Why are foreign cos keen to sell smaller planes to India?

Aircraft manufacturers Bombardier and Embraer are making a pitch for small jets to connect Tier-II and Tier-III towns with metros.

With these jets, which have fewer than 120 seats, these companies are promising lower seat-km costs.

Seat-km cost is the unit cost incurred to fly a certain number of passengers on a particular route.

Currently, domestic airlines fly narrow-bodied Boeing 737s or Airbus A320s, which have about 180 seats.

While Air India, Jet Airways and SpiceJet fly turboprops (40-80 seats), regional operator Air Costa flies two Embraer E-170 jets, with 67 seats, in south and west India.

To expand its regional network, Air India has invited bids for eight 70-80 seater turboprops, while IndiGo is exploring plans to create a separate subsidiary to link small towns with ATR turboprop planes.

Last month, Air Costa had ordered 50 Embraer E190-E2 and E195-E2 jets, with a capacity of 98-118 seats. Deliveries of the E2 jets will begin in 2018.

Brazilian aircraft manufacturer Embraer sees strong growth prospects for small jets in India.

Mark Dunnachie, vice-president (Asia-Pacific), Embraer Commercial Aviation, says, “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 10-20 years, we expect demand for 200 aircraft in the 70-120-seater category from India. We expect we will have a significant share of that.”

The E2 aircraft will give Indian airlines flexibility to redraw schedules — airlines can fly a Boeing 737 or an Airbus A320 during the morning rush hour and a 120-seater in the afternoon, with travel demand is low. Dunnachie said many airlines, including LOT Polish Airlines and Jet Blue, deploy Embraer jets during non-peak hours.