The U.S. has 10 cities with populations of 1 million or more. China has more than 100 such cities or metropolitan areas. Then there are the ones of intermediate size, say 300,000-700,000 people.

Assume that air links between all those 1 million-plus-size “metros” require the workhorses of the industry, the Airbus A320 and Boeing 737. Then consider the potential to link the intermediates, both to each other and to the metros. Here there is clearly a role for crossover narrowbody jets of 90-150 seats, particularly when frequency-building is called for.

With the openness of the Chinese market needing to be taken into account, Embraer Commercial Aviation forecasts a demand over the next 20 years for 1,300 jets with up to 150 seats in China “supported by efforts to implement structural improvements aiming to increase the quality of its air transportation system,” according to Rodrigo Silva e Souza, the company’s vice-president of marketing.

“The largest commercial aircraft market in the world is set to continue expanding with strong investment infrastructure and growing focus on efficiency,” Silva adds. “China has plans to build 170 new airports, and the absolute majority of these will be in locations currently not served by air transportation.

“To serve these new markets, a crossover narrowbody can deliver the cost efficiencies at low risk. Still, from an efficiency perspective, the Chinese fleet is heavily concentrated in large narrowbodies, which account for around 75% of the total commercial fleet in operation, flying routes at low frequency. By using a crossover narrowbody jet in the same route, frequencies can be added at lower trip cost while keeping seat costs at the same level,” Silva says. “For airlines, this means better service and better competitive positioning at low cost and low risk. The fundamentals for strong demand for crossover narrowbody jets in China are very promising,” he adds.

Although agreeing with Silva’s basic premise, Jorge Abando, vice-president of sales and marketing at Mitsubishi Aircraft Corp., cautions against wild optimism. “A decade ago, our forecast would most likely be based on a 22.8% CAGR [compound annual growth rate] on regional jet RPKs [revenue per kilometer] [up to 100 seats]. This year we have considered a more modest 8.7% CAGR, partly due to fuel price and infrastructure, without assuming artificial or political economic barriers,” he says.

“According to the U.S. EIA [Energy Information Administration], the outlook for fuel is that it will remain below $100 per barrel and new airports, [planned for] the west and interior of China will increase slot capacity. This in turn will tend to draw higher-capacity aircraft to capitalize on those initial slots and benefit from low fuel costs,” Abando observes.

“However, we do see that the China market is still growing rapidly, boosted by economic growth and the size of the population. There will be increased opportunity for building connectivity and supplementing routes with smaller jets for more frequency,” Abando notes. Setting aside the potential for a stretched MRJ100X, Mitsubishi expects 619 delivery units in the 70-100-seat market in China over the next 20 years.

Airbus has not yet made a separate prediction for the A220 family (formerly Bombardier C Series). For the “small” aircraft segment (up to 230 seats, range up to 3,000 nm) in its latest market forecast, the company predicts a need for 12,494 aircraft across the whole of the Asia-Pacific region including China.

Prior to the transfer of the C Series to Airbus, however, Bombardier’s 2017-36 forecast for the 60-150-seat segment predicted 2,150 deliveries for China, with 1,250 of those being in the “small single-aisle” category.

The Chinese government’s aviation strategy has previously focused on building widebody and larger narrowbody fleets. Crossover jet OEMs have been awaiting a shift toward the country’s airlines acquiring crossover narrowbody jets, which—if the internal market opens up—could feature these aircraft in both the traditional airline business model and the low-fare model.

“Airlines are increasingly focused on margins, not only cost, and the crossover narrowbody jets are already a reality to support airlines to gain efficiency and sustain improved profitability,” Silva says. “E-Jets have been critical to regional aviation development in China with over 100 aircraft in operation. On top of that, crossover jets will open a new frontier for both traditional airlines and LCCs to expand to new smaller markets that cannot be sustained by larger aircraft.

“At the same time, crossover jets can be used to build high-frequency routes with the connectivity demanded by business travelers. With the current airline business models being pushed to the limit, a new fleet of crossover narrowbodies enables airlines to explore the opportunities in secondary and tertiary markets in China,” Silva declares.

Abando points out that China’s large carriers such as Air China, China Southern Airlines and China Eastern Airlines all serve major international and domestic trunk routes. “Smaller jets help provide the needed frequency and connectivity across the demand spectrum of these airlines’ O&D [Origin and Destination] markets,” he remarks. “New clean-sheet design jets—such as the MRJ—provide the step change in the operating cost structure that will benefit both the traditional airline business model and give low-fare airlines a competitive edge in markets where demand can be better matched with [smaller] jets.”

While China’s government has long overseen import licenses on aircraft, which has often created a barrier to sales for foreign OEMs, another potential barrier is looming. The Trump administration’s increasing tendency to place tariffs on Chinese goods could affect aircraft deals, given the amount of U.S. content on every aircraft.

“The current U.S. administration is clearly on the path of U.S. protectionism, and despite China being a major global economy that is perceived to be able to retaliate significantly, the general understanding is that no one wins in a trade war,” Abando comments. “According to Bloomberg [April 2018], high-technology products may dominate the U.S. list of items to be subject to tariffs, but “ ‘aluminum-based’ items account for only 2%.

“While Mitsubishi Aircraft Corp. would consider any ‘concrete’ comment on the effects of any U.S. tariffs to be premature, the only applicable assumption at this time could be lower GDP,” Abando concludes.

With a growing middle-class possessing disposable income in all those intermediate-size cities, the clamor to travel is likely to push at all types of barriers and therefore, at some stage, open up a vast market for crossover jet manufacturers.