‘See huge blue ocean opportunity in India for regional jets, perfect fit between turboprops, larger planes': Raul Villaron

Indian Express

6 hours ago

Hitherto a small player in India's aviation landscape, Brazilian aircraft manufacturer Embraer has its sights set on India as its next growth market—for commercial as well as defence aircraft. The company is already in the running for the Indian Air Force's (IAF) medium transport aircraft procurement project, and is also pitching its portfolio of regional commercial jets—a segment yet to take off in India—to fast-expanding Indian airlines. As part of the effort to capitalise on the opportunity, Embraer recently announced an India-focussed subsidiary. In a freewheeling interaction with Sukalp Sharma, Embraer's President and Group CEO Francisco Gomes Neto and Embraer Commercial Aviation's Head of Asia-Pacific Raul Villaron discuss the company's India ambitions and vision, including the possibility of local manufacturing. Edited excerpts:
The Embraer C390 is seen as a frontrunner for the IAF's medium transport aircraft procurement project. How confident are you about winning the contract? How does the C390 stack up against competing aircraft like Lockheed Martin C130?
Neto: We are convinced that the C390 is the best solution for the Indian Air Force. If you look at the last orders we got for C390—Portugal, Hungary, the Netherlands, Austria—most of them replaced the C130 with the C390 because our aircraft is more modern, faster, and carries more load. It's multi-mission by design, it is more flexible. With the C390, you can perform the same missions with less aircraft.
At what stage are your conversations with the IAF and the government? When do you expect a decision?
Neto: I think we're moving well. They are learning more and more about the features of our aircraft, and we believe we have a good chance, although nothing is decided…We expect a decision in a couple of years. But this is not in our hands. This is more in the hands of the Indian Air Force.
If you get the IAF contract, you will be setting up an FAL (final assembly line) to build the aircraft in India. Are you also open to having an FAL here for your commercial jets as well?
Neto: Everything depends on the size of the order. In the case of a C390, the expectation is to have a deal for 40 to 80 aircraft, which is a lot for that size of aircraft. If the orders (for commercial aircraft) are large enough, it would be possible for us…We are bringing a procurement team already to India because we want to explore a supply chain, even without selling many commercial jets here. We already want to find component suppliers here for aircraft to be sold in other markets.
Coming to commercial aircraft, Embraer specialises in regional or small narrow-body planes. This segment did not take off in India, even as the country emerged as a massive market for larger aircraft. What is Embraer's view on the India opportunity in the segment?
Villaron: We see a huge blue ocean opportunity in India, where most of the unserved markets are either too long for turboprops or too thin for (typical) narrow-bodies. We see a potential for 300 (small narrow-body) aircraft in the next 10 years, and 500 aircraft in the next 20 years in India. Historically, Indian airlines either ordered turboprops or larger narrow-bodies. We feel turboprops now have a mature network in India and there aren't many growth opportunities left. It's limiting the airlines' ability to expand regional networks because the (turboprops') range doesn't let them go beyond the short sectors. Also, with improvement in India's roads and airport infrastructure, the benefits of turboprops are eroding with time. Meanwhile, the regular narrow-bodies are upgauging (getting bigger). So, the gap between a turboprop and a typical narrow-body is widening and is becoming difficult to bridge. You want to replace a 70-seater (turboprop) due to higher demand, but a 180-seater (regular narrow-body jet like Airbus A320 and Boeing 737) has more seats (than needed). But a small narrow-body like ours—up to 146 seats—fits perfectly in that gap.
Why couldn't Embraer break into India's commercial aviation market?
Villaron: Embraer didn't have a strong penetration in India compared to the US, Europe, and some other markets, as our earlier E1 (series) aircraft's main value proposition was trip cost, while the seat cost was higher, which did not suit a country like India where yields are very low. But our new E2 (family of aircraft) comes with more seats, and its seat cost is very competitive—same as larger narrow-body planes—while the trip cost is still 20-25 per cent lower than theirs.
Are you in active discussions with Indian airlines for your E2 aircraft?
Villaron: Yes. Our main partner in India is (regional airline) Star Air (with five previous generation Embraer regional jets), and they have announced their plans to expand their fleet. So, we are talking to them to understand their needs. They took delivery of another Embraer aircraft just a month ago. The business plan and the opportunity that we see for the airline is interesting, so we are talking to them.
What about major Indian airlines that are predominantly in larger narrow-body operations?
Villaron: As good salespeople, we talk to everyone. We want to present these opportunities that are so clear to us. We want to make sure the airlines visualise that as well. The big ones (IndiGo, Air India, etc), I think are busy with the large aircraft orders they have placed and the expansion internationally. But they also recognise there is a need to work on the regional network. IndiGo has a turboprop fleet, which at a certain point will need to be replaced and we believe that jets are going to be the next phase of the regional network expansion in India. As for Air India, their main competitor (IndiGo) has a regional network, while they don't. So, I believe they would need to look at these opportunities. We are the leaders in the regional segment, so we are confident that we will be considered.
Airbus, which has a significant presence in India, also has a small narrow-body product, A220. What is your pitch to the airlines for your E2 portfolio—E190-E2 and E195-E2—vis-à-vis the A220?
Villaron: If we do a nose-to-nose aircraft comparison, the E2 is much more efficient. It's about 10 per cent cheaper to operate due to lower fuel burn. It's a much lighter aircraft, has a higher-aspect-ratio wing with better aerodynamics. It has a longer interval, so maintenance cost is lower. We use a similar engine as the A220 but because our aircraft is lighter, it stays longer on the wing…We are confident that even though our competitor is strong in India, when you compare the two aircraft, our product is better. Also, if you're looking for something that really complements the gap in India's fleet, you need to buy something from the gap, not something that's almost as big as the thing you're not looking for. The A220, with around 160 seats, is very close to a (regular) narrow-body that has 180 seats.
Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More