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.
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.
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’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.
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.
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!