IndiGo was supposed to have been the second airline to receive the Airbus A320 neo. Despite the delay, IndiGo will still be the first Indian airline to receive the A320 neos, followed by Go Air. Deliveries to IndiGo are likely to happen in the summer of this year. Lufthansa, the first customer of the variant, is already operating the neo albeit short routes within Germany, between Frankfurt, Hamburg, Munich and Berlin.
Seat maps published by Lufthansa allow one to compare the A320’s cabin with the A320 neo’s cabin. Both cabins are of identical length, but have a key difference in the layout: The aft two lavatories are moved to the rear bulkhead, reducing galley space, and making space for one extra row of seats (see the image on top). Lufthansa’s A320ceos has 168 seats in its cabin (across 2 classes), while the A320 neo with the rearranged ‘SpaceFlex’ cabin fits 180 seats (across 2 classes), as shown below.
In the case of IndiGo and GoAir’s A320 neos, the cabin will be fitted with 186 seats (single class), 6 more than the present 180 seats fit in the cabin. Moving the lavatories towards the rear bulkhead, and eating into the galley space makes sense for low cost carriers, as the quantum of uplifted food is lesser than full service carriers. But the last row will be where the lavatories were earlier located.
The issue is not about sitting where the lavatories once were, but that the last row (which will be identified as row 31 on IndiGo and GoAir, and row 32 on all other airlines that skip the number ’13’ when identifying rows) will have no window, and little to no recline. This will, undoubtedly, become the least preferred row on the entire aircraft. To make things a bit more uncomfortable, the walls start moving inwards at that row, part of the taper of the aft fuselage.
Seat pitch on the 186 seat A320s will remain unaffected at 28/29 inches. But remember to keep an eye out for windowless row 31 and above.
ATR received EASA certification for its high-density cabin layout which fits 78 seats, using the existing airframe which was until recently certified for a maximum of 74 seats. Cebu Pacific, the leading Phillipines low cost airline, is the launch customer of this new configuration of the ATR 72-600. The airline had formally announced an order for 16 ATR72-600s during the Paris Air Show with options to acquire an additional 10 ATR 72-600, worth US$673 million at list prices.
Cebu Pacific will receive its 78 seat aircraft in August 2016. According to ATR, ” The additional seats are very valuable for airlines operating in the regions where traffic grows rapidly and the demand is highly sensitive to fare”. According to Thierry Casale, ATR Senior Vice President Programmes, “The demand comes from airlines, especially in the Southeast Asian market, requesting to further optimize the cabin space and to increase the number of available seats for regional flights".
In August 2014, Thailand’s Nok Air took delivery of an 86 seat Bombardier Q400, becoming the launch operator for the extra capacity seating configuration. Bombardier was able to squeeze in 86 seats at 29 inches seat pitch by shifting the aft galley into the aft cargo hold, thereby reducing aft cargo space by 20%. Forward baggage hold is done away with.
ATR can pack in 78 seats by reducing seat pitch to 28 inches, downsizing and moving the aft galley into the rear cargo compartment, and by placing two rear facing seats in the first row, which take up a part of the otherwise forward right cargo hold, thereby reducing forward cargo space. ATR’s target is an 80 seat ATR 72, which will be possible only with four, rear facing seats on the first row. Such seats do not recline.
The configuration is built with the current SFE Geven Classic seats, requiring no special or different seats.
Interestingly, demand for these configurations have come exclusively from South East Asian low cost operators. According to a study that the ‘Association of Southeast Asian Nations DNA’ conducted, Filipinos are the second shortest race in the South East Asian region, with males measuring 5 feet 3.7 inches. Thailand’s males are the second tallest, at an average 5 feet 6.9 inches. This makes Filipino men 4.8% shorter than the average Thai man, while a 28 inch seat pitch is only 3.4% lesser than a 29 inch seat pitch. Assuming similar thin seats on both aircraft, Filipinos, due to their height, may feel as comfortable, if not more comfortable, than Thai men flying in the high density Q400.
