Filippo Bagnato is chief executive of Franco-Italian turboprop aircraft maker ATR, which has enjoyed a record year in terms of order intake some three decades after the venture was established. Having progressively updated its ATR 42 and ATR 72 models, the company forecasts a market for about 3,000 aircraft during the next decade - including 1,000 potential sales of a possible larger 90-seat variant. Bagnato talks to Flight Daily News about the growth of the regional airliner market in the Middle East, the reasons behind ATR's recent successes in the marketplace and its product development plans

How important will the Middle East and Africa market be to ATR in future years in terms of sales?

Between Africa and the Middle East we have an installed fleet of more than 100 aircraft, out of an overall fleet of around 900. If I had to bet on the new demand from the market, we will see that Africa is a fast-growing market. I believe very much in the African market. It is not by chance that we have decided to invest in putting a flight simulator in Johannesburg, because in Africa I see strong growth potential.

Filippo Bagnato

 © ATR

We have introduced, with our launch customer, the new model - the -600 - to Royal Air Maroc. They are very satisfied with how the aircraft is operating.

I see more close prospects in Africa. In the Middle East there is strong potential, but I think that will arrive a little bit later because airlines in the Middle East have given priority to international connections. When I'm at Dubai airport, almost 100% of the passengers that are flying there are international. There are a very limited number of passengers that are related to the region, but this is something that for me is quite natural. Due to the geographical position of the Middle East, it's obvious why they decided to give priority to international. The second step will be to develop the regional connections. In Pakistan, for example, they discovered the ATR is the best facility they have in order to ensure internal connectivity. The other Middle East countries will pay more attention to the development of the regional market.

How long will it take for the Middle East regional market to fully evolve?

If you think of the last five to six years, Indonesia and Malaysia were pushing for international flights. In India, they were giving priority to international, then one day they realised that it was the proper time for developing regional. I have a fleet in Asia that is around 250 aircraft. In Indonesia there is a large market for ATR, where we already have a huge contract. In India, ATR is the main regional aircraft, and also in Taiwan and Malaysia. In Malaysia there is a fleet of more than 20 ATRs. For Thailand, Laos, Vietnam it is the same story. If you look at what has happened in the last five years, you will understand what will happen in the Middle East. It is the same dynamics. Clearly the speed is related to the population. We must not forget that in Indonesia there are 300 million people. In India there are one billion people. In the Middle East the density of the population is not the same but, nevertheless, they will arrive to the regional connections exactly the way that all of the other countries of southeast Asia arrived. Today southeast Asia, together with South America, are my best customers.

In South America, they started with Varig at that time with international connections. The internal connections were limited to the Sao Paulo-Brasilia-Rio de Janiero trunk route, and now if I show you the regional network of Brazil it is transformed. My opinion is driven by the experiences of ATR in the last five to seven years.

What have been the driving factors behind ATR's recent sales success?

Today, my modest impression is that the airlines have a situation of traffic growth, but at the same time they are fighting with yield. The price of tickets is going down and down. They have to cope with the costs of the fuel and personnel, which are increasing. Inevitably, they have to select the right aircraft. They are making profits or losses based on the fleet policy they are implementing, and clearly today - especially with the new ATR model which is providing a high level of comfort to passengers in addition to the new avionics - you have a situation where you can provide good comfort for the passengers. The airlines are saying to me that with the ATR they make money. Clearly, I'm talking about sectors below 350nm (650km), but on those sectors I think the ATR solution is the best blending between comfort and efficiency. We have been able to sell in the last six years almost 50% of all the ATRs that have been sold since day one, and ATR today is celebrating 30 years of life. ATR is at a delivery rate of 54 aircraft, which jumps to 72 next year, and 80 in 2013 and 85 in 2014, so we are moving to multiply by four the production rate of 2005.

Why is ATR not showing any aircraft in the static park here in Dubai?

We have a stand but we do not have aircraft on the static display. There are so many air shows during the year that we have to prioritise. The day when we will have one air show per year, full stop, will be a great day. Having an air show somewhere every two months is a nonsense. We are trying to reach a reasonable compromise, and waiting for a little bit of intelligence from the air show organisers. Clearly, our launch customer Royal Air Maroc has an event which is very close to the show and we will go to Morocco. For some of the smaller shows we will go on an opportunity basis. Then there are the traditional air shows which, like 5 o'clock on Sunday afternoon when you visit your old grandma, you have to go, because your grandma is not happy if you go somewhere else. Sometimes we are obliged to go because others are going. It's not a complete waste of money, but if we make a real cost benefit analysis then I wonder how many shows will result in a real benefit?

Are you revisiting the possibility of setting up an overseas local assembly line for the ATR turboprops?

I am following what is required by my customer. My customers are private airlines and they are focused on reducing their direct operating costs. The airlines are asking me to reinforce maintenance and training centres, but the final assembly lines, generally speaking, are more required when your customer is not a private customer but is state-owned, and the state has to blend a major aircraft requirement with an industrial requirement. Then, they are pushing for a final assembly line. But the private guys don't care.

What comes next for ATR in terms of product development?

The next iteration of the existing aircraft will come, because if I look at the market for the next 20 years there is a requirement for 3,000 turboprops. Of these, two thirds will be turboprops below 70 seats and one third will be around 90-seaters. So for the two thirds I will have the -600, the -700 I don't know how many dashes. We have been able to invest when ATR was a smaller company, one third the size of the company today, so we will continue to invest. There is no comparison between the -600 and the ATR of 15 years ago. It's another aircraft. So I intend to proceed in this direction. Having said that, we are also carrying out a pre-feasibility study for the evaluation of a larger aircraft. We are proceeding with the engine manufacturers on analysing the feasibility and I think that sooner or later we will move from the feasibility to development if my shareholders will allow me. The engine manufacturers are working very well in this direction. The 70 seater and the 50 seater must then have an engine of the same family. I have a perspective of 20 years in front of me.

Source: Flight Daily News