PARIS (Reuters) -Turboprop aircraft maker ATR said on Wednesday it would scrap development of a new model designed to take off and land on short runways and concentrate instead on its existing portfolio.

The French-Italian company, co-owned by Airbus and Leonardo, said the decision to halt the new ATR 42-600S Short Take-Off and Landing (STOL) development followed an extensive market review and lingering supply chain tensions.

ATR is the world's largest producer of regional turboprop planes, with a family of aircraft seating 42 to 78 people.

In 2019, the Toulouse-based manufacturer announced plans to develop a special version of its smallest model designed to squeeze in and out of airports with runways as short as 800 metres (2,600 feet), backed by 20 provisional orders.

Customers for the version included Air Tahiti, Papua New Guinea's PNG Air and Irish lessor Elix Aviation Capital, according to previous ATR announcements.

It said when launching the project that the new design would unlock access to 500 additional airports, reflecting rapid regional economic development in markets such as Asia.

But announcing the decision to close the project on Wednesday, ATR said the number of targeted airports in Southeast Asia that might need such a plane had shrunk because of runway extensions or the construction of nearby alternative airports.

France's Force Ouvriere union said there had been doubts over business plans and development costs. It warned of economic losses caused by the repayment of airline deposits and said ATR workers had been shocked by the decision to halt the project.

A spokesperson for ATR could not be reached for comment.

ATR enjoys a strong position in the market for turboprops, which are considered more efficient than jets over short distances, and faces limited competition.

ATR turned its attention to the small and nimble STOL variant after industry sources said Airbus had blocked plans favoured by its partner Leonardo to build a larger model with 100 seats.

In 2022, Brazil's Embraer abandoned plans to develop an all-new turboprop plane.

(Reporting by Tim Hepher; Editing by Jamie Freed)