RE­GIONAL JETS IN IN­DIA EX­TINC­TION OR RE­BIRTH?

THE AR­TI­CLE ES­TAB­LISHES THAT RE­GIONAL JETS ARE NOT EX­TINCT BIRDS. IN­STEAD, THINK OF THEM AS RIS­ING LIKE A PHOENIX.

SP's Airbuz - - Front Page - AN SP GUIDE PUBLICATION

THE LIST OF AIR­LINES that once flew re­gional jets – Paramount Air­ways, Air Costa – and some that never got off the ground or are strug­gling to take off – Star Avi­a­tion and Flyeasy – seems to be grow­ing. Given the dou­ble-digit an­nual jump in pas­sen­ger en­plane­ments, why hasn’t the re­gional jet rev­o­lu­tion landed in In­dia? It trans­formed air travel in North Amer­ica and Europe, and has a strong foothold in China, the three big­gest air travel mar­kets in the world. Even Brazil and the African con­ti­nent are home to a siz­able fleet of 70 to 100-seat re­gional jets. Yet in In­dia, a coun­try poised to be­come the globe’s fourth largest air travel mar­ket in the next decade, you have to ask “where are all the re­gional jets?” A DIS­AP­PEAR­ING SPECIES. Look hard and you’ll find fewer than ten RJs – 50-seat Em­braer RJs at Horn­bill Air­lines and Bom­bardier CRJs at SpiceJet – com­pared to more than 500 sin­gleaisle com­mer­cial jets reg­is­tered to In­dian air­lines. RJs ac­count for fewer than 2 per cent of the na­tional fleet. That low per­cent­age con­trasts with the more than 25 per cent share in the North Amer­i­can and Euro­pean mar­kets, both of which have huge se­condary and ter­tiary cities, much like In­dia. FOR­MULA FOR SUC­CESS. With fewer seats and flights on shorter sec­tors, RJs don’t gen­er­ate the same vol­ume of avail­able seat kilo­me­ters as larger, sin­gle-aisle jets. Even though an RJ’s trip cost is lower than that of a big­ger jet, amor­tiz­ing the lower trip cost over fewer seats pro­duces a higher cost per avail­able seat. One way to re­duce that num­ber is to in­crease daily uti­liza­tion.

An RJ must work hard to pro­duce a suf­fi­cient num­ber of flight hours for the op­er­at­ing eco­nom­ics to be at­trac­tive. This is char­ac­ter­is­tic of mar­kets in which low-fare, low-cost air­lines dom­i­nate and ticket prices are chron­i­cally low, like In­dia’s. RJs fly­ing from dawn to dusk face the added stress of more take offs and land­ings that are as­so­ci­ated with de­ploy­ment on short-dis­tance routes. High-cy­cle op­er­a­tions neg­a­tively im­pact main­te­nance costs.

There is of­ten lit­tle slack built into a re­gional jet’s flight sched­ule. Through­out the day, RJs must land, be ser­viced, un­load and load pas­sen­gers, and de­part for the next flight in as few as 30 min­utes. In re­gions with ma­ture RJ op­er­a­tions, it’s com­mon to find an RJ in the air 10 hours per day, 3,400 hours per year. Air­craft re­li­a­bil­ity is es­sen­tial to main­tain sched­ule in­tegrity. IN­DIA’S UL­TRA-LOW DO­MES­TIC FARES. Prior to the near col­lapse of the do­mes­tic air­line in­dus­try at the end of the last decade, lo­cal air­fares were de­clin­ing in a frenzy of new com- pe­ti­tion across the coun­try. The re­sult was the low­est rev­enue per pas­sen­ger kilo­me­tre among Asian coun­tries with do­mes­tic ser­vices. In­dia ranked at the bot­tom, be­low Ja­pan, China, Thai­land, In­done­sia, Aus­tralia and the Philip­pines.

Even after re­group­ing fol­low­ing air­line bank­rupt­cies and con­sol­i­da­tion, In­dian yields are still far be­low those of other Asian na­tions. New com­pe­ti­tion, mas­sive or­ders for new 150-seat air­planes, and ag­gres­sive pos­tur­ing by LCCs con­tinue to put pres­sure on do­mes­tic ticket prices.

Ul­tra-low fares in key mar­kets of­ten in­flu­ence fare lev­els in se­condary and ter­tiary mar­kets. Even though short-dis­tance routes char­ac­ter­is­ti­cally have high yields, that pre­mium can be un­der­mined if LCCs en­ter a nearby mar­ket and di­vert traf­fic orig­i­nat­ing in RJ cities to their net­work hubs. Re­gional air­lines usu­ally must match LCC fare dis­counts in order to re­tain that orig­i­nat­ing traf­fic. BREAKS FOR RE­GIONAL AIR­LINES. Re­cent re­forms to land­ing fees for re­gional air­craft, a re­duc­tion in the avi­a­tion tur­bine tax, the elim­i­na­tion of a min­i­mum fleet size for start-up car­ri­ers, and the Re­gional Con­nec­tiv­ity Scheme have gone a long way to en­tice air­lines to open routes with lower de­mand. But those ef­forts still haven’t en­cour­aged car­ri­ers to add RJs to their fleets. ARE TUR­BO­PROPS THE AN­SWER?. IndiGo’s order for 50 ATR 72s sent a clear mes­sage that tur­bo­props may be more sus­tain­able than RJs, par­tic­u­larly after Air Costa, with its fleet of Em­braer E-Jets, sus­pended op­er­a­tions last year. With their lower unit costs, high cruise speed, lighter struc­tural weight and lower fuel burn that RJs, tur­bo­props are a com­pelling so­lu­tion to In­dia’s low-fare en­vi­ron­ment.

Both IndiGo, with its ATR 72s and SpiceJet, with its Q400s, have tapped into new de­mand in se­condary mar­kets. The car­ri­ers are de­ploy­ing those 70- to 78-seat air­craft on short-haul routes with the right com­bi­na­tion of ca­pac­ity and fre­quency that likely makes their eco­nom­ics bet­ter than an RJ, es­pe­cially should the price of jet fuel start to creep up. IS THERE A FU­TURE FOR RJS?. There is a cross­over point, measured by dis­tance, where the ef­fi­ciency of a jet sur­passes that of a tur­bo­prop. Longer sec­tors hold the key to the RJ’s suc­cess where non­stop flights that re­place hub con­nec­tions can com­mand higher yields.

For now, tur­bo­props are help­ing to grow do­mes­tic net­works by feed­ing traf­fic and tap­ping into the grow­ing de­mand to and from se­condary mar­kets. But if the fore­cast for growth in pas­sen­ger en­plane­ments for the next decade proves ac­cu­rate, longdis­tance RJ fly­ing may be­come more at­trac­tive.

To­day’s RJs have come a long way from the small, cramped, lim­ited-range air­craft of ear­lier gen­er­a­tions. Fly­ing non­stop from the north all the way to south or across the breadth of the coun­try is more com­fort­able and more eco­nom­i­cal with an RJ. Ad­vances in engine tech­nol­ogy have low­ered fuel burn and other im­prove­ments, some RJ man­u­fac­tur­ers claim, have made the op­er­at­ing cost of their new air­planes com­pet­i­tive with larger sin­gle-aisle jets.

It’s an in­trigu­ing prospect – smaller ca­pac­ity RJs, non­stop flights that by­pass hubs, higher yields, lower unit costs – that may just mean that RJs will once again find their place in In­dian skies.

Don’t think of them as ex­tinct birds. In­stead, think of them ris­ing, like a phoenix.

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