While programmes from the new players are on, Embraer, Bombardier and ATR (turboprop) are on their toes, not just to keep in shape, but also to stave off the imminent competition, albeit delayed

ATR was upbeat at the Paris Air Show having bagged 88 orders and 42 options, estimated at $2.8 billion ( Rs. 12,600 crore), a record for ATR. The Chief Executive Officer of ATR, Filippo Bagnato was under the arc lights as he announced ATR plans and how regional aircraft would be a vital cog in the aviation wheel.

Bagnato’s comments are some indication to the shape of things to emerge in the regional aviation market. “In the next 20 years, the market for turboprops will be about 3,000 aircraft. As fuel cost for an airline is likely to go up from 26 per cent to 30 per cent this year, airlines which will shape themselves around a correct product will be able to make money.” Turboprop is one of the answers. “In the regional segment of up to 75 seats, 75 per cent of the regional aircraft sold since 2005 are turboprops.” He also indicated that one-third of the turboprop requirement would be met by larger turboprops as the markets get dynamic.

ATR, which is celebrating 30 years, has logged 1,152 orders, having delivered over 900 aircraft. “Today, we have over 4,500 flights per day and the operator base has gone up to 175 from 145 in the 2009 Paris Air Show. We need to do a second ramp up in production. Next year, we will have to increase our volume of production by around 35 per cent compared to this year’s volume.”

The fact that lessors are getting interested in turboprop, Bagnato remarks is a pointer to ‘ATR being a good profitability tool for airlines’. One of the major lessors, GE Capital Aviation Services (GECAS), has a fleet of 150 ATR and during the show, GECAS ordered 15 ATR 72-600 (with options for 15).

Will this growth continue? Bagnato is positive. The economies are slowly bouncing back and air traffic is going to explode.

New performers

That explains the emergence of new players from Japan, Russia, China and India, in addition to the regional jet duopoly of Brazil’s Embraer and Canada’s Bombardier.

Japan’s Mitsubishi Regional Jet (MRJ) has pegged passenger traffic to be three times higher after 20 years with demand for 70 to 90 seat class aircraft going beyond 5,000 units due to the market trend of “up-sizing” from 50-seat RJs and route-transfers from mainline jets to large RJs in consequence of high fuel price and low passenger yield (see graph on the next page).

Despite such a number being music to ears, MRJ was not able to garner any deals at the Paris Air Show. The only announcement was its tie-up with Boeing for customer support services, while the first MRJ delivery has been rescheduled for 2014 from the last quarter of 2013. It is sitting on the Trans State order of up to 100 MRJs.

However, another new entrant Russia’s Sukhoi Superjet was in a song and dance mood, having clinched 24 orders, 12 each from Blue Panorama Airlines from Italy and PT Sky Aviation, an Indonesian carrier. It was celebration time for Sukhoi not just because of the orders but the Russian Prime Minister Vladimir Putin sat through its debut flying in Paris. The first Superjet 100 is already flying between Yerevan and Moscow for Armavia Airlines.

The country to watch indeed is China, a huge market opportunity as well as a growing manufacturing hub. The Commercial Aircraft Corporation of China is on course to launch the ARJ21, a 105-seat regional aircraft which will help in domestic route-networking of the Asian giant. The air traffic in China has grown nearly four times the global rate of 4.3 per cent since 1990 and has the propensity to accelerate the growth.

While these programmes from the new players are on, Embraer, Bombardier and ATR (turboprop) are on their toes, not just to keep in shape, but also to stave off the imminent competition, albeit delayed.