The head of Longview Aviation Capital, the new owner of the De Havilland Dash 8 production line in Toronto, believes a renewed focus on the aircraft’s marketing and manufacturing will help boost a sagging market share and revive the Canadian plane’s long-term prospects.
“[Former Q400 owner] Bombardier was not focussed on the turboprop. They were obviously distracted by other programs,” said David Curtis, Executive Chairman of Longview, in an exclusive interview with Western Aviation News. On top of turboprops, Bombardier produced the Canadair Regional Jet, and spent more than $6 billion on the years-long development of the CSeries regional jet which was later sold and became the Airbus A220.
Longview bought the production line for the former Q400 turboprop from Bombardier in a landmark deal last November. It then re-launched the storied De Havilland name, breathing new life into a type that seemed a little passé.
“The difference today is that we’re not going in to see an existing customer or a new operator and trying to sell them CRJ or CSeries. We’re focussed on the turboprop and the value proposition that that airplane brings to that marketplace.”
No easy market
“It’s an incredibly competitive marketplace,” said Curtis of selling turboprops. Margins are thin, the market is small, and the aircraft last a long time, largely sheltered from the economics that force jet manufacturers to continually reinvent their products. On top of that, turboprops compete with regional jets that are faster, can fly higher, and have a more modern perception among passengers.
But the economics of a turboprop are hard to beat, since they use less fuel, particularly in their sweet spot: flights around an hour in duration and 500 miles (800 km).
“There are two very, very strong competitors between [Toulouse-based turboprop manufacturer] ATR and the Dash 8,” said Curtis, “and it’s a relatively small market. We believe that we have a better product, but we’ve got to work on the pricing competitiveness of the airplane.”
Curtis points to a recent conversation he had with an Embraer executive at a recent air finance conference. “Welcome to the battlefield,” the executive told him. “I can’t wait to kill you.”
“I had to laugh, because after that conversation with Embraer, they were talking about, they were going to launch a new turbo prop and compete in the sector. And they’ve since announced that they’re backing off which isn’t a surprise to me because the cost to enter the marketplace given the size of it, I’m not sure who in their right mind would want to develop a ‘clean sheet’ turboprop today.”
That doesn’t mean there isn’t a world of potential. Estimates are hard to pin down, but De Havilland occupies between a fifth and a third of the turboprop market. Rival ATR sees a market for 2,390 turboprops in the 61 – 80 seat range in the next 20 years, the niche the 400 Series occupies. Sixty per cent of that will be new planes operating routes that don’t exist yet, mainly in Southeast Asia.
“In spite of naysayers around the turboprop business and the competitive nature,” said Curtis, “I think the value proposition that we bring as Canadians and as Longview, is significant.”
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In Canada, three airlines operate substantial Dash 8 fleets, and are loyal to De Havilland. Westjet and Porter only operate the 400 Series, while Air Canada operates the -400 and older and smaller -100s and -300s. ATR has a small number of Canadian airlines, including Canadian North in the Arctic.
A new Dash 8 rolls off the production line in Toronto roughly every 18 days, 20 in a year. That rate is about half what it was a the peak.
As he spoke with suppliers at a recent aerospace conference in Abbotsford, British Columbia, Curtis was very clear. Future development of the 400 series turboprop does not involve composite wings or radical new ‘clean sheet’ designs. The market it simply too small to justify the risk.
But that doesn’t mean the Dash 8 will forever be built the way it is now.
To be competitive, the Dash 8 has to get cheaper. To do that, Curtis is looking at innovative ways to build aircraft, ways that are already being used at Longview’s other aircraft manufacturer, Viking Air. In the past six months, Viking took possession of its first 3D printer, and starting printing parts for its Twin Otter aircraft, mostly ducts and other interior plastic components.
Today, 100 part numbers on the Twin Otter are printed, saving time and upwards of $100,000 on each plane.
De Havilland, with its more complex operations isn’t printing parts… yet. But it’s coming.
“It’s a huge opportunity,” said Curtis. “When you’re talking about low-run production lines the ability to print aircraft parts in volume and repeatability, it’s incredible.”
Right now, aircraft printing is limited to plastics and similar materials lining the passenger cabin. But it’s moving into high-tech alloys, and Curtis believes it won’t be long until aluminum airplane parts are printed.
“I think it’s going to disrupt the whole industry,” he said.
If and when new manufacturing processes are introduced, De Havilland is still facing uncertainty with its Downsview plant in Toronto. There are a little less than four years left on the lease, and negotiations around renewing the lease with the new owners won’t begin until the fall. Curtis said the goal is for De Havilland to stay put as long as it can.
Smaller Dash 8 revival?
Longview has had success reviving the Twin Otter, a 1960s niche aircraft that may never have set the world on fire, but for which Curtis sees a long production run in the future. That has led, unsurprisingly, to questions whether De Havilland plans to bring back older Dash 8 types, the 100, 200 and 300, which are older designs and smaller than the 400 Series.
Curtis is downplaying the possibility, though he isn’t completely closing the door, either.
“I get asked that all the time,” he said. “We’re looking at all these opportunities. What a lot of people don’t understand is that the Dash 8, the legacy airplanes and the 400 are very different airplanes. Different manufacturing techniques, legacy airplanes are all bonded panels and skin, and the other ones are chem milled. It’s a very different airplane. They kinda look like they’re similar, but it’s a separate production line. It’s just more complicated.”
It comes back to two things: one is Curtis’ reluctance to take on the risk of a ‘clean sheet’ airplane design; the other is the price of fuel. On this point, De Havilland and ATR agree, when oil prices rise, the economics of a turboprop become far more interesting.
With that in mind, ATR projects a market of 630 aircraft in the 40 to 60 seat range in the next 20 years. That could be just tempting enough for De Havilland to make a play at building a niche aircraft.
“There’s some interesting things we’re looking at, and the answer isn’t no,” said Curtis. “We continue to look at the market to understand the 50-seat market. Is there a [Short Takeoff and Landing] niche play here? Certainly everything we hear is that the Dash 8 is the preferred airplane in that category, and what are we going to do about it?”
“I think the big issue is going to be the price of oil,” said Longview’s Executive Chair.
At the same time, Curtis doesn’t see a higher-capacity development for his line of aircraft. The 400 series is now up to 90 seats in some configurations, far larger than any aircraft ATR is producing.
“Do I see an upsize? I don’t think – we’ve got the Dash 8 Series 400 up to 90 seats, and it’s pretty interesting that it’s the only airplane in its class with 90 seats. As fuel goes up, which inevitably it will, I think that value proposition of that 90-seat airplane are going to be tough to beat on short sectors. An hour, an hour and a half is the sweet spot.”
Does that guaranteed a bigger market share? No, but the trend among airlines is to larger planes, even on shorter routes. And Curtis believes the De Havilland team, with its renewed focus only on the turboprop market, has what it takes to grab a larger share of worldwide sales.
“I think there’s a number of things we’ll have to tune up. We’re going to have to convince customers that we’re in it for the long haul.”