CONNECTING CHINA
TURBOPROP MARKET FORECAST FOR CHINA
2018-2037
04IN A NUTSHELL
10MARKET TRENDS
22FORECAST BY MAIN AREA
TABLE OF CONTENTS
IN A NUTSHELL
EXECUTIVE SUMMARY
CAPACITY
6 76 76 7
IN A NUTSHELL
ROUTES TO BE CREATED BY TURBOPROPS
AVAILABLE SEAT-KILOMETERS FORECAST
IN A NUTSHELL
TRAFFIC GROWTH
+4.6%GDP
X8REGIONAL TRAFFIC
NEW TURBOPROP ROUTES
2,110NEW ROUTES
13%Existing Network
2016
2018
2020
2022
2024
2032
2026
2034
2028
2030
2037
2036
FORECAST
34%New Regional Aviation Routes
53%New General Aviation Routes
Southwest390
Pan-Northeast650
Pan-Northwest290Xinjiang240
Mid-East540
OF 2037 ACTIVITY WILL COME FROM
NEW ROUTES
87%
EXECUTIVE SUMMARY
CAPACITY
8 98 98 9
IN A NUTSHELL TURBOPROP DEMAND BY REGION
IN A NUTSHELL TURBOPROP DEMAND
TURBOPROP DELIVERIESTURBOPROP FLEET EVOLUTION AND DELIVERIESIn-service passenger fleets
While it is still at an early stage of development, regional connectivity in China is the next big thing.
With over 500 airports to connect, through the opening of new routes, the market is expected to be boosted by both Regional and General Aviation development plans.
IN S
ER
VIC
E
DE
LIV
ER
IES
2017 2037
Growth RegionalAviation 280
Growth General Aviation 800
Stay in service 5
1,105 1,100
25
23070 seat turboprops Regional Aviation
7050 seat turboprops Regional Aviation
1,100DELIVERIES
80030 seat turboprops
General Aviation
Southwest225
Pan-Northeast345
Pan-Northwest150
Mid-East300
Xinjiang80
Replacement 20
MARKET TRENDS
EXECUTIVE SUMMARY
CAPACITY
131313
ECONOMIC IMPACT OF REGIONAL AVIATION
Either through tourism development or by establishing business, interlinking secondary and tertiary cities allows every community to be connected and benefit from global economic growth – a key component of sustainable development.
+8%Foreign
Direct Investment+5%
Tourists+6%
Regional GDP
+10%FLIGHTS
GENERATES
More Employment
More Social Development
AIRPORTS SERVED EXCLUSIVELY BY REGIONAL AIRCRAFT
Many communities rely on regional aircraft to connect to other countries and regions throughout the world. Through an adapted technology and capacity, turboprops efficiently answer this essential market need.
Turboprops are the benchmark as they provide specifically adapted economics for the average worldwide route length of 300 NM.
Furthermore they ensure accessibility to all airfield profiles and are the lifeline of many communities.
50%Airports relying
exclusively on regional aircraft
36%Airports relying
exclusively on turboprops
3,800+
COMMERCIAL AIRPORTS
WORLDWIDE MARKET TRENDS
CONNECTING LOCAL COMMUNITIES
WORLDWIDE MARKET TRENDS
AIR CONNECTIVITY SUPPORTS LOCAL DEVELOPMENT
12
EXECUTIVE SUMMARY
CAPACITY
14 1514 1514 15
WORLDWIDE MARKET TRENDS TURBOPROPS PLAY A KEY ROLE
IN REDUCING EMISSIONS
POTENTIAL EMISSION SAVINGS BY REPLACING REGIONAL JETS WITH TURBOPROPS
Assuming all short haul flights worldwide operated by regional jets today were replaced by modern turboprops, 11% of overall regional aviation CO2 emissions could be saved.
These 4,100,000 tonnes of CO2 overall regional aviation emissions are equivalent to the annual absorption of 200,000,000 trees.
876,000
1,168,000
1,095,000
949,000
CO2 ANNUAL SAVINGS BY REPLACING JETS ON ROUTES UP TO…
400-500 NM
300-400 NM
200-300 NM
Up to 200 NM
Up to 11% of overall regional aviation emissions saved
tonnes
WORLDWIDE MARKET TRENDS
NEW REGIONAL MARKETS ARE YET TO EMERGE
MATURITY STAGES OF REGIONAL NETWORKS
Although some are very well populated, many countries still have poor regional connectivity, contrasting with mature European and North American markets.
Leveraging turboprop advantages (cost efficiency, access to challenging airfields), China will lead market growth while developing the economies of secondary and tertiary cities.
