Boeing and Airbus have swept up the major orders from Southeast Asia’s airlines, but regional aircraft manufacturers are now in hot pursuit of the market.
Although most of the growth in passengers has come through low-cost carriers like AirAsia using narrowbody aircraft, some analysts believe that more carriers are going to push into regional destinations.
“There is already some opportunity for regional networks to develop, particularly in Indonesia, Myanmar, Vietnam, etc where there are some lower density routes which cannot justify 180-seat services at twice-daily frequency,” says Rob Morris, head of advisory at Flightglobal’s Ascend Advisory service.
Franco-Italian manufacturer ATR is the leader in the regional market. Until recently it had a virtual monopoly on regional turboprops in Southeast Asia, thanks to large orders from the likes of Lion Air, Garuda Indonesia and Firefly. There is also a large base of older generation ATRs operating in countries such as Myanmar, Cambodia and Laos.
“The ATR 72 performance and economic proposition is more suited to the region than the Q400, which has driven the current market share scenario,” says Morris.
Rival Bombardier has however managed to break ATR’s grip on the market, with Thai low-cost carrier (and ATR operator) Nok Air placing a firm order for two Q400s, which will be delivered in 2016. It has also taken two options and four purchase rights, and will join PAL Express as the only other Q400 operator in Southeast Asia.
Nok’s order is also significant as it is the launch customer for an 86-seat layout Q400, which Morris says narrows its cost disadvantage relative to the ATR 72. The Q400s longer range and faster cruise, as well as the earlier availability of the aircraft could also drive further sales in the region.
Bombardier’s vice-president sales Asia Pacific, Torbjorn Karlsson, expects that Q400 sales will pick up as airlines move to consolidate their networks around hubs and spokes.
“The turboprop market in Asia has very much been short-haul point to point and generally profit-driven,” says Karlsson. “Going forward, when these markets and routes have to stand on their own and be part of a network model, the Q400 will be a far better fit.”
A number of carriers in the region are also pushing the two manufacturers to launch 90-seat turboprop programmes. Last year Firefly wrote to ATR offering to be a launch customer for such an aircraft, but that proposal remains on hold as the manufacturer awaits approval from its shareholders Airbus Group and Alenia Aermacchi to launch a programme.
Morris predicts that prospects for a 90 seat turboprop in Southeast Asia are very strong.
“The Flightglobal Fleet Forecast predicts demand for more than 500 90-seat turboprops in Asia-Pacific over the next twenty years,” he says. “That's more than 50% of the total predicted demand for 90-seat turboprops, so we thus expect the region to be massively significant for any new 90-seat turboprop programme.”
Regional jets ascending?
Prospects are also looking up for further sales of regional jets, which have had a limited penetration in the region.
On paper, the most successful regional jet in the region is the Sukhoi Superjet, which has been ordered by Indonesian carriers Kartika Airlines and Sky Aviation, as well as Lao Central Airlines.
While the latter two carriers have started taking delivery of their aircraft, Kartika's 30 aircraft order looks shaky. Last year the manufacturer said that it was negotiating leasing and other financial arrangements, but there has not been any further development since.
Bombardier has had a small level of success in the region with Garuda Indonesia taking delivery of 16 CRJ 1000s which are being deployed on thin domestic and international routes.
Despite its best efforts, Embraer’s E-Jet series has not been able to crack the market. At the 2011 Paris Airshow Indonesia’s Sriwijaya Air signed a tentative order for up to 30 Embraer 190s, but now appears to have dropped that plan.
Nevertheless, Morris says that prospects for the Brazilian manufacturer are improving.
“The economics of E-Jets are increasingly competitive and thus one would expect some demand to develop for such aircraft. However, it is unlikely to be as large as single-aisle demand in the region,” he says.
Bombardier is understood to be aggressively pitching the CSeries to carriers in the region. Having been previously rebuffed by AirAsia, there were indications last year that Lion Air could order the 160-seat variant of the CS300.
More recently though, sources at the airline have told Flightglobal that it does not plan to order the aircraft.
Over the long term Morris believes that the CSeries will attract interest in the region, as it is better optimised for thinner routes compared to the competing A319neo and 737-7 Max. Still, with Embraer now pushing the E2 series, Bombardier will have a fight on its hands.
“The E195E2 variant in particular looks competitive with CSeries and thus offers another option for airlines in that space,” he says.