JETS CAN DECONGEST MA­JOR HUBS

With the ma­jor hubs heav­ily con­gested, the ques­tion an­a­lysts ask is why op­er­a­tors do not con­nect re­gional air­ports with ‘right’ size air­craft with­out tran­sit­ing through the ma­jor hubs?

SP's Airbuz - - Table Of Contents - BY R. CHAN­DRAKANTH

IN­DIAN AVIATION CON­TIN­UES TO soar to greater heights. The Direc­torate Gen­eral of Civil Aviation (DGCA) has stated that In­dia’s do­mes­tic air­lines car­ried 99.89 mil­lion pas­sen­gers in 2016 as against 81.09 mil­lion in 2015, reg­is­ter­ing a 23.18 per cent growth. By 2020, pas­sen­ger traf­fic at In­dian air­ports both do­mes­tic and in­ter­na­tional, is ex­pected to in­crease to 421 mil­lion. In­dia has over­taken Ja­pan (97 mil­lion do­mes­tic pas­sen­gers) to take the third spot, but it is still way be­hind China (436 mil­lion) and the US (719 mil­lion). How­ever, In­dia will be­come the third largest mar­ket two to three years ahead of what has been pro­jected ear­lier.

While such hu­mon­gous pas­sen­ger growth is good, the wor­rysome part is that in­fra­struc­ture, par­tic­u­larly air­ports, will come un­der se­vere pres­sure, un­less of course, cor­rec­tive ac­tion is taken and in time. In­dia’s key air­ports at Delhi, Mum­bai, Ben­galuru, Hy­der­abad, Chen­nai, and Kolkata ac­count for 66.5 per cent of In­dia’s to­tal air traf­fic and the rest comes from the nearly 100 other op­er­a­tional air­ports. The six air­ports listed above are the ma­jor hubs and are fac­ing ca­pac­ity crunch. Th­ese six lo­ca­tions re­quire new air­ports by 2025-26 or even ear­lier. Mean­while, the govern­ment is de­vel­op­ing 50 un-served and un­der­served airstrips as low-cost air­ports in Tier-II and -III cities. Each of th­ese air­ports is es­ti­mated to cost be­tween 100 crore to 150 crore.

It is not just air traf­fic con­ges­tion at th­ese ma­jor hubs, Delhi and Mum­bai be­ing the worst af­fected, there ex­ist prob­lems at the ter­mi­nal level as well. This is likely to worsen as more planes get in­ducted into the fleet of the air­lines. Presently, In­dia has over 430 air­craft in ser­vice and the air­lines are ex­pected to add 100 air­craft in the next 18 to 24 months and over 700 airplanes in the next decade, all of which will add to the con­ges­tion woes of the hubs. ‘RIGHT-SIZE’ AIR­CRAFT FOR POINT-TO-POINT TRAVEL. With the ma­jor hubs heav­ily con­gested, the ques­tion an­a­lysts ask is why op­er­a­tors do not con­nect re­gional air­ports with ‘right’ size air­craft with­out tran­sit­ing through the ma­jor hubs? From the per­spec­tive of a pas­sen­ger trav­el­ling from an airport in Tier-II or -III city, presently air travel is cum­ber­some. He has to be at the airport at least 45 min­utes be­fore de­par­ture, add to that the flight time to a ma­jor hub, be­fore reach­ing fi­nal des­ti­na­tion. The lay­over time is a nui­sance. Though air travel re­duces the travel time from point-to-point, sec­ondary and ter­tiary sec­tor pas­sen­gers tend to spend more time in ac­cess­ing the airport and in lay­overs. An­a­lysts hope that in ‘ UDAN,’ re­gional connectivity will be such wherein op­er­a­tors will look at routes that will avoid ma­jor the hubs. Embraer calls it the con­cept of ‘ hub by­pass’. LONG LAY­OVERS. One of the ex­am­ples an­a­lysts give is why can’t there be a flight be­tween Madu­rai, a tem­ple town in South In­dia to Jaipur, the pink city in Ra­jasthan or vice versa and the fre­quency of th­ese flights can be de­ter­mined based on de­mand. A SpiceJet flight from Jaipur to Madu­rai takes 7 hours 55 min­utes with two lay­overs, one in Delhi for 1 hour 5 min­utes and an­other in Chen­nai for 35 min­utes. This is re­ally stretched for a pas­sen­ger who is se­ri­ously look­ing at ‘di­rect rout­ing’ op­tions, even if it means pay­ing a lit­tle ex­tra as he or she would be sav­ing on time and lay­over is­sues.

