Japan's SpaceJet dream to compete with Boeing, Airbus was a flight of fancy: insiders

Mitsubishi Heavy Industries on Tuesday scrapped its ambitious bid to develop a passenger plane, in a move industry insiders said came as little surprise but was "a terrible blow to the prestige of Japan's hi-tech industries".

The government-backed SpaceJet project was launched 15 years ago to elevate Japan's aviation industry to compete with the likes of Boeing, Airbus, Bombardier and Embraer.

Mitsubishi Heavy initially expected to roll out its first plane by 2013, but a lack of know-how and technological snags caused the company to postpone its delivery date six times, leading to repeated design changes. On Tuesday, it said the jet had "failed to confirm sufficient business viability".

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Tokyo-based analyst Geoff Tudor from Japan Aviation Management Research said the cancellation came as "no surprise at all" to those in the industry. "They have only been maintaining one of the test aircraft for the last couple of years, and it was obvious that the end of the story was coming," he said.

The termination of the project appeared inevitable in 2020 when Mitsubishi Heavy and its partners cut 95 per cent of the people still working on SpaceJet, although it insisted at the time that the changes were merely a "reorganisation". By then, an estimated 1 trillion yen (US$7.6 billion) had been spent.

Tudor said the failure of the project was down to a combination of factors.

"Although Mitsubishi makes parts for planes for other companies, such as Boeing, they have no direct experience of designing an entire aircraft and then working with other suppliers to put a plane together," he said.

"And then they were designing the wrong plane for the wrong markets and at the wrong time," he said. "Their vision was for a bigger aircraft, of between 70 and 90 seats, but that was not what potential clients in the business wanted."

The development of the twin-engined plane for short flights had marked a new chapter for Japan's aviation sector, which last launched a commercial airliner in 1962.

But the project had big trouble getting off the ground. Some test flights were aborted because of air conditioning defects and other software problems, and the delays meant revisions to the original design were required.

It was "difficult to obtain understanding and necessary cooperation from global partners", and "further extensive funding" was needed to get the plane's design approved, Mitsubishi Heavy said.

Of the 1 trillion yen spent on the project - a figure that some in the industry believe to be a conservative estimate - a good percentage came from the government.

Tokyo first aired its vision for a mid-size regional jet in 2003, with the launch of a five-year, 50 billion yen (US$420 million) research project to determine the viability of a short-haul airliner.

One of the key markets was China, where travel was beginning to boom, but the project overlooked the fact that a number of Chinese firms were also making inroads into the sector and would have the benefits of support from the government and lower costs.

All Nippon Airways was the first to commit to buying the SpaceJet aircraft, with an original order of 15 and an option on an additional 10. A number of US airlines had also put in orders, including SkyWest and Mesa Airlines.

But a decade after SpaceJet was due for commercial roll-out, Japan's aviation dream appears all but over.

"It seemed like such a dream at the outset, when everything was possible, but it has turned into a nightmare," said Tudor. "Mitsubishi should arguably have pulled the plug much earlier, as soon as they realised that they were just not up to the job."

Additional reporting by AFP, Kyodo

This article originally appeared on the South China Morning Post (SCMP).

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