Air Costa, which used to operate 32 daily flights to 9 destinations, will be operating 18 flights to 8 destinations starting today, 16th November, till 26th November, as the airline’s fleet temporarily reduces to just 2 aircraft – one 67 seat Embraer E170 and one 112 seat Embraer E190. No sale of flights on one of the patterns (MAA-HYD-VTZ-BLR-VTZ-HYD-MAA-JAI-MAA) was noticed on the airline’s website. This leads to VTZ not being temporarily served by Air Costa.
VT-LSR, one of the two Embraer E170s, has been pulled out of operations due to the planned return of the aircraft to its lessor. VT-LBR, one of the two Embraer E190s, operated a special Chennai-Bengaluru flight LB709 (the first 7xx flight number for the airline), which is a ferry flight turned commercial flight, before heading off for scheduled maintenance to Jordan via Muscat. This leaves only two airplanes – VT-LNR (E170) and VT-LVR (E190) in the active fleet in the short term.
In contrast to Air Costa cancelling flights, AirAsia India, which presently has one of its Airbus A320 airplanes (VT-BLR) at Hyderabad for scheduled maintenance (Since 1st November), has not allowed operations to be impacted. The airline, which recently received its 6th aircraft (VT-APJ), continues to fly 5 patterns with 5 active aircraft. VT-BLR is expected to return from maintenance today to allow VT-APJ to fly to Delhi to operate additional frequencies on existing routes, from tomorrow. (Edit: VT-BLR flew to Delhi late this morning, and will take on Delhi flights from tomorrow).
Highlights: The death of the 70 seat regional jet market, shifting market trends, and what airlines seem to trend on: affordable capacity.
50 seat regional jets heralded a new way to travel. Comfort and speed were real reasons, and offering a jet to regional customers, as opposed to a turboprop aircraft, suddenly seemed very attractive. The Embraer ERJ 145, introduced in 1996, and the Bombardier CRJ 100/200, introduced in 1992, both extremely popular 50 seat airplanes, sold 708 airplanes and 935 airplanes, respectively.
Regional aviation only continued to grow, fuelled by more efficient jets that promised good operating economics. According to Bombardier’s study in 1998, there was a growing requirement for larger aircraft in the fleets of the world’s regional airlines. To keep up with the growth in mainline fleets, Bombardier felt that regional fleet must grow in both size and capacity. The company felt that if the regional fleet did not grown beyond 50 seats, the number of 50-seaters required to satisfy demand would quadruple.
Because of this growth, regional airplanes grew in capacity, to match demand. The CRJ 700, a 70 seat regional jet from Bombardier, was introduced in 2001, and the competing Embraer 170 was introduced to airline service in 2004. As airplanes grew in size, the operational costs per seat started to fall, further opening up regional aviation to larger airplanes while gradually declining the smaller regional jet market. The market shifted, and continues to shift towards larger sized regional jets.
The CRJ 100/200 is no longer in production. In 2008, the Embraer 145 had 733 firm orders, which slumped to 708 in 2009, and has remained at that figure, over 4 years till date. By 2011, all orders had been realised through deliveries. The 50 seat jet market effectively and statistically died many, many years ago.
The CRJ 700, when introduced, did exceedingly well. Between 2000 and 2010, the order book grew by 160%, to 344 firm orders. The Embraer 170, which had a late start, touched 194 firm orders in 2009. While these were fairly good figures, the market shift hadn’t stopped.
The Embraer 190, and the CRJ 900 have seen the greatest sales growth. The E-190, when introduced in 2005 with JetBlue, had 185 firm orders. This has seen a fairly steady, and unparalleled growth to 560 in 2013: a growth of 200%. The CRJ1000 was Bombardier’s answer to the E-190, but that entered service very late, almost 5 years later, in December 2010, but firm orders stand at only 70, as of July 2013. The CRJ1000 is not much of a competitor to the E-190; The longest range version of the jet, 1,622NM, falls short of the shortest range version of the E-190: E-190STD at 1800NM. The E-190AR has a range of 2400NM.
While there was such encouraging growth in sales of 100 seat airplanes, The CRJ700 stopped building orders after 2010. In fact, after 2010, 4 firm orders were lost, with the number lazily bouncing back to 347 in 2013. After 2009, The Embraer 170’s firm orders only reduced, and hasn’t recovered since. It’s not the manufacturer. It’s the market, and the 70 seat regional jet isn’t favoured anymore. As of Sep 2013, there is a backlog of only 6 E-170, of which 2 are for Japan Airlines and 4 for ETA Star Aviation, India.
