Up and down

The local market for turboprops is heading in two directions at once. Commercial operators in the Middle East are turning away from them, but in North Africa and the oil & gas sector, there is strong demand.

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By  Neil Denslow Published  December 5, 2004

|~||~||~|The global market for regional turboprops is seemingly heading in opposite directions. Some markets, notably the USA, have all but rejected turboprops from their passenger airline fleet, while other part of the world, notably Europe, Africa and the Asia/Pacific region, cannot get their hands on enough. The Middle East, although never a big user of regional aircraft of any type, is sat somewhere between the two. The few commercial operators of turboprops in the region are seemingly turning away from them, but the local oil & gas sector remains a strong market. In many ways, the Middle East and North Africa region are ideal territory for turboprops. The aircraft operate well in hot and humid conditions, and they are also able to take off and land on unpaved runways, which are found across the region. For these reasons, turboprops have become well established in the oilfield support sector, with a number of companies flying them in the Middle East. Saudi Aramco, for instance, has three Dash 8s, Abu Dhabi Aviation has two Q200s, and Oman Air predominately operates its four ATRs on behalf of Petroleum Development Oman (PDO). Egypt’s Petroleum Air Services also recently expanded its fleet of turboprops by ordering a fourth Q300. “We require an additional Bombardier Q300 because of increasing activity in both the petroleum and tourism sectors,” explains General Hassan Mahmoud Rashed, chairman & managing director, Petroleum Air Services. “Our current Q300 aircraft have been performing very well in our hot and sandy climate so we have no hesitation in adding to the fleet.” Commercial operators in North Africa have also made extensive use of turboprop aircraft, especially when serving remote communities. Air Algérie, for instance, has a fleet of six ATR 72-500s, and a number of smaller operators fly them across Morocco, Tunisia and the rest of the Mahgreb. “There is also potential growth in other areas of North Africa,” adds John Moore, senior vice president, commercial, ATR. “Particularly when you are talking about small communities that are currently out of reach of air travel, a turboprop is the right aircraft to spur economic development and open new ties to major business centres,” he explains. In the Gulf and Middle East, however, there are few turboprops in the commercial fleet, and there will seemingly soon be even fewer. Iran Aseman Airlines maintains a large fleet of ATRs and Fokkers, but other operators are turning against them. Oman Air, for instance, currently has four ATR42-500s, but only one of these is used on scheduled services, flying to the UAE and within the country, and it will soon be taken off the network. “We are pulling the ATRs out of scheduled operations, and our plan calls for us to do that by 2006,” explains Ed Grauvogl, divisional manager, planning, Oman Air. “We are not going to get rid of the ATRs though, because they also do service for PDO into the desert.” After the changeover, all of Oman Air’s commercial destinations — with the exception of Khasab, where the runway cannot handle a jet — will be served with Boeing 737s. The ATRs have played a major role in allowing the airline to gain a dominant share of the traffic between the UAE and Oman, mainly because they could support eight daily flights. However, they are now being phased out in favour of a larger aircraft. “We are flying 80% of the O&D traffic between Muscat and Dubai, and we are doing it because the ATRs allowed us to put on that kind of frequencies. Now the market has grown a bit, and we have more connecting traffic moving over the segment, so it is feasible to look at moving up a gauge to jet,” explains Grauvogl. Royal Jordanian’s regional arm, Royal Wings, which presently flies two Dash 8 Q300s, is also toying with retiring its turboprops in favour of jet aircraft. “Passengers can live with a turboprop aircraft, but I do not think they are happy with it,” says Ghassan Ali, the recently-appointed managing director of Royal Wings. “We may need to offer more competitive and convenient aircraft.”||**|||~||~||~|The reasons Oman Air and Royal Wings cite for withdrawing their turboprops will make depressing reading for the manufacturers, as they reflect the negative image that has built up around the aircraft over the last few years in the US market. “Our customers are not particularly fond of the very small cabin,” says Grauvogl. “The second, perhaps more important reason, is we have a tremendous amount of business traffic between Muscat and Dubai, and we cannot cater to it properly with the ATRs.” “Passengers in the Middle East travel with a lot of baggage, and the capacity of turboprop to lift baggage is not really huge,” adds Ali. “That is a problem in the Middle East, especially with the availability of many carriers who offer quality services. It is not easy for a