“WE WILL HAVE A LOT OF FO­CUS ON ASIA-PA­CIFIC”

John Slat­tery, Pres­i­dent & CEO Em­braer Com­mer­cial

SP's Aviation - - FRONT PAGE -

Jayant Baran­wal (JB): As Pres­i­dent & CEO, what do you think is the most dif­fi­cult chal­leng­ing task you need to deal with as you head one of the most pro­gres­sive re­gional air­craft man­u­fac­tur­ers in the world?

John Slat­tery (Slat­tery): Th­ese are ex­cit­ing times for Em­braer – the de­vel­op­ment of our E-Jets E2 jets is on time, on bud­get and on sched­ule for their test pro­gramme and the first of the E2s, the E190-E2, is due to be de­liv­ered next year, in 2018. The most re­cent up­dates of the test pro­gramme are that the fourth E190-E2 has made its first flight, and the first E195-E2 pro­to­type per­formed the first flight by the end of March.

What is key for us now is to keep our mo­men­tum and main­tain our lead­er­ship po­si­tion in the 70-130 plus seat seg­ment. To date we have de­liv­ered more than 1,300 cur­rent gen­er­a­tion E-Jets to 70 air­lines in 50 coun­tries. We also have 690 com­mit­ments for E-Jets E2, which we are ex­pect­ing to grow in the near fu­ture.

JB: Ac­cord­ing to you, what is the most im­por­tant fea­ture unique to of­fer­ings of Em­braer Com­mer­cial Avi­a­tion mak­ing it dif­fer­ent to the com­pe­ti­tions?

Slat­tery:

Over the years, we have demon­strated that we are in­no­va­tive! For ex­am­ple, we were quick to spot and seize the gap in the 70-110 seats mar­ket 17 years ago, when we started the E-Jets pro­gramme. We found a niche where our air­craft would add value to air­lines. Since then, other man­u­fac­tur­ers have also joined this space.

Our air­craft are known for their per­for­mance and re­li­a­bil­ity — E-Jets have an av­er­age ser­vice re­li­a­bil­ity of 99.5 per cent. Last year, Fuji Dream Air­lines in Ja­pan achieved a 12-month ser­vice re­li­a­bil­ity av­er­age of 99.83 per cent — that is the high­est among all E170/E175 op­er­a­tors. Air Costa’s 2016 av­er­age ser­vice re­li­a­bil­ity was

99.45 per cent.

The E-Jets E2s will fea­ture im­proved ca­pac­ity, range, main­te­nance costs and fuel ef­fi­ciency, which will add value to op­er­a­tors. Em­braer also col­lab­o­rates very closely with its cus­tomers, keep­ing our ears tuned to what the cus­tomer wants. Our can-do at­ti­tude have en­abled us to at­tain very high cus­tomer sat­is­fac­tion rat­ings.

JB: What is the mar­ket share of Em­braer Com­mer­cial in Amer­i­cas, Europe, Mid­dle East, Central Asia, South East Asia, Aus­tralia/Pa­cific Rim and China?

Slat­tery:

Em­braer is the third largest com­mer­cial air­craft man­u­fac­turer. Glob­ally it has a mar­ket share (in terms of de­liv­ery) of more than 60 per cent in the 70/130-seat seg­ment. In China, for in­stance, Em­braer holds more than 80 per cent of mar­ket share in the 100-seat jet mar­ket.

JB: Which is the most im­por­tant mar­ket for Em­braer Com­mer­cial to­day in the world as of to­day? And which is the most promis­ing mar­ket in the world for com­ing years?

Slat­tery:

We are a global or­gan­i­sa­tion to­day. We have 100 com­mer­cial jet cus­tomers in over 50 coun­tries around the world and we have a core ob­jec­tive of con­tin­u­ally broad­en­ing our fran­chise foot­print in terms of op­er­a­tor base and ge­og­ra­phy. We have very large mar­kets in the United States and in Europe, but I would say that one area we will have a lot of fo­cus on in 2017 and 2018 is Asi­aPa­cific, in­clud­ing China.

