ATR Extends Market Leadership And Pushes For New Product

By Jens Flottau
Source: Aviation Week & Space Technology

The turboprop manufacturer argues there is a market of up to 1,300 units for the proposed aircraft. The demand will partly come from airlines eliminating some jets from their fleets in favor of turboprops, ATR believes. “The jet manufacturers are moving toward 100 seats. To break even, they need to fly in regional markets with larger aircraft.” That could open up a niche that can be filled with a newly designed turboprop. Bagnato also believes that its existing customers will switch to bigger aircraft.

Unlike ATR, Bombardier has no plans for a turboprop larger than its Q400. It notes its customers have not indicated interest in a larger version.

But as always, the two turboprop rivals' positions have to be weighed. Bombardier is struggling to keep its new large CSeries jet on track. It has just pushed out first flight by another month—until the end of July—and the relatively small company cannot afford any major program delays; these have caused fiscal pain to other manufacturers. It can also not afford to run another multibillion-dollar development program concurrently. The Canada-based manufacturer is struggling to sell its Q400. The backlog is a mere 48 aircraft.

ATR, by contrast, sees a key strategic advantage in launching a new turboprop. Not only would it provide customers the opportunity for more capacity at low unit costs, it would also gel the manufacturer's competitive position as the dominant builder of regional 50-90-seat turboprops. A broadened ATR portfolio, and what would likely be a much-lower-unit-cost larger turboprop, would make it even tougher for Bombardier to sell the Q400 in significant quantities.

The ranks of ATR's competition have swelled, though. China has proposed to build an aircraft of similar size in the next five years and South Korea has hinted about building a new turboprop, too. From a strategy and commercial point of view, ATR would be wise to be able to offer its product ahead of the new competitors'.

As for the incumbents—Boeing and Airbus—although the behemoth manufacturers would never openly admit it, the launch of Bombardier's CSeries with Lufthansa played a role in the decision to launch the 737 MAX and the NEO. Their market success seems to demonstrate that timing is not always crucial (the CSeries is planned to enter service next year, NEO is due in late 2015, and MAX is slated for 2017).

While ATR has briefed its shareholders about the proposed aircraft, little is publicly known. The 90-seater is understood to be a new aircraft, not a derivative of the -72. It is to be equipped with new engines, avionics and wings. And while it is reported to be a little faster than the current ATR models, the company does not want to compromise efficiency for speed, which is one of the problems Bombardier is facing with its much faster Q400.

ATR recorded 173 orders and commitments so far this year, 83 of which are firm. A big part of the airframer's success is due to the fact that it made inroads in the leasing market. Nordic Aviation Capital placed orders for up to 91 aircraft (36 firm) and Air Lease Corp. bought five ATR 72-600s at last month's Paris air show.

The manufacturer's firm backlog now stands at 270 aircraft, significantly more than the 223 units recorded two years ago. As sales increase, so does market coverage. Danish regional operator Jettime will fly an initial fleet of six aircraft in Sweden, a country where ATRs have so far not been operated. Last month, Avianca took delivery of its first ATR 72 and the airframer is following up with more support infrastructure in Latin America. ATR is opening a training center in Bogota, Colombia, in cooperation with Avianca.

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