low cost airline [such as Royal Wings] to compete.” The manufacturers though, contend that turboprops are now equal to regional jets both in terms of comfort and noise level, as well as being considerably cheaper to operate. “If you step into a modern turboprop, and you did not see the propellers on the outside, you would be hard pressed to judge whether you were in a large jet, a smaller jet or a turboprop,” says Steve Stamm, general manager, marketing, regional airline engines, Pratt & Whitney, Canada. The problem is that passengers in the Gulf, and also North America, look down on small aircraft, especially turboprops, and see them as dated and uncomfortable planes. “The image problem in the United States is historical,” says Barry MacKinnon, vice president marketing & airline analysis, Bombardier Regional Aircraft.“A lot of the turboprops that served the US market for years were 19 seat aircraft. They were small, noisy and cramped, sometimes they did not have a flight attendant, and sometimes they did not have a washroom. The modern aircraft are nothing like this, though.” The image and use of turboprops, especially in the US, has also been hurt by airlines heavily promoting regional jet services, as this has also helped make the aircraft look dated. “In the States, turboprops were kicked out on the basis of image more than anything else. If your competitor brought in regional jets, you had to as well…. It was not really driven by commercial logic,” says Kevin Wright, marketing director of Skyways Aviation, which specialises in brokering deals for Fokker 50 and SAAB turboprops. Getting passengers — and airlines — to accept that modern turboprops are nothing like their predecessors is difficult though, as flying in them is the best way to experience what the technology allows. However, it is, of course, impossible for passengers to fly in the aircraft until an airline has bought one, which they will not do if they do not think passengers will accept them. There are carriers that have broken this vicious circle in America, notably Horizon Air, which successfully flies Bombardier Q400s despite competition from low cost giant Southwest Airlines. “It is a bit of an education process for [passengers in] the US, but in markets that have experienced the Qs, for example, Horizon Air’s Pacific Northwest market, there has been excellent acceptance of the larger Q400s,” comments MacKinnon.||**|||~||~||~|Outside of the US and the Middle East, there is also a strong demand for regional turboprop aircraft, notably in Europe, the Asia/Pacific region and Africa. Bombardier, for instance, recently sold 17 50-seat Q300s to Air New Zealand subsidiary Air Nelson — with options for 10 more and 13 70-seat Q400s — and it has also had large orders from both ANA and Japan Airlines this year. “We are not seeing any turboprop avoidance in the Asia/Pacific market,” says MacKinnon. “It has been very receptive to turboprops, as airlines [in the region] understand the benefits.” Europe has also seen a growth in regional turboprop operations, with the likes of FlyBe also introducing them into the low-cost sector. Along with a steady demand for freighter conversions, especially the ATR42, there is a strong market for second hand turboprops. “The demand remains strong to the point where we sometimes have difficulties supplying aircraft to meet the demand,” comments Moore. “Any 50 seat turboprop is hot property right now,” agrees Wright. “All the good European aeroplanes are gone, and European operators looking to expanding are finding that getting additional aeroplanes is hard work. ATR42s are not just lying around. Fokker 50s, which were a type with a poor reputation, are also not available any more.” The reason for this strong demand is a combination of the different perception in Europe and Asia/Pacific, where the aircraft have never suffered from the poor image they have in the US, and also economics. With US operators selling off turboprops, prices in the second hand market fell and this has driven up demand. “When the Americans started putting all of the turboprops down and the deserts started filling with them, the prices collapsed,” says Wright. Aside from the cheaper purchase price, the operating cost advantages of turboprops over jets have also become clearer with the rising fuel costs. Turboprops have always been cheaper to fly than jets, especially on routes of less than an hour or so, where a jet offers no clear timesavings, but with the rising cost of fuel this difference is becoming even clearer. “It will be difficult for airlines as they build up their profitability not to look at turboprops for the routes that are best suited for them,” says Stamm. Even carriers in the region looking to move off turboprops and start flying jets see this difference. “From a profitability point of view, the ATR is a better aeroplane for such a short run [Muscat-Dubai],” says Grauvogl. “It is a 230 Km segment, and it is going to cost us a bit of profitability to fly all jets up there... However, if the customers want jet, jets they must have,” he adds.||**||

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