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Turboprop Efficiency Has Users Holding On

posted Apr 16, 2013, 5:21 AM by Michael Adams

The average retirement age for turboprop aircraft is creeping up and the pace of retirements is decelerating—in contrast with the general pattern for commercial jets—with high fuel prices heightening the appeal of the propeller-driven flyers and manufacturers creating programs to extend their lives.

The continuation of the trend could depend on what happens to all of the used regional jets that will be entering the market over the next few years. Regulatory authorities also could change the dynamic by placing new, costly requirements on the aircraft. But for the moment, the shift has been significant: An analysis using Aviation Week Intelligence Network's (AWIN) fleet database shows that commercial airlines retired 493 turboprops from 2004-06 and 441 from 2007-09, but only 279 from 2010-12.

The database also indicates an average age of 32 for all 94 of the turboprops classified as retired in 2012. That follows by three years when the average age ranged from 29-30. The average age last approached 32 in 2008, and has not dropped below 28 since 2004.

What has happened? Fuel is a major factor; turboprops are more fuel efficient than the small jets that would be the alternative in some markets. Also, a wave of retirements from aircraft built in the 1970s and early 1980s has passed.

But there are additional circumstances as well. For example, demand for turboprops has picked up and so has their value, so airlines might be more willing to refurbish and hold onto them, says Michael Magnusson, the president of Saab Aircraft Leasing. Also, there is no widespread, suitable replacement for the smaller turboprops because no one is making them; the new ATRs are too expensive for many operators.

What could become a replacement for some operators are the smaller used regional jets (RJs) that will be flooding the market during the next few years. But Magnusson checked into that scenario last November and did not find much evidence to support it.

In perusing the more than a dozen long-time turboprop operators taking used RJs over the past four or five years, he found that each one only took a handful for specialized purposes—about 60 in total. Many of them did so because they could obtain the aircraft cheaply and use them for a couple of long-distance markets.
“Even if they're very cheap, they're still hard to justify on the shorter sectors,” Magnusson says. “I think there will be more RJs being parked than replacing turboprops.” On shorter flights, turboprop fuel savings usually trump RJ operational or marketing advantages.
Magnusson also does not foresee maintenance or structural issues with turboprops reversing the retirement trend anytime soon. Actions already have been taken to extend the lives of Saab 340s and older ATR 42s and Bombardier Dash 8s, he notes.
Of the 94 turboprops retired in 2012, only seven were from the ATR 42-300 family and three were Dash 8s, the AWIN database shows. Four were Saab 340As and two were 340Bs.
As of November 2012, Magnusson says, 75% of the 156 Saab 340As that were produced remained in service at an average age of 25 years and 87% of the 201 Saab 340Bs remained in service at an average age of 21.
What could take a toll are costly new regulatory requirements. “Any new electronic upgrade that authorities feel is necessary over the next 5-10 years can kill off airplanes if it costs $100,000 to install,” he says. “It probably will be something like that that accelerates the parking of airplanes.”
The data does show one potential warning sign for turboprops. On Airfax, which lists aircraft sale and lease offerings for more than 100 marketers worldwide, the number of postings doubled over the past year to more than 50 Saab 340s and 2000s and more than 60 for ATR 42s and 72s.
Airfax Publisher Jim Williams does not believe the ATR numbers are a sign of weakness in the market, but could instead reflect airlines putting older ones up for sale as they take delivery on newer versions. “It's a robust market,” he says. “I don't see any sign it is flooded.”
The Saab increase also could be a temporary spike based on how Saab, which controls a significant portion of the fleet, is pricing them, he says.
Turboprops in general, he adds, “are still very valid for operations today. For the short sectors, nothing beats them. There is not going to be a lot of demand, but there's going to be consistent demand for them.”