ATR begins US tour, part owner wants to divorce Airbus

ATR is making a push to sell its turbo-props in the US, which is the last exclusive domain of the Bombardier Q400. Note the new forward door on this ATR-72. The absence of this door, which the Q400 has, was a strike against the ATR in the US. The door now enables jetway boarding. Photo via Twitter.

May 3, 2016, © Leeham Co.: ATR, the maker of the ATR turbo-prop, is beginning a tour of its aircraft in the US, the last uncontested domain for the rival Bombardier Q400.

ATR won orders for its ATR-42/72 in the US decades ago, but largely ceded the market to Bombardier.  ATR-42s fly for FedEx, the express package carrier, but no

ATR-42 operated for FedEx. No passenger ATRs are operated in the USA. Photo via Google images.

passenger ATRs are in service in the USA.

As the tour gets underway, Finmeccania, a 50% owner of ATR with Airbus owning the other half, wants to assume the latter’s holdings if Airbus doesn’t change its mind over its refusal to green light development of a next generation turbo-prop.

Airbus has for several years refused to grant approval because ATR had between 80% and 90% of the backlog at any given time. Bombardier had the remaining market share backlog. Now that oil prices are low, Airbus doesn’t believe a business case can me made to justify a new development.

ATR Tour

ATR -72 USA tour. Image via Twitter.

Reuters reported last week that Finmeccanica “is discussing with France’s Airbus the possibility of taking full control of regional planemaker ATR, Chief Executive Mauro Moretti said on Thursday. “Our partners do not want to develop, so either we convince them to invest or we convince them to strike a deal that will give us control,” Moretti said, speaking at the annual shareholders meeting in Rome,” Reuters reported.

American Eagle, a unit of American Airlines, was a major operator of the ATR-72. One of its airplanes crashed en route to Chicago in 1994. The probable cause was due to icing. The accident revealed a previously unknown tendency to ice in certain conditions. The problem was later resolved, but the ATR disappeared from US routes over the next several years.

Bombardier’s Dash 8 and Q-Series airplanes, designed differently, became the staple of turbo-prop operations in Canada and the US. But elsewhere, ATR, whose airplanes cost less to acquire and were cheaper to operate against the high-speed design of the Q400, became dominate in the rest of the world. In an interview with LNC in March 2015, ATR’s CEO expressed an interest to refocus on the US market.

That time has come.

ATR says that more than “30% of the routes operated by regional jets in the US are below 300 miles, a range where the operating costs and fuel-efficiency of the newest generation ATR -600s are unrivaled.”

42 Comments on “ATR begins US tour, part owner wants to divorce Airbus

  1. Since Bombardier and Embraer took about 25 years + to move from turboprops to very competitive mainline jets, not sure Airbus wants its offshoot to grow up outside its control

  2. Patrick de Castelbajac and his team are the experts, Airbus have NO IDEA about selling Turboprops. If ATR say it is high time to develop an ATR-90, then let the ATR-90 be ! Full stop ! Airbus is plagued by a DECISION-HAPPY syndrome. Thomas Enders wants to decide. The ail is taking unwarranted proportions, to the extent that a NO-DECISION is confused with a decision. When you don’t know, you abstain. Either Airbus lets de Castelbajac have it his way, or Airbus quits, selling off their participation in ATR to people who have faith in the ATR team. By holding back on the reins of ATR, Airbus are permitting Bombardier with its Q400 to gain advance with their 90-seater.

    • An odd comment. Presumably Airbus is acting completely in line with its business interests, and as an equal partner in the joint venture it is entirely its prerogative to decide not to fund a new aircraft.

      As for Airbus having ‘no idea’, well given that ATR is a JV with its headquarters next to that of Airbus in Toulouse, I’d rather suggest the opposite.

      • To understand the implications of my comment, you need to be intimately familiar with the workings of an aircraft Sales Department. The Salesman visits the prospected airline and comes back with a completed “Airline Data Sheet” that constitutes a precious GOODWILL, on which – properly compiled – is based the Product Strategy of the airframer. When I say Airbus has NO CLUE, I imply Airbus does not visit Commuter Airlines at all. The Commuter sales goodwill is an ATR exclusive on which de Castelbajac derives his product strategy. Airbus visits Mainlines, and derives their own exclusive product strategy. There is no overlapping of goodwill from one to the other.

        • Airbus is not some monolithic entity; it is comprised of people, many of whom transfer between ATR and Airbus. In addition, as a partner in the JV, Airbus will have full access to everything going on in ATR. So, in short, Airbus will see everything that it needs to see to inform it on whether or not to support the product development.

        • There is no such thing as ‘goodwill’ in business. All about the dollars and cents

          • With ‘goodwill’ understand costly (hard-won) ‘know-how’, ‘expertise’, ‘insider privilege’ … meaning at considerable effort to have gained access to pertinent market details available only to the few. Business certainly is dependant on this kind of goodwill to be successful in making the kind of dollars & cents you’re aiming for.

    • FYI, Patrick de Castelbajac was head of procurement in Airbus France till one year ago… and he was appointed at his current position by Airbus Group.

