Magellan Air, ATR win first open t-prop bid in Russia

 - March 22, 2007, 8:12 AM

Siberian regional airline UTair has selected the Franco-Italian ATR 42 as its primary growth platform in the first-ever open tender for regional turboprops held by a Russian airline. UTair, ATR and Irish leasing company Magellan Air signed the respective letters of intent for five used ATR 42-300s on August 5, some three weeks before the parties expected to sign a firm contract.

After laying plans to lease the airplanes, UTair general director Andrei Martirosov told AIN that a close analysis of financing considerations led him to a direct purchase from Magellan. He estimated the value of the deal at $20 million, which covers the purchase price, technical kits and crew training. UTair expects the first airframe to arrive by the end of the year, leaving enough time to ready the airplane and crew for scheduled services next spring or early summer.

UTair will get two ATR 42-300s built in 1988 and three 1991-vintage examples that flew with three North American airlines, Timur Devyashov, Magellan representative in Moscow, told AIN. Their passenger cabins, configured with 46 seats at a 31-inch pitch, could use refurbishing, but UTair hasn’t yet committed to a completion contract. On its Old Askol-Moscow service, UTair already operates Antonov An-24s with modified interiors. “A corporate client asked for an improved section of the cabin,” said Martirosov. “We introduced it, squeezing maximum comfort possible out of the An-24, and it is now very popular with the passengers.”

While Magellan supplies the airplanes, ATR will provide technical support. UTair seeks the right to perform line maintenance, and, later on, C-checks. Until then, ATRs will undergo maintenance in Western Europe. The carrier also wants to train its ATR pilots at its crew training center in Tyumen, the largest in Russia. Martirosov said any plans to acquire a flight simulator hinge on the eventual size of the UTair fleet.

“Having selected the ATR 42, we made a commitment not just for five aircraft,” he said. “In choosing a type, you tie yourself up with its maker for a considerable period of time. We’ll take no other type [in that seating capacity], except, perhaps, ATR 72s. We’ll gradually replace all our Yak-40s and An-24s with ATRs.”

Martirisov stressed the importance of linking purchase and maintenance agreements to his ability to forecast operating costs. “What’s good about ATR is that we can plan and control maintenance expenses over a long period of time,” he said. “That’s not the case for An-24s. The price for keeping them airworthy tends to rise 40 percent every year, and we can do nothing about it.” Earlier he grumbled that, although strongly built, an An-24 requires the same number of man-hours on a 500-hour check that an ATR 42 does on a 5,000- hour check. The Ukrainian turboprop also consumes twice as much fuel.

Together, maintenance and fuel expenses render old Soviet types uneconomical to operate and Western types more attractive. Following a worldwide tendency, the price per a ton of jet fuel in Moscow airports rose from $270 in late 2003 to more than $400 in June.

“In the conditions when the fuel prices are so high and rising, the operational economics makes up for any kind of import taxes,” Martirosov said. Russian law prescribes 20 percent import tax for imported aircraft and 20 percent VAT on any airplane transaction. UTair, however, may see some relief: the Russian government granted a “favorable” tax regime to the airline’s home region of Khanty-Mansiisk, to speed development of the oil-rich territory.

The ATR 42 economics allows the airplane to fly on any route UTair now serves, but it will not fly internationally. “We are simply not able to reach Russian state borders when operating an ATR 42 from West Siberia,” Martirosov explained.

On fuel burn CIS manufacturers claim their new products burn less fuel than their Western counterparts, but this alone could not convince Martirosov to opt for the An-140 or Russia’s only modern turboprop, the Ilyushin Il-114. A technical evaluation of both airplanes preceded the tender, but the 64-seat Il-114 proved too large for and ill-adapted to operations from unprepared airstrips. Its low wings expose its Stupino SV-34 propellers to stones thrown by the nosewheel at takeoff and landing runs.

Meanwhile, the 52-seat An-140-100, offered by the International Aviation Project 140 (MAP 140) Russo-Ukrainian joint venture, proved too expensive at $8.5 million apiece.

“Both the ATR 42 and de Havilland Dash 8 operate in northern regions, and rely on the same engine type, and that’s 30 percent of an airplane,” said Martirosov. “All other Western makers have quit the market, which for us was proof of the technical and economical competitiveness of the ATR and Dash 8.”

When under certification trials in Russia, an ATR 42-500 underwent cold soak testing in the coldest region in Russia–Yakutia–and formally proved its ability to operate in ambient temperatures lower than the An-24’s lower limits. While no ATR has ever flown commercially in Russia, several Dash 8-100s made a good account of themselves during two years of use with Sakhalin AirRoutes, serving the international team of fossil fuel companies exploring oil fields in the island of Sakhalin, north of Japan.

“Personally I always favored Bombardier; my soul was always speaking for Canadian aircraft,” admitted Martirosov. “But economics prevailed: Magellan and ATR made a better offer.”