On March 8, 2010, Hindustan Aeronautics Limited (HAL), and a consortium of Indian company announced that they would begin developing a 70 seat regional turboprop that has been dubbed the RTA-70. Now the RTA-70 has entered itself into a very crowded market, which already has two strong players in the ATR 72, and the Bombardier Dash 8-Q400; aircraft that have combined for over 1400 sales (for the purposes of this post, we'll consider the turboprop and regional jet markets as separate entities). The main purpose of large turboprops like the RTA-70 is to provide medium frequencies over short to medium distances, and to provide capacity boosts in markets that cannot handle additional mainline frequencies. Horizon Air in the United States uses their Dash 8s for the former, and Kingfisher Airlines of India is very creative in adding capacity with its ATR 72s. This niche is especially apparent in markets such as India, Japan, and Europe. In order to prove my point, I want to break this down for you by answering a few questions about the aircraft.
1) Who is Building the Plane?
The aircraft is going to be built by a consortium of companies including HAL, National Aeronautics Lab (India), and some private contractors. The consortium will be lead by the retired chairman of the Indian Space Research Organization (ISRO). The ISRO has an excellent track record, and is known for its relative lack of bureaucratic red tape.
2) When Exactly Can We Fly This Thing?
No one knows for sure when the aircraft will come out, but India hopes to roll out a test version by 2014 or so. Assuming everything goes according to plan, the best case scenario is that commercial service begins in 2015. That's assuming that nothing goes wrong....
3) Will the Plane Actually Fly?
Your guess is as good as mine in this category. India has already built one turboprop transport aircraft, the NAL Saras, though that is mostly a military aircraft. In that sense, the Saras program has been an abject failure, as it took almost 13 years to come into production (1991-2004). The problems with the project cannot all be blamed on NAL, who lost support from the Russians soon after the project started, and later ground to a halt, due to economic sanctions for India's nuclear tests in 1998. And, the aircraft has good capabilities as well; similar to those of the RTA. With a research cost of only 30 million dollars, the Saras program is extraordinarily cheap, and if similar costs are achieved on the RTA, then only 50 or so sales would be needed to break even. No one doubts that HAL and NAL have the technological know-how to build this plane, as HAL has already proven with the Dhruv, one of the world's finest transport helicopters. But India's bureaucratic nature is a significant pitfall.
4) What Sets This Plane Apart From All the Other Ones?
As a new design, the RTA-70 has the advantage of flexibility over the Dash 8 Q400 and ATR 72-500 which are basically updates to a 20+ years old design. By using composite materials, they will be able to reduce the aircraft's weight significantly, leading to gains in fuel efficiency. HAL and co. are aiming for a 25% gain in fuel economy over current turboprops. They also claim that better parts and sophisticated flying systems will lead to a 25% reduction in Operating Costs, and 50% reduction in maintenance. I for one don't believe those numbers, but even a 10% reduction in all those costs will make the plane useful. The RTA-70 is planned to be the first turboprop to employ Fly-by the Wire control systems, allowing airlines to operate more efficiently. It will also include a significant MTOW (Maximum Take Off Weight) increase, allowing more lucrative cargo to be carried in its belly. And with an eye to the Asian Market, they have given the aircraft the ability to take off on runways as short as 2950 ft, or 900 m, when fully loaded. By comparison the Dash 8 requires 1400 m, and the ATR 72, 1200 m. This will allow the RTA 70 to operate in a larger group of airports than the other two. The aircraft is said to
have a range of 2000 km, between the ATR and Dash 8, with a crusing speed of 300 knots, close to the Dash 8's, and faster than the ATR 72. With its better cost structure, this aircraft could dominate the future of the 70 seat turboprop.
5) Who's Going to Buy It
Ok, lets assume for a second that it is now 2014, and the aircraft has lived up to its specification claims, and proven its effectiveness on routes it is designed to handle. That being said, who will buy this aircraft. Well first off, there's the obvious; India. The RTA 70 is perfect for India, with its relatively backwards air infrastructure, and fast -growing markets. I have created a chart to illustrate where the RTA 70 could derive its sales.
Tier 1 Markets- Markets that have proven Demand on Sectors that currently operate with similar aircraft.
India (100-600 frames)- The obvious one. India is the market the RTA 70 is designed for. Many Airlines use turboprops extensively- replacing all turboprops
Intra Caribbean (50-100 frames)- The RTA 70 can be used to perform island-hopper operations, especially because of its short runway requirement. In addition, O&D demand Intra-Caribbean will need 70 seat airplanes in order to reach full potential.
Southeast Asia (100-150 frames)- RTA 70 can be used in high density configuration to vacation destinations, and on smaller domestic routes as ATR 72 is current used.
Africa Domestic(80-120 frames)- RTA 70 can be used to replace older ATR 72/Dash 8, and upgauge capacity on current routes.
Australia (150-200 frames)- turboprops used significantly in Australian domestic market
Tier 1 Airlines- Airlines with significant ops in the markets specified above:
NACIL
Jet Airways
Kingfisher
SpicJet
Paramount Airways
IndiGo
BWIA
Caribbean Airlines
American Eagle
Bangkok Airways
Druk Air
Lion AIr
Garuda Indonesia
Malaysia Airlines
Air Asia
Thai Airways International
Most African Airlines
Qantas Group
Virgin Group
Regional Express
Air New Zealand
Air Fiji
Air Vanatau
Tier 2- Markets with proven demand, but not much capacity in turboprops yet.
