Japan Air Commuter takes first ATR in quest for foreign tourists

By Tim Hepher TOULOUSE, France (Reuters) - Japan Air Commuter (JAC) took delivery of its first European ATR turboprop airplane on Friday, gambling on attracting foreign tourists to a little-visited archipelago as Japan bids to place Amami and Ryukyu islands on UNESCO's World Heritage list. The first direct sale of ATR turboprops to Japan is seen as a breakthrough for the Franco-Italian manufacturer in a national market dominated mainly by North American suppliers. So far, just one ATR flies in Japan, through a leasing deal. JAC, majority-owned by Japan Airlines <9201.T>, has ordered nine 48-seat regional ATR 42 models, worth some $22 million (18 million pounds) each at list prices, and has the right to purchase another 14. Built by a joint-venture between Airbus and Leonardo of Italy, the ATR aircraft will replace smaller Saab turboprops. The airline's partly subsidised operations serve residents and mainland businesses providing services and medical care. But it is looking for a boost from foreign visitors to the mangrove-clad region to offset a declining islander population. "Amami is not famous yet but will become World Heritage in a few years, and many tourists from other countries will visit," Hiroki Kato, president of Japan Air Commuter, told reporters. "If in the future we have tourists from abroad it might be a chance for us." Kato said JAC could upgrade to the 70-plus-seat ATR-72 model if foreign tourist traffic grows quickly enough. But he acknowledged stiff competition from high-speed rail on its inland routes and some pressure from rising oil prices. The rise in fuel values could negatively affect parent JAL's performance in 2017/18, he said. "So far there is no big impact, but maybe for the next fiscal year it may impact our profit." The group's fiscal year runs from April to March. Kato said the JAL group was not worried about delays to the MRJ regional jet. JAL has ordered 32 of the jets, Japan's first home-grown passenger plane since the 1960s. Chief architect Mitsubishi Aircraft is expected to announce a fifth delay to the project next week. ATR's family of two sizes of turboprop aircraft competes mainly with the Q400 of Canada's Bombardier . Japan Air Commuter also operates nine of those aircraft, but no decision on whether to renew or replace them is expected before 2020. In another turboprop battle, Bombardier said last month it had won a deal from Hawaii-based Island Air, knocking out ATR as the airline's sole aircraft supplier. (Additional reporting by Allison Lampert; Editing by James Dalgleish)