The lease rentals of turboprops continued to reflect the overall demand in the market and have therefore exhibited a modest rise, according to an in-depth analysis by our sister publication Aircraft Value News. The failure of ATR and Bombardier (BBD) to eventually make a decision on replacement aircraft could leave the market open to other competitors with the funds and industrial will to produce aircraft of their own, said AVN, citing India, Russia and China as prime examples.

Though fuel prices have eased slightly, the new-found economics of the turboprop continue to be held in high regard, increasing demand once more. Even in the context of global warming, the lower operating altitude used by turboprops is seen as less harmful to the environment.

The demand for used turboprops has made it necessary for some operators to seek equipment from storage, dropping the level of availability to more reasonable levels. However, the number of turboprop aircraft listed as being in storage can be deceiving since listings fail to take into account those aircraft that are undergoing maintenance or those that have been acquired for freighter conversion but are awaiting such modification. The members of the ATR family, in particular, may show a number as being in storage but a large proportion are awaiting conversion by FedEx. Indeed, FedEx continues to acquire additional ATRs for future conversion.

The popularity of the existing range of turboprop still lies in part to the absence of a replacement. The turboprop manufacturers continue to focus on meeting demand from a number of sources. While improvements are constantly being sought -- for example Kingfisher aircraft have been fitted with an IFE, the first time for a turboprop -- there is still little appetite for the design of a replacement since manufacturers are still trying to recoup the losses made when production was in virtually single figures.

The age profile of the existing turboprop fleet also needs to increase, said AVN. A major upgrade in terms of performance, operating efficiency and even size may however be required within 10 years.

For an in-depth analysis of the values for each regional aircraft, by type, see the January 22 edition of Aircraft Value News.

Regional Jets Impact Larger Jet Values

In an in-depth analysis of the Boeing B737-500, Aircraft Value News indicated that its value has diminished owing to a shift in the market structure over the last five years, especially with the advent of larger regional jets. While there is strong demand for the aircraft in the short term, AVN predicted this would likely shift in favor of larger or smaller types in the medium term.

The publication noted the 100-seat market used to be the preserve of the major operators. The majors used jet equipment with regionals operating turboprops. The 100-seat market now straddles the markets served by both the majors and regional airlines. A major airline now finds difficulty in making a 100-seat aircraft pay. Higher crew costs and other overheads simply do not work for a 100 seater, said the publication. Major airlines also tend to operate out of congested airports and a 100 seater fails to make the best use out of a valuable take-off slot.

Conversely, a regional airline will find a 100 seat too large. Too many passengers may have to be carried at discounted rates to achieve a sufficiently high load factor. A 100 seat aircraft also costs more to operate in terms of navigation and landing charges. Long range requires a higher MTOW, and therefore will need more powerful engines, all adding to operating costs. For many intra-regional routes, long range is not necessarily a prime consideration. The new generation of larger regional jets, featuring 70-90 seats, offer economics that work for the smaller operators. While efficiently using labor resources, the new range of regional jets also match capacity with demand and the increased emphasis on yields. The new regional jets seek to maximize the operating efficiencies of a dedicated regional jet design as well as offering extensive commonality with smaller regional jet equipment.

Conversely, for the major operators, as the smallest member of a narrow-body family, the 100 seater is likely to be seen as an important addition for a handful of routes -- an ancillary variant to the basic type rather than being used to form the basis of a fleet. If operators experience an increase in traffic, then, for regional airlines, the larger regional jets will be the main target for acquisition while the majors seek to use larger narrow-bodies such as the B737-700 and A319.

It had been previously suggested that the -600 may be a "sleeper" in terms of value, just like its predecessor, the -500, experienced a fleeting moment of popularity. A "sleeper" is indicative of a type that is expected, but has yet, to find its market niche. The 100-seat market is, however, crowded with at least four types though only two remain in production. The larger regional jets also encroach onto this market.