Addendum
ATR pursues market share with reluctant China buyers
November 1st 2016
ATR Global head of sales, John Moore, forecasts that regional traffic demand in emerging countries like the Philippines will grow eight times faster than in more mature economies and that turbo props often are the only way to access remote airfields in several countries in the region. Read More »
Speaking to Orient Aviation in Boracay last month, at the entry into service of ATR’s very first high-capacity ATR 72-600 at Cebu Pacific Air, Moore said ATR predicted the Asia-Pacific would have 750 new turbo prop aircraft in the next 20 years, with 600 new routes created, excluding China.
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“There are still a lot of underserved or un-served airports across the Asia-Pacific,” said Moore. “In the Philippines, only 30 of more than 100 airports can accept jets.” However, it is still a difficult market at the moment for ATR with the fluctuating dollar acting as a drag on sales. “It’s had a slowdown effect but overall, there is 4%-5% growth annually in the region,” he said.
ATR holds 90% of the regional aircraft sector in Southeast Asia, with 337 ATRs in service at 60 carriers. Its largest markets are Indonesia, Malaysia, the Philippines, India and Thailand and its largest customer is Indonesia’s Lion Air. Lion Air’s Wings division has ordered 100 ATRs, with above 50 delivered to date.
But China is not proving to be as good a market for ATR as elsewhere in the Asia-Pacific. There are no ATRs in service on the Mainland, a fact which ATR hopes will change now it has opened a representative office at Beijing’s Tianzhu Airport.
Moore said: “A few years ago, if you went to a Chinese airline or a Chinese government bureau and mentioned ATR, they would give you a puzzled look and be surprised when you said the aircraft was still in production,” the Los Angeles native laughed. “So we’ve been building up our image and visibility. We have not closed any deals, but we’re making progress.” Moore added ATR would record another first for the company in China by exhibiting at Air Show China in Zhuhai this month.
He said there are very few regional airlines flying regional networks in the Mainland and that they make up just below 3% of the market. “The challenge in China is to find specific markets and regions small enough for turboprop operations. I don’t think we’ll sell ATRs to China Southern or Air China. Our potential customer is going to be an entrepreneur or a smaller airline started by a local province,” he said.
Locally, ATR must compete with Aviation Industry Corporation of China (AVIC), the Chinese state-owned aerospace and defence company that builds the MA-60. AVIC is an ATR supplier so the Europeans believe there should be “a give and take on industrial cooperation and commercial access to the market”.
Another big China challenge is the AOC application process, often stalled and complicated, and shortages of qualified pilots. “Until I can find pilots I’m not going to buy your airplane,” Moore has been told more than once in China. “We’re looking at new ways as a manufacturer to supply that food chain,” he said, including manufacturer driven initiatives to dispatch flight deck training crews and expanding its regional training centres in Bangkok and Singapore.
Safety remains the top priority at ATR and its turboprop rivals, specifically after several high-profile accidents in the past two years in Taiwan, Nepal and Indonesia that led industry regulators and the Association of Asia Pacific Airlines to highlight a surge in turboprop incidents.
Most of the accidents and incidents were caused by pilot error. In response, ATR has created a dedicated safety department whose staff report directly to the CEO. “We keep our ears and eyes open. If we sense that there are weaknesses we focus on airlines that may need extra help or extra support. We have to be a very active participant in the whole safety situation and processes,” Moore said.
Under the leadership of new ATR CEO, Christian Scherer, the Franco-Italian OEM remains hell-bent on defending its market share, especially in the Asia-Pacific. Last month, Air India’s regional airline confirmed its intention to add ten ATR72-600s to its twelve in-service ATR42/72s.