Regional aviation activity per inhabitantsEarly stage Mature
MATURITY STAGES
Blank: no data
EXECUTIVE SUMMARY
CAPACITY
16 1716 1716 17
CHINESE MARKET TRENDS
TRAFFIC IS HEAVILY CONCENTRATED
CHINESE FLEET EVOLUTION AIRPORT AND TRAFFIC DISTRIBUTION
CHINESE MARKET TRENDS
A FLEET GROWTH FOCUSED ON NARROW-BODY
Regional fleets of aircraft with less than 100 seats are lagging behind China’s tremendous fleet growth and barely reaching a 2% share of the total fleet size against a worldwide average of 25%.
To sustain regional route development, China requires adapted capacities.
Answering demand for air transport between large cities as well as their international connectivity has been prioritised so far.
There are still many opportunities to connect all of the smaller cities through an efficient regional network.
AIRPORTS
90%of traffic is to/from
the 13% largest airports
87%of airports
account only for 10% of traffic
BY TRAFFIC
TOP 32
MID 100
BOTTOM 100
x2
x8
x5
x7
1998
2000
2002
2004
2006
2014
2008
2016
2010
2012
2018
Regional Narrowbody
Wide-Body Total fleet
OVER LAST 20 YEARS
EXECUTIVE SUMMARY
CAPACITY
18 1918 1918 19
CHINESE MARKET TRENDS DIFFERENT FLOWS, DIFFERENT CAPACITIES
CHINESE MARKET TRENDS
AIR CONNECTIVITY COMPLEMENTS HIGH SPEED TRAIN (HST)
HIGH SPEED TRAIN & AIRPORT MAP CAPACITY ALLOCATION VS TRAFFIC
In main cities, high speed train is the solution when large traffic demand generates airport and air space constraint.
Yet many smaller cities can not access high speed train directly. Their air connection to these wider air and train networks is crucial for their development.
Traffic flows between secondary and tertiary cities require adapted capacity sub-80 seats to allow a good level of service frequencies as well as adapted economics to enable affordable fare without subsidies.
HST network
>10Mpax airports
Other commercial airports
Air connectivity is essential to many smaller communities that do not have access to the High Speed Train
Regional Aviation and General Aviation have ideal capacity ranges to fly smaller flows
LARGE CITIES
LARGE REGIONALAIRPORTS
DA
ILY
TR
AF
FIC
FL
OW
SMALL REGIONAL AIRPORTS
GENERAL AVIATION AIRPORTS
HST, large Jets
Mostly narrowbody complemented by turboprops
Mostly turboprops and regional jets
General Aviation turboprops
EXECUTIVE SUMMARY
CAPACITY
20 2120 2120 21
NETWORK SCHEMES GENERAL AVIATION AIRPORT DISTRIBUTION
CHINESE MARKET TRENDS
CONNECTING GREATER CHINA THROUGH COMPLEMENTARY SCHEMES
CHINESE MARKET TRENDS
GENERAL AVIATION AIRPORTS WILL ENHANCE AIR SERVICE PROXIMITY
It’s encouraged to build GA airports around hubs with flows of 10 million passengers or above, per year or above, to undertake non-competing services from hubs. It’s also encouraged to build GA airports to conduct short haul transportation and improve transportation conditions in remote areas or where ground transportation is under developed.
CAAC 13th 5 Year Development Plan
Southwest
Xinjiang
Pan-Northwest
Pan-Northeast
Mid-East
Under planning
Under construction
Constructed
BY REGIONS BY STATUS
Unlimited range within each province
Up to 300 Level 1 General Aviation airports
Large airports
Other regional airports
General aviation airports
Up to 500km inter-province Up to 600km inter-province
Up to 30 seats Up to 100 seats
From/to General Aviation airports and regional airports
Only from/to regional airports
GENERAL AVIATION REGIONAL AVIATION
FORECAST BY MAIN AREA
EXECUTIVE SUMMARY
CAPACITY
24 2524 2524 25
FORECAST BY MAIN AREA
FOCUS ON SOUTHWEST CHINA
225DELIVERIES
3020175
390NEW ROUTES
Famous for rich natural resources and tourist attractions. The challenging terrain makes the HST connection extremely difficult and costly.
The resulting mathematic model is calibrated on 5,000 existing Chinese domestic routes. It is used to estimate activity potential on every airport pair not yet flown.
50 seat turboprops Regional Aviation
70 seat turboprops Regional Aviation
30 seat turboprops General Aviation
FORECAST BY MAIN AREA
METHODOLOGY
Using gravity modelling, one can correlate each route activity with its characteristics.
