Turboprop industry growth switches on and off

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Surging oil prices traditionally push the economics of turboprops to the forefront, but future opportunities at both ends of the size spectrum are still to crystallise

Whenever fuel prices spike, as they are doing now, the industry inevitably mulls over whether a sustained turboprop revival is in the offing. A true resurgence seemed almost assured in 2005 and 2006 when airlines' appetites for turboprops returned, and orderbooks swelled at ATR and Bombardier.

But the economic recession that ensued in the years that followed prompted many airlines to postpone equipment planning and fleet renewal, resulting in a flattening of turboprop growth for the period.

Even though the two manufacturers have enjoyed solid success with their current generation turboprops, the types have not reached critical mass. And so, the industry's on-again, off-again affair with turboprops continues. "The excitement over turboprops always peaks when fuel goes up and not surprisingly. It's the logical solution," says George Hamlin, president of Hamlin Transportation Consulting. "When fuel goes down, people forget about it."

SPEED, SIZE EFFICIENCY

The often-cited "logical" reasons for airlines to deploy turboprops remain the same as they did six years ago. Their speed, size and fuel efficiency make them well suited to replace less efficient regional jets that fly 300400nm (560740km) routes, as well as aged 20 and 30-seat turboprops that will be coming out of service in the next decade such as Embraer EMB-120 Brasilias and Saab 340s.

"As fuel is getting higher, people are looking at the high cost of operating regional jets, knowing they could save a lot of money if they could persuade passengers to go back to turboprops. Actually, when push comes to shove, passengers actually really care about the ticket price so airlines might have a window of opportunity to add turboprops," says Peter Morris, chief economist at Flightglobal's data and consultancy division Ascend.

Gordon Pratt, director of Q Series programme management at Bombardier, says: "Compared to a 70-seat jet, the Q400 has 30% better economics and costs. Compared to a 50-seat jet, it will have the same trip costs, but you get an airplane that is 40% more capacity so it offers an ideal opportunity for airlines to replace their 50-seaters and grow their business without growing their costs."

Boeing sees a need to replace regional jets with turboprops. "You can't make money today flying a small regional jet," maintains Boeing vice-president of marketing Randy Tinseth.

"What we're seeing is small regional jets replaced by turboprops, maybe larger aircraft in the single aisle market," Tinseth continues.

A Q400 pilot who works for a prominent operator that swapped out regional jets for Q400s tells Airline Business: "Before I flew the Q400, I was flying the Embraer ERJ-145 so our company took the position of replacing the ERJ-145 with the Q400. Their opinion at the time was the Q400 had the exact same cost base as a 50-seat jet, but it had another 28 or 30 more seats they could sell."

The pilot continues: "The Q400 is a very, very quick turboprop. It cruises at around 360kt [670km/h], only about 90kt slower than the ERJ-145. But we cruise at 25,000ft [7,630m] because the aircraft is not equipped with passenger oxygen, so we get to top climb in 12 to 13 minutes versus the ERJ-145, which took roughly 20-25 minutes. So we're finding that, on sectors of an hour to an hour-and-a-half long, our block time is no longer than it was on the jets. So we've kept the cost base the same, increased the number of seats, and no penalty in time."

Accustomed to receiving endorsements such as these, Bombardier remains firmly optimistic that it will once again see a rebound for its in-production turboprop, the 74-seat Q400 turboprop, "as the market recovers from the 2008 era of economic decline", says Pratt.

But with a backlog of just 40 Q400s, or only nine months worth of production, Bombardier has opted to cut production of the turboprop towards the end of the year.

"We did announce sizing the production rates to the current order base we have. That's what we do, but we anticipate recovering that as the orders come in. We are seeing a big resurgence in the number of sales contacts we're making, the quality of those contacts, the pulling forward of the decisions," says Pratt.

At present, ATR is faring far better than its rival. The airframer achieved 84 net orders in the first half of 2011, bringing its backlog to 226 aircraft, according to figures disclosed by EADS in its half-year results. Referencing the new ATR -600 series turboprop, EADS chief financial officer Hans-Peter Ring says the order performance "confirmed the success of the upgraded product range".

Embraer, meanwhile, believes the regional turboprop market is too crowded, and thus it is still focused on a possible larger jet. However, among the carriers examining how the ATR 72 or Q400 will fit into its fleet is US regional SkyWest Airlines.

The increasing age of its 30-seat EMB-120s and its more than 150 50-seat Bombardier CRJ200s is a factor in SkyWest's studies. Company president Chip Childs admits the operating economics of CRJs beyond 40,000 cycles "gives us pause".

However, scope restrictions at SkyWest's partner United-Continental remain highly uncertain and will colour any decision. The merged United and Continental pilots are in the midst of contract negotiations and it is unclear if United's more relaxed scope clause, which allows for the operation of 70-seat aircraft by regional carriers, will prevail in a final contract. Continental's pilot contract caps regional jet flying to 50 seats, but allows for the operation of 70-seat turboprops.

