Despite all the problems in the air transport industry, Avions de Transport R�gional (ATR) is doing well in a variety of markets, and expects that to continue this year, according to John Moore, president of ATR Marketing, Inc. and ATR Support, Inc.

Moore noted that the turboprop is one of the backbones of the regional fleet in terms of number of aircraft and number of departures. "It still represents a significant portion of the fleets in the United States and the rest of the world," he said. While the regional industry in the United States is, in general, turning toward the regional jet (RJ), "we are seeing the pendulum swinging back to a more balanced perspective now," he said. "The airlines are recognizing that the turboprop has an important role to play in their overall fleet mix."

ATR is one of two remaining turboprop aircraft manufacturers, along with Bombardier of Canada. It produces the 48-seat ATR 42-500 and 70-seat ATR 72-500. The company manufactures roughly 20 to 25 aircraft per year, with the ATR-72 being the biggest seller. "Roughly two-thirds to three-quarters sold are the 72s," Moore said. "That trend should continue. The 72 is a very cost effective aircraft with 70 seats, and the airlines make a lot of money with it. It's a very profitable aircraft with the costs almost compatible to a 42, but you have the extra capacity." The worldwide general forecasts for new turboprops show a market averaging 60 to 80 aircraft per year for the next 20 years, he said

The company does not anticipate moving up to a larger aircraft, such as an ATR-92. "We came out with the ATR 500-series in the mid-90s, with the ATR 42-500 introduced around 1995 and the ATR 72-500 in 1997. We took the existing generation of ATRs and did a fairly extensive rework on the aircraft, primarily oriented toward passenger amenities, passenger comfort, making the cabin larger and quieter with more bins, more like jetliner comfort in the cabin. We also went to a six-bladed propeller and we improved the performance of the aircraft, so it's been within the last five or six years that we've done a major rework of the product. It's well adapted for the market."

Moore said that ATR had been looking at the RJ market over the years, but chose not to go into it. "But we feel that we are well positioned for the future if other opportunities and other projects come along."

ATR's marketing and support operation for the Americas is based in Herndon, Va., just outside Washington, D.C., close to Dulles International Airport, and supports some 200 aircraft, or about a third of the worldwide fleet, in North and South America.

There are currently about 125 ATRs in the United States, with the two largest operators being American Eagle and Atlantic Southeast Airlines (ASA). Kent Landers, spokesman for ASA, said that the ATRs are complementary to the airline's RJs, used on those 200 to 300 mile routes that are high density but too short to be served economically by the jet aircraft. Although ASA is currently taking its Brasilias out of the fleet, "we see at least a near or midterm value in maintaining the ATRs in our fleet serving the short-haul markets because of their economic viability. There will be some fleet decisions to make in the future as the leases come due, but right now there is no plan to change the [ATR] fleet size for the next few years." ASA current operates 19 ATR 72s configured for 66 passengers.

Rather than competing with the regional jet, the ATR has become a complementary aircraft to it. "We see that all the time with our customers," Moore said. "In Europe, there are airlines such as Air Dolomiti, Alitalia Express and EuroLOT that operate mixed fleets, and they are buying new ATRs, so they clearly feel there is a long term role for both aircraft. From an economic and performance standpoint, you have to have that mix." He noted that for those short haul routes, the speed of the RJ is negated by the short distance and the turboprop burns half the fuel while providing the same capacity.

Moore also pointed out that for the Caribbean, "it doesn't make sense to operate RJs," and that the baggage capacity and performance of the ATR lends itself to the market. There are also other parts of the world, such as Latin America and Asia, where the turboprop is still the main source of regional traffic.

"The turboprop is not dead; it is still a viable market. It is not generating the number of aircraft sales that the RJs are, but it is still a stable and healthy market. A lot of it is outside the United States, so it doesn't get the visibility here," he said.

Moore noted that Canada is becoming a good market for the turboprop. A new Canadian operator, First Air, is now operating four ATR 42 combis in the northern regions. "They had been flying HS-748s, but developed a full combi modification [for the ATR 42] and got it approved as an STC [supplemental type certificate] by the Canadian authorities, so they are renewing their fleet with ATRs. We see other similar opportunities with operators now flying up in the north with 748s, Convairs, F-27s. Those carriers have a very low utilization rate, so they have to wait until the cost of the aircraft gets down to where they can afford to fly it."

