Bombardier Q400
Jim French, chairman and managing director of British airline FlyBE, left, joins Steven Ridolfi, president of Bombardier Regional Aircraft, on the stairs of a Bombardier Q400 at the Paris International Air Show. FlyBE agreed to buy four of the turboprops for $100 million.
updated 6/17/2005 3:54:36 PM ET 2005-06-17T19:54:36

With Boeing and Airbus battling over a recovering market for big commercial jets, it's easy to overlook another part of the passenger aircraft business that's gaining altitude fast. Orders for 50-to-75 seat turboprops -- the size commonly used by regional airlines such as American Eagle and British discount carrier FlyBE -- are up sharply, from a total of 50 worldwide last year to more than 87 since January, according to the industry.

Surprised? I know what you're thinking: Such planes have an image problem. You hear turboprops, and a cramped, noisy puddle-jumper comes to mind, right? In fact, many airlines in recent years have started using jets even on short hops that could be flown just as quickly by a turboprop.

Airlines' cost pressures
But a visit to this week's Paris Air Show suggests that turboprops may be coming back into fashion. ATR of France and Bombardier of Canada, the two leading producers, have introduced new models within the past few years that feature spacious cabins and a smooth, quiet ride.

What's really getting the airlines' attention, though, are the fuel savings. A turboprop burns about 50% less than a comparably sized regional jet. At current near-record-high oil prices, that works out to a savings of $20 to $30 per passenger on a one-hour flight, says John Moore, ATR's American-born sales director.

On top of that, a turboprop costs about one-third less than a jet of a similar size. "Today, the biggest pressure in the airline industry is on costs," Moore says. "Now the airlines are realizing the value of the turboprop."

The numbers tell the story: Toulouse, France-based ATR, a joint venture between the European Aeronautics Defence & Space Co. and Italy's Alenia Aeronautics, has logged 50 orders this year, up from 13 in all of 2004. Montreal-based Bombardier has 37 orders already this year, surpassing its 2004 total of 33. Worldwide, ATR forecasts demand for 1,000 new turboprops over the next 20 years.

Developing market?
True, turboprops still have some disadvantages. While the newer models can cruise as smoothly as jets when the weather is clear, they're still more prone to bouncing in turbulence. And on longer routes of 350 miles or more, jets have a speed advantage.

But that leaves plenty of opportunities for turboprops. During this week's airshow, for instance, ATR inked deals with regional carriers in Finland, India, Madagascar, and Corsica. Bombardier announced an air-show deal with FlyBE and has recently logged orders from airlines in Korea, Australia, New Zealand, and Japan.

What about the U.S.? Most American carriers are in such dire financial straits that they can't buy planes right now, ATR's Moore says. "But I think the market in the U.S. will develop." If oil prices stay high, turboprops look set to soar, too.

Copyright © 2012 Bloomberg L.P. All rights reserved.


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