It is a mar­ket that we are spend­ing a lot of time un­der­stand­ing the cus­tomer re­quire­ments in that re­gion, and are in­vest­ing a lot of hu­man

“WHAT IS KEY FOR US NOW IS TO KEEP OUR MO­MEN­TUM AND MAIN­TAIN OUR LEAD­ER­SHIP PO­SI­TION IN THE 70-130 PLUS SEAT SEG­MENT. TO DATE WE HAVE DE­LIV­ERED MORE THAN 1,300 CUR­RENT GEN­ER­A­TION E-JETS TO 70 AIR­LINES IN 50 COUN­TRIES.”

cap­i­tal re­sources into our re­gional of­fices in both Bei­jing and Sin­ga­pore in ad­di­tion to lo­cal on­site ware­house and lo­gis­tics sup­port. I’m ex­cited about the op­por­tu­ni­ties for Em­braer in Asia-Pa­cific. The in­sight­ful China re­gional avi­a­tion pol­icy is­sued by the CAAC looks to de­velop avi­a­tion links to the sec­ondary and ter­tiary cos­mopoli­tan ar­eas. There are sim­i­lar ini­tia­tives in In­dia, and are part of the gov­ern­ment’s in­creas­ing fo­cus on the proven benefits of re­gional avi­a­tion.

Thanks to the op­er­at­ing cost per seat and per trip of the E195-E2 and its en­larged size (three ex­tra rows), I be­lieve we now have a very com­pet­i­tive propo­si­tion to present to the LCCs. As the LCCs con­tinue to de­velop, we ex­pect they are go­ing to look for new mar­kets to serve. As this model de­mands con­tin­ued ca­pac­ity growth, I be­lieve th­ese air­lines will now look to serve sec­ondary and ter­tiary cos­mopoli­tan ar­eas that can be done more prof­itable and sus­tain­ably by right-siz­ing the air­craft.

With the E195-E2, which is a profit hunter, we have changed the par­a­digm of op­er­at­ing costs that ex­ists and cou­pled with the ex­tended range and op­er­at­ing per­for­mance of the air­craft, there­fore, I be­lieve we now have a very at­trac­tive offering for the LCCs.

Based on Em­braer’s stud­ies, two-thirds of un­der­served mar­kets within In­dia are too thin in pas­sen­ger de­mand for large nar­row­body air­craft op­er­a­tions and more than 80 per cent of th­ese mar­kets have stage lengths too long for vi­able tur­bo­prop op­er­a­tions. It is fore­cast that by 2020, there will be more than 120 un­der­served mar­kets with an av­er­age stage length of more than 1,000 km. Th­ese mar­kets are more op­ti­mally served by 80- to 130-seat jets offering the ideal ca­pac­ity size for thin pas­sen­ger de­mand and with the ad­e­quate range ca­pa­bil­i­ties.

JB: Can you elab­o­rate a lit­tle on the cut­ting-edge tech­nolo­gies Em­braer Com­mer­cial must be work­ing to­wards, re­lent­lessly?

Slat­tery:

The E-Jets E2 air­craft will fea­ture new aero­dy­nam­i­cally ad­vanced, high-as­pect ra­tio, dis­tinc­tively shaped wings, im­proved sys­tems and avion­ics, in­clud­ing fourth-gen­er­a­tion full fly-by­wire flight con­trols, and Pratt & Whit­ney’s PurePower Geared Tur­bo­fan high by­pass ra­tio en­gines (PW1700G on the E175-E2; PW1900G on the E190-E2 and E195-E2). All th­ese im­prove­ments will re­sult in a re­duc­tion in fuel con­sump­tion by over 24 per cent and more than 20 per cent lower main­te­nance costs, im­proved emis­sions, noise and in­creased air­craft avail­abil­ity.

JB: Can you elab­o­rate on the plans/ ini­tia­tives on the part of Em­braer Com­mer­cial ad­dress­ing the need of Greener Skies?