Indonesian males are the shortest in the South East Asian region, at 5 feet 2 inches, which makes the 78 seat variant well suited for the Indonesian market. If airlines are scientifically driven, airlines in other countries may not opt for the 78 seat variant, unless the business model decides otherwise.
The 78 seat ATR 72 seats 4 more than the until-recent maximum of 74. Assuming a 100% seat factor, 4 extra passengers will burn around 11 kg additional fuel on a 250NM sector, assuming ancillary cargo remains unchanged. This results in a 1.3% fuel burn increase on a 250NM sector, or a 0.65% increase in costs assuming fuel is 50% of the total operating expenses. Yet, due to the four additional seats, the cost per seat, after including the fuel increase, drops by 4.5% on a 250NM sector. We ignore possible increased maintenance costs due to slightly higher stressed operations.
This allows an airline to drop average fares by down to 4.5% to remain competitive in the market at unchanged margins.
Edit (30th Sept): Edited to include the first flight of the first production A320NEO, which is destined for IndiGo. Edit includes a confirmation of a Space Flex cabin.
Indian domestic market leader IndiGo’s first Airbus A320 NEO (New Engine Option) – part of the July 2011 order for 180 aircraft, has rolled out of the Hamburg (Germany) final assembly line fully painted in the airline colors, but without the Pratt & Whitney Geared Turbo Fan (GTF) Engines. This is the third such airframe of the airline. Two have no engines fitted. The cabin has not been fitted yet.
MSN 6720, destined for IndiGo, first flew on September 25th at Toulouse, France. The aircraft fuselage has however not been painted in the airline’s colors, but the wings are in the airline’s markings. MSN6720 is the 6th NEO to be produced, and the first ‘production’ NEO. The to-be Indian Registration of MSN 6720 is yet unknown, but will likely be the first A320 NEO for IndiGo.
A320-271N MSN 6744, which is expected to be registered VT-ITA, is the 7th NEO produced, and likely the second for IndiGo. A320-271N MSN 6799, to be registred VT-ITC, is likely IndiGo’s third A320 being assembled at the Toulouse (France) final assembly line, and is the 9th NEO to be produced. All Airbus A320 NEOs that IndiGo will accept will be powered by the Pratt & Whitney PW1127G engines.
The same engines had a problem with a clip holding seals inside the engine. This had caused concerns on the NEO program schedule, which has invariably slipped a bit. However, launch customer Qatar Airways expects to receive the first aircraft by the end of the calendar year. Interestingly, Qatar’s A320 NEO is MSN 6772 – the 8th NEO – which means it is later down the assembly line sequence when compared to IndiGo’s 6744 and 6720.
The NEOs rely on the sharklets and new, ultra-high bypass geared turbofan engine technology to together deliver fuel savings of upto around 15% (over and above today’s CEO A320’s without sharklets) . Such high fuel savings will however be realized only on very long flights that approach the maximum range of the airplane.
Airbus’s “Space Flex” concept allows airlines to increase the seating capacity of the Airbus A320 (both current engine options (CEO) and NEO) to 189 seats, without compromising on seat pitch and comfort. This is achieved by moving the two rear lavatories closer to the bulkhead, eating into the galley space. This makes more sense to no frills carriers which do not carry much meals on board. The space for service trolleys in the aft galley of the aircraft reduces from 7 to 3. The space where the aft lavatories were fitted are replaced with 1.5 rows of seats.
This increase in number of seats reduces unit costs by 5% to 6%. It is not known if IndiGo will adopt the space flex concept yet. No physical changes to the emergency exits are required. However, opting for a mix of 189 seat and 180 seat A320s may reduce operational flexibility for the airline. Opting for a higher capacity however seems inevitable.
IndiGo is believed to have opted for the Space Flex cabin, but details on when it will appear are not known.
SpiceJet goes loud on some developments, and silent on the rest. What SpiceJet has done in the last few weeks is to unbundle as much of its services as possible, to find multiple ways in which the airline can make money.
