Printed headline: Next-Gen for ATR
ATR’s 42/72 turboprops arguably have the strongest outlook in the regional aircraft market and therefore may be expected to account for a major influx of work for MRO providers over the coming years—if not decades.
The Franco-Italian aircraft family has been around since 1985. After the demise of most competing programs and as ATR has continuously introduced product upgrades, the future looks bright for the 50-seat-class ATR 42 and 70-seat-class ATR 72. The replacement market alone holds the promise of sales of several hundreds of units in the short-to-medium term, especially if the perception of turboprops changes in the U.S. The outlook remains positive, even though ATRs have had their share of airworthiness directives and related maintenance issues.
The ATR 42 entered service with France’s Air Littoral in December 1985. The program had been launched by Aerospatiale (now Airbus) and Aeritalia (now Leonardo) under the newly created ATR joint venture in October 1981. The stretched ATR 72 was launched in October 1989.
ATR was formed with an initial sales goal of 400 aircraft. The 1,800th will be delivered this year, says ATR’s head of marketing, Zuzana Hrnkova. The Aviation Week Network’s 2017 Commercial Aviation Fleet & MRO Forecast projects that the in-service fleet will grow to 1,796 aircraft in 2022, from 1,536 in 2018. Most operators have just 1-10 aircraft, says Richard Aboulafia, Teal Group’s vice president for analysis.
What are the factors behind ATR’s success in sales? They include fuel efficiency—stated as 50% better than for a same-size jet—and a simple architecture that makes the aircraft relatively light and cheap to maintain, according to Hrnkova. Dispatch reliability stands at a measured 99.7%. “ATRs can fly to places where others cannot go,” Hrnkova adds, referring to the short runway length required for landing.
“Others” means the Bombardier Q400. It is now the last rival for the ATR 72. Regional turboprops made by BAe (now BAE Systems), Saab, DASA/Dornier and Fokker have disappeared. Despite higher ownership costs, the Q400 still has a significant market share, at around 30%. It is faster, more robust and copes better with bad weather—hence it is favored in northern regions, Aboulafia explains.
Nevertheless, “ATR is really the only regional turboprop success story; one key to ATR’s success is that it has avoided glutting the market, with clever remarketing of used machines,” he says.
The only serious black mark for ATR’s sales record is in the U.S. In the early 2000s, U.S. carriers were the most strongly affected by so-called “jetmania”—an irrational preference for jet aircraft. In a period when fuel was cheap, the speed advantage was believed to be essential to compete in hub-centric markets. Jets were also deemed more attractive for the passengers than “aircraft with propellers.” Compounding the problem for ATR was a tarnished reputation after an accident in 1994.
As a result, the sales drought in the U.S. began in 1997, after an order from American Eagle. It ended 20 years later, in 2017, with an order from FedEx. If Silver Airways’ order (via a lessor) is counted, that suggests ATR’s 2016 demonstration campaign in the country was fruitful.
As a result of jetmania, hundreds of regional jets entered service, and they have yet to reach retirement age. “The replacement wave is starting and is to be more intense from 2020; the replacement opportunity is 300-350 aircraft,” Hrnkova estimates. Aboulafia concurs, betting ATR will ultimately benefit from a retirement market in the U.S. There, some jets still operate on routes shorter than 200 nm, where the benefit in flight duration is pointless, but the negative impact on the environment because of the extra fuel burn is significant.
Just 12 years ago, mostly because of jetmania, the company was questioning its own future. But in 2007-08, high oil prices gave it a new lease on life. Props are fashionable again, ending talk of all-jet regional fleets.
Emerging markets were never hit by this irrational exuberance for regional jets, and airlines there are quite happy to use props, Aboulafia notes.
A need for improved connectivity worldwide (meaning new routes to smaller destinations) seems to account for the relatively recent acceleration in sales, notably in the Asia-Pacific region. If one considers the current regional network, 58% was created over the last 15 years, with an intensification over the past five years, Hrnkova says. “In 2017, 155 new routes were opened with ATR aircraft,” she notes.
ATR thus claims a 37% market share in regional aviation overall, where half of the orders placed since 2010 were for turboprops, she says: “On the turboprop side, we maintain 70%-plus.” Citing a recent 20-year forecast ATR prepared, Hrnkova says there is room for 3,000 turboprops in the 40-80-seat segment, 40% of which are for replacement.
