=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2008/03/23/financial/= f112557D02.DTL --------------------------------------------------------------------- Sunday, March 23, 2008 (AP) High Gas Prices Aid Prop-Plane Comeback By SLOBODAN LEKIC, Associated Press Writer (03-23) 11:25 PDT BRUSSELS, Belgium (AP) -- As fuel prices soar to record highs and airlines struggle to maintain profitability, the unglamorous but fuel-efficient turboprop regional airliner is making a remarkable comeback. The revival of the propeller-driven planes — which typically consu= me a quarter to a third less fuel than equivalent jets — marks a significant new trend in the industry. Until recently, many commuter airlines had been determined to consign the planes to history and convert to all-jet fleets which offer greater passenger comfort. Although the latest generation of turboprops has addressed some of the comfort issues by flying above turbulence and providing quieter cabins, analysts say the airlines' money worries about their bottom line now outweigh any passenger preferences. With jet fuel prices 60 percent to 70 percent higher than a year ago, regional jets no longer offer good economics for short-haul flights, said Michael Dyment, an aviation analyst at Nexa Capital Partners, a Washington, D.C., corporate finance group. "Nowadays, operating efficiency trumps any passenger considerations," Dyment said. The world's remaining manufacturers of turboprops for commuter airlines, Canada's Bombardier and France's ATR, have ramped up production to 140 of the planes this year, after making 100 deliveries in 2007. This compares with only 26 in 2002. "There has been a clear reversal of trends in the regional airline business over the past three to four years," said Richard Maslem, an editor of Airliner World, a British trade magazine. "Airlines that only a short time ago were championing the cause for the regional jet and suggesting the end of the line for turboprop models are now having to eat their words." The regional sector as a whole experienced something of a boom, with traffic growth estimated at almost 8 percent in 2007, ranging from 3.1 percent in the United States to more than 9 percent in China. While jets such as the Embraer E-series still topped the delivery list, the upsurge was led by turboprops, which accumulated 210 orders from clients worldwide. The 1950s-era Fokker 27 was typical of the first generation of short-haul airliners with gas turbine engines driving propellers, which acquired a reputation for fuel economy and ruggedness. Passengers, however, hated the propeller noise, vibrating cabins and susceptibility to turbulence at low altitudes. As the next generation was entering service in the 1980s, many feeder airlines favored speedier and quieter 30- to 70-seat jets, such as those produced by Brazil's Embraer. This sparked predictions that they would eventually replace the turboprops. By the beginning of the millennium, several turboprop manufacturers — including Fokker and Saab — had either declared bankruptcy or abandoned production of turboprops, leaving Bombardier ATR as the only major turboprop manufacturer. But tight economic times have revived demand for the propeller craft over the past couple of years. A recent report by the market research firm Forecast International attributed this to the need by regional airlines to cut costs and reduce fares in the face of competition from low-fare carriers. Jet fuel now averages $3.70 a gallon in the United States — nearly double the price a year ago. Local airlines, which generally are run on very slim margins, already routinely resort to fuel-saving measures such as taxiing out on a single engine and coasting to landings by idling the engines. With market interest growing, Bombardier is evaluating lengthening its existing 78-seat Q-400 to 90 seats, and its French rival is considering launching a totally new aircraft rather than extend its existing 70-seat ATR-72. The new models would also have advanced noise and vibration suppression systems and would fly at higher cruising altitudes than their forerunners, offering in-flight comfort levels comparable to jets. The stakes are high for both companies, because analysts predict a requirement of nearly 1,500 regional aircraft from 2007 through 2016 to keep up with projected demand. "What has happened with new-generation turboprops is on short flights and with a smaller capacity they can open up or sustain markets that jets cannot. So you get the best of both worlds — comfort for passengers and financial viability for the airline operator because of the 30 percent lower per seat costs," said John Strickland, director of JLS Consulting, a London-based aviation consultancy firm. Strickland also pointed to the widening use of turboprops among partner subsidiaries of such companies as Lufthansa, Alaska Air, Air France and Quantas, where they feed traffic to the carriers' jet routes. Luxembourg's airline Luxair typifies the turnaround. In 2000, the carrier decided to discontinue the turboprop fleet it had operated since the 1950s and replace it with commuter jets. But as fuel prices skyrocketed, the airline turned to the more economical propeller models, and placed orders in 2006 for a fleet of new Q-400s. Among other orders in recent weeks: _ Seattle-based Horizon Air, a subsidiary of Alaska Air Group Inc., ordered 15 of the Q-400 turboprops from Bombardier, with options for 20 more, in a deal worth nearly $400 million. _ SAS, the joint flag carrier of Sweden, Norway and Denmark, reversed its decision to discard its fleet of Q-400s after a series of landing gear incidents. Instead, it reached a compensation agreement with the planemaker that included orders for 27 new aircraft of an improved model with options for 24 more — a potential value of $1.75 billion. ------= ---------------------------------------------------------------- Copyright 2008 AP <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".