Presently, there is no such con­nec­tion and a pas­sen­ger from Madu­rai would have to make a trip via Chen­nai, Ben­galuru or Delhi which is not only ad­di­tional time in the air, but also ad­di­tional air­fare. The pas­sen­ger from Madu­rai or Jaipur or any other such un­con­nected city by di­rect flights feels let down, even while the govern­ment is mak­ing grand plans for re­gional connectivity. While it is good to con­nect a hub to a Tier-II or -III city, the ef­fort should be to con­nect Tier-II to an­other Tier-II or -III city and help decongest the hubs. RE­GIONAL JETS FOR PAN-IN­DIA COVERAGE. This could be done by de­ploy­ing a re­gional jet which can fly the re­quired dis­tance with­out any stopover. The rea­son­ing is that sin­gle-aisle air­craft such as the A320 is too big for the jour­ney, leav­ing many seats un­sold, while the tur­bo­props are ideal for short haul. It is quite a sit­u­a­tion for air­line rev­enue an­a­lysts who have to sug­gest the right air­craft for such di­rect long routes and re­gional jets are best suited to fill that slot. With seat­ing ca­pac­ity from 70 to 130, th­ese jets are not only ca­pa­ble of fly­ing the pan-In­dia dis­tance but also can have op­ti­mal loads.

As the next phase of air traf­fic growth is ex­pected from In­dia’s Tier-II and -III cities, many of th­ese pas­sen­gers be­ing first-time fly­ers, the ur­gency to pro­vide di­rect con­nec­tions to im­por­tant des­ti­na­tions across the coun­try needs no em­pha­sis. Th­ese trav­el­ers are look­ing at air travel for long routes, while for short dis­tance travel be­tween five and eight hours by sur­face trans­port, they can do it by tak­ing an overnight bus or train or even driv­ing down. Tak­ing a flight for a des­ti­na­tion which is five hours by road does not make any sense, as ac­cess to the airport it­self takes about two hours (in­clud­ing check-in time, se­cu­rity clear­ance, etc) and trav­el­ling from the airport to the des­ti­na­tion takes an av­er­age of an hour. The flight time is half hour to 45 min­utes. All one is do­ing is sav­ing about an hour, but pay­ing an av­er­age fare be­tween 2,500 and 3,000. Whether it is worth it, only the pas­sen­ger can an­swer de­pend­ing upon ur­gency and the pre­ferred mode of travel.

McKin­sey re­port on airport con­ges­tion in met­ros states that air­lines tend to de­ploy big­ger air­craft to ac­com­mo­date more pas­sen­gers. McKin­sey calls it ‘up-gaug­ing’ wherein many air­lines start us­ing big­ger planes even on short-haul flights. In 2002, nearly half of short-haul seat ca­pac­ity at Bei­jing Cap­i­tal In­ter­na­tional Airport was car­ried on wide-body air­craft. Wide-body us­age fell sig­nif­i­cantly through 2010, as de­mand picked up for travel to sec­ondary Chi­nese cities. But by 2012, a year af­ter the airport be­came sat­u­rated, a new trend be­gan. Wide-body use rose again as car­ri­ers were forced to up­gauge in or­der to han­dle the in­creased vol­ume of pas­sen­ger traf­fic.

