Current upward trends in regional air traffic benefit unequally the different manufacturers that are positioned in this segment. Market leaders ATR, Bombardier and Embraer are showing fairly impressive order books, although a bit less fat than widebodies.
According to Bombardier’s market forecast for 2013-2032, the company is targeting 5650 deliveries of 60-99 seater aircraft, of which 2700 are turboprops. “Regional carriers gradually articulate their business models around the regional aircraft segment of 60-99 seater turboprops and jets” Bombardier says. The average size of such planes is growing slightly. In Europe, for example, the average size of regional aircraft increased from 63 seats in 2001 to 72 seats in 2009 and 78 seats in 2012.
As a good compromise between speed and fuel efficiency, turboprops are also gaining strategic market shares and companies that have implemented this technology have known success on emerging markets. For instance, ATR recently reported a turnover of $1.63bn (13% year on year growth) and record-breaking deliveries of 74 new aircraft in 2013. According to La Tribune, ATR – which sold 89 units ($ 2.10bn) and 106 options in 2013 – has a backlog of 221 aircraft (worth $5.3bn).
The company announced that orders should remain stable for FY2014. Over the past 3 years the company received 35% of market share (400 aircraft), far ahead of Bombardier’s Q400 (11% market share) and even ahead of the Embraer Regional jets (31%). For the past five years, ATR has accounted for nearly 85% of sales of all aircraft under 90 seats in the regions of Latin America and the Southeast Asia.
According to Chris Seymours – head of market analysis with Ascend advisory service – one notable feature of ATR’s 2013 orders was that 75% were from operating lessors, headed by Nordic Aviation Capital. “This sector has really developed in the past 4 years as lessors have recognised the good value retention and liquidity of larger turboprops” he told Flightglobal.
Bombardier took just 4 lessor orders for its Q400 in the same period, all from NAC. According to Flightglobal, the ATR 72-600 has clearly become the aircraft of choice in the 70-seat market. “It is seeing high demand in emerging markets, being ideally suited for short-haul, lower-yield routes requiring market leading operating economics.” The dramatic fall from grace of thirsty smaller regional jets has been particularly noticeable in these fastgrowing territories. Asia-Pacific and Latin America account for almost 80% of the ATR and Q400 market, says Seymour.
For the last two years, ATR CEO Filippo Bagnato has been trying to convince its two main shareholders, Airbus and Finemeccanica to launch the “NGTP” new 90-seat aircraft. Airbus CEO Fabrice Bregier, in line with the group strategy, considers it is no time to spend money in new projects. For him and Tom Enders, now is the time to optimize return on investment on successful products, while preserving cash and increasing margins. “Don’t invest, meet profitability”.
Other competitors seem reluctant to launch new products as well. Neither the Chinese nor the South Koreans, nor Bombardier, seem prepared to launch 90 seater turboprop. Struggling with its CSeries program, the Canadian aircraft manufacturer is glad of Airbus vetoing the launch of a 90 seater project.
A few years ago, Embraer said the Brazilian airframer was considering developing a 90-seater turboprop aircraft, as fuel prices made the idea sensible. But as of today, no project and no blueprint saw the (public) light of day… So far, the competition will not come from Brazil. Russia could be another challenger, but according to local media, Rostec is close to finalizing an agreement with Bombardier to start producing its Q400 in Russia… Meanwhile, Avic’s 70 seater MA700 could soon compete with the ATR 72.
For its part India seems nowhere near launching its own regional transport aircraft (RTA). India’s National Aerospace Laboratories (NAL) had told Flightglobal Pro in late 2012 that a turboprop would be preferable because the aircraft is envisaged as flying missions of 500nm (926km). But again, nothing has emerged so far. For various reasons, the competition is giving confidence in the new Airbus credo: keep calm, and don’t launch new planes.