Satu Dahl speaks with ATR’s SVP of commercial, Fabrice Vautier to learn more about the recovery and upcoming opportunities when it comes to the regional aircraft sector.
[This feature first appeared in the Spring 2021 issue of Low Cost & Regional Airline Business, which you can read in full here.]
After such a challenging year, the aviation industry is looking forward to recovery. With Covid-19 vaccine programmes accelerating around the world, the outlook and demand for air travel looks brighter. ATR’s SVP of commercial Fabrice Vautier (pictured below) explains how the regional aircraft manufacturer is seeing several opportunities coming up in the near future.
What are the main opportunities for ATR’s aircraft in the current market?
In the short to medium-term, we see that the recovery will begin in earnest this year and that a number of factors will drive the main opportunities, leading to a partial production recovery in the coming years. Firstly, the replacement market: there are more than 900 ageing 30-50 seat turboprop aircraft which are approaching retirement. These aircraft need to be replaced or the communities and economies that they serve will lose vital connectivity.
This replacement wave already started around five years ago in countries such as Japan, then we have seen orders in Papua New Guinea, Colombia, the Caribbean and Scotland and the wave will continue in the likes of the US and Australia.
Secondly, new opportunities will arise in markets like China and Asia Pacific. The Chinese regional aviation fleet represents just two per cent of its total fleet, compared with a worldwide average of around 25 per cent. This shows the scope for the regional market and, indeed, the Chinese government recognises this as a priority.
The passenger profile may evolve in the post-Covid environment, with travellers aiming to avoid crowds by choosing smaller airports and smaller aircraft modules in order to reduce exposure in ground transportation.
One example is Buddha Air, a Nepalese operator which has reported that they have new passengers electing to pay a little extra and fly by aircraft rather than spend six hours in a bus and potentially risk exposure to infection for longer.
Finally, governments and regulatory bodies around the world want a more responsible aviation industry to emerge from the pandemic. Burning 40 per cent less fuel and emitting 40 per cent less CO² than a similarly sized regional jet, ATR is currently the most environmentally sustainable aircraft.
We will continue to play a key role in the future by further improving our aircraft’s environmental footprint, bridging the gap toward disruptive technology while the implementation of the necessary ecosystem and infrastructure occurs. This will also generate opportunities for us.
2020 was an exciting year for ATR with the 72-600F freighter taking flight. How much demand are you seeing for the 72-600F?
Naturally, another opportunity for ATR is the cargo market due to the e-commerce boom. The ATR 72-600 is the only line fit freighter in its category – it is truly born to be a freighter. It features a large cargo door, improved lighting and many other innovations that will make a positive impact on the operations of integrators and other logistics and cargo operators.
Our latest forecast sees a demand for 460 freighters in the three to eight ton category for the next 20 years. Consequently, we are seeing some interest, particularly in North America, Europe and certain parts of Asia, where our aircraft are very well suited to operating in the particular geographies, such as serving islands and operating on shorter runways.
These are markets where e-commerce is already growing exponentially and will consequently have the most need for short delivery times to satisfy customers that are increasingly demanding.
With the World Economic Forum reporting that the pandemic has accelerated the shift to e-commerce by five years, regional freighters are an essential part of this growing ecosystem. We see a potential for up to 30 aircraft a year, both new and converted, in the next 15 years. The ability to offer our new purpose-built freighter, conversions of legacy aircraft and quick, temporary conversions means we offer solutions, which are sure to meet the needs of operators, whatever their requirements.
It is also worth noting that the freighter could generate interest in developing countries and emerging economies such as South America, Africa and other parts of Asia, where there may be fewer alternative land and sea connections.
Can you tell us a bit about ATR’s sustainability work with ECOACT?
We have set an ambitious target to make our onsite activities carbon neutral by 2030 and ECOACT is going to help us define a roadmap to achieve this vision. We want our low-carbon transformation to be aligned with climate science and, with the support of ECOACT, we will be reaching out to and engaging with our stakeholders to encourage them to reduce their emissions.
With the specific support of ECOACT, we are currently in a process of measuring emissions related to our activities and we aim to reach a high-level performance on direct emissions from operated sites.
They will also support us to ensure that our emission trajectory is aligned with a Paris-compatible pathway and help us adopt a strategy and mitigation plan to reach this objective. Secondly, ECOACT will help us define a compensation and sequestration strategy for any remaining emissions.
Another aspect of our sustainability work will see our sites in Toulouse powered by locally sourced alternative energy, starting from this year.
Will there be a lasting impact of Covid-19 on the regional aircraft segment?
It will take time to reach 2019 levels, but the regional market will recover. Regional aircraft, and in particular ATR aircraft, saw the latest and shallowest decline alongside the earliest recovery, with 71 per cent of our fleet back in service.
The reason for this is that our aircraft operate principally on domestic routes, accounting for 85 per cent of operations, and provide essential connectivity. With international travel particularly affected, domestic markets and travel corridors will support regional market recovery. We have already seen the trend that domestic flights are recovering more quickly. The lower trip cost of the ATR means it is a lower-risk platform financially so will be desirable to operators. We have already seen examples of ATR aircraft replacing bigger jet aircraft on their traditional routes.
Furthermore, though our operators on average tend to be smaller and are facing significant challenges in the current context, as we shift to the recovery phase, their size will allow them to operate more nimbly and rapidly adapt to shifting market conditions.
The world needs regional connectivity and it will be vital as we enter the recovery phase. Even during the pandemic last year, arguably the most significant crisis the industry has ever faced, ATR added nine new operators, including three new countries of operation, and opened 84 new routes. Our operators have performed truly essential operations such as repatriations, medivacs and transporting vital supplies and medicines.
Yes, times are challenging but regional connectivity remains essential and while the length of this recovery is not yet known, as long as people need to travel for business, health, education and to see their loved ones, then regional aviation will have a vital place in the world.