CEO Interview: ATR chiefs says no 90-seater without Airbus support

ATR - Patrick de Castelbajac-4

ATR CEO Patrick de Castelbajac. Source: ATR.

March 3, 2015, c. Leeham Co: ATR, the turbo-prop OEM 50% owned by Airbus and 50% by Finmeccanica, wants to develop a new airplane to replace the venerable ATR 42/72 series that entered service in 1985 and 1989 respectively..

Airbus, as half owner, has the power to block the plan–and it has, saying that because ATR has 85%-90% of the market, a new airplane isn’t needed.

Despite this huge market share, ATR CEO Patrick de Castelbajac says ATR doesn’t “own” the market. The need for a larger, 90-seat turbo-prop mirrors an industry trend toward up-gauging and the ATR 72 has been stretched probably as far as it can go, says de Castelbajac.

But if Airbus isn’t on board, development of a new airplane isn’t possible, he says.

“With Airbus owning 50% there is no way we can build a 90-seater without Airbus on board,” says the ATR chief.

With Airbus saying “no,” ATR continues to look for ways to improve the ATR 72. It’s certified for 74 passengers and ATR is seeking certification for 78 using slim-line seats, a path taken by Bombardier for the Q400, now certified for 86 seats with the slim-line option.

ATR continues to study whether a neo—the New Engine Option—makes

ATR-72. Source: Planespotters via Goggle images.

sense, but de Castelbajac says this could result in design creep.

“There’s no technical non-starter,” he says. “We are talking with Pratt and another engine manufacturer to see how it could be done. Our aircraft is not burning much fuel to begin with. We’re looking at the engines and propellers, the entire propulsion system. But if you do that you may have to change the wing. You want to change the bleed. I’m trying to calm down engineers, everyone wants to get excited.”

Everyone, it seems, except ATR’s own chief financial officer, who de Castelbajac says isn’t excited in part because of today’s low fuel prices.

“Fuel prices being where it is now it makes the business case less attractive,” he says. “I have to get my finance people excited.” De Castelbajac doesn’t see fuel prices staying down extended time.

Another issue working against a 90-seat design: de Castelbajac says the ATR 72 is already an advanced design.

“The ATR 72 flew after the A320, it’s a modern aircraft, it’s got a glass cockpit and the cabin redone a couple of years ago. There’s no imminent need to do it. My predecessor wanted to launch next generation of turboprop but the fact is we are doing very well with 72 and we’re still selling 10 or more 42s per year. Airbus doesn’t see competition coming to bite us.”

Fabrice Bregier, CEO of Airbus Commercial, favors incremental improvements to existing products over new airplanes. Airbus photo.

Still, aviation technology doesn’t stand still. Fabrice Bregier, CEO of Airbus Commercial, wants to see further improvements to the ATR, following the course he’s set for the mainline jet product lines.

“Fabrice sees a need to continue to improve the platform, cabin, avionics, incremental improvements, which of course is much easier to do than go for an all new aircraft,” de Castelbajac says.

ATR may not “own” the market, but it does have an overwhelming majority of between 85%-90% of the backlog at any given time vis-à-vis Bombardier and the Q400.

  • See our previous posts here, here and here about the market shares and related issues.

De Castelbajac believes the Q400 fills too narrow a niche: the high-speed sector above the baseline 300 mi turbo-prop routes and below the pure jet markets. Routes that are 300nm, about an hour, are the heart-of-the market for which the Q400 is not well suited, he says.

But new competition may be coming. India and Indonesia governments have announced programs to develop 80-90 seat turbo-props. Each country has burgeoning requirements for small airplanes serving small cities. But developing airplanes that can be exported requires certification from Europe’s EASA and the USA’s Federal Aviation Administration, tasks that are tough to meet. De Castelbajac isn’t concerned about these projects any time soon.

On the other hand, Embraer, should it choose to reenter the passenger turbo-prop market, has the ability, skills, funding and market knowledge to become a serious competitor. But de Castelbajac thinks Embraer’s next family of airplanes will be larger than its E-Jets, not a down-sizing to turbo-props.

ATR’s greatest market penetration is in Asia. It has very little in North America, where only about 80 ATRs are operating, with about half as cargo feeders for FedEx.

“One of the reasons we’ve failed to come back into the [US] market is the [union] scope clause, which doesn’t encourage airlines and pilots to go for turbo-props,” de Castelbajac says. Also, on the ATR, passengers board aircraft in the rear of the aircraft. “In many airports in small countries, [this] is an advantage but it is a disadvantage in US.”

Still, he sees thin routes supporting only 50 seat aircraft as a continuing need in the US, and for this the ATR 42 is “the best option.”

“I will focus on the way back into the US market,” he says.

Another, much broader objective is promoting safety among the small airlines and developing regions in which the ATR operates. Operations and training are bigger issues than the airplane.

“We are focusing on support to airlines on this,” de Castelbajac says “That’s the key to us. As soon as pilots get a couple of thousand hours they go to larger airlines. Operations are tough. There are short runways and not necessarily good ATCs. We are working with airlines, authorities to improve safety.”

