RAA 06 Convention Report: T-props grab top billing at annual meet

 - September 15, 2006, 7:23 AM

The resurgent turboprop market showed no signs of retreat during late May’s Regional Airline Association convention in Dallas, where word leaked that Continental Airlines wants to field 24 Bombardier Q400s within its domestic U.S. system by early next year. The airline would place 12 airplanes in Houston and another 12 in Newark, where current code-share partner ExpressJet flies the bulk of the 69 Embraer ERJ 145s due for removal from the Continental system by the end of next summer.

Although Continental accepted a bid from Chautauqua Airlines in April to fly at least the same number of RJs starting in January, it appears now that the airline’s plans involve more than a straight one-for-one jet replacement. Continental cited confidentiality concerns in declining to comment to AIN specifically on the turboprop RFP, but in a written response in effect confirmed its existence.

“We are examining options for replacing part or all of the capacity provided by the 69 aircraft that are being withdrawn from our capacity purchase agreement with ExpressJet,” it said. “A number of airlines have been invited to submit proposals. We have the time and flexibility to pursue a number of options for our future regional flying needs.”

The revelation comes exactly a year after SkyWest CEO Jerry Atkin told AIN that Continental had approached him to fly 50-seat Saab 2000s from Houston. Unwilling to do so, SkyWest ceded the Continental Connection feeder service it once performed with Embraer Brasilias to Colgan Air, which now flies its Saab 340s on the CO code to 14 destinations from Houston.

Meanwhile, another Continental Connection partner, Plattsburgh, N.Y.-based CommutAir, has finally secured the financing to obtain a long-coveted fleet of 30-seat turboprops to fly from Cleveland. Now flying 14 Beech 1900s, CommutAir has agreed to replace the 19-seat turboprops with between 10 and 15 thirty-seaters, most likely Saab 340Bs. On hand in Dallas, Saab Aircraft Leasing president Michael Magnusson said that he has placed the last of his portfolio’s 340Bs. American Eagle will begin returning its 25 340BPlus machines in September at an average rate of one per month until the end of 2008.

Over the past year the suddenly rejuvenated market for turboprops has kept Magnusson and his competitors scrambling to find relatively low-time machines in good condition for clients ranging from Nascar race teams to coastal patrol agencies. Also completely sold out of Saab 2000s, Magnusson expects to encounter little trouble finding homes for the five due for return from France’s Regional late this year, followed by another five from Finland’s Blue 1 next year. Of the 63 Saab 2000s built, 58 remain in service with 15 operators, reported Magnusson. Even Saab’s sluggish cargo conversion business has gained some momentum lately, securing its first customer in Mexico with a contract to supply a Saab 340 Cargo variant to DHL Express partner Saint-Ex. As of last month Saab had converted fourteen 340As to cargo duty.

“In the last year the cargo market has really taken off,” said Magnusson. Overall, the number of stored turboprops continues to decline, he added, while the storage rate for regional jets rises. According to Magnusson’s calculations, roughly 9 percent of the world’s 50-seat Bombardier CRJs now sit idle.

Meanwhile, Franco-Italian turboprop builder ATR has already sold 46 new airplanes this year, maintaining the torrid pace it set when it sold 90 last year–its second best in its history. Bombardier, too, continues to watch the ever more popular Q400 drive a recent run of success that saw the company book net sales of 60 turboprops last year. So far generating sales of another 22 copies this year, the Q400 now flies with 14 operators on 370 routes around the world.

According to Bombardier’s figures, 67 percent of Q400 departures either supplement or have replaced jet service. In fact, if Continental goes ahead with its plans to add the 70-seat turboprops, that percentage will only rise. “A 70-seat turboprop has a lower trip cost than a 50-seat jet,” remarked ATR senior vice president commercial John Moore, who added that as fuel prices rise the difference in operating costs becomes all the more dramatic.

Meanwhile, the recent growth of long, thin markets once better suited to 50-seat jets now requires the extra capacity of 70-seaters. With a 6.9 cent per mile direct operating cost, compared with a 50-seat jet’s 10.9 cents, 70-seat turboprops have become more attractive than ever for such replacement duty, said Moore.

As a result, the U.S. alone will generate a replacement demand for some 500 turboprops over the next five to 10 years, said Moore. Worldwide, ATR sees an average demand for 100 turboprops a year for the next decade. ATR delivered nine aircraft in 2003, 13 in 2004 and 15 last year. It also sold 43 used aircraft and delivered 48. Carrying a new airplane backlog of roughly 100, the company plans to deliver 25 machines this year, 40 next year and roughly the same number in 2008.