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EMBRAER PERSPECTIVE
In India, success depends on where you
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Regional Sales Director for Embraer in Delhi Manoj Muttreja does some plainspeak on the other culprit, besides economic downturn, that has spelt trouble for airlines in India—namely, overcapacity—and stresses why small is beautiful, and very profitable
A PHOTOGRAPHS: EMBRAER
FTER YET ANOTHER PERIOD DURING WHICH THE AIRLINE INDUSTRY REPORTED HEAVY losses and carriers continued to trim flight schedules to reflect weak demand, there is still no clear indication that the bottom of the economic downturn has been reached. The first quarter financial performance of India’s two largest airlines reflects the difficult environment shared by airlines around the world. Although much of the blame for the industry’s dire predicament has been placed on the high price of oil in 2008, there is another culprit that is equally sinister: overcapacity. In the first three months of this year, the big two, Kingfisher and Jet Airways, filled just 66 per cent and 64 per cent of their available domestic seats, respectively. In absolute numbers, that translates to an average of 73 paying passengers per flight. That volume, by itself, wasn’t sufficient to generate positive margins. So how are some carriers responding to the glut of seats? Deferring new aircraft orders or outright canceling future deliveries are two ways of keeping a cap on the seat count. But airlines that can’t make the domestic market work are considering deploying their assets to access foreign markets that offer the promise of less competition and higher fares.
SMALL IS BIG: EMBRAER’S MARKET ANALYSIS SHOWS AMERICAN AND EUROPEAN FLEETS HAVE A LARGER PROPORTION OF SMALL-CAPACITY AIRCRAFT THAN INDIAN CARRIERS
‘START WITH SMALLER AIRPLANES’
“It doesn’t have to be that way” according to Manoj Muttreja, a 20-year industry veteran who has worked at Indian Airlines, Sahara and Kingfisher and is now the Regional Sales Director for Embraer in Delhi. “Our carriers don’t have to look abroad to solve their capacity problems when there is way to address 42
SP’S AVIATION
Issue 7 • 2009
them here at home. The domestic Indian traveller shouldn’t be forced to pay for today’s financial mess.” Muttreja’s colleagues in Embraer’s market intelligence www.spsaviation.net