ATR's forecast for China considered variables
• Route distance,
• Time to travel by road,
• HST availability,
• Airport activity in size and quality,
• Cities’ local demographics, economic indicators (e.g. income, tourism, …),
• Province’s economic indicators
EXECUTIVE SUMMARY
CAPACITY
26 2726 2726 27
FORECAST BY MAIN AREA
FOCUS ON XINJIANGFORECAST BY MAIN AREA
FOCUS ON PAN-NORTHWEST
80DELIVERIES
10565
240NEW ROUTES
A vast region where travelling by road is time consuming and the cost to build a HST connection is high. Nearly all the air traffic is concentrated on Urumqi, while connectivity between other airports is scarce.
50 seat turboprops Regional Aviation
70 seat turboprops Regional Aviation
30 seat turboprops General Aviation
150DELIVERIES
2010120
290NEW ROUTES
The northwestern region is vast, with complex terrain. Regional aviation and GA short-haul transportation requires lower investment than HST and road construction, but always brings quicker turnarounds and development opportunities to local communities.
50 seat turboprops Regional Aviation
70 seat turboprops Regional Aviation
30 seat turboprops General Aviation
EXECUTIVE SUMMARY
CAPACITY
28 2928 2928 29
FORECAST BY MAIN AREA
FOCUS ON MID-EAST CHINAFORECAST BY MAIN AREA
FOCUS ON PAN-NORTHEAST CHINA
345DELIVERIES
9520230
650NEW ROUTES
A vast region where road transportation is time consuming and HST connection only connects a handful major cities. Many regional airports require inter-connection. Bohai Bay could be better served by combining complementary air transportation with the HST.
300DELIVERIES
7515210
540NEW ROUTES
This region has a dense HST train network however as development spreads to secondary and tertiary cities Regional Aviation and GA transportation can bring complementary connectivity to these markets, for which the HST network is not designed.
50 seat turboprops Regional Aviation
70 seat turboprops Regional Aviation
30 seat turboprops General Aviation
30 seat turboprops General Aviation
50 seat turboprops Regional Aviation
70 seat turboprops Regional Aviation
CAPACITY
303030
SAFE HARBOUR STATEMENT
DisclaimerThis presentation includes forward-looking statements. Words such as anticipates, believes, estimates, expects, intends, plans, projects, may, forecast and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements made about strategy, rampup and delivery schedules, introduction of new products and services and market expectations, as well as statements regarding future performance and outlook.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
These factors include but are not limited to:• Changes in general economic, political or market
conditions, including the cyclical nature of ATR business;• Changes in Chinese regulation of regional aviation and
general aviation;• Significant disruptions in air travel (including as a result of
terrorist attacks);• Currency exchange rate fluctuations, in particular between
the Euro and the U.S. dollar;• The successful execution of internal performance plans,
including cost reduction and productivity efforts;• Product performance risks, as well as programme
development and management risks;• Customer, supplier and subcontractor performance or
contract negotiations, including financing issues;• Competition and consolidation in the aerospace and
defence industry;• Significant collective bargaining, labour disputes;• The outcome of political and legal processes, including
the availability of government financing for certain programmes and the size of defence and space procurement budgets;
• Research and development costs in connection with new products;
• Legal, financial and governmental risks related to international transactions;
• Legal and investigatory proceedings and other economic, political and technological risks and uncertainties.
Any forward-looking statement contained in this presentation/publication speaks as of the date of this presentation/publication release.
ATR undertakes no obligation to publicly revise or update any forward-looking statements in light of new information.
ASSUMPTIONS
Geographic scope
Only domestic routes are considered
Pan-Northwest: Qinghai, Gansu, Ningxia, Shaanxi, Shanxi and western Inner Mongolia (airports west of Hohhot)
Pan-Northeast China: Hebei, Shandong, Heilongjiang, Jilin and Liaoning, north-eastern Inner Mongolia (airports east of Hohhot)
Mid-East China: Henan, Jiangsu, Anhui, Hunan, Jiangxi, Hubei, Zhejiang, Fujian, Guangdong, Hainan
Southwest China: Sichuan, Guizhou, Yunnan, Chongqing and Guangxi
Xinjiang: Xinjiang Autonomous Region
This study does not cover market in Beijing, Shanghai, Tibet Autonomous Region, Hong Kong, Macau and Taïwan
Definitions & assumptions
GDP: Gross Domestic Product
Turboprop in-service fleets are considered in the range of 30-80 seats in standard configuration.
Turboprop aircraft supply is based on in-production and launched programs.
Network range up to 900 NM ~ 1,700 km ~1,000 mi.
Route size considered: up to 450 daily seats each way per carrier.
Depending on distance and traffic flow criteria, each route is allocated to most probable aircraft category, from 30 to 200 seats, jet and turboprop technologies.
General Aviation airports considered of Level 1.
Sources
• ATR Studies and survey
• CAAC
• Flightglobal, OAG, Oxford Economics
• Acknowledgement to Mr. QI Qi and Mr. GAO Yuanyang for their valuable contributions.
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