      • The professional Loyalty of PdC is to his new Employer, ATR. When raising to his Board of Shareholders (wherein Airbus has those 50 % inherited from Aérospatiale when merged into EADS) a motion to launch an ATR-90, PdC is voicing the considered and documented professional opinion of a full Team of Experts with experience accumulated in 34 years of Turboprop Sales & Marketing Operations. The motion is substantiated based upon the compilation of some three hundred individual Commuter Airline Data Sheets methodically and systematically revised/updated based on insider information gathered in direct contact with Executives and Managers of said Commuters, wherever located throughout the Globe.

        • And? It doesn’t matter how good the data is that he has is, unless Airbus sees that the development is going to be good for its own causes, then it won’t support the case. Recall once more that ATR is a joint venture, and that therefore a new development would require the support of cash (and perhaps other resources) directly from both parent companies – given that Airbus is on a drive to boost its own profitability, it probably doesn’t want to release that cash right now.

          • @ StevenS & Paul : from various sources, my take of this affair is that Airbus are warming to the Business Case of ATR, as is to be expected (non obstante your opinion to the contrary) only that the discussion is about what size exactly the next ATR family member should be, with “bigger is beautiful” being voiced from inside Airbus. The idea would be to compete head-on on a CASK basis against CS100 (and other RJ in the 80-125 seater class), in preference to undercutting Bombardier’s bottom offer size-wise.

            So Airbus seem to have heard the call of PdC and are encourageing his endeavours with a little push upwards … we’ll see what comes out of the brainspinning, but I’m convinced PdC will end up with a top end new ATR family member sooner than later, because Airbus themselves are not going to do make any move below A319.

  3. Airbus should accept that the A318 and A319 are history.
    An ATR-100+ would also be an instrument to keep the C-series small. To do that the ATR-C needs an A320 cockpit.

    Maybe Airbus just fears big turboprops. On the other side Airbus also offers the smaller CASA turboprops.

    An A200Civil with just two enigine comes to my mind. So a divorce might be what Airbus really needs to get the whole cake.

  4. Business sense had Airbus stop investments. The ATR’s having a 80-90% marketshare, after the big -600 upgrade, killed business cases for new investments.

    It seems there is a market for an efficient short haul 90-100 seater. but you are in MRJ, E2 even CS100 territory here. And while props are cheaper to operate, they are significant noisier too. Not unimportant if you have dozens of late flights from city airports.

    Maybe the next short haul 100 seater needs an optimized super quiet 1:15 BPR geared fan for M 0.7?

    If oil bumps up >$100+ again, bigger, noisier concepts might be considered.

  5. I had to laugh, forward door, you are going to hook a Jet way to a door that is 2 feet off the ground? Its not possible.

    It may happen, special Jetway? Turbo way? I have never seen it.

    It may work better and suit US ops or bent, anyone have a picture of a Jetway attached to a DASH 8 or Q400 door?


      • Amazing, thank you, and Horizon no less!

        Sure don’t have them (or didn’t) in Seattle.

        Pretty silly but what the heck.

        • Thats the thing about selling airliners, if the customers want it…they get it.

          • Obviously not. ATR build 1250 without front doors. And while winning the battle against BBD they got worked out of the US market.

            In the US, probably the speed of the Q400 works better because of longer stretches. BBD has a strong presence in the US because of CRJ operations on top of that.

          • Certainly in the Western US those distances are a factor.

            However, it was noted that Bombdier has failed to conveyr that the Q400 can achieve very close to the same fuel economy when throttled back to ATR speeds, and it has engines that are almost twice as powerful.

            That means it has better and safer operation in high and hot (a lot of Western US in summer) as well as much higher margins when an engine is out, that includes terrain limitations to where you can go to get out of a failed engine.

            Ask any pilot if he ever has too much power!

    • This is pretty much what I had in mind regarding Airbus’s reluctance in moving ahead with the proposed larger turboprop and I’m taking their side on this. The future of the narrowbody/short haul aircraft segment is still undefined at this time and with the new technologies slated to be ready from the middle of the next decade, building something based on today’s tech is not going to be a good use of resources. It can affect Airbus’s future narrowbody replacement strategy. And besides, ATR already enjoys a strong market share. Would be sensible to leave all options open at this time, without rushing decisions.

      • The ATR72-600 sells well. The EU sponsors a development in Clean Sky 2. “The Regional Aircraft IADP will focus on demonstrating and validating key technologies that will enable a 90-seat class turboprop aircraft to deliver breakthrough economic and environmental performance and superior passenger experience.” Hence the design will evolve and if the numbers turn out right it will be launched most likley with a Tubomeca/Safran Engine and a new generation Airbus cockpit.

    • Pretty strange on that. Rename the company, hmmm, not sure I get the Leonardo thing.

      Who changes their name to Einstein next?

