Opinion- Turboprop Times (Video)

With a highly dispersed population, a wide range of airport facility capabilities, lots of short-haul routes and cash-strapped passengers, Asia could be seen as a problem area for airline operators. But one class of aircraft – the turboprop – is proving that all these hurdles can be overcome to offer a viable business model. By Neelam Mathews

AS ASIAN SKIES OPEN  AND MORE secondary airports with short runways are developed, the need for propeller driven turboprops is being recognised. With low buy-in and maintenance costs, high usage rates, low running costs and small-airfield landing capability, turboprops look like the perfect solution to Asia’s dispersed yet large population.

They offer convenience, tested technology and environmental acceptance, which all make them perfect for Asia’s scattered and airport-sparse environment.

John  Moore, Head of  Sales for ATR Regional Aircraft asserts that turboprop aircraft are in strong demand, as airlines around the world seek to increase their short-haul services while reducing operating costs. ATR’s CEO, Filippo Bagnato, agrees. “Not only is the number of operators on the rise, but the average size of their [turboprop] fleets is also continually growing. Airlines operating in highly buoyant markets such as Brazil,

Indonesia and  Russia are currently developing their short-haul routes around the operational benefits that [these] aircraft bring,” he says.

Today, these aircraft are the ideal complement to a fleet for airlines operating medium-haul routes, flying to hubs and opening up regions which have up to now been little or poorly served, says Bagnato. Technical obsolescence, cost inefficiencies and age will also drive aircraft to retire.

The situation

As the aviation market becomes increasingly segmented, turboprop aircraft now represent 80% of the order book for planes with up to 90 seats, a massive proportion.  Regional jets have much higher operating costs than propeller-driven aircraft, and their sales are progressively focusing on higher capacity models.

With fuel prices showing no respite, the airline industry has started to move towards the purchase of larger, more efficient regional aircraft, whether jets or turboprops. The decision by Embraer not to re-enter the turboprop sector probably is a relief to the present market leaders – ATR and Bombardier – that they will not suffer from having to face excess supply rather than demand.

In addition, increases in fuel prices that makes jet operations unviable on certain routes has made Lion Air open to the idea of ATR’s fuel-efficient turboprop aircraft, the new-generation turboprop (NGTP) that will seat up to 98 passengers.

New bigger aircraft with new engines will result in the cost per available seat kilometre (ASK) dropping to lower than previous models. Bombardier too is considering whether or not it shouldlaunch a stretched, 90-seat model of its  Dash 8 Q400  NextGen turboprop.

“There are many questions to ask before making any decisions on this. We need to hear what most want to see, given that they want increased capacity,” said Philippe  Poutissou, VP of  Marketing at Bombardier Commercial Aircraft. He says that makers must juggle the advantages of new technology with maximum commonality with existing fleets.  Either way, the orders keep coming in.

Asia Uptick

Approximately 250 ATRs are currently operating for Asia-Pacific carriers, with an 80-aircraft backlog. The region accounts for over 40% of the company’s sales since 2005. The first ATR 72-600 turboprop aircraft destined for the AsiaPacific region was delivered in August to the leasing company Avation Plc – which has placed firm orders for nine ATR 72-600 aircraft to be operated on Australian regional routes – as part of an agreement with Australian regional carrier Skywest Airlines and Virgin to work on feeder routes for the main corridors.

“There has been very positive feedback from passengers who have travelled on the ATRs in Australia, and the enhanced comfort of the new 600 series should contribute to continued favourable reaction. Avation  Plc’s commitment to expand with our 72-600s is a significant vote of confidence,” said Bagnato. And at the recent Farnborough International Airshow, Taiwan-based TransAsia Airways placed an order for eight ATR 72-600s in a deal worth over US$210 million. Vientiane, Laos-based Lao Airlines has ordered two ATR  72-600s to be added to its fleet of four existing turboprops, and earlier this year,  Indonesia’s Lion Air inked a firm contract for more ATR 72-600s, raising its order total to 40 and making it the manufacturer’s largest customer.

CHINA

China’s emergence as an economic powerhouse drives demand for new

aircraft, and this market is now second only to that of North America.

China is expected to take delivery of 2,200 aircraft (including 1,400 in the 100- to 149-seat segment) over the 20- year forecast period, says Bombardier’s outlook. “China will need to aggressively build and equip a significant number of new airports, some to relieve air traffic congestion in heavily populated and travel areas, and still more to develop and extend economic and social links to remote parts of the country.” China is therefore expected to also require a significant number of 60- to 99-seat regional aircraft to meet demand, as well as pilots to fly them, technicians to maintain them, and an air traffic control system with which to operate them safely.

A growing appetite among  Indian carriers to serve regional routes makes India a potentially big market for turboprops too.  India’s first order for Bombardier’s Q400  NextGen turboprop aircraft was made by budget SpiceJet in 2010, for 15 for US$450 million at list price.