Tony Fernandes (Group CEO, AirAsia) and Mittu Chandilya (CEO, AirAsia India), have been fighting for unbundling of services for long. In fact, when AirAsia launched a year ago, it charged passengers for check in baggage. DGCA interference, reportedly driven by pressure from other airlines, ensured that the airline provided a minimum free check in baggage service: 15kgs per passenger. Tony Fernandes regarded this move undemocratic. He had a point: The 15kgs of baggage did not come free, but was included in the airfare, unknown to the passenger. This only meant that every passenger was forced to pay for a baggage service that he or she may not opt for. Business travellers usually have no check-in baggage.
Air Transport Circular 1 of 2015, dated 24th March, 2015, seems to be an outcome of the constant requests AirAsia India has made to the ministry. The DGCA now allows airlines to charge for all seats that are pre-booked. Previously, this was limited to just 25% of the seats and excluded the middle row seats. The new circular also talks about “Check-in baggage charges” being unbundled. Although this was present in the previous circular, upon which AirAsia India acted, DGCA had the final say. Things seem to have now changed.
SpiceJet is the first airline to have stealthily implemented the circular to the fullest. All the seats on SpiceJet’s aircraft – Bombardier Q400 & Boeing 737, are chargeable when pre-booked, which wasn’t the case earlier.
Every Seat Pays
On the Boeing 737-800s (The airline flies 16 B737-800s and 1 737-900, besides three wet-leased Boeing 737-800s which have no SpiceMax extra legroom rows), the middle seats on rows 6 to 13 are charges at INR 100. The window and aisle seats are charges INR 300. Seats on the first five rows are charged INR 1,000. Emergency exit rows are charged INR 600. From rows 16 to 31, middle seats are charges INR 50, while the aisle and window seats are charged INR 100.
This allows SpiceJet to potentially generate an additional INR 56,400 per Boeing flight. Assuming a flight with 80% load factor has 25% of its passengers pre-booking their seats, this is INR 11,300 per flight. With this assumption, and a maximum of 129 Boeing flights in a day, SpiceJet may realise around INR 14,50,000 revenue per day from selling seats on Boeings alone.
On the Q400s, (The airline flies 12 -13), there are no middle seats. Row 1 (two seats) and Row 2 (right two seats) are SpiceMax seats, charged at INR 500. All other seats upto and including row 6 are charged INR 200. The rest of the seats in the cabin are charged INR 100.
This allows SpiceJet to potentially generate an additional INR 11,200 per Q400 flight. Assuming a flight with 90% load factor has 25% of its passengers pre-booking their seats, this is INR 2,520 per flight. With this assumption, and a maximum of 162 Q400 flights in a day, SpiceJet may realise around INR 4,10,000 revenue per day from selling seats on Q400s alone.
Together, the airline may, on average, generate 18,66,000 per day from selling seats. Over a month, this will be sufficient to pay almost two Boeing 737s’ dry lease.
No free check-in baggage
With SpiceJet’s “#Travel Light, Save More” offer, announced on April 27th, SpiceJet offered 1,50,000 seats on sale. The tickets for these seats were on the condition that a passenger did not travel with a check-in baggage. The offer was extended, adding an additional 100,000 seats. In total, SpiceJet offered 250,000 seats for sale with high confidence that these passengers would not have check in baggage.
With 15Kg per passenger not occupying the cargo hold, the airline has saved 3,750 tonnes of cargo hold weight. At an assumed average cargo rate of INR 20,000 per tonne (we’ve earlier determined this average to be slightly higher), this allows the airline to ‘sell’ INR 7.5 Crore worth cargo space/weight to its cargo handler, Sovika.
If however any passenger chooses to check in their baggage on these tickets, the airline’s T&C requires a flat fee of INR 750 to be paid for upto 15kg. This is the first example in India where a passenger is not granted complimentary 15kg check in service, but has to pay for “any” check in baggage.
This may be SpiceJet’s move in evaluating demand for such tickets. Perhaps, if proved successful, the airline may implement a policy of paying for every check-in baggage.
Other unbundled services
SpiceJet also charges for priority check in, Meal (hot meals – 737s and cold sandwiches – Q400s), excess baggage slabs, a ‘Meet and Assist’ service, and “SpiceAssurance”.
