Small is the next big thing in Asia aviation

Feb 13 2014, 20:40 IST
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On this short distance route the turboprop is the most efficient aircraft. Reuters On this short distance route the turboprop is the most efficient aircraft. Reuters
SummaryOn this short distance route the turboprop is the most efficient aircraft...

After flying under the radar for many years, manufacturers of smaller jet and propeller-driven passenger aircraft are finding a bigger market in the Asia-Pacific with a slew of orders at the Singapore Airshow.

Canada's Bombardier, Brazil's Embraer, European joint venture ATR, Russia's Sukhoi and Japan's Mitsubishi Aircraft do not roll off the tongue as easily as Airbus or Boeing, but in the lucrative Asia market there is room for everyone.

Embraer, the world's largest maker of regional aircraft, forecast in Singapore this week that the region will take delivery of 1,500 new jets of 70-130 seats over the next 20 years. That translates, it says, to a staggering $70 billion worth of business.

Importantly, for the likes of Embraer, the world's two largest aircraft manufacturers do not make aircraft that compete in the below-130 seat segment.

Low-cost airlines like AirAsia, Lion Air, and Cebu Pacific, with orders for hundreds of Airbus A320s and Boeing 737s, have driven much of the growth in the Asia Pacific airline market.

Increasingly, however, the major hub airports are getting crowded and there is growing demand for services to and between smaller second and third tier cities.

"The great opportunity in Southeast Asia is to get more people to fly, and that is about tier two and tier three cities," said Torbjorn Karlsson, who leads aircraft sales for Bombardier in Southeast Asia.

He identified countries such as India, where only about 1 percent of country's one-billion-plus population flies, and Indonesia and Thailand as inviting markets.

COSTA SEES ENORMOUS POTENTIAL

While there may still not be enough passengers to use the A320 or a 737, there is enough for smaller aircraft. And that is where the likes of Embraer and Bombardier come in. Thousands of this type of aircraft have been sold across Europe and the Americas, but relatively few have found their way to Asia. That's now changing.

Embraer announced its first major Indian deal in Singapore, with start-up Air Costa ordering 50 jets valued at $2.94 billion on Thursday.

In a country like India, where Airbus and Boeing aircraft have saturated the market with airlines like IndiGo, SpiceJet and GoAir, Costa is trying to find a niche for itself by connecting the smaller cities with Embraer jets.

""You don't need larger aircraft. This is enough for us," said Ramesh Lingamaneni, chairman of Air Costa, which began operations in October and now has four Embraer jets. "Regional air services have enormous potential in India."

Bombardier did not

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