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‘ATR's destiny has been linked to India, a lot of new pages to write in that story': MD, Asia Pacific
European regional aircraft manufacturer ATR, which has a dominant market share in India's small regional aircraft market, sees massive potential for turboprop aircraft in India—the world's third-largest and fastest-growing major aviation market—as the country's regional network densifies and expands. The company is 'very bullish' on the Indian market and sees potential for as many as 300 turboprop aircraft in India over the next 10 years, ATR's Managing Director & Head of Region for Asia Pacific JEAN-PIERRE CLERCIN tells SUKALP SHARMA. In a freewheeling interaction, Clercin states that ATR is in discussion with all existing Indian airlines and even a few parties that don't have airline operations yet. He also delves into India's regional aviation sector's growth potential and government push, the turboprop versus regional jet debate, and whether ATR would consider collaborating with India to manufacture aircraft in the country.
Edited excerpts:
What is ATR's expectation from the Indian market over the next few years?
We are very bullish on the market. Everything that has happened over the last couple of years is quite impressive, and we still see a greater potential. In the regional segment, last year we were looking at a potential market of around 200 aircraft covering around 120 airports. Now if we also consider the 80 or so new airports that are expected to come up, we feel they could potentially add another 100 aircraft. So, we currently see the potential for 300 turboprop aircraft in India over the next 10 years. By contrast, the current fleet in India is just 70 aircraft.
There appears to be a debate on what is better for regional air connectivity—turboprops or regional jets. What is your view?
It's like comparing a fork and a spoon. They are very different products and address very different markets. The main difference is that a jet—in terms of the distance and economics—is meant for longer routes, whereas a turboprop is optimised around the one-hour stage length. For any distance below 400 nautical miles, there is no question really about the superiority of a turboprop against a regional jet. Turboprops are more economical and fuel efficient than a jet on short segments, where a jet burns 40-45 per cent more fuel. Anything above 400-500 nautical miles would be more suited for jets… If you look at the whole mobility landscape of India, in terms of inter-city trips, 90 per cent are under 400 nautical miles (of which just 3 per cent is currently served by airlines, the rest by road transportation and trains). That's where we see great potential, and that's where we play.
Also, I feel that a small jet versus a big jet is more a function of the volume of traffic, and the relative difficulty for regional jets in India comes from the fact that it's a fast-growing market. So, very quickly, large narrow-bodies like Airbus A321 would become more suitable than regional jets on many routes.
Which Indian airlines are you in talks with for aircraft sales? Can we expect a follow-on order from IndiGo now that their previous ATR order has been fulfilled?
We are in discussion with all existing carriers and operators. If you have any specific questions, I think it's best to ask IndiGo and the other airlines. I think everybody (airlines) is looking at turboprops, because the capacity today is about 70 aircraft, while there is potential for a lot more. We are in active discussions with most of the players, including a few who currently don't have an AOC (air operator certificate) or a license today…For now, there is no order backlog for India, but there are a few lessor slots that could come here.
India's regional air connectivity scheme UDAN has seen some successes but a large number of routes have failed to take off as well. How do you view the performance of the scheme considering it could be crucial to your potential opportunities in India?
I think UDAN supports regional air connectivity very well as it shoulders the risk of opening a route, which is great because many airlines will see opening a route as a big risk. So, it's about trying routes and seeing if they work or don't work. When I talk to policymakers in other places, I tell them to notice what India is doing because I think this is the gold standard of regional aviation and connectivity. Of course, sometimes things work, sometimes they don't—maybe the timing was not right, or there was something missing, etc. But what's more important is the vision of encouraging airlines to enhance the regional network, and supporting new routes.
India wants foreign aircraft manufacturers to set up final assembly lines (FALs) to make planes in India. Is that something ATR could consider seriously?
We are keen on exploring further ties in India. We have been here for decades now…our destiny has been linked to the country and I think there are a lot of new pages in that story to write. I think it's difficult to be specific (about the possibility of an FAL in India). It's a market where ATR can grow and bring value with hundreds of aircraft and that would need stronger cooperation—in components, industry, and aftermarket. But it would be too early to talk about the specifics because we also have a strong mission to keep the operations and the platform affordable. We need to have the correct combination of doing more with India while keeping the platform competitive…If you have mobility, but it's not inclusive, then it defines the purpose. What I find quite interesting is the vision that you have as a country. You want to make everybody fly. That is a very strong statement that not a lot of countries have as a vision.
The government wants to build an indigenous regional aircraft. Would ATR be open to collaborating on such a project?
We're open to looking at any kind of collaboration. Firstly, I'd like to say that this vision of the government underpins the vision they have for the regional market…It's difficult to be black or white, but certainly we have a lot of experience in the regional market and in the Indian market. So, we can surely bring experience to the industry. We can bring our technology, our know-how, and continue to contribute to the aviation ecosystem in India.
Are the global supply chains any better now? Do you still have aircraft delivery delays?
The whole aviation ecosystem has been in an interesting situation over the last few years and nobody has been safe from that. We now see some encouraging signs of improvement. We are working with our suppliers to make sure that we are back where we should be. We still suffer from delays but in a much proportionate way than the bigger manufacturers. The size of ATR as a manufacturer is very much smaller than an Airbus or Boeing. If they build 35 aircraft in a month, we build 35 in a year. For us, it's really more about striking the right balance between supporting the existing fleet and ensuring that we don't over stress the supply chain with too much focus on manufacturing new aircraft.
Is there any clarity on the impact tariff-related uncertainties could have on the global aviation ecosystem? Could the combination of supply chain issues and tariff uncertainties lead to higher price tags for planes?
Currently it's difficult to understand where all this is going to go because of the volatility and the complexity of the policies. I mean one move could have an effect that we don't necessarily comprehend…I think the market has difficulties to absorb significant increases in cost from an airline point of view. That is why we are trying to keep our platform as competitive as possible. I cannot really say what would be the outcome of the tariff situation. We are, of course, trying to not impose higher or unrealistic pricing on our airline customers. The good thing is that our platform is the most cost-effective from an operating cost point of view in the regional segment, and that's also a way for airlines to hedge against higher costs for regional airlines or regional operations of large carriers that would come with using jets for short segments, regardless of what happens on the tariff front.
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
