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Aircraft Asset Assessment

February 18, 2019

CRJ700

Market Presence. There are approximately 330 CRJ700s in service with 30 operators. The majority, 276 or 84 percent, are located in the U.S. Asia and Pacific have only 27 units or eight percent of the market. The majority – or nearly a 100 aircraft – are located with Skywest who already have a large number of new aircraft on order. The other major operators of the CRJ700 are Gojet, ExpressJet and American Eagle. These four carriers account for nearly two thirds of the fleet and represents a significant challenge when the aircraft are released onto the used market. For the CRJ series, then pricing has perhaps become more competitive with the larger orders for the CRJ900 inevitably seeing significant discounts. Values of new CRJ aircraft have continued to decline. The competitive pricing of the CRJ series means that the values of used CRJs have experienced a decline in recent years and in view of the inability to compete with the Embraer E2 and MRJ in the coming years, such a trend can be expected to continue.

Market Outlook. The market for the 70 seaters, at least those produced in the 2000s, is being eroded as operators seek replacement with larger capacity aircraft. Values are falling as the age of the aircraft advances. The market for the 70 seaters is not what it once was and values are declining by a reasonable percentage. The experience of the CRJ200 underlines just how fragile this segment of the market can be when major operators divest themselves, willingly or unwillingly, of their fleets. With little demand in other regions, there will be a concern as to where used CRJ700s will be placed in the coming years. The 70-100 seat segment now features at least five manufacturers. Even if the new manufacturers are able to secure sizeable orders from domestic and regional orders, the lack of a wider market could pose problems for residual values. Fleet concentration both in terms of size and geography have long since been considered major negatives when considering residual values. The 70 seat regional jet market is heavily dependent on the fortunes of the U.S. market and some volatility has already been experienced. The larger regional jet market has become the new hunting ground for lessors seeking to increase margins.

 

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