"I think there is quite a big question as to what the US airline strategy is going to be, and whether they even know it at the moment. Route economics, scope clauses, deals between majors and their suppliers, all of these things come into it. The big turboprop count at the moment, even though it has been declining the faster, has been in North America, and while regional jets did take over turboprops, that one has swung into reverse," maintains ­Ascend's Morris.

The Q400s in operation with Horizon Air and Colgan Air in the USA have shown that the aircraft "definitely fits in a set of markets", notes Hamlin. And the type has become a workhorse for UK carrier Flybe, which serves countries across Europe.

All three carriers are considered prime candidates for a larger sized turboprop, should ATR and/or Bombardier opt to offer a 90-100 seater. Both airframers have indicated interest, but have postponed a final decision on programme launch into 2012.

ENGINE GAME CHANGES

An important factor in their decision-making is whether or not engine manufacturers will bring game-changing new engines to market.

GE is actively engaged with manufacturers interested in a 90-seat turboprop platform to support the CPX38 engine, which is based on the GE38 being developed for the Sikorsky CH-53K heavylift helicopter.

GE general manager of small commercial and business aviation engine programmes Chuck Nugent says the manufacturer has run tests on two development GE38 engines to date, and the CPX38 would share a common core with that powerplant.

Nugent cites "strong interest" from airlines around the world for a larger turboprop and "a lot of eagerness from airframers over what we can deliver".

The engine manufacturer is targeting a 15% improvement in fuel consumption with the CPX38, and Nugent says the manufacturer seeks to deliver an integrated propulsion system of the propeller, engine and nacelles.

NEXT GENERATION

Pratt & Whitney Canada, meanwhile, has outlined a plan to offer a next generation turboprop engine, which the manufacturer estimates could offer a 20% fuel burn improvement over today's models.

"Most sales today are for 70-seat aircraft," says Richard Dussault, PWC vice-president of marketing. "We definitely see a place for 90-100-seat aircraft and that's where we're aiming for with a 5,0007,000shp engine. We could easily do 8,000shp as well."

In terms of speed and altitude, Dussault says 300350kt is the "most likely goal of that market" with similar cruise altitudes to today's turboprops in the mid-20,000ft range.

Meanwhile, industry stakeholders are trying to determine if a market exists for a new, clean-sheet 50-seat turboprop for replacement of smaller types.

"The whole 20-30 seat turboprop market is interesting. There is something like 1,000 aircraft in that category, but there is an awful lot of aircraft wandering around the world and the ones in other parts of the world have not been driven by esoteric things like scope clauses," says Morris.

"These aircraft were put together in the 1980s and 1990s; they've got 20-year technology. Since that time, the avionics have improved and everything has gotten better," says Morris.

"Could a new turboprop provide a step change with composites, or a new engine? If you could get an increase in productivity onto that new turboprop it could start to change the game," he continues.

Childs points out there is no ideal replacement option for the 30-seat EMB-120s and CRJ200s in the carrier's fleet, and believes a 50-seat turboprop will be suitable for many of the missions carried out by those aircraft.

So far airlines have been able to manage he lack of a new small turboprop by shifting aircraft around the marketplace, notes Morris. "The other thing is that the cost of aircraft has been really quite stable. But now it is trending towards tumbling up because there is market scarcity. Still, there is not enough information to give critical mass for airframers to be certain that there really is a market opportunity here."

Morris continues: "The difficulty is proving what the strategy will be five, ten years out for everything from regional airlines in North America to those in China and India."

Small turboprops were once a familiar sight in the USA. A map of a 1962 Lake Central Airlines timetable, provided courtesy of Hamlin Transportation Consulting (see map bottom left), shows the Midwestern cities once served by the carrier, which merged into Allegheny in the late 1960s.

"The interstate highway killed most of these places. Just because a market exists now doesn't mean it will exist in the future," says Hamlin, noting, however, that "there are always exceptions like Cape Air", which flies nine-seat Cessna 402.

But airframers have little interest in creating a high-speed 50-seat turboprop. Bombardier built 267 50-seat Q300s but the aircraft was much slower, at 287kt, than the Q400's 360kt. The manufacturer says shrinking the Q400 to 50 seats is not viable because the capacity will not support the cost of the higher power engines.

"You need enough chairs to cover the speed," says director of market development Jerome Cheung, who adds that 50-seat high-speed turboprops had struggled to meet large-scale demand. For example, only about 60 Saab 2000s were produced.

Childs says if the airline had more visibility on the outcome of scope talks, it may have made an aircraft decision by now. A dual-class Q400 looked attractive, he says, but evaluations rest on the economics of a larger turboprop and "what happens with scope".

The wild card, suggests Hamlin, could be non-traditional markets like India or China. "I'm not certain they have the need, but if they do, it's likely to be a need in significant numbers. The combination of those plus North American need could be the critical mass that someone needs to make this kind of aircraft.

"That might be a manufacturer in China. It might be something for ATR or Bombardier, but if sufficient demand materialised, I'm sure that's even something Embraer would look at too," he says.