ATR has turned its attention to the U.S. market for its 600-series turboprops after several years of absence from scheduled service. As if to underscore the seriousness of its new marketing effort, it took an ATR 72-600 on a nine-city demonstration tour of North America this past spring, including a stop at the annual Regional Airline Association convention in Charlotte, North Carolina.
ATR chief executive Patrick de Castelbajac, a former executive with Airbus in charge of the U.S. market, knows North America well, and harbors no illusions about the challenge a return of ATR to the region presents.
“My experience with the U.S. airlines is they are very pragmatic people, they’re very rational people,” said de Castelbajac. “We didn’t place sufficient focus on the U.S. for a long time…When you have so much growth [in other parts of the world] and the U.S. doesn’t necessarily welcome you with open arms, you go to all the other places where people are asking you to come.”
In fact, ATR (Chalet B25) has now sold more airplanes in Asia than in Europe, and holds a 90 percent share of the turboprop market in the Far East. Now counting more than 200 operators, ATR enjoys a broader market presence in terms of sheer numbers than does Boeing with the 737.
Recently, growth has slowed somewhat, however, giving ATR another reason to prepare for a future that includes a presence in the biggest market in the world. Still, de Castelbajac harbors no intention to price the airplane well below cost simply to gain entrée into the U.S. “We certainly are willing to do a lot of discounting for U.S. carriers, but we’re not desperate to the point of having to take huge losses,” he said. “I don’t intend to buy my way in.”
ATR has already addressed one clear prerequisite, as de Castelbajac explained, for attracting U.S. business in offering a forward passenger entrance, allowing access through jet bridges. It also has put more emphasis on multi-class cabins, another requirement of many potential U.S. customers.
“The market here is very demanding in terms of comfort, so we also need at least two-class, sometimes three-class, which is something that we were not necessarily keen on doing,” said de Castelbajac. “But we understand that it’s not a matter of whether we are keen or not keen, it’s a market requirement.”
Half owned by Airbus and half by Leonardo-Finmeccanica, ATR enjoys access to engineering resources and supplier relationships from the European consortium in particular that competitors do not, giving the ATR 72 what de Catelbajac described at cutting edge technology in the cockpit as well.
“When Airbus invests billions into a system, we can benefit from part of this without investing what we would normally invest if we were a third party,” explained de Castelbajac.
The new Thales flight deck in the 600-series ATRs and, of course, modern, quieter Pratt & Whitney PW127M engines represent two of the big differences between what the company offers today compared with the typical turboprop now flying in the U.S., which averages some 21 years of age. Meanwhile, as airlines jettison aging, less efficient regional jets and drop many of the routes on which they used to fly, ATR sees an opportunity to market both its 50-seat ATR 42-600 and 70-seat ATR 72-600 for segments of less than 300 nautical miles, where block time differences between a jet and turboprop are negligible, but fuel efficiency much better.
“There are five destinations from Charlotte that people fly to several times a day that are less than 100 miles away,” said de Castelbajac. “So that means basically you’re talking 20-minute flights, and we would do them in 23 minutes -- except we burn 60 percent less fuel.”
However, de Castelbajac admitted that ATR hadn’t yet entered end-stage talks with a U.S. airline, and he acknowledged that in many cases a shortage of pilots has prompted airlines to prioritize routes served by mainline jets. In fact, over the past 10 years 400 regional routes have closed while only 200 have opened, resulting in a net loss of 200 routes, primarily to small communities.
While de Catelbajac also attributed much of that phenomenon to airlines’ recognition of the cost ineffectiveness of 50-seat regional jets, ATR plans to do its part to address the cockpit crew problem with a new U.S. pilot training center to open by next February. As of May the company hadn’t decided on the location, but southern Florida appears a likely option given its North American headquarters and warehouse presence in Miami, said an ATRspokesman.
Having delivered 88 airplanes this year, ATR registered record revenues of some $2 billion last year. This year it plans to produce some 90 airplanes, as it manages what de Castelbajac called a supply chain challenge exacerbated by rapid acceleration of narrowbody production at Airbus and Boeing.
For next year, ATR will watch how the market develops during the rest of 2016. “The market is slowing down a little bit, and we need to see…if this will last or not,” he said. “So we’ll just be rather conservative and stabilize at around 90, 90-plus, and then we’ll see. It will depend on a couple of things–whether India will really go big, and I believe that will be the case And we need to see if we can break into China.”
While regional aircraft account for some 20 percent of the world’s fleet, in China they account for roughly two percent, noted Castelbajac, clearly suggesting an opportunity for ATR.
No ATRs now fly in China, whose own turboprop program–the Xi’an MA700–would conceivably address a need Castelbajac considers substantial. “I don’t know what [the MA700] is today, because when you discuss it with them…when you see the models…it sometimes looks like an ATR, it sometimes looks like a Bombardier; sometimes I hear it’s going to be a 90-seater, sometimes I hear it’s going to be 70.
“But for me the good thing about them launching the 700 is it kind of acknowledges the need for a turboprop in China.”
Both China and India appear good prospects for a long-proposed 100-seat turboprop, launch of which remains stalled by hesitancy on the part of Airbus. Meanwhile, de Castelbajac dismisses suggestions that Leonardo-Finmeccanica could pursue the project on its own given ATR’s long association with such an influential industry player as Airbus.
“There are two legs we are standing on and I think we need both,” he said. “I don’t think it would be reasonable for any shareholder to go on its own. Because our position in the market is quite a strong one, so to say basically ‘I disregard all this capital I’ve built over the years’…I’m not sure it’s the right thing to do.
“Second…Airbus has amazing know-how in terms of developing new aircraft, so to say we will do a regional aircraft without Airbus, it is not something I would recommend,” concluded de Castelbajac. “My belief is one day ATR will do it, but there is no point in rushing.”