With a fleet of 12 Q400s, the airline has been fast expanding its domestic footprint by aggressively tapping tier two and three cities in India. With traffic numbers small, narrow-body aircraft have been unable to fill seats at smaller airports that the 70- to 80-seater Q400 can.

The reason for choosing the turboprop was clear. “As India experiences substantial growth, many cities and industrial towns remain underserved,” said Kalanithi Maran, Chairman, SpiceJet. “SpiceJet is focused on connecting these burgeoning areas with more than 60 airports that could not be served by larger jets. After an evaluation of all the aircraft in the 60- to 80-seat category, we selected the Q400 NextGen aircraft, which combines excellent reliability, economics and passenger comfort.”

SpiceJet plans initially to use the Q400s on grossly underused low- to medium-density routes – about 250 routes remain unused in India – as they are not profitable to run with narrow-body aircraft.  In the non-metro sector, 133 routes have fewer than one frequency a day. “SpiceJet’s order was a breakthrough for our Q400 NextGen turboprop in the Indian market, and Bombardier’s portfolio of commercial aircraft and customer services continues to be well positioned to support the development of India’s airline network,” said Chet Fuller, SVP of Sales, Marketing and Asset Management, Bombardier Commercial Aircraft at the time of the first delivery.

Flexible friends

The other plus turboprop aircraft bring is flexibility in landing field access. The typical configuration – high wing, dirt-resistant engines and tough landing gear – make them perfect for less developed airports.ATR landing gear is specially designed for airports that have unpaved runways and is used by carriers such as fast growing Cebu Pacific on its shorter routes.

“We intend to create unique city pairings across the country connecting secondary airports. We remain confident that these initiatives will further promote local travel within the Philippines and in the region,” Lance Y. Gokongwei, President and CEO of Cebu Pacific says. Pioneering the service on its Boracay and Laoag flights, it has since expanded its turboprop operations to destinations such as Siargao, Naga and Busuanga (Coron), among others.

Airlines like Bangkok Airways have indicated that service-wise, turboprops make it easier to offer more frequency. For instance, in Laos where the runway at Luang Prabang was recently upgraded to handle jets, the airline still decided to continue operating two ATR turboprops a day rather than just have one flight a day using an A320. Turboprops still win out on short distances.

“Our fleet of ATR 72s is playing a major role in the development and democratisation of the aviation services in Indonesia, bringing new travel possibilities at low rates to an increasing part of the population,” Wings Air chairman and Lion Air president Pak Rusdi Kirana says.

Kirana says that the flexibility turboprops bring is contributing to the development of business opportunities across the country and developing tourism in regions like Java, Bali and Nusantagara.

Bombardier Aerospace has big plans for China, having opened its office in Shanghai that supports its Q-series and is also home to the Bombardier Commercial Aircraft teams working with the Commercial Aircraft Corporation of China (COMAC). Bombardier predicts a demand for almost 2,400 commercial aircraft in the 60- to 149-seat segment in booming China over the next 20 years, making it the world’s second-largest market for new aircraft deliveries, following closely behind the US. Bombardier is also moving aggressively in Russia, where it expects to sell 200 large turboprops over the next  20 years, once the current 20% import tariff is removed. Russia’s largest aircraft lessor,  Ilyushin Finance, has tentatively indicated its interest in 10 aircraft.

The smaller-selling Fokker 100s continue to be strong in Australia as Network Aviation, a Qantas subsidiary, is adding five Fokker 100s to its existing fleet of seven, taking its Fokker fleet to 43. While orders haven’t increased, “the slightly smaller number now reflects the lower availability of Fokker aircraft,” says Fokker Services’ Director of Aircraft Remarketing,  Peter van Oostrum. And Australian operator Alliance is adding a Fokker 50 to its fleet of five Fokker 50s and 20 Fokker 70/100s. The Fokker 50 is leased from Dutch lessor GAFinance.

Looking ahead

As technical obsolescence, cost inefficiencies and age drive small capacity aircraft to retire, turboprops will bring their advantages in fuel efficiency and flexible handling to the fore. This, say the makers, will result in a positive impact on demand for new aircraft in the next 20 years. Asian carriers like FireFly (owned by Malaysian Airlines), Philippines’ Bicol Air Express (looking to start services with Fokker 50s) and Pakistan’s Airblue (due to implement 70-seater turboprops by 2013) are all jumping on to the turboprop bandwagon. The best for the market may just be yet to come.

Post-sales service is an important part of any aircraft deal. SpiceJet has signed a 10-year agreement under Bombardier’s comprehensive SmartParts programme that will provide a wide spectrum of cost-per-flight-hour maintenance for the airline’s full fleet of Q400 NextGen aircraft. “The fact that we will be able to proactively budget for traditionally variable expenses and count on optimal repair turnaround times under Bombardier’s SmartParts programme is another significant advantage,” said Neil Mills, CEO,SpiceJet.

Beautiful Toronto skyline-landing at Porter Airport!