The 78-88 (80) seat E-175 is the next-best received aircraft. Orders for the type are nowhere close to that of its longer, 100 seat E-190, and had stagnated for more than 1 year in the period after 2011, at the level of the dead-market E-170. A sudden surge in orders, of 65% to 315 in 2013, is thanks to Skywest, which placed a large enough order for the type. The 90 seat CRJ900, has 306 firm orders in 2013, and witnessed a 380% surge in orders between 2005 and 2007.
A 2000NM range airplane with the ability to carry 100 passengers has been the hottest selling cake. Add another 16 to 24 seats and the offering, the E-195, isn’t quite as attractive. Bombardier’s response to the E-195 is the 125 CS100, and the unique, hitherto unmatched offering is the 135-160 seat CS300.
Proof that the market is shifting away from 70 seat jets is the fact that Embraer, that has moved forward with its plans to re-engine, significantly re-engineer and update the E-Jets to a “Second generation" of E2 jets, has the E-195-E2, the E-190-E2, and the E-175-E2, but no plans at all for the E-170-E2.
The market needs higher capacity airplanes for greater flexibility, provided that it doesn’t come at the cost of economics and performance. With economically better performing or promising airplanes hitting the market, “affordable capacity" is the market demand.
And since the E-175-E2 is planned for a 2020 Entry into service (EIS): the last amongst all re-engined E-Jets, it’s a sign of the 80 seat regional jetliner’s grave being prepared, next.
*This section is part of a much bigger, comprehensive article on the C-Series by The Flying Engineer.
Bombardier’s success with the CRJ 100/200 airplanes, which eventually sold 935 units, made it explore significantly larger capacity airplanes, in the 100 seat segment. According to Bombardier’s study in 1998, there was a growing requirement for larger aircraft in the fleets of the world’s regional airlines. To keep up with the growth in mainline fleets, Bombardier felt that regional fleet must grow in both size and capacity. The company felt that if the regional fleet did not grown beyond 50 seats, the number of 50-seaters required to satisfy demand would quadruple.
Bombardier identified a gap between its 50-70 seat CRJ series, and the smallest of the Airbus and Boeing single aisle offering: the Airbus A318 and the Being 737-600, both with typical single class capacity of around 120 passengers. Even before a formal launch, Bombardier had unveiled during the Farnborough Air show in 1998 the 88 seat BRJ-X-90 and the 110 seat BRJ-X-110, the “BRJ" short for Bombardier Regional Jet.
The BRJ-X-110 was applauded by airlines as a true 100 seat airplane, unlike attempts by Airbus and Boeing to scale down much larger airplanes. Although during that time, the first of the Brazilian Embraer E-Jets, the 80 seat ERJ 170, competitor to the CRJ700, hadn’t yet taken to the skies, published drawings of the BRJ-X airplanes bore an external resemblance to the new Embraer jets. But the cabin was wider, with a 5 abreast seating.
Threats from the new Embraer jets, which had a significant head start, and the then Fairchild-Dornier’s 50-110 seat regional jetliners, forced Bombardier to rethink the BRJ program. Late 1999, despite having further matured the design of its “paper airplanes", Bombardier switched focus from the BRJ-X-90 to the stretched CRJ700: the 90 seat CRJ 900. According to Michael Graff, the then President of Bombardier Aerospace, “ They (airlines) have told us that a simple stretch of the CRJ 700series rather than an all new aircraft in the 90 seat category will meet their requirements for increased capacity at reduced acquisition and operating costs"
Mid 2000, although the BRJ-X-90 was killed, the entire BRJ program was suspended, but never cancelled. In the March of 2004, the 114 seat Embraer 190 took to the skies on its first flight, and Bombardier had no airplane to compete in that class. In July of the same year, Bombardier announced the development of the C Series as a replacement for the shelved BRJ-X project.
The C Series then had two variants: the 125 seat CS110 and the 145 seat CS130. But after failing to secure significant orders, and in the light of the certification of the Embraer 190 in 2005, the program was shelved in early 2006, and the focus again shifted to lengthening the CRJ series, to a 100 seat CRJ1000.
In the July of 2006, EASA certified the 124 passenger Embraer 195, competing directly with the shelved CS110. Bombardier was trailing its only significant regional jet competitor, Embraer, with no competing airplane.
Early 2007, Bombardier re-commenced work on the C Series program. In the July of 2008, Bombardier officially launched the C Series, with a letter of interest for 60 aircraft and 30 options from Lufthansa.