CON­NEC­TION-HEAVY ROUTES GET DROPPED. Ev­i­dence sug­gests that as an airport gets more con­strained, air­lines drop con­nec­tion-heavy routes in favour of routes with high point-to-point de­mand, which are more prof­itable. Air­lines op­er­at­ing out of con­gested air­ports tend to in­crease the fre­quency of flights on ex­ist­ing routes, rather than of­fer new des­ti­na­tions. Be­tween 2002 and 2014, many large, un­con­strained air­ports in and around Europe ex­panded their net­works; Charles de Gaulle Airport in Paris added ap­prox­i­mately 30 new cities to its list of short-haul des­ti­na­tion list dur­ing this time, and Is­tan­bul Ataturk Airport added more than 60. Air­lines at Heathrow, how­ever, ac­tu­ally re­duced the num­ber of short-haul des­ti­na­tions they serve but in­creased the fre­quency of flights to those cities. In short, as air­ports get busier, they of­fer more flights to fewer cities; un­con­strained air­ports serve more cities, less fre­quently. This pat­tern is sim­i­lar for longer flights. Seats on di­rect flights to and from con­gested air­ports are at a pre­mium. De­mand out­strips sup­ply, which means air­lines some­times in­crease prices to fo­cus on pre­mium traf­fic. In 2012, the av­er­age price of a di­rect flight to or from Heathrow was more than three times that of nearby Gatwick.

This makes per­fect sense when the travel is from a hub to an­other hub or an­other des­ti­na­tion in de­mand which can be clas­si­fied as pri­mary mar­ket. This pri­mary mar­ket is ex­tremely com­pet­i­tive. Embraer has iden­ti­fied about 158 mar­kets which

have about four com­pet­ing air­lines with over ten daily flights and one can un­der­stand the kind of mar­gins the air­lines will be hav­ing, un­less of course, it is peak sea­son when air­fares sky­rocket. Embraer has iden­ti­fied over 800 mar­kets which have less than one to five daily flights which can be eas­ily served by a re­gional jet. Based on this mar­ket study, it has es­ti­mated an in­dus­try de­mand of up to 350 units in the 70-130 seat seg­ment. Mak­ing sim­i­lar ar­gu­ment are air­framers such as Canada’s Bom­bardier with CRJ700/900/1000 air­craft, Rus­sia’s Sukhoi of­fer­ing Su­per­jet In­ter­na­tional, China’s ARJ21, Ukraine’s Antonov with An-148/158 and Ja­pan’s Mit­subishi Re­gional Jet. EMBRAER’S E-JETS MAK­ING THE RIGHT PITCH. The Embraer E-Jet fam­ily is a se­ries of medium range twin-en­gine re­gional jet air­lin­ers, car­ry­ing 70 to 146 pas­sen­gers com­mer­cially. The Brazil­ian aerospace con­glom­er­ate Embraer has cre­ated some­thing called ‘FleetS­mart’, a com­pre­hen­sive range of fleet op­ti­miza­tion so­lu­tions based around three key prin­ci­ples – de­sign smart, ex­pe­ri­ence smart and busi­ness smart. The E-Jets 170; 175; 190 and 195 have been around the world, giv­ing op­er­a­tors an op­por­tu­nity to cap­i­tal­ize on routes that nei­ther tur­bo­props or wide-bod­ies can vi­ably han­dle. The E-Jets are de­signed for short to medium range flights, thus be­ing the an­swer to re­gional aviation. The E-Jets E2 are the lat­est of­fer­ing from Embraer and the largest air­craft in the E-Jet E2 fam­ily, the E195-E2 has been de­signed to max­i­mize re­turns and ef­fi­ciency on high-den­sity routes, where the A320s and Boe­ings can­not fly with full ca­pac­i­ties. The E195-E2 is op­ti­mized to cover more than 99.9 per cent of routes within the sin­gle-aisle seg­ment, thus tap­ping routes which are not hith­erto di­rectly con­nected.

