COMMERCIAL REGIONAL AVIATION
sar, Bhopal, Coimbatore, Guwahati, Kochi, Lucknow, Mangalore,
Pondicherry which are classified as Tier-II, are witnessing rapid
economic development. Similarly, in China, Tier-II cities such
as Chengdu, Sichuan, Chongqing, Dalian, Liaoning, Hangzhou,
Ningbo, Zhejiang, Kunming, Yunnan, Nanjing, Suzhou, Jiangsu,
Qingdao, Shandong, Tianjin, Shenzhen and Zhuhai, Guangdong,
Wuhan, Hubei, Xiamen, Fujian, Xi’an and Shaanxi are rapidly
getting into the mainstream. Besides, there are approximately
200 county-level cities in China that fall in the category of Tier-III
cities such Zhongshan, Shantou, Xining and Baoding.
Planning Considerations
In this scenario where all modes of transportation will be at different levels of advancement, air transport certainly will be the
one lagging behind for obvious reasons. Investments are high,
margins are thin and entrepreneurs have to be daring. This
certainly calls for extensive planning and foresight on the part
of an airline operator on not just how to nurture the nascent
market, but to remain in tune with developments. A classic
example of forward planning is that of Vijayawada-based Air
Costa which was launched in late 2013 with Embraer E-170
Jets with seat configuration of 67. It presently connects TierII cities such as Jaipur, Coimbatore, Ahmedabad, Visakhapatnam, Vijayawada, as well as the metros Bengaluru, Chennai
and Hyderabad. The operator claims to have respectable plane
load factor and if the going is good, then the operator has to
make the next move. In fact, Air Costa
has already done so by ordering 50
Embraer E-190 E2 and E195-E2 jets
which will have seat capacities of 98
to 118. These routes which currently
are thin, are expected to grow. Air
Costa can then deploy the E-170s to
other Tier-II and III cities.
Flying narrow-body planes such as
the Boeing 737 or Airbus A320 which
have about 180 seats on thin routes,
does not make any business sense as
the demand is not there. Demand has
to be created and nurtured and this
will take time. Airlines such as SpiceJet, Air India and the defunct Kingfisher Airlines used turboprops on the thin routes.
A320 during the morning rush hour and
a 120-seater in the afternoon, when the
demand for travel is low. Dunnachie said
many airlines including LOT Polish Airlines
and Jet Blue deploy Embraer jets during nonpeak hours.
Embraer’s Rule 70-110
Embraer states that several mainline aircraft with high number
of seats are increasingly flying routes where the demand is low.
Meanwhile, regional markets are still expanding, putting pressure on the current breed of regional jets to carry more passengers more frequently. Clearly, passenger demand is trending
towards the 70- to 110-seat segment, a range for which an efficient aircraft family didn’t exist until now. In other words, the
industry is facing an acute equipment gap at the same time a
relevant portion of the segment’s fleet is approaching the end of
its economic operational life.
Demand-Capacity Gaps
Embraer states that mainline jets with 120-plus seats are
effective in serving large-market, high volume city pairs. And
on lower demand routes, 50-seat regional jets have been successful. However, market volumes requiring 70- to 110-seat
jets are currently being served inefficiently due to the industry’s lack of optimised aircraft. Commercial carriers have a
limited number of options to right-size
fleets for efficient operation in the 70- to
110-seat category. Neither current mainline aircraft nor regional jets are best
suited to serve the emerging 70- to 110seat market.
Acquiring incrementally
larger aircraft helps
retain passengers
and keeps an airline
competitive as well as
more profitable.
Matching Size with Demand
Canadian aerospace major Bombardier and Brazilian giant
Embraer have started making a pitch for small jets to connect
small towns to the cities and metros. They have jets which are
configured to provide seating between 70 and 120, thus promising operators a lower seat-km costs. Seat-km cost is the unit
cost incurred to fly a certain number of passengers on a particular route.
Brazilian aircraft manufacturer Embraer sees strong
growth prospects for small jets in India. “About 84 per cent
of all routes in the Asia-Pacific have demand of less than 300
seats. Airlines need to have aircraft that offer the right capacity
and cost structure. The E2 jets will offer 20 per cent lower trip
costs than a Boeing 737 Max or an Airbus A320neo. In 10 to 20
years, we expect demand for 200 aircraft in the 70- to 120-seat
category from India. We expect we will have a significant share
of that,” says Mark Dunnachie, Vice President (Asia-Pacific),
Embraer Commercial.
The E2 aircraft will give the Indian carriers flexibility to
redraw schedules. Airlines can fly a Boeing 737 or an Airbus
www.sps-aviation.com
Regional Jets (RJ) Stretched
As regional city pair frequencies reach
their schedule limits, fully-booked,
prime-time 50-seat RJ flights can often
spill passengers. With a growing need to
serve new long and thin markets, RJs are
increasingly being pushed to enhance
frequency in the drive to sustain revenue growth and market share. New longer distance missions
require greater focus on cabin comfort and passenger amenities with baggage and cargo capacities similar to those found
on mainline jets. Like the large capacity narrow-body jet operators, regional carriers have few equipment options to serve
emerging demand in the 70- to 110-seat market segment.
Ageing Commercial Fleet
More than one-third of the world’s in-service fleet of 61-to
120-seat aircraft are over 20 years in age and approaching
the end of their economic lives. Fleet planners are challenged
with making the right decision for their airline in the existing
operating environment while anticipating the airline industry’s future. Retiring older aircraft gives operators the opportunity to optimise fleets, right-sizing for profitability in the
70-to 110-seat market.
Embraer states that the logic behind the Rule of 70 to 110 is
easy to understand. Put simply, the Rule suggests that ideally, a
carrier match aircraft capacity to passenger demand precisely.
Currently, some flights don’t carry enough revenue passengers
to cover operating costs. Yet other flights sp