Slat­tery:

Em­braer and Boe­ing have been work­ing on the Boe­ing ecoDe­mon­sta­tor pro­gramme. The pro­gramme is de­signed to test tech­nolo­gies to im­prove air­plane en­vi­ron­men­tal per­for­mance and ac­cel­er­ate their in­tro­duc­tion into the mar­ket­place.

An Em­braer E170 served as the fly­ing test­bed and fea­tures ad­vanced en­vi­ron­men­tal tech­nolo­gies that will un­der­went op­er­a­tional test­ing in Brazil. The ecoDe­mon­stra­tor flights has been test­ing test sev­eral tech­nolo­gies de­signed to re­duce car­bon emis­sions, fuel use and noise.

Also, Em­braer has been work­ing with in­dus­try part­ners and air­lines for years to ad­vance bio­fuel pro­duc­tion. In March 2016, KLM Royal Dutch Air­lines launched a se­ries of around 80 bio­fuel flights from Oslo to Am­s­ter­dam op­er­ated with an Em­braer 190. On th­ese flights, Em­braer had been con­duct­ing mea­sure­ments to gauge the ef­fi­ciency of bio­fuel in com­par­i­son with kerosene.

JB: Ac­cord­ing to you, what kind of econ­omy of the cost of op­er­a­tions E-Jets of­fer to its op­er­a­tors? Slat­tery:

The E-Jets E2 has a very high com­mon­al­ity (A/A/A) with the cur­rent E-Jets and a tran­si­tion train­ing of less than three days, without the need for a full flight sim­u­la­tor or high­level flight train­ing de­vice is re­quired. The E-Jets E2 air­craft will fea­ture new aero­dy­nam­i­cally ad­vanced, high-as­pect ra­tio, dis­tinc­tively shaped wings, im­proved sys­tems and avion­ics, in­clud­ing fourth-gen­er­a­tion full fly-by-wire flight con­trols, and Pratt & Whit­ney’s PurePower Geared Tur­bo­fan high by­pass ra­tio en­gines (PW1700G on the E175-E2; PW1900G on the E190-E2 and E195-E2). All th­ese im­prove­ments will re­sult in a re­duc­tion in fuel con­sump­tion by over 24 per cent, 25 per cent lower main­te­nance costs, im­proved emis­sions, noise and in­creased air­craft avail­abil­ity.

The E-Jets E2 is ca­pa­ble of achiev­ing sim­i­lar costs per seat of larger reengined nar­row­body air­craft, with sig­nif­i­cantly lower costs per trip, thus cre­at­ing new op­por­tu­ni­ties for lower risk de­vel­op­ment of new mar­kets and fleet right-siz­ing by air­lines.

“WE HAVE VERY LARGE MAR­KETS IN THE US AND IN EUROPE, BUT I WOULD SAY THAT ONE AREA WE WILL HAVE A LOT OF FO­CUS ON IN 2017 AND 2018 IS ASIA-PA­CIFIC, IN­CLUD­ING CHINA.”

JB: And what kind of com­forts be­ing of­fered to the pas­sen­gers, the en­duser of the E-Jets?

Slat­tery: With no mid­dle seats, E-Jets

BASED ON EM­BRAER’S STUD­IES, TWOTHIRDS OF UN­DER­SERVED MAR­KETS WITHIN IN­DIA ARE TOO THIN IN PAS­SEN­GER DE­MAND FOR LARGE NAR­ROW­BODY AIR­CRAFT OP­ER­A­TIONS AND MORE THAN 80 PER CENT OF TH­ESE MAR­KETS HAVE STAGE LENGTHS TOO LONG FOR VI­ABLE TUR­BO­PROP OP­ER­A­TIONS. IT IS FORE­CAST THAT BY 2020, THERE WILL BE MORE THAN 120 UN­DER­SERVED MAR­KETS WITH AN AV­ER­AGE STAGE LENGTH OF MORE THAN 1,000 KM. TH­ESE MAR­KETS ARE MORE OP­TI­MALLY SERVED BY 80- TO 130-SEAT JETS OFFERING THE IDEAL CA­PAC­ITY SIZE FOR THIN PAS­SEN­GER DE­MAND AND WITH THE AD­E­QUATE RANGE CA­PA­BIL­I­TIES.

