On Sept. 30, 2006, Japan retired the last of its only domestically produced airliner, the YS-11.

About 1,000 people turned out at Tokushima airport to bid adieu to the twin turboprop on its last scheduled flight.

Only 182 YS-11s were built before production terminated in 1973 amid huge losses in Japan’s failed attempt to foster a civil aircraft industry.

Aerospace firms here now only serve as component subcontractors to global giants, including Boeing Co. of the United States and Airbus SAS of Europe.

But the ambition to get into the global jet race has been rekindled, and Mitsubishi Heavy Industries, famed for its fearsome wartime Zero fighter, is taking a stab at the commuter jet segment.

Following are questions and answers pertaining to Japan’s aviation industry:

How was the YS-11 project launched and why did it end?

The YS-11 was developed as a government-private sector project to revive the aircraft industry, which had thrived before and during the war but was banned by the Occupation as part of Japan’s demilitarization.

The ban ended in 1952, and the government began mulling the manufacture of civil aircraft in 1957. Development was led by a government-backed consortium involving six aircraft makers, including Mitsubishi Heavy and Fuji Heavy Industries Ltd.

Production of the YS-11 began in 1964 and 182 were built before output halted in 1973.

The consortium not only sold the propeller-driven planes to domestic carriers but also to 16 foreign airlines from 13 countries. The enterprise was forced to dissolve after suffering ¥36 billion in cumulative losses, according to aviation analyst Takanori Maema, who has written several books on Japan’s aircraft industry.

Why did the project fail?

“It all comes down to the inability to control costs as a result of unaccountable management,” Maema said.

The consortium was a hodgepodge of government officials and engineers and employees from six firms.

Maema said government officials who led the enterprise lacked cost-awareness and formulated a sloppy business plan, while the companies believed the government would foot the bill no matter how lax the operation was.

The seven-year ban also made it difficult for aeronautical engineers, who were only experienced in making military aircraft before the war, to catch up with advances in aviation technology at a time when the world was embracing jetliners.

What about the new development involving MHI?

MHI is pursuing its Mitsubishi Regional Jet project, a 70- to 90-seat next-generation regional jetliner, and started fielding orders from potential customer airlines in early October. Depending on how many orders it gets, it plans to decide by next spring whether to commercialize the project.

The MRJ is touted as a national project to resume domestic production of passenger aircraft, which both the government and businesses have been longing for since the YS-11 demise. If commercialized, the MRJ will be Japan’s first jetliner.

What is the current status of the project?

Mitsubishi Heavy said the MRJ will enter service in 2012 if there is a commercial launch. The development costs are expected to total ¥150 billion.

The jet, which will carry a price tag of around ¥3 billion to ¥4 billion each, will be powered by Geared Turbofan engines being developed by Pratt & Whitney of the U.S. The MRJ would be the first jetliner equipped with the new engine.

With the new engine and use of carbon fiber composite materials, which are much lighter than conventional metals, the jet will have extremely low emission levels compared with current regional jets and will achieve greater fuel efficiency, according to MHI.

The project is supported by the Ministry of Economy, Trade and Industry, which has so far requested ¥15.7 billion for the fiscal 2008 budget to cover part of the costs for research and development. The government is expected to subsidize a third of the ¥150 billion project but has not committed to a specific amount.

Developing, producing and marketing aircraft from scratch requires a huge initial investment that takes 20 to 25 years to recoup. This is why aircraft makers worldwide need state support.

“(The government) will back the project, which clarifies where responsibility lies,” said Hirofumi Katase, head of METI’s aerospace and defense industries division.

Learning from the YS-11 lesson, MHI will take most of the risks as the primary contractor even though other companies may take part.

Is the market for 70- to 90-seat jetliners big enough to accommodate MHI?

MHI estimates the global market for small regional jetliners could surpass 5,000 in the next 20 years and the company is hoping for a share of around 1,000. There were about 1,100 regional jets on the market in 2006, according to Japan Aircraft Development Corp.

But while the market has the potential to grow, Mitsubishi Heavy will face stiff competition. The regional jet sector is largely dominated by Canada’s Bombardier Inc. and Brazil’s Embraer SA., but Chinese and Russian manufacturers are planning to debut regional jets a few years earlier than the MRJ.

Analysts and industry officials say the MRJ will arrive too late to take advantage of big fleet reorganizations planned by Japan Airlines Corp. and All Nippon Airways Co., potential big customers for Mitsubishi Heavy.

The expansion of Tokyo’s Haneda airport, Japan’s most crowded airport, is scheduled for 2010 and Japanese carriers are planning to expand their regional fleets before then.

JAL already announced earlier this year it will purchase 10 jetliners in the 70- to 80-seat range from Embraer.

Then why is Mitsubishi Heavy so eager to go ahead with the project?

Analyst Maema said one major reason is to provide incentive for engineers to keep developing cutting-edge aircraft technology. MHI has been manufacturing fighter jets, but the outlook for defense-related procurements is dim because the Defense Ministry will no longer buy the F-2, the main Mitsubishi product codeveloped with the U.S. and based on the F-16 design, after fiscal 2007.

“Revenues from the defense-related business at Mitsubishi Heavy will drop, and there is no new project planned to sustain the company’s defense aerospace business,” he said. “Mitsubishi Heavy has to take risks or else its aerospace business will go into decline.”

Maema added that merely providing components to leading foreign manufacturers yields lower profit margins. “You’ve got to take the initiative (in development). Suppliers are always under stricter pressure to cut costs,” he said.

What is the government, for its part, trying to achieve through the MRJ project?

Full-fledged production of jetliners requires a wide range of technologies, which the government hopes will benefit other domestic industries and thus boost Japan’s competitiveness overall.

At the same time, Maema warned that Japanese airplane makers may not be able to stay on as suppliers to Boeing and Airbus because the rise of China’s state-owned aircraft maker may threaten Japan’s position.

“The government should have a long-term vision on how it will nurture Japan’s aircraft industry,” he said.

The Weekly FYI appears Tuesdays (Wednesday in some areas). Readers are encouraged to send ideas, questions and opinions to National News Desk

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