High fuel costs are hammering home the economic realities of operating regional jets over shorter sectors, with the turboprop enjoying a resurgence as a result
The last rites have been read over the turboprop several times since the emergence of the small regional jet in the early 1990s. But each time, the ministrations have proved to be premature and the patient recovered.
The latest revival began at the end of last year when Australian carrier Qantas decided to order up to 17 Dash 8s from Bombardier for its QantasLink regional network. This was consolidated by the conversion into firm orders of 20 previously held options for Dash 8 Q400s from UK regional flybe in January this year, which just squeezed into Bombardier's year-end results. This will bring flybe's fleet to 41 aircraft, the largest in the world. A huge order for 30 new ATR 72-500s was placed by Air Deccan for the Indian market, announced in early February.
As a result, orderbooks for the two remaining major turboprop manufacturers are healthier than they have been for a long time. Including the flybe order, the backlog increased by nearly half to 84 aircraft at the end of 2004, the highest figure since 2001. There is no reported backlog for the 19-seat Beech 1900D, the only other regional turboprop nominally in production (see table).
The record high level in the price of oil, which has forced many airlines to re-evaluate the costs of operating jet aircraft, is certainly one explanation for the most recent resurgence of the turboprop, but, according to John Moore, senior vice-president commercial for ATR, not the only one.
"In our view, the recognition of the role of the turboprop as the best-suited aircraft for shorter sectors has been returning over the past few years," he says. "Thus it is not only a consequence of high fuel prices. We can probably say, however, that the record fuel prices have helped to bring this awareness to a broader level, because it magnifies the difference and the economic advantage of the turboprop."
Moore continues: "We have had operators in Europe, also operating regional jets, that were renewing their turboprop fleets because they recognised the difference in operating costs. Also in the USA, the regional jet is typically operating on the longer sectors and turboprops are still very prevalent on the shorter routes."
Barry MacKinnon, vice-president of marketing and airline analysis at Bombardier Aerospace Regional Aircraft, agrees. "High fuel prices have historically nudged the pendulum more in the direction of turboprops versus jets," he says, "but this is not the only influencer. With fuel burn as only one component, the overall economics of operating turboprops on short routes has always been superior to that of competing jet types. The drivers of such economic advantages are fuel burn, maintenance costs and even some of the airline-specific costs such as labour rates."
There is no doubt that once the small jet arrived, turboprop aircraft were viewed as old technology. There is strong evidence now that public perception is shifting and that the shape and type of the engine is less important than comfort, frequency and reliability. A trend away from jets back to turboprops has been particularly noticeable in the USA. The obsession by the US majors to provide a seamless service where passengers at the hub airport step from a large jet aircraft on to a small regional jet for short onward journeys appears to be waning, as cost pressures mount. With fuel prices hovering around $50 a barrel, and predicted to go higher still, flying regional jets on short segments of 500km (270nm) or less, no longer makes sound business sense – if it ever did.
Continental Airlines in particular has been boosting the number of turboprop operations of its Continental Connection partners. Most recently it added Colgan Air and its 30-seat Saab 340Bs, with larger 50-seat aircraft under consideration, and expanded its deal with Gulfstream International Airlines to include the 30-seat Embraer Brasilia.
Turboprop flights now account for 15% of Continental's operations, a marked increase over previous years. Northwest and United Airlines have also been shuffling equipment among their Northwest Airlink and United Express partners and plan to maintain a modest number of turboprops, although neither have committed to buying new aircraft.
In Europe, Belgian carrier VLM Airlines has been building up its Fokker 50 turboprop fleet and shows a reluctance to move over to jets. Chief executive Johan Vanneste says the Fokker50's fuel efficiency has enabled the airline to avoid implementing a fuel surcharge in 2004.
Jim French, flybe managing director, is another turboprop fan: "The aircraft is very economical to run and will be a key strategic weapon for flybe in what is a very competitive marketplace." The difference in speed is only 5min on the BAe 146 jet block time.
The second-hand market has also been buoyant. ATR itself handled 51 transactions last year, with 30 ATR 42s and 21 ATR 72s changing hands, while a total of 43 Dash 8s were placed with customers. The reassessment in the USA of short-haul markets and opportunities in other countries in the Americas are also providing some encouragement for BAE Systems Asset Management and Saab Aircraft Leasing, which, although no longer in the manufacturing business, have large portfolios of aircraft operating there. In 2004, BAE placed 25 Jetstreams and four 50-seat ATPs, the last-named a mix of passenger aircraft and freighter conversions. A total of 35 Saab 340s and 17 Saab 2000s were reported to have changed hands. According to Airfax, a total of 345 turboprop aircraft are available on the market (see table), of which the ATR 42/72 and Bombardier Dash 8s account for only around 50 aircraft.
There is a consensus forecast between manufacturers, suppliers and industry analysts that there will be an average demand for around 50 new regional turboprop aircraft a year for the next decade. This would suggest there will be a market for the foreseeable future that can be satisfied with existing products through life-extension programmes and continuous improvements. Thereafter, if the turboprop still finds favour and regional jets have been unable to close the gap in operating costs and environmental acceptance, ATR and/or Bombardier will have to bring new types to the market after 2015.
The difficulty both face is to predict what these may be in terms of size and type. The Dash Q Series covers demand from 37 to 78 seats, while the ATR line ranges from 42 to 74 seats. Both would appear to cover the upper limit, as the turboprop would begin to lose out to the jet in terms of block time on longer and higher-capacity routes.
Moore says that it is too early to speculate on what new aircraft may be required, while MacKinnon claims an advantage in that the Q400 is already the largest modern turboprop and is new to the market, having entered service in early 2000. "No extensions are planned," he says, "and Bombardier is currently not looking at entirely new turboprop programmes."
But what of the 30-seaters such as the Saab 340, Fairchild Dornier 328 and Jetstream 41, and the smaller 19-seat Jetstream 31, which will reach the end of their working lives within the next decade and are still used in large numbers, especially in North America? MacKinnon says that declining yields have made many 19-seat turboprop markets disappear and will put pressure on the 30-seat markets.
Historically, the regional airline business centred on North America and Europe, and these markets will continue to provide opportunities due to the sheer size of each. But ATR and Bombardier are focusing on a number of differing markets, of which India and China, they agree, have the most potential for regional aircraft, including turboprop types. "The regional airline business is still in its infancy in a number of markets, such as Central Europe, South-East Asia, the Far East and Central and South America," MacKinnon says, and they will develop further.
"There also exists an evolution in airline business models that has spurred a new crop of low-cost carriers, which present many new opportunities for regional aircraft. Regional airlines are establishing their presence in the low-cost business and carriers like flybe in the UK are proving very successful," adds MacKinnon. "Some of these new airline business models are not bound to specific countries and in fact push the envelope of liberalisation and open skies, creating additional opportunities."
"In our view," says Moore, "the turboprop technology as it is today, which offers the best economics and a high level of comfort, as well as performance in certain difficult operating environments, is not likely to be replaced by jet aircraft for the foreseeable future."
GŰNTER ENDRES LONDON
Source: Airline Business