FARNBOROUGH, England/SINGAPORE (Reuters) - Japan’s Mitsubishi Aircraft Corp, trying to keep its new regional jet on track after series of delays, was forced to cancel a demo flight for the world’s aerospace industry on Tuesday after the jet was hit by a truck.

A Mitsubishi Aircraft Corporation flag flies at Farnborough International Airshow in Farnborough, Britain, July 17, 2018. REUTERS/Toby Melville

The prang, which follows the jet's debut at the show on Monday, will not interrupt marketing efforts. But it will do nothing to help the Mitsubishi Regional Jet (MRJ) pull in orders at a time when giants Airbus SE AIR.PA and Boeing Co BA.N are extending their grip to the smaller end of the market.

The 90-seat MRJ, Japan's great hope for reviving a dormant commercial aviation industry, was launched a decade ago. Five delays later, it is now expected to enter service with Japanese carrier ANA Holdings Inc 9202.T in 2020, compared with the initial target of 2013.

As a result, it missed a potentially lucrative window of opportunity to be the first to market with the latest generation of fuel-efficient regional jets.

It is now up against the already in-service Airbus A220 - the newly rebranded former Bombardier Inc BBDb.TO CSeries - and the Embraer E2 series, which may be controlled by Boeing if a provisional deal between the manufacturers is completed.

“These developments are disastrous for the MRJ,” said Richard Aboulafia, vice president, analysis at Teal Group. “They are no longer competing with small companies from Canada and Brazil; they are now competing with global aerospace behemoths, with enormous pricing power and industrial scale.”

Mitsubishi Aircraft is looking to gain orders despite the increased competitive threat, and executives at Farnborough, hosting a press conference as the rival A220 flew overhead, said they felt they had a good chance in the regional market.

"This is the newest plane design in several decades," Shunichi Miyanaga, President and CEO of parent Mitsubishi Heavy Industries Ltd 7011.T said. "Engine-wise and aerodynamically it is the newest type of regional jet and is highly competitive."

It will not compete with the larger variants of the Embraer and A220 planes, with Miyanaga saying that it wanted to focus on the 100-seat and under segment of the market.

U.S. MARKET CHALLENGES

However, analysts say the more immediate challenge is hanging onto its existing order book given Mitsubishi Aircraft has so far lost its bet on U.S. pilot unions relaxing strict rules about the size of jets flown by regional carriers.

Of the 213 firm orders, 150 are split between two U.S. regional carriers, SkyWest Inc SKYW.O and Trans States Holdings.

The MRJ90 is too large for them to fly without the relaxation of the pilot union rules and the prospect of changes has dimmed due to a pilot shortage that has given unions more bargaining power.

As a result, Mitsubishi Aircraft is now trying to bring the smaller MRJ70, which can be flown by U.S. regional pilots, into service as quickly as possible, with late 2021 the target date.

FlightGlobal’s 2018 Flight Fleet Forecast released last week estimated the regional jet market as worth $120 billion over the next 20 years, with 40 percent of the value coming from 70-76 seaters serving the North American market.

However, MRJ has yet to convince its key U.S. customers to switch to its smaller jet, which has its own challenges.

The MRJ70 has 69 seats rather than the 76 of the rival Bombardier CRJ900 and Embraer E175 when configured with business and economy class as is typical in the United States, meaning its fuel efficiency is less of an advantage than it might seem.

“Downsized variants of jetliner families have inferior economics - fewer seats, but the same engines, systems, and most of the structures too,” Teal Group’s Aboulafia said.

Embraer on Monday signed a firm order with United Airlines UAL.N for twenty-five 70-seat E175 jets, shortly after JetBlue Airways Corp JBLU.O opted to replace its fleet of Embraer jets with the A220.

SkyWest and Trans States did not immediately respond to requests for comment on whether they plan to switch to the MRJ70.

FINANCIAL DISAPPOINTMENT

For the Japanese consortium behind the MRJ, led by Mitsubishi Heavy with a 64 percent stake, the project has so far been a financial disappointment due to the delays and technical challenges.

Nikkei last week reported Mitsubishi Aircraft was looking to increase its capital through a combination of a debt-to-equity swap and raising fresh equity.

Japan Inc’s ultimate goal for the program, however, goes beyond profit. It is about serving as a foundation for the revival of Japan as a passenger jet manufacturer, rather than just a major supplier to companies like Boeing.

“We are working without pause to deliver the first aircraft to ANA in 2020. It is the beginning of a countdown, not only to the first delivery but to a new era for the industry,” Miyanaga said.