MIAMI — We sat down with Simon Roberts, Vice President and General Manager of Turboprops and Toronto Operations for Bombardier at the Farnborough Airshow in July, discussing the Q400 Cargo Combi, its potential for regional jet replacement, and the Q400X. We also discussed the state of the Q400 program in our program analysis published on September 29, 2014, though the program analysis covers several different themes.
Airways: So today you launched the Q400 Cargo Combi
Simon Roberts: So the Cargo Combi, it’s the ideal balance of passenger comfort, up to 50 passengers, and also very large payload capacity. What that allows really is an airline to optimize their revenue both in terms of payload and freight and also passengers. Today at the event, one of the panelists from South Africa shared his desire to actually see a Q300 be replaced, which is a reality after he received his briefing on the Cargo Combi. What he realizes now is basically you have that flexibility within one aircraft. So where the routes are thin in terms of passenger traffic you can now have the opportunity [to serve them], particularly to regions where you do require central services difficult to access by conventional means of transportation. In the near future we will be able to announce to launch customers. We are at very advanced stages of negotiations and in the very near future we will be able to make those announcements.
So in the African aviation market, passenger demand is still a little volatile, but cargo demand, especially because of the lack of adequate surface transport options, is very high. Do you think that Africa will be the core market for the Cargo Combi?
I wouldn’t say necessary Africa as a region will be the core market but I think regions that need to find that sweet spot, that optimum balance between payload and passengers, are exactly where the Cargo Combi will play a critical role. We have flexibility as well in terms of configuration so we can adapt to certain specifications: the size of the payload and also the passenger configuration as well. So again I think it demonstrates the flexibility of the Q400. This is another example of the versatility of the design of the aircraft. Customers have the ability now to operate 86-seats, 50-seats with a Cargo Combi configuration, and other variations. The Q400 is becoming the perfect companion to single aisle. Additionally, you also see now greater flexibility to use dual class configurations with business class; a premium service for your premium customers. We have sold over 50 Q400s with business class configurations.
Does this Q400 Combi offer a Q300 replacement? Can it replace the Q300?
It offers more than that. It offers obviously the cargo capacity, and obviously the passenger capacity around 50 passengers. So again, I think it’s the perfect balance to meet the needs of your business model, not to compromise your business model because of the limitations of the aircraft. And I think that’s what we are demonstrating consistently with the Q400 now. The Q400 offers four times the flexibility of rival aircraft: single class, duel class, Cargo Combi, and extra capacity of 86 seats.
In terms of larger Combi aircraft, particularly with the 747-400 Combi which was a reasonably popular aircraft in the market, regulatory changes in the United States and Europe that made it harder for sort of airlines to change where they place the quick conversion between passenger capacity and cargo payload they had. There were some regulatory changes around that that culled the market for Combis. Is the Q400 going to be affected by the same regulatory constraints?
This meets class C requirements for payload and freights and transportation so of course during development, that was at the forefront of the requirements for the Combi. So it meets all regulations and it’s the only in-production Cargo Combi. The performance of the Q400 allows it to get into regions, allows it to land on gravel runway, it’s hot and high superior performance, it’s economics, it’s superior fuel efficiency. Obviously when you combine all of them together it brings a lot of flexibility but it also brings a lot of value to a customer that’s trying to balance it’s business model and I think we have the perfect solution to meet all of those demands. And today we also announced the launch of a fuel efficiency manual. A fuel efficiency manual is basically 16 tools and techniques that an airline can use to improve their fuel consumption and by definition increase their profitability. So this has been a collaborative project we’ve done with a number of customers one in particular who spoke today is Flybe. Over the last 2-3 years we’ve seen a 13% reduction in their fuel costs through these initiatives.
Yeah, it’s a significant saving and I think it’s instrumental to the competitive advantage that the Q400 provides whether that’s in Europe or any other region.
13% will allow you to more closely match the ATR 72 on a trip cost basis?
Exactly and we’re already dependent on the configuration, we’re not only meeting but we’re now surpassing trip cost and seat mile cost and fuel cost. So if you actually take the 86-seat configuration, we actually have a 17% cost advantage per seat and a 7% fuel burn advantage over the ATR 72. That’s at the heart of the Q400; fuel efficiency. The Q400 is the only turbo-prop that airlines have the option to fly slow or fast, and a number of airlines are starting to enjoy that adaptability now. Where speed isn’t the primary requirement because of the network design and the business model, they’re able to not use the full speed but enjoy the benefit of a low fuel consumption
So you guys have basically just done what ATR is still waffling about with a 90-seat turbo-prop. So I want to change tack a little bit and discuss how turboprops can play a role in the future of regional capacity provision in the US. The combination of pilot shortage, aging 50-seat fleets, and other factors have colluded to make regional jet economics in the US rather unprofitable. The Q400 in particular with its high speed offers decent potential for regional jet replacement. So does the Q400 have an opportunity to serve as a regional replacement because with its lower fuel costs, an airline could pay the higher pilot wages and still maximize the economics of their present regional fleet? Is that something you see an opportunity in?
Absolutely. I think if we look to Canada, if you look at Porter, Jazz, or WestJet all now fully utilize the Q400 either exclusively within their fleet or complementary within their fleet alongside single aisle jet aircraft. You’re actually seeing them now enjoy the economics you just described. You also see them now access markets that help generate growth in feed to the mainline business. I think to specifically answer the question, I would look to Horizon Air. Alaska Airlines in the last 12 months has seen continued growth to the [Q400] fleet with Horizon Air. We’ve now seen the Q400 Next Gen actually enter into the state of Alaska. Obviously there are additional opportunities to Alaska Airlines in terms of how they utilize the aircraft. I think answering your question, there are many examples in Europe, Canada, and now there is a very good example with Horizon Air of airlines that enjoy the benefits that you describe in terms of costs, as well as speed and passenger comfort.
Can you give any color as to what the distance is where the slower speed of the Q400 and the lower costs start to converge with regional jets?
It’s a difficult question to answer, you really have to look at the cost structure from customer to customer. From airline to airline it’s a different number, but there’s certainly an optimum point, and what we enjoy is actually working with the airlines and finding what that point is for them. That’s really about looking at the design of the network and looking at their overall cost structure. But I think as I described, the single most one or one of the significant advantages of the Q400 is the ability to adjust speeds on different routes. So I think there is no single answer to your question. It’s adaptable to the business needs and that’s the value proposition the Q400 offers – you don’t adapt your business model to the product, the product can be adapted to your business model.
Can you comment on a potential Q400X with higher speed engines, perhaps using the GE CPX30 derivative?
I think what we’ve been able to do with the extra capacity is really further exploit the design point of the aircraft and we’re very confident of the future development capability of the aircraft. It’s a very young platform, and I think what we’ve seen in the 86-seat variant is, that by listening to our customers and the demands of the market, we’ve been able to adapt the product to meet the needs of the customer and we will continue to do that. I think at the moment our focus is around the actual capacity but I think today, you leave this event knowing the Q400 has four times the flexibility: single class, dual class, Cargo Combi, and the extra capacity. And no other turboprop can offer that flexibility. As part of our strategic planning, we always look to the future market and product requirements, so we’ll assess that situation as the market dictates.