MRJ90 and E175-E2 exceeding the MTOW limits, Gregg Overman, a spokesman for the Allied Pilots Association, which represents American's pilots, said American can operate them as mainline aircraft flown by mainline pilots.
“Our take on that is that it would make a fabulous American Airlines airplane,” he says. “Any aircraft that exceeds 76 seats or that MTOW, if they're generating revenue for the company, they belong on the property.”