The other 60%—needed for growth—will hopefully include sizable acquisitions by Chinese carriers. ATR made its first foray in the country in 2017, after years of trying. The Civil Aviation Administration of China has been reluctant to grant licenses to new regional operators. But ATR’s salespeople and two determined customers found a workaround, and two small operators have signed letters of intent for a combined 13 ATR 42-600s.
Both the ATR 42 and ATR 72 have been regularly upgraded, mainly at the engine and avionics level. In the latest iterations, the 42-600 and 72-600, ATR has several upgrades in the works.
For low-visibility conditions, ATR has been flight-testing ClearVision, an Elbit-designed combined vision system that merges synthetic terrain with images from optical (infrared) sensors, all superimposed on conventional guidance symbology, with the pilots using a wearable display. The first such equipped aircraft, an ATR 42-600, is scheduled for delivery in July 2019 to Bhutan-based Drukair.
For destinations like fjords, small island air strips or short runways where obstacle clearance and steep approach capabilities are needed, a short-takeoff-and-landing version has been studied for the ATR 42. A tradeoff has been found between the option’s price and the aircraft’s capabilities, which involve airframe and system changes. ATR is testing the market, and program launch can be expected by year-end, according to Hrnkova.
Such a decision may prove timely, as the ATR 42 is enjoying renewed interest. This year, sales for the smaller model have been faster than for its longer sibling—for “the first time in a while,” Hrnkova says.
“There was an enormous level of production for that size of aircraft in the 1980s and early 1990s. . . . There will be a replacement market [for hundreds], starting 6-10 years from now. . . . That’s the place ATR where should be looking for technology improvements,” Aboulafia emphasizes.
Another product evolution is being seen at the passenger level. ATR and seat manufacturer Geven have managed to make the regional turboprop’s economy seats slightly wider, while keeping the same sidewalls and a four-abreast layout. NeoClassic and NeoPrestige seats, at 18 in., are the new standard offering. The buyer may also choose ultralight Expliseat seats that can can save 300 kg (660 lb.) in an ATR 72 cabin.
Such upgrades are likely to keep ATRs attractive to buyers, despite an old airframe. In the future, GE’s intention to increasingly compete with Pratt & Whitney Canada in the turboprop engine market may well benefit ATR. “Whatever GE does will cause Pratt to do something that could help ATR,” says Aboulafia. “Competition is always healthy,” Hrnkova agrees.
The numerous upgrades hardly mask a less rosy lack of strategic direction for the long term. Indeed, ATR embarked on the design of a cargo variant in 2017. But the last time an updated passenger version was launched was in 2007. In recent years, talks between Airbus and Leonardo about a cleansheet-design 90-seater failed. Then, the hints about an evolution toward an “ATR neo” never materialized into a new model.
Airbus and Leonardo are also unenthusiastic parents, as Aboulafia puts it. Airbus does not like the idea of a larger turboprop comparing favorably with regional jet economics, he says. That has become all the more true since Airbus took over the C Series program, renamed the Airbus A220.
For Aboulafia, Airbus’ lukewarm attitude about ATR is evident with the decision, in September, to pull Christian Scherer—“a very promising” CEO since late 2016—back from his position at ATR.
With the help of buyers, Leonardo may buy out Airbus’ share of ATR, and Aboulafia is wondering why that has yet to happen.
As for customer support, “they are good, which is key in the product’s success,” he says.
“We continuously improve the landing gear’s maintenance costs,” stresses Hrnkova. The landing gear was at the center of several airworthiness directives (AD) the European Aviation Safety Agency (EASA) released over the last few years. In April, a U-joint issue sparked an inspection and a replacement program because some had been found cracked. The condition, if not detected and corrected, could lead to the main landing gear’s structural failure, EASA said.
For the same reason, ADs were published in 1996, 2014 and 2016 about rear hinge pins in the main landing gear.
Separately, another recent EASA AD was prompted by several instances of cracks in the wing’s structure. They were found on the upper feet of ribs and on the upper skin of the wing outer boxes. The AD calls for inspections and, potentially, repairs.
ATR owns four customer service centers, in Miami, Singapore, Bengaluru (India) and Toulouse, providing spare parts and technical support. Three regional support offices in Sao Paulo, Johannesburg and Brisbane (Australia) provide technical support and can send a technical representative to the operator’s premises. Five spare parts warehouses are located in Miami, Singapore, Sao Paulo, Auckland and Paris.
Several MRO service providers have been approved by ATR. The resulting “ATR MRO network” includes Skyways Technics (Denmark), Fokker Services Asia (Singapore), TAP Maintenance & Engineering (Brazil) and Rheinland Air Services (Germany).