The E2 seat­ing con­fig­u­ra­tion comes in cat­e­gories — three classes 120 seats — 12 seats @36”, 28@34” and 80@31” pitch; Sin­gle class 132 seats @31 pitch and 146 seats@28” pitch. The run­way leg­ends have been the ERJ 130; 140; 145 and 145XR. The air­liner is mak­ing the right noises for re­gional aviation, while di­rectly and in­di­rectly solv­ing the is­sue of con­ges­tion of air­ports. CHINA’S ARJ21 FO­CUS­ING ON SEC­ONDARY CITIES. China is ag­gres­sively look­ing at con­nect­ing its sec­ondary cities with re­gional jet and its ARJ21 is rightly po­si­tioned for that. The ARJ21 is the first short-medium range tur­bo­fan re­gional air­craft de­vel­oped by the Chi­nese. It has a lay­out of 78 to 90 seats and a range of 2,225 to 3,700 km. The air­craft has al­ready notched up or­ders of over 400 from 19 dif­fer­ent cus­tomers, sig­ni­fy­ing the need to fill the gap be­tween short-haul to nar­row-body air­craft and also of the need to con­nect sec­ondary cities.

Sim­i­larly, Rus­sia’s SSJ100, a 100-seater air­liner is be­ing widely used by Aeroflot to con­nect the hin­ter­land. While it has a fairly good base in Rus­sia, it has not made any sig­nif­i­cant in­roads in­ter­na­tion­ally, ex­cept in Mex­ico, Ar­me­nia and Ire­land. BOM­BARDIER’S SUC­CESS­FUL RE­GIONAL JET PRO­GRAMME. Mak­ing a strong case for re­gional jets is Bom­bardier’s CSeries air­craft, the only sin­gle-aisle plane specif­i­cally de­signed to serve the 100-150 seat mar­ket. This drives the air­craft’s phe­nom­e­nal economic propo­si­tion and per­for­mance, opening up new op­por­tu­ni­ties in this seg­ment. And for medi­umhaul ap­pli­ca­tions, the CRJ Se­ries fam­ily of air­craft is the bench­mark for re­gional jet ef­fi­ciency in the 60 to 100-seat seg­ment, of­fer­ing up to ten per cent ad­van­tage in op­er­at­ing cost, re­duced en­vi­ron­men­tal im­pact and en­hanced cabin in­te­ri­ors. With over 1,900 CRJ Se­ries air­craft or­dered world­wide, Bom­bardier’s CRJ Se­ries fam­ily of re­gional jets is recog­nised as the most suc­cess­ful re­gional air­craft pro­gramme in the world.

Then there is the Antonov An-148 which has a max­i­mum range of 2,100-4,400 km and is able to carry 68-85 pas­sen­gers de­pend­ing upon the con­fig­u­ra­tion. The Antonov An-158 is a stretched fuse­lage ver­sion of the air­craft, ac­com­mo­dat­ing up to 99 pas­sen­gers. Mean­while, Mit­subishi Heavy In­dus­tries (MHI) has an­nounced that the first de­liv­ery of the Mit­subishi Re­gional Jet (MRJ) will take place be­tween mid-2018 to mid-2020, a pro­gramme de­layed, but it is on as there is a mar­ket for the medium-range air­craft.

Th­ese smaller “right-sized” air­craft of­fer a new strate­gic mind­set to the air­line, as it drives a shift from com­pet­ing to cre­at­ing new mar­ket space and seek­ing un­tapped op­por­tu­ni­ties. Be­sides op­por­tu­ni­ties, it helps in de­con­ges­tion of hubs across the world.

SMALLER “RIGHT-SIZED” AIR­CRAFT OF­FER A NEW STRATE­GIC MIND­SET TO THE AIR­LINE, AS IT DRIVES A SHIFT FROM COM­PET­ING TO CRE­AT­ING NEW MAR­KET SPACE AND SEEK­ING OUT UN­TAPPED OP­POR­TU­NI­TIES

Embraer E195-E2 has been de­signed to max­i­mize re­turns and ef­fi­ciency on high-den­sity routes

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