Thursday, May 12, 2016

ATR Scours U.S Regional Airlines for an ATR 72-600 Buyer

French/Italian aircraft maker ATR is in an unusual position with the ATR 72-600. It has made a good airplane and sold hundreds of them around the world, but it hasn't sold a single one in the U.S. and despite a continuing eight-city U.S. demonstration tour it isn't close to selling one.

On Tuesday, ATR CEO Patrick de Castelbajac told reporters at the Regional Airline Association conference in Charlotte that in recent years a configuration with a rear exit has kept the company from trying to sell the aircraft in the U.S. Now ATR said it would adopt whatever configuration buyers prefer.

"For many years, we didn't do the front door, which is a key requirement here," he said. Additionally, he said, "If you sell all your productions, why both going to the U.S? We know it's difficult here.

Last month, Delta said it would order 75 CS100 aircraft, which like the ATR 72-600 had never been sold in the U.S. The announcement vastly improved the image of the CS100, and it was hard to resist the conclusion that Bombardier acted wisely when it decided to take a loss in order to gain the Delta seal of approval for the aircraft.

Could de Castelbajac find his Delta at the RAA conference, which ends Thursday?

Sadly, no. "We are not close" to finding a buyer, de Castelbajac conceded. "We have to put the {ATR} aircraft back on the map first. I believe in touching and feeling things. People need to see it and need to fly it."

Asked if he might adopt the strategy Bombardier used with Delta, and take a loss, de Castelbajac said he was willing to discount, but "we're not desperate." He said ATR has aircraft flying in the U.S (including 34 ATR 42s at FedEx) so, "I'm not starting from scratch." He asked, "How much market share does Bombardier have" in U.S mainline aircraft? The answer, unsaid, is none.

Around the world, ATR has sold more than 500 ATR 600 series, including ATR 42-600s and ATR 72-600s and it has a backlog of more than 250 additional ATR-600s.

Besides the rear door, why else won't American carriers buy the ATR 72-600?

Besides ATR's hesitancy to pursue the U.S. market, aerospace analyst Scott Hamilton, editor of Leeham News, said one problem is that the Bombardier Q400 "has such an exclusive position in the states" that it is hard for ATR to get a foothold. The leading U.S. operator, Alaska Airlines partner Horizon Air, operates a fleet of 52 Q400s with an average age of nine years.

Another problem may be the lingering impact of a crash in 1994, when an American Eagle ATR 72 crashed near Roselawn, Ind., as a result of icing, killing all 68 people. The National Transportation Safety Board found that ATR, French regulatory agency DGAC and the Federal Aviation Administration "had each contributed to that accident because they had each failed in the duty to ensure the highest possible level of safety to the traveling public," according to Wikipedia.

In the aftermath of the accident, American and two Delta Connection operators, SkyWest and Atlantic Southeast Airlines, began to use the ATR aircraft primarily in warm weather areas to avoid the threat of icing. ATR moved to correct the defect, but the number of ATR aircraft in use in the U.S. declined.

Aviation consultant Richard Aboulafia of Teal Group said a turboprop like the ATR 72-600 represents a "superb idea {that} should have happened a long time ago." He said turboprops are fuel efficient and passengers may in fact appreciate them, but airline decision-makers seem to want to go with the flow.

"Not everyone is a rational economic actor," Aboulafia said. "The North American guys are just kind of on autopilot when it comes to sourcing jets {rather than} props.

"If it didn't happen when fuel was $90 a barrel when will it happen?"

Original article can be found here: http://www.thestreet.com

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