Japan (30-100 frames)- short distances, + good O&D means RTA 70 could find niche in certain markets
Eastern China (30-50 frames)- airports are closely spaced on China's East Coast, the RTA 70 could be used to explore smaller markets
China (100-500 frames)- on a broader scale, can be used to provide cheap service to all varieties of Chinese airports
Eastern Europe(100 frames)- mainline transporter among smaller Eastern European airlines
Scandinavia (50 frames)- replacement for turbos operated by SAS group etc.
Europe Regional (50-600 frames)- replacement for turbos operated by regional airlines, and upgauge over previous turboprops..
Tier 2 Airlines:
JAL group
ANA group
Air Hokkaido
China Eastern
China Southern
Air China
Hainan Airlines
Shenzhen Airlines
Chinese startups
Aeroflot
S7 Airlines
Roissya
Russian airlines
Aerosvit+ Ukraine Air International
Belavia
JAT
Aegan Airlines
Tarom
Montenegro Airlines
Croatia Airlines
Malev
CSA
Air Italy
Olympic Air
Turkish Airlines
SAS Group
Air France- KLM group
British Airways Group
Lufthansa Group
Iberia Group
European Regionals/Startups
Tier 3 Markets: Places with minimal demand, but future growth, and or ideas not implemented yet
Northeast USA shuttle (50-100 frames): This is an idea of mine that I will discuss in a later post, but essentially it is transporting pax between secondary Northeast markets, similar to the shuttles operated between Philly, DC, New York and Boston. The RTA 70 would be a right-sized aircraft for this operation
Midwest USA shuttle(35-75 frames): Same as above, except in the Midwest USA.
Mexican Domestic (50-100 frames): would require more point to point flying, but can see it working from places like Tijuana, Guadalajara, and Monterrey
USA-Mexico (75 frames): Would provide significant efficiency upgrade over current routes operated by regional jets out of IAH, DFW, PHX, etc. Would also allow for direct service to such markets as Austin, San Antonio, El Paso, Albuquerque, Reno, etc.
Central America (25-70 frames): Could work for TACA and Copa Airlines on routes to secondary destinations
South America (50-300 frames): Could be used in high frequency domestic markets such as Colombia and Brazil from secondary hubs such as Porto Allegre and Cali.
Turkey Domestic(25-50 frames): Large number of airports and medium distances allow RTA 70 to be a frequency booster.
Middle East shuttle(50-100 frames): Also an idea that I've developed, similar to Northeast and Midwest US shuttles, but international as well
Domestic Routes in Korea/Taiwan/Philippines (50-100 frames): domestic capacity and efficiency booster
Based on the above information, I have pegged the market at anywhere from 1250 frames, to 5000+. If the RTA 70 can capture 25% of the market or more, it should be fantastically profitable.
Tier 3 Airlines:
Startups
US regional airlines
Aeromexico Group
Mexicana Group
Aero California
Viva Aerobus
Azul
GOL
TAM
Mid East startups
Avianca
Aires
LAN
Turkish Airlines
Fly Dubai
Korean Air
Asiana
Air Philippines
Air Asia
China Airlines
Eva Air
Asian startups
5) What Can Stop the Plane's Eminent World Domination?
Ideally; nothing could. However, earlier I mentioned that India has problems with bureaucratic regulations and the like. And its true. India does have many problems with its civil servants. They can often hinder and slow a program down so much, that it can be doomed to failure. Also, the Indian Law is fraught with archaic rules from a past era. These rules do not encourage risk taking, and gov. employees are loath to take chances because they don't want to be liable for the problems.
My grandfather, who worked with the India Bureau of Mines estimated that only 30% of funds are actually used for research, development, and production, with the remaining 70% going to salaries, waste, and bribes. He even told me the following story to illustrate my point. An Indian businessman who owned a lead mine in Indonesia had the mining laboratory of India perform tests on the metal for him. He also wanted to build a lead production plant in Indonesia as well. However, when he asked the people at the lab, who he had hired as consultants to help him plan the factory, they refused on grounds that if something went wrong at the plant, they would be held liable. The business man, in his frustration, ended up buying $2.5 million worth of machinery. But he had no plan to use it, and didn't know how to set it up. So he went back to the lab and asked for their help in connecting the machinery. They once again refused him. In the end, the man was sent to my grandfather, who helped him set up the plant. But in the process, more than a million dollars was wasted, all because the gov. employees didn't want to take responsibility.
I tell this story to illustrate the pitfalls involved in working through the Indian Government. If the RTA 70 runs into some of the same problems as the businessman did, then its cost structure will spin out of control rapidly. A strict oversight committee will be necessary to keep the project in line.
The other thing that could hold the RTA 70 back, is India's marketing capability, or lack thereof. Earlier, I mentioned the Dhruv helicopter, and how it was comparable with western-developed helicopters. The problem is, that India has not marketed it actively, with only a token presence at most airshows. As a result, the orders are limited to mostly Asia and the Middle East. If the RTA 70 program is to succeed, they need to market it heavily to world airlines, show up at all the major airshows, and basically get the word out about its superior capabilities.
Conclusion: The RTA 70 is an aircraft that is far superior to present day turboprops. Its introduction could seriously change the world's short-haul aircraft market. The market for the aircraft itself is large and growing, with great future potential. But the RTA 70 is going to have to fight India's bureaucracy and be marketed effectively to world airlines, if the program is to be considered a success...
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