Having the right product at the right time bode well for the Brazilian airframer. The CRJ 700, 900 and 1000 combined have orders (as of 30 June 2013) of 723 airplanes, of which 91 are unfulfilled. On the other hand, the Brazilian Embraer E-Jets, comprising the E-170/175 and 190/195 families, have total firm orders of 1213, of which 266 are unfulfilled. Bombardier had to stop trailing and start leading, and focus on the clean sheet C Series was the only way out.
*This section is part of a much bigger, comprehensive article on the C-Series by The Flying Engineer.
3. Embraer 190STD: MSN 593, leased from GECAS, yet to be registered in India.
4. Embraer 190AR: MSN 608, leased from GECAS, yet to be registered in India.
The 170AR version has a range of about 2,200NM with 66 passengers. The cabin of the two E-170ARs are dual class: 6 first class seats with a luxurious 40″ seat pitch and 20″ seat width, and 60 economy seats with a very comfortable 32″ seat pitch and 18.25″ seat width.
The Two E-170s are about 3years 7 months old, and were formerly flying for Gulf Air. The E-190s, however, seem to be new airplanes.
The E-190s may also have a dual class cabin: 8 first class seats with a luxurious 38″ seat pitch and 20″ seat width, and 88 economy seats with a comfortable 31″ seat pitch and 18.25″ seat width. The 190STD has a range of about 2000NM with 96 passengers, and the 190AR, with the same payload, has a range of about 2,500NM.
The video shows The Embrarer E-190, MSN 608, which was originally intended to be leased by Estonian Air from GECAS. However, the carrier didn’t take the airplane, and the airplane now has a new operator: Air Costa.
Interestingly, Paramount Airways, had leased its two Embraer E-170s from ECC Leasing and its 3 E-175s from GECAS.
Air Costa’s all-inclusive “Economy” airfare from Vijayawada to Bangalore is INR 2,798. In contrast, the lowest available airfare on the same day, from competing carriers, is INR 6,242 (Air India, one stop). The only other direct flight is operated by Jet Airways on their ATR-72, and this is priced at INR 10,200.
The “Economy Plus”, which essentially buys you one of the 6 first class seats on the airplane, is priced at INR 11,876, all inclusive.
Air Costa’s Vijayawada to Bangalore is a 1 hour flight direct flight, departing at 0645IST and landing at 0745IST.
At the moment, bookings are open only till the 26th of October, 2013 (2 weeks from the scheduled first flight: 14th October 2013). The published airfares could possibly be for a “promotional” period.
Air Costa, which is expected to start operations this month (July 2013), is ready to receive its third aircraft, a brand new Embraer 190 which was purchased from the manufacturer. Serial Number 593, which is painted in Air Costa colours and headed to Vijayawada, rolled out of the factory early this year, for an “undisclosed customer".
The purchased Embraer 190STD adds to Air Costa’s fleet of two leased Embraer 170-100LR airplanes (serial numbers 278 and 293). About 85 Embraer 190/195 aircraft were produced in 2012, of which 61 are variants of the Embraer 190. In sharp contrast, Embarer, in 2012, produced just 22 ERJ 170/175, of which only 2 are Embarer 170s; the rest being ERJ 175s.
While earlier reports cited April 2013 as the date of commencement of operations, new reports talk of July 2013 as the month that may witness Air Costa’s launch. Last year, Air Costa was to have launched in the month of May or June with Bombardier Q400 airplanes.
While Air Costa’s Embraer 170LR’s maximum passenger capacity of 80 and MTOW of 37,200kg will benefit from a landing fee waiver and a flat 4% service tax on ATF, the 114 seat (maximum) 47,790kg MTOW Embraer 190STD will attract landing fees and applicable tax on ATF which may be as high as 30% at some cities.
Quoting an Embraer release: “Air Costa has chosen E-Jets for their efficiency and reliability. Our plan is to link underserved markets in India with more direct flights," said Captain Babu, CEO of Air Costa. “The E170 and E190 are ideal in size and range. We can add frequencies and routes without adding too much capacity, thus serving places with seasonal demand, as well as key secondary and tertiary business centers."
As per Air Costa’s website, the airline will connect Vijayawada, Bangalore, Hyderabad, Vizag, Chennai, Ahmedabad, and Pune. While it is uncertain when the airline will actually launch, and how well a parent company focused on property development, and infrastructure development in the commercial, residential, education, power and health sectors will fare with an airline, success is possible with three key ingredients: strong focus on the customer and costs, adherence to a well researched business plan, and shunning of the ego.
It may be too early to say this, but the nature of the present businesses for LEPL foster a mindset that may turn out to be devastating for an airline. And if they succeed, which I hope they do, then they’ve, in all probability, read this post.