 

21 Comments on “CEO Interview: ATR chiefs says no 90-seater without Airbus support

  1. basicly they are using avoiding the topic because the new ATR would not be a replacement of the 50-75 seat ATR 42/72 ~ 300NM, but an additional new series 80-120 seats up to maybe 600NM. Or even bigger/further.
    http://i191.photobucket.com/albums/z160/keesje_pics/ECR20_12ckeesjeconcepthenrylamgraphics.jpg

    Low costs/margin turboprops are totally unhelpful for narrowbody sales.

    http://www.gcmap.com/map?P=&R=300NM%40FRA,+600NM%40FRA,300NM%40DFW,+600NM%40DFW,300NM%40HKG,+600NM%40HKG,300NM%40SIN,+600NM%40SIN,300NM%40MEL,+600NM%40MEL,+300NM%40DEL,+600NM%40DEL,+300NM%40LAX,+600NM%40LAX,+300NM%40PBM,+600NM%40PBM,+300NM%40JNB,+600NM%40JNB,+300NM%40ICN,+600NM%40ICN,&MS=wls&MR=1800&MX=720×360&PM=*

    • I doubt that 90 seat turboprop will have any significant impact on narrowbody sales. Not so for regional jets and both big OEMs are absent in this market segment.

      • Kamil, look further then “90” seats.

        The ATR42/72 was launched as 50 seater, a few later it was 50% more.

        Same for most aircraft families (762, 772, A300, 787-8, Q100,E170, CS100..)

        The 90 seater would be the shortest of a new 30 yrs family. Probably 5 abreast & fancy engines.

        Props are very efficient for short flights but noisy. So oil price influences the business case too. And oil is low.

  2. Airbus top level executives are directly incompetent as far as ATR-connected issues are concerned. ATR as a business unit came off the lass when Aérospatiale was absorbed into EADS. Selling regional turboprops has nil in common with selling feeder jets. Airbus Group should adopt a non-intrusive low profile “passive investor” attitude, letting Castelbajac and his team run the show, which they have proven to master to relative perfection. The ATR-90 if recommended by ATR should be backed without hesitation : it is not acceptable that Airbus puts sticks into the wheels of ATR.

    • You don’t want to upset a market that you are riding high. This goes in any industry, transportation or otherwise. If they can hold off a number of months, they gain significant advantages because they can mature new technologies, retire some risks, and build an airplane that will be more competitive over two-three decades.

      • ATR are firmly established in the 40-80 pax segments, where routine tweaking of existing models (eg such as superslim 28″ for higher density, revised emergency exits …) is both welcomed and recommended. Meanwhile, natural segment maturation is shifting the pendulum into 70-110 pax where ATR are not present. The competitors here are regional jets (SSJ, ARJ, MRJ, ERJ topped by C-100) plus Q400, all vulnerable CASK-wise vs an optimised turboprop newbuild. Not to lose grasp onto their markets, ATR want to expand their offering. This does not imply biting a chunk off existing AT42/72 markets but rather to retain full strategic control of sectors where natural maturation calls for some larger module …

  3. The deal with turboprops as understand it is you get half a jet plane at half the cost to buy and run. To maintain that equation as jet aircraft get bigger and more fuel efficient, turboprops have to get correspondingly bigger and more efficient. Single class single aisles are now running at 180-200 seats, so a 90-100 seat turboprop is the correct response.

  4. FF, I think Turboprops are more fuel efficient <600km/hr on any aircraft.

    A similar (core) technology turboprop and turbofan on the same aircraft differ about 15-20% in fuel efficiency.

    But turbo props are speed limited and you can't get very powerful ones.

    GE and PW are developing new ones. I think the GTF , low oil prices, the re-engine trend and noise restrictions in populated areas aren't helpful..

    • Yup. I should have said the deal is that you get a plane that is half the size,costs half as much to buy and to run and flies half the distance at half the speed.

      It’s not that turboprops have to be smaller than jets. It’s simply how you can make a smaller aircraft stack up economically against the standard jet, which nowadays is 737-800, tending to MAX 200

    • ATR is now where close to speed or engine limits.

      Q400 is, twice the engine and a lot faster. doesn’t sell as well but AK like them a lot for the long thin Western US routes.

      I think BBD has failed to market and sales not nearly the effort ATR has done.

  5. I wonder if Airbus will use the same logic with the 380? They own the market, so why do a 380neo.

    • The 777-9 is a CASM threat. Not as simple as ATR/Q400.

      • Still it takes two (grin) 777s to carry same pax as A380, so if the argument is more in one lump sum the better the A380 still wins?

        Maybe not so much?

    • it’s 2 inches not 9 (2.57 m vs 2.51 m). The Q400 cabin is near 2 meters longer than ATR 72.

      • From a cabin comfort viewpoint, cabin width is more important than cabin length. With a wider cabin, you can have more comfortable seat.

        • 2 inches for 4 seats is meaningless, the passenger doesn’t see the difference. Anyway, my point was the difference is 2 inches, not 9, like Keesje said earlier.

  6. Pilots point of view: ATR is terrible,
    underpowered engines, very sensitive wing (icing conditions, NTSB study after Amerigan Eagle 4184 crash), terrible handling on x-winds, like a snake on the ground roll, the hole electrical system desing and etc… (list is too long to post here!)
    Q400 is superb to fly compared to ATR and it has enough power and superb handling,
    If pilots could choose, no one would fly the ATR…

    So many loss of control incidents lately
    in Europe in icing conditions (3 in last 12 months, Norway, UK and Spain)
    and one crash in Canada.

    ATR its about a time to desing a new aircaft to replace the old bad cheap desing! Airlines only buy ATR because it burns much less fuel than the Q400, there is no other reason.

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