  6. Years ago a study was done on impact of RJ’s versus props and the study revealed that ridership went up 20% when an RJ replaces the prop on the same route. It was called the RJ factor.
    I have not ridden on a Q400, but I have ridden on dozens of Dash-8 flights and they are noisy, slow and vibrate like crazy. In the minds of travelers, props are antique and they prefer RJ’s. On several flights from PHL to ROA, the RJ flight was so much quieter and 15 minutes were cut from the Dash-8 flying time.
    Its been many years since I have ridden an ATR and I can’t remember what the experience was, but the only operational advantage props have is being able to operate off short runway such as HHH. It appears the newer generation of RJ’s are better off short runways than the CRJ-200 and Embraer ERJ-145’s.
    It may be that the props are finally on their way out.

    • Thats would be interesting if it was so. Do you have a link? Its got the ring of just a maker’s sale spiel.

      • Sorry for the delay. I just completed a trip starting with a CRJ-700 and Dash-8-300. What a difference.

        DOT REPORT
        Since Comair, a Delta partner, introduced the RJ into the domestic commercial aviation market in
        1993, passengers have demonstrated a clear preference for jets, rather than turboprops, in short to
        medium-haul markets. This preference grew especially strong in late 1994 and early 1995 as a
        consequence of the public scare caused by several high-profile turboprop accidents. Regional carriers,
        aware of passenger preferences as well as an expanding body of proven financial data pointing to the
        positive economics of regional jets, have quickly joined Comair on the RJ bandwagon. The Wall
        Street Journal reported that one commuter carrier, based on its research prior to signing a contract
        to purchase regional jets, calculated that a turboprop avoidance factor would increase traffic on some
        routes by as much as 20% simply by replacing a turboprop aircraft with a regional jet.

          • Thats because nearby Chengdu capital of Sichuan has them instead.
            Chengdu ( formerly Chungking) doesnt have its own province being one of Chinas city- provinces.

            You can see Sichuan has 80 million people .

          • That should be Chongquing is a city province.
            Looks like they have taken Embraers 3 across jet ERJ 145 and are putting underwing engines. All wild dreams of course

  7. Ohana Air (subsidiary of Hawaiian) flies Pax Versions of the ATR-42

    • Additionally, Island Air operates a handful of passenger ATR-72s in Hawaii. The Hawaii market may be special because stage lengths tend to be quite short — 100-150 miles is probably average — and there are a handful of airports with very short runways.

      I think turboprops will continue to have a tough time competing with RJs in most situations because of negative passenger perception. It’s pretty clear that a big reason behind Alaska’s recent E175 order is that management is worried about losing customers to Delta on routes where Alaska has been flying Q400s against E-Jets.

      Additionally, as pilot pay goes up (at least in the U.S.) the extra block time gets expensive — even if it’s only 10 min.

  8. ATRs tend to fly relatively short distances where there aren’t good roads. That’s either because the country is poorly developed and lacks infrastructure or because you are flying to an island. Probably not applicable to most of North America.

    I have some sympathy for Airbus in this dispute. This plane sells into a very cost-conscious market. Saving on development costs is probably a good idea. They were favoring a NEO development to save on fuel and maintenance costs. Article in French

    • From that article:

      2016 is the year when Patrck de Castelbajac will try to convince Finmeccanica to launch the ATRneo. Airbus Group appears to be ready to agree to developing this airplane, which will cost several millions of euros. This model will see a reduction in fuel burn of 15% and in maintenance costs of 20%. This last point is crucial given ATR’s economic business case

      In the medium term ATR is talking about the development of plane with 100 seats, rather than 90.. High density cabin arrangements for the ATR-72-600 (78 seats currently, with the possibility of 80-82), make a 90 seater less convincing.

    • Makes you wonder why they don’t let it for as Finemecanica wants it.

      • Finmeccanica may have the opposite problem from Airbus – in that they have spare resources that they want to employ and be compensated for. ATR is a joint venture, not a standalone company they invest in. The partners will get the share of the work in developing a new plane and will be paid for it.

        Just speculation on my part.

    • Not quite.
      Turboprops are used for short distances ,where there are good road and rail links but a plane saves time.
      Edinburgh to London , Calgary to Edmonton, Hamburg to Warsaw, Cairns to Townsville, Lugano to Zurich, Vienna to Zagreb, Hannover to Brussels, Innsbruck to Frankfurt… and so on

  9. Case FOR ATR-90: develop now while fuel prices low so product is ready once fuel prices rise; possible market in China/Southeast Asia/Africa

    Case AGAINST ATR-90: fuel prices may stay low; stiff competition at 90-seats capacity (E-190, MRJ, SSJ, CS100, even 2nd-hand F100/A318/B737-600); Scope clauses at US regionals; US Regionals phasing out turboprops and may not return regardless of fuel price

    So I can actually understand AIB’s reluctance.

  10. Further enhancing the ATR family, adding better engines, seatrows, speed, might be the best strategy to maintain the current strong marketposition.

    You have to appreciated the last big upgrade helped a lot. Fancy cabin with bigger bins, new engines, 6 bladed quieter props and glass cockpit.

    ATR considered turbofans for a new 90-100 seater a few years ago.

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