CIVIL REGIONAL AVIATION priorities and many are even prepared to accept salary cuts to avoid being laid off. Prices would have come down more sharply but for the fall in the rupee against the US dollar. Airlines are paying more in rupees for items like aircraft lease rentals and most maintenance costs as both these are generally quoted in US dollars. Airlines have slashed schedules, cut jobs and reduced overheads to contain losses. Yet they cannot break even—blame it on falling demand and low ticket prices. Paradoxically, some regional airlines worldwide hardly seem affected and are, in fact, in the expansion mode. Perhaps the “small is beautiful” principle applies—their strategies can be finetuned for their market niche. Their costs are competitive, and their service is sometimes targeted at relatively price-insensitive customers, producing a healthy profit. In many cases, regional airlines achieve higher load factors than narrowbodies, illustrating why regional jets are ubiquitous today. Regional carriers survive by concentrating on high-yield traffic in low-density markets. Although they have fewer seats and higher seat costs, they fly higher loads and often charge significantly higher fares than national carriers. Paramount Airways, expected to have a fleet strength of 27 by the end of the year, could well serve as a model. Though not operating under official regional aviation rules, it currently meets many of the criteria of a regional airline. What is more, it is one of the few Indian carriers seemingly unaffected by the woes besetting the industry. It is the first in India to launch the new generation Embraer 170/190 series aircraft. When “no frills” was the flavour of the season, the airline stuck to the top end—business and first class. It was the only airline to offer full business class service at prices only marginally higher than economy class of other full-service airlines. At the same time, it preferred steady Many regional growth to rapid expansion. airlines This seems to have enabled it worldwide to weather the storm that many now operate or airlines are facing due to huge losses consequent to reckless plan to induct expansion. Strongly positive in aircraft that are approach, it has been rewardlarger and faster, ed by increasing market share as rivals have slashed capacity and due to mounting losses. THE FUTURE BECKONS
Improved engine design will, perhaps, be the key to even better regional airline performance in future. The twin pressures of environmental 34
SP’S AVIATION
Issue 2 • 2009
capable of flying longer ranges
concerns and fuel costs are likely to make the clamour for more fuel-efficient engines louder. The primary target of most greens is the short- haul flight for which either alternatives exist or can be created by way of high speed rail, luxury buses etc. Many conscientious travellers seem convinced that in the interest of saving the planet they need to shun short air journeys even if they cannot avoid long-distance ones. As for the price of oil, savage production cuts coupled with a rebound in flagging demand, are more than likely to send prices sharply northward again. The only question is when. Important requirements for regional airliners include a 20 per cent reduction in speFUTURE BRIGHT: REGIONAL JETS SUCH cific fuel consumption, a AS BOMBARDIER’S CRJ, SEEN HERE IN higher power-to-weight AIR SAHARA (NOW JETLITE) COLOURS, ARE EXPECTED TO EMERGE AS ratio, better fuel flow and FAVOURITES FOR ECONOMICAL REASONS lower emissions. Noise levels should be below ICAO Stage 4 limits. The current revival of propeller-driven planes—which typically consume a quarter to a third less fuel than equivalent jets—marks a significant trend. Until recently, many regional airlines seemed determined to consign turboprops to history in favour of all-jet fleets, since the latter offer far greater passenger comfort. Although the latest generation of turboprops has addressed some of the comfort issues by flying above turbulence and providing quieter cabins, analysts say the airlines’ worries about their bottom lines now outweigh passenger preferences. As demand decreases because of the current slowdown, it no longer makes sense to fly larger aircraft—hence the renewed interest in fuel-efficient 50- and 70-seat turboprops. IN CONCLUSION
In most parts of the world and many sectors of the aviation economy, there is a growing feeling that 2009 could be a make or break year. More than 11 per cent of the global commercial air transport fleet is now under storage, awaiting better times. Recent increases in carrying capacity combined with the current financial crisis mean that airlines need to rethink and readjust the fundamentals of their business. Experts feel that charging tickets below cost is a device that has been tried, but failed. Seats need to be priced appropriately, allowing airlines to increase volumes and obtain adequate returns. Regional carriers are also examining ways to run the business better by being more creative in developing new opportunities within their chosen business model. Lack of deep pockets is compensated for by intimate knowledge of local conditions in a relatively small region and nimble-footed strategies to deal with troubling economic conditions. SP www.spsaviation.net