Wednesday, June 9, 2010

Low-, Medium-Density Indian Routes Remain Untapped


AWIN First Jun 08 , 2010
Neelam Mathews

Regional-jet maker Embraer thinks Indian commercial aviation needs more regional and short-haul links and is aggressively targeting airlines in India, Aviation DAILY has learned.

The Brazilian airframer is in talks with all the budget- and full-service carriers in India to replace and/or add a regional-jet element to their fleet, eyeing 383 low- and medium-density routes across the country. Embraer says India will need 200-250 regional jets (RJs) and turboprops by 2020, a radically different view than Boeing, whose recent market outlook saw a requirement for only 60 regional jets in India through 2028.

Indian domestic carriers flew 44 million Indian passengers last year. Of this, 17 million were concentrated in 24 city pairs across major metro cities, known as category 1. The balance, 27 million passengers, flew in low- and medium-density markets (category 2 and 3), says Embraer in a report soon to be made public.

“We see an imbalance of Indian regional fleet compared to matured economies,” says Luiz Sergio Chiessi, Vice President, Market Intelligence and Airline Market. “Planes with 100 to 120 seats are an important tool for Indian carriers to feed hubs from low- and medium-density routes.”

India has a narrow-body fleet of 261 and only 20 regional jets. “This means that Indian carriers have been looking at the high-density market rather than medium. We believe the market will evolve as it has in the U.S and Europe once it matures,” says Chiessi.

Embraer says its E-Jets (smaller E-170 and E-175 and the E-190 and E-195 stretched versions) will strengthen the base for narrowbodies in India because major carriers can use them either to complement the bigger aircraft during off-peak hours or substitute a fleet on secondary routes.

In the non-metros sector, 133 routes have less than one frequency a day.

“This doesn’t provide an adequate frequency to passengers,” says Alex Glock, Managing Director, Embraer Asia Pacific.

The potential for RJs is immense. “It is no wonder why other forms of transport are used such as first-class rail, with its fare equivalent to airfare.”

A large number of low- and medium-density routes remain unused as they are not profitable to run by narrow-bodies, says Embraer. The manufacturer says there are around 2,500 such possible routes. Last year, 29 markets were lost as airlines stopped flying to them as a result of low load factors. This is where RJs and turboprops have a role to play, Glock says.

Embraer expects to announce a procurement order by the end of this year, which may not be in big numbers initially. The emerging economy, though ready, is not fully aware of the benefits of running a smaller plane on low- and medium-density routes. “We will move in small steps...but will get there,” says Chiessi.

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