fam­ily has given each pas­sen­ger an un­prece­dented level of per­sonal space, set­ting a bench­mark. E-Jets E2 brings an evo­lu­tion of the bench­mark. In­creased space for pas­sen­gers, new lev­els of con­nec­tiv­ity and in­ge­nious seat con­fig­u­ra­tion op­tions (like stag­gered seats in busi­ness class) de­liv­ers an ex­pe­ri­ence that is more com­fort­able and more mem­o­rable. The E-Jets E2 have been de­signed in part­ner­ship with award-win­ning de­sign firm Pri­est­manGoode, with its in­te­rior cabin de­sign recog­nised for Best In­te­rior by the

Crys­tal Cabin Award.

JB: Sur­vival, Sus­te­nance and Growth — th­ese fac­tors re­main more or less chal­leng­ing for the air­lines in­dus­try to­day. Do you agree on this? Where do you see the in­dus­try head­ing through the prism of th­ese cru­cial fac­tors? Slat­tery:

In an en­vi­ron­ment of oil price un­cer­tainty, air­lines are look­ing for more ef­fi­cient air­craft as well as a more en­vi­ron­men­tal-friendly tech­nolo­gies. The E2s are the most ef­fi­cient plat­form with an op­ti­mised range to open up new routes and rev­enue streams. The E-Jets E2s are built on the proven ef­fi­cien­cies of the E-Jets fam­ily and have the low­est op­er­a­tional costs in the seg­ment. The E195-E2, for ex­am­ple, has 24 per cent bet­ter fuel con- sump­tion per seat com­pared to the E195-E1.

JB: As you know the air­line in­dus­try is show­ing a steady de­cline in pas­sen­ger fares and yields are fore­cast to be lower through 2017; how will this af­fect the de­mand of small­er­ca­pac­ity air­craft such as E-Jets ac­cord­ing to you? Slat­tery:

Many air­lines are grow­ing but few are de­liv­er­ing the ap­pro­pri­ate re­turn to share­hold­ers. They need a new tool that al­lows them to un­cover new op­por­tu­ni­ties to achieve higher prof­itabil­ity while keep­ing com­pet­i­tive unit cost. That is what the E195-E2 was de­signed for. It is a Profit Hunter!

Em­braer has ap­plied the lessons learned from over 17 mil­lion flight hours of ex­pe­ri­ence we have with cur­rent gen­er­a­tion, which re­sulted in 20 per cent lower trip cost than larger new gen­er­a­tion NB (MAX8 and A320­neo) with sim­i­lar seat cost. That means much less risk and a lot of op­por­tu­nity to de­velop new mar­kets with bet­ter yields. It has 10 per cent more seats than the di­rect com­peti­tor (CS100) and is still able to keep the same trip cost. The E195-E2 will be the ideal air­craft for re­gional busi­ness growth as well as low­cost busi­ness plans and com­ple­ment­ing ex­ist­ing main­line fleets;

“THE IN­SIGHT­FUL CHINA RE­GIONAL AVI­A­TION POL­ICY IS­SUED BY THE CAAC LOOKS TO DE­VELOP AVI­A­TION LINKS TO THE SEC­ONDARY AND TER­TIARY COS­MOPOLI­TAN AR­EAS. THERE ARE SIM­I­LAR INI­TIA­TIVES IN IN­DIA, AND ARE PART OF THE GOV­ERN­MENT’S IN­CREAS­ING FO­CUS ON THE PROVEN BENEFITS OF RE­GIONAL AVI­A­TION.”

SPEARHEADING GROWTH:

JOHN SLAT­TERY BRINGS A HOST OF PRAGAMATIC PLANS AND STRAT­EGY FOR THE COM­PANY

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