HONG KONG (BLOOMBERG) - A new, long-delayed 88-passenger jet from Japan may finally be the right plane at the right time.

More cities in Asia and Europe are seeking to link up with each other and the global air travel network. The Mitsubishi Regional Jet (MRJ), the first airliner built in Japan since the 1960s, began certification flights last month in Moses Lake, Washington, to satisfy that demand.

Mitsubishi Heavy Industries' new airliner is testing the skies just as rivals are moving to sell off their manufacturing operations for jets with up to 160 seats.

Boeing is set to buy 80 per cent of Embraer's commercial operations in a joint venture, while Bombardier last year sold control of its C Series airliner project to Airbus and is exploring "strategic options" for its regional-jet operations.

At stake, particularly in the market for jets with fewer seats, is US$135 billion (S$183 billion) in sales in the two decades through 2037, according to industry group Japan Aircraft Development.

"Bombardier's moves do indeed create opportunities for the MRJ," said Mr Richard Aboulafia, aerospace analyst at Teal Group. "It's the biggest single factor in the MRJ's favour."

With few seats and smaller fuselages, regional jets are a different class of aircraft from larger narrow-body planes such as Boeing's 737 or Airbus's A320. The MRJ has a range of about 2,000 miles (3,219km), while a smaller variant can haul up to 76 people for about the same distance.

A long-time supplier of aircraft components to Boeing, Mitsubishi Heavy is developing the MRJ to emerge from its customer's shadow. After spending at least US$2 billion over more than a decade, the manufacturer is looking to get its jet certified and start deliveries to launch partner ANA Holdings.

Mitsubishi initially planned test flights in 2012 but blew past that deadline because of production difficulties. Now, the company, which makes ships, nuclear power plants and aerospace components, expects to have the plane ready for customers next year, a timetable that will test the company, said Mitsubishi Aircraft president Hisakazu Mizutani.

"This coming year is extremely important for us," Mr Mizutani said at a media event on Tuesday (April 16) in the central Japanese city of Nagoya.

A lot now hinges on Mitsubishi's ability to get the jets ready on schedule, said analyst Sho Fukuhara at Jefferies Japan, who said the company's current 407 MRJ orders are not enough to make the programme profitable.

"Longer term, there should be an opportunity but right now they have to deliver the very first plane. Potential buyers are looking at how they proceed with their schedule."

The company announced in October it was pumping an extra 170 billion yen (S$2 billion) in capital to its aircraft unit's existing capital of 100 billion yen; Mitsubishi also cancelled 50 billion yen of the debt owed by the aircraft division.

Also adding to Mitsubishi Heavy's challenges is a lawsuit filed by Bombardier in Seattle last October, accusing the Japanese company of acquiring secret information and causing Bombardier "to suffer irreparable financial loss".

Mitsubishi counter-sued, denying the Montreal-based company's accusations and saying that it violated antitrust laws through "a multifaceted scheme to expand its power within the regional jet market by impeding the entrance of a new competing aircraft".

Bombardier denies the allegations and will vigorously defend itself, spokesman Simon Letendre said in a statement.

Mr Mizutani said: "Our views are completely different, and so we're looking to get a clear determination in a public forum."

Mitsubishi Heavy is not the only Asian manufacturer betting that it can build aircraft cheaper and more efficiently. Commercial Aircraft of China, also known as Comac, has a new regional jet in service, while Korea Aerospace Industries is studying whether to develop a 100-passenger aircraft.

"The aviation market in Asia is expected to grow further in the coming years and there will be demand for these aircraft," said analyst Lee Dong-heon at Daishin Securities in Seoul. "The shift in the regional aviation segment we have seen over the last year or so has opened opportunities."

In order to compete, Mitsubishi cannot just rely on its home market. The biggest customers, therefore, could be in the United States, where large airlines try to cut costs by outsourcing short flights to smaller carriers that fly regional jets.

Trans States Airlines, which operates flights for United Airlines under the name United Express, ordered 50 of the planes, with options for 50 more, in 2010. Trans World did not respond to requests for comment.

The weight and capacity of the MRJ now in testing are too large for many regional carriers, according to Bloomberg Intelligence analyst George Ferguson, although the company plans to introduce the smaller version in 2021.

As part of its preparations to ramp up deliveries and support operations, Mitsubishi's aircraft unit separated its sales and marketing divisions this month, created a customer support unit and moved its US headquarters to Renton, Washington, the Seattle suburb where Boeing assembles its 737 jets.

"The need for regional jets isn't going down," Mr Mizutani said "The MRJ is fully capable of competing in the market."