After a period of modest improvement, lease rentals of the majority of regional jets have seemingly reached a ceiling, according to an analysis in next week’s Aircraft Value News, RAN’s sister publication, which outlines in details the values of all regional aircraft on the market. AVN
There continues to be reasonable variation in lease rates attributable to the region; the lessee; the term of the lease and the return conditions. The proportion of regional jets operated on the basis of a vanilla lease continues to be much smaller than for commercial jets. Some lessors view the returns on regional jet operating leases to be less than larger jets while involving the same degree of management time. Remarketing opportunities can also be seen to be less.
The European market remains the more attractive option for the leasing of aircraft owing to smaller quantities, higher specifications and a more fluid market not necessarily driven by tax issues. Growth, coupled with demand for jet style comfort, led to an increase in average turboprop size. Just as regional jet manufacturers have been able to take advantage of improvements in technology, so too have turboprop designs. Increasing the size of the Dash8-300 was an obvious solution for Bombardier in seeking to continue turboprop production. With the cancellation of the BAe ATP program, the ATR72 had the high capacity market, albeit limited, to itself. A higher capacity immediately reduces unit costs, an issue that will be attractive to operators seeking lower seat-mile costs. The advances in engine and interior technology meant that further improvements could be made. Active noise suppression has been a key consideration as has been a higher speed.
The seating capacity of the Dash8-400 goes beyond that of the ATR72 and offers a maximum of 78. Using a seat pitch of 31 inches, the Dash8-400 can carry 76 versus fewer than 70 for the ATR72. With a speed in excess of 400 miles per hour, the block time on sectors of less than 300 nautical miles is approximately the same as a jet. The BAe146 has a relatively slow cruise speed allowing the Dash8-400 to compete on nearly equal terms. The –400 is available with differing MTOWs, ranging from 61,700lbs through to 64,500lbs translating into potential sector lengths of 1,000 through to 1,360 nautical miles.
Service entry of the Dash8-400 saw some initial problems which saw SAS Commuter temporarily ground the then new aircraft. Now the airline is to shed its fleet in totality. As the Dash8-400 represented more than a stretch to the –300, there were inevitably likely to be teething problems for manufacturer and operator alike. With some 170 now delivered to a widening customer base, production specification has improved, as has reliability but some work on the type remains.
The order book for the Dash8-400 totaled more than 250 in late 2007. The order book has increased by nearly some 100 units during the course of the last two years. The U.S. market had been the key for past turboprop programs but the –400 is still facing a tough time in this traditional core volume market. The transition to regional jets was well underway but the high price of fuel has caused some operators to reconsider. Horizon Air has –400s. Europe and other countries outside of the U.S. have a continued appetite for turboprops where shorter sectors and less adverse passenger perception, allows operators to use turboprops with greater freedom.
In terms of residual value performance the Dash8-400 appears to be showing some resilience. While the influx of new 70- to 80-seat regional jets is expected to cause competition, the European market, with its focus on high specification equipment and lower volumes, has tended to generate higher pricing, particularly if financing is provided to non-flag carriers. The development of the 90-seat Dash8-400X has the potential to overshadow the existing -400 though perhaps not for the next few years.