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Regional Jet Values Remain Weaker

January 20, 2020

The transition to new types continues and this is inevitably impacting older models to a greater or lesser extent.

There have been a number of notable occasions when older regional jets have been placed onto the market only to find that offer prices have been below market value. Potential buyers, particularly non-airline entities, are naturally concerned about the risk associated with used regional jets in terms of residual values going forward and wish to protect themselves today by securing a lower price – or they may simply wish to buy the aircraft at a discount.

Values are in Millions of US Dollars and are based on The Aircraft Value Reference published by The Aircraft Value Analysis Company Ltd (AVAC) An Aircraft Rating has been included reflecting the suitability of the type for asset based financing over the medium term with a range of A++ (best) through to E—(worst).

Regional Jet Current Values US$m – January 2020
Aircraft Age Value Rtg Trend Analysis
Avro RJ70 19931996 0.40.6 E The corporate sector remains the best opportunity for the RJ70. There can be no escaping the lack of interest in the RJ70 in a commercial role. The four engines are a constant concern when fuel prices increase although of course on shorter routes, the fuel component of direct operating costs will be that much less. The aircraft is not a type that is suited to asset based financing.
Avro RJ85 19931998 0.91.0 E+ The number in storage represents a constant concern for values although any owner will not be willing to sell the aircraft for too low a sum. The market for the RJ85 has been weak for many years but in terms of capital cost versus new offerings, the RJ85 represents something of a bargain. A figure of more than $2 million can apply to types in good condition but these are rare. Conversion to fire fighters seems to be a good option.
Avro RJ100 19931998 0.81.2 E+ There have too many parked for too long. The capacity of the RJ100 is notable though some long term operators have signaled their intent to move to alternative types in the coming years though this will not likely impact already weak values. To some extent it straddled the regional and mainline market such that only a few were capable of using the aircraft given that the seating capacity could be over 100 thereby equating more to the B737-500.
CRJ100ER 19931998 0.30.5 E- The market for the CRJ100ER continues to weaken and as such values are falling to ever lower levels. The CRJ100ER started the 50 seat revolution although there were pocket rockets in the 1960s – the BAC1-11, the DC9-10, or F28 for example.
CRJ200ER(U.S.) 19961999200120032005 E- There can be considerable variation in values depending on the condition and location of the aircraft. The last ten years has not been kind to the 50 seaters due to scope creep which saw the average size of the regional fleet increase. It has to be noted that those potential buyers outside of the U.S. prefer to acquire non U.S. aircraft as transferring maintenance and registration can be easier.
CRJ700(U.S.) 2000200320052011e DD Just as the 50 seat market was a victim of scope creep and concentration in the U.S. so too have the 70 seaters experienced an acceleration in residual value declines due to the same negatives. The market for the type remains sporadic with demand sometimes allowing used units to be absorbed and at other types, allowing the aircraft to lay idle. Values therefore continue to wobble.
CRJ900(U.S.) 200220052011en2016ng D++C– The stagnation of scope creep means that the CRJ900 has been granted something of a reprieve even as the production of the aircraft is due to cease in the near future now that the aircraft has been acquired by MHI. Values of the youngest are set to decline. The market for the aircraft is particularly skewed in favor of the U.S. – again. This suggests that the market will be difficult as fleets may need to be moved.
CRJ1000 20112014 10.018.0 D++ The problem for the aircraft was that orders were too limited to allow for ease of remarketing. The operator base is very restricted and with cessation of production the values will be likely continue to decline at a faster than average rate. The problems of the type are all the more evident with the arrival of the E2. The delay to the MRJ provided a measure of respite but not much.
ERJ135ER(U.S.) 19992001 0.61.0 E- The 30 seat commuter jet offered much – at least in an era of heavily regulated fares. Unfortunately, the type arrived at the time that deregulation made it necessary for smaller aircraft to succeed on their own merits.
ERJ145ER(U.S.) 1996200120032005 E- Like the CRJ200, the market for the ERJ145 was always dependent on the U.S. market and scope clauses. With the erosion of both factors then this has meant that the last ten years has seen a continue decline in values. The Aircraft Rating has dropped again. There are a large number on the market most of which originate in the U.S. and may not be easily exported to other countries where most buyers reside.
Embraer 170Std 2003200720112014 D+ The last few years have seen very few if any orders for the E170 and few deliveries. The used market is still seeing some demand but the emphasis is on larger aircraft. The aircraft is therefore facing issues when placed onto the used market and values are ever weaker. The M100 represents a formidable competitor when it finally enters service and it can be expected that new orders will emerge for the SpaceJet as such service entry approaches.
Embraer 175 200420102016E 6.413.523.0 C-C+ The E175 is essentially operating in a vacuum – which is a problem for an engine that relies on oxygen – as it centers on the artificially created U.S. market. If the U.S. market behaved in the same manner as the European or Asian segments, there would be very few orders for the type. With scope creep having come up to the barrier, then the E175 will be in demand for some time yet except that the E175E2 is now under development and the SpaceJet will soon gain certification. Just as the concentration of the CRJ200 in the U.S. caused problems for residual values so too is the attraction in virtually a single country likely to have repercussions for residuals.
Embraer 190 2005200820112014 7.211.518.020.0 C- The market for the E190 is fragile with a number arriving onto the used market at virtually the same time. The large number of aircraft being made available has therefore inevitably affected values. The E2 is also being delivered albeit not in the numbers that would effect immediate replacement. The cost of engine overhauls has been an issue and this has proved to be an expense too far for some operators when a few passengers can make the difference between a profit and loss.
Embraer 190E2 2018 31.0 B The E2 is providing good service and a number are now in service but perhaps not as many as might have been expected. The number of orders is also very limited which is a major concern although of course the Boeing sales machine is only now getting into its stride. The initial trend for residuals is not as promising as the performance of the E2 suggests.
Embraer 195 200620112014 8.916.020.5 C– The E195 was always expected to see considerable demand but this failed to materialize as the aircraft was too large for some operators and too small for others. The values of the E195 are therefore experiencing a sustained decline.
Embraer 195E2 2019 36.0 B- The E195E2 has garnered the majority of orders for the E2 program which is something of a surprise. The E195E2 has been stretched such that it offers more seats and even better economics. There have thus far been very few deliveries. There remains an element of concern over residuals although Aercap has ordered 50 and Aircastle 13 which should allow the operator base to expand.
328JET 19992001 0.10.2 E- A good aircraft that perhaps did not have the best of starts. Value convergence has been apparent for some time and the market is now very restricted. The basic design is now to be upgraded by Turkey which is an interesting development given that this segment of the market has not produced any winners.
Fokker 70 19951998 0.50.7 E– Some still view the F70 as attractive and it certainly does have a low capital cost. If utilization can be kept low then it may remain in service but has long since lost its appeal for asset based financing.
Fokker 100 19871993 0.50.7 E– The Fokker 100 belongs to a previous era and asset value has long since passed. here can also be variation in the pricing with some in good condition attracting much higher prices.
Commentary reflects changes from last update of September 2019



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