First Air does its own combi conversion, which could provide some potential for marketing their STC throughout the world. "But the combi is such a niche market, there are not a lot of combi operators," Moore said.

Niche markets provide "a number of opportunities where the flexibility and performance of the turboprop, and the ATR, are really unmatched. You can't operate into some of those airfields with an RJ." Another niche market is the smaller independent regional carriers such as Gulfstream or Chicago Express who are currently operating 19-seat equipment. "They will eventually move up into larger turboprops," he said.

The used turboprop market has become very active, with about 40 to 50 used ATRs sold every year. This allows the company to expand its market base "and develop new opportunities, which will evolve into a market for new aircraft," Moore said. "On balance, in terms of our market and sales activity, in the early years we were building and delivering 50 to 60 new aircraft per year. We're delivering about the same number of aircraft now (60 to 70 per year), but the balance is between new and used, and we're delivering around two thirds used and one third new aircraft annually.

With the price of earlier ATRs going down, the cargo market has become the big development arena. "The ATR is very suited for that market. These aircraft are around 15 years old, so that is getting to a price level that can make sense to the cargo market. As with the niche operators in the Canadian market, the freight operators only fly two to three hours per day, so the ownership cost becomes a much more important part of the total operating cost," he said.

Moore said that a rule of thumb for the cost of an aircraft to become viable as a freighter is that "once the ATR 42 gets down to the $3 million to $3.5 million price range they are starting to go into the cargo market. We're seeing 10 to 15 aircraft per year going into freighters. It's becoming more of an important market for us."

While the "10 to 15" aircraft going into the cargo market could increase over time, a lot will depend on the value of the aircraft. With Continental Express' decision to get rid of its 30 ATRs, putting a large number of aircraft on the market and putting downward pressure on price, the aircraft's capabilities as a freighter has made it a prime candidate for the cargo market. However, there was speculation late last year that the ATR 42 would be the replacement aircraft for Federal Express' 35 F27 freighters. So while the value of used ATR 42s has been declining in recent years, the current interest in them, and the removal of some 30 aircraft off the market by FedEx could send the value back up. The value of the aircraft could be significantly impacted by FedEx's decision on a replacement regional cargo aircraft, which is expected by the end of this month.

As for the ATR 72, the early -200 model is now reaching the point where it is being targeted for the freighter market, taking up some of the excess aircraft that are being replaced by newer ATRs or regional jets. Moore noted that there is still somewhat of a limited supply of used 72s, so the price is still a bit high for the cargo market. However, once it gets to the point where it can economically be converted into a freighter, "it is going to make a great cargo aircraft," he said.

Conversion of the ATR's interior to meet cargo requirements is primarily done by Aeronavali of Venice, Italy. Aeronavali can put in special cargo doors, although "the beauty of the ATR is that it already has a fairly large cargo door. So for a lot of cargo operations, you don't have to increase the size of the door," he said. "The ATRs that are currently operating cargo, and there are about 30 today, just use the existing door."

Aeronavali has also developed a large cargo door that can take pallets and LD-3 containers and the standard size units used by a lot of the integrators. "The ATR's cabin will handle those, which is unique in this category aircraft. The Dash 8 and SAAB 340 do not have that capability," Moore said. He also noted that other companies besides Aeronavali have done cargo cabin conversions, "but not the doors."

As for the future, Moore stated that given the overall difficult circumstances in the industry, 2002 was a good year and "quite respectable" and that 2003 is expected "to present many challenges as well, but also good prospects for ATR products." There continues to be good growth in regional airlines both outside the United States and within North America.

"We expect demand for the latest generation new aircraft for passenger airlines that are growing or renewing their fleets. We also will continue to see an active market for used aircraft, both in passenger services and going into the growing cargo market, where we expect significant developments for ATR, particularly in the U.S," he said.

ATR is also expected to realize the benefits of the Design Organization Approval certification that was granted by the French DGAC (Directorate General of Civil Aviation) in late 2002. "This was made possible due to the integration of ATR and will increase the efficiency of our engineering support to the customers."

(Contact: ATR, John Moore, telephone: 703-736-4200, e-mail: jmoore@atrsupport.com)