Viking Air will deliver two Twin Otter Series 400s to Beijing-based Reignwood Aviation Group before the end of this year. Viking said it firmed the initial purchase contract for the two aircraft from a letter of intent (LOI) for 50 signed by at the Paris Air Show in June.
Confirming this to AIN, Evan McCorry, Viking Air’s vice president of international sales and marketing, said that by late this year, the company also will deliver the first two of 10 Twin Otter 400s ordered in September by Russian operator RN-Air. RN-Air is a subsidiary of Russian state-controlled oil giant Rosneft. It will use its Twin Otter 400s–all 10 of which are due for delivery by early 2017–for operations in the Krasnoyarsk region of Siberia. According to Viking Air, RN-Air will operate its aircraft on 19-passenger regional commuter, corporate shuttle and cargo operations.
McCorry said one of the two Twin Otter 400s going to Reignwood Aviation this year will have wheeled landing gear installed, while the other will be fitted with amphibious floats. Reignwood Aviation, which will use its first two Twin Otter 400s as sales demonstrators, is one of many companies owned by Reignwood Group. The group has businesses in many industries, including the sole distributor for Red Bull energy drinks in China.
When Viking and Reignwood signed the 50-aircraft LOI, they also agreed for Reignwood to be Viking Air’s exclusive sales agent in China. “We’re signing firm contracts [with Reignwood] as we go,” said McCorry, adding that Reignwood expects to take four more Twin Otter 400s in 2016 and seven per year thereafter.
Viking Air sees China as a large potential Twin Otter 400 market, partly for land-based operations in the far western part of the country but even more so for Twin Otter 400 seaplanes operating from the many bays and large rivers on China’s eastern coast.
“The airspace in China below 10,000 feet is going to open up in the next year,” particularly for coastal seaplane operations, McCorry predicted. “If you look at the Twin Otter 400 on floats and amphibs, we’re the number-one seaplane in the world,” in current sales. Future Chinese seaplane operators represent “a target market for us.”
One Twin Otter expert speculated to AIN recently that Chinese state aerospace manufacturer Avic might try to block any incursion by Viking Air into China’s domestic market, so Avic can promote sales of its own Harbin Y-12E and Y-12F instead. However, Viking Air obtained certification for the Twin Otter 400 from the Civil Aviation Administration of China last year and McCorry does not foresee potential market-access problems there. “We don’t believe Avic is going to try to block us,” he said.
McCorry also revealed that reports earlier this year indicating Viking Air was cutting its annual Twin Otter 400 production rate from 24 aircraft to 14 were wrong. In fact, Viking Air decided to cut the rate to 18 aircraft a year and even that rate cut was “back-end loaded.” As a result, after delivering 27 Twin Otter 400s in 2014 (three of them held over from 2013 production), McCorry said Viking Air will deliver 22 or 23 this year. The company forecasts that in the first 12 months of the rate cut–which began in mid-2015–it will build 18 or 19 aircraft.
Viking Air originally made the decision to reduce annual Twin Otter 400 production from 24 aircraft to 18 because it was concerned the effects of economic sanctions by Western nations on Russia were affecting its Russian market, which the company still sees as potentially its largest. At that time, “All the previously signed aircraft kept getting delayed and nobody was ordering new aircraft,” said McCorry.
However, since then, Rosneft has signed its 10-aircraft order and Viking now has sold 21 Twin Otter 400s to Russian operators, six of which it has delivered to date. Moreover, while Western “sanctions have been a challenge…we think we have learned to navigate the sanctions legally,” he said.
“Today, 18 to 24 aircraft is a very comfortable place for us to be,” added McCorry. “We and our partners [Pratt & Whitney Canada, Honeywell and Wichita-based Lee Aerospace, which manufactures all Twin Otter 400 fuselages] are tooled to build 60 Twin Otter 400s a year,” and can rapidly increase production again if necessary.
Because Viking Air is headed by financial executives and has an aerospace company-turnaround specialist on staff, its Twin Otter production is now a lean process, according to McCorry. The company’s main objective is to ensure that confirmed Twin Otter 400 sales represent a 15-month production backlog at all times and it adjusts the production rate with that goal in mind.
“We look really carefully” at the Twin Otter 400 production rate, said McCorry. “We have readiness meetings every month to discuss the rate.”
If two sales campaigns current in late October prove successful–Viking Air was hoping to announce deals within weeks–it could decide to increase the annual production rate above 18 aircraft again. “We have the ability to go up 15 to 20 percent in six months,” said McCorry. “That’s not by accident, but because of years of planning.”
Viking Air is showing Twin Otter 400 MSN897 at the NBAA static display. The aircraft features a livery the company developed for a Northern Canada tour in June to mark the 50th anniversary of the Twin Otter entering service. At the NBAA show, Viking Air is also showcasing its recently FAA-certified Phase 2 upgrades for the Twin Otter 400’s Honeywell Primus Apex avionics suite. Some upgrades come free in new-production aircraft, but others represent optional upgrades.
Phase 2 avionics improvements include a TCAS upgrade to TCAS II; a three-axis autopilot with an integral yaw damper; Honeywell’s SmartView synthetic vision system; software upgrades to the Twin Otter 400’s Aircraft Personality Module, providing Coupled VNAV and LPV approach capability; ADS-B in and out; Honeywell’s Runway Awareness and Advisory System; a satcom-based aircraft tracking system; and several other options.