Priority Check-in charges a passenger INR 200. Hot Meals on Boeings are charged at INR 315 when pre-booked and INR 350 when bought on board. On Q400s, pre-booked Sandwiches are available for INR 200, and INR 220 when bought on board (the illustration for the Q400 meal is misleading as it shows steam coming from the plate that has the sandwich, which is not true. The sandwiches are cold). The SpiceAssist service comes at INR 500 per passenger (assistance from the SpiceJet staff at the airport).
All these services are ‘opt-in’ services, as mandated in the DGCA circular (a passenger needs to check the box associated with the service. By default, there must be no service pre-selected). However one service, the SpiceAssurance which charges INR 35 per passenger is pre-checked, which may not be the right thing to do. By paying INR 35, SpiceJet offers passengers a voucher of INR 500 is the flight is delayed by 1 to 2 hours, and INR 1000 if beyond 2 hours. This also offers limited baggage loss reimbursement.
This, in our personal opinion, is a poor move. Firstly, this is an opt out service. Secondly, a passenger has to pay for his own compensation for a delayed or cancelled flight. Previously, the airline offered this compensation for free, more. Third, the compensation is in the form of a voucher, which forces the passenger to book on SpiceJet to avail the compensation as a deductible from the next travel fare. Fourth – the voucher is valid for 90 days only.
Passengers who miss this INR 35 on the SpiceJet website (not offered through OTAs) will together contribute INR 19,30,000 to the airline, per month (assuming 10% bookings are through the website, and all these passengers miss or choose to ignore the INR 35 charge).
For a limited period, opting for a SpiceMax seats entitles a passenger to a complimentary meal. However, the airline allows for a meal to be chosen as well. This means that a passenger pays for a meal that he is entitled to. This seems to be a glitch in the system.
These small little things add up to big money! SpiceJet, we hope, corrects the ‘hot sandwich’ and SpiceAssurance.
Moving towards absolute no-frills
SpiceJet is the first to act like a ‘true LCC’ in India. IndiGo, Go Air, and surprisingly – AirAsia India, are yet to follow with seat selection and no-free check in baggage. On one hand, these moves pitch SpiceJet as a LCC (we now don’t believe in the term, we prefer no frills carrier), and on the other hand, the SpiceMax seats with good legroom and complimentary meals lend it a different image: of good premium economy luxury. Same brand, two images. Does it lead to brand confusion? We think so.
Indigo – the Indian airline known to religiously adopt best low cost carrier practices, thanks to its founders who brought with them unequalled relevant airline experience, has taken yet another step to lower costs, and in part increase passenger comfort.
IndiGo flies one aircraft type- The A320-232, with some of the newer ones featuring fuel saving wingtip modifications known as ‘Sharklets’. As of date, the A320 can seat a maximum of 180 passengers in an all-economy cabin layout. With such a configuration, all seats, with the exception of those at row 1, 12 and 13-the later two being emergency exit row seats- feature a 29 inch seat pitch.
Of the 29 inches in seat pitch, around 4 inches may be subtracted due to the thickness of the seat, leaving an effective room of about 25 inches, or 2′ 1″. For an average Indian with a height of around 171cm and a Body Mass Index (BMI) of 24, this leaves between two to three inches between the knee and the seat pocket in front. Magazine thickness in the seat pocket affects how much ‘knee’ room is finally available.
With SpiceJet talking about its latest cabin product SpiceMAX, where the first five rows of most of its Boeing 737-800 & -900 aircraft feature a generous 35 inches of seat-pitch, or about 31 inches from the backrest to the seat pocket in front – or half a foot more than IndiGo’s offering, IndiGo may have felt threatened by its inability to match such a product for its passengers. The Flying Engineer learns that the airline has recently changed its passenger seats to the Dragonfly from SICMA Aero, which manufactures and sells aircraft seats under ZODIAC Aerospace group. The airline previously flew the model ‘5600’ seats from Weber seats – the company which in 2012 became Zodiac Seats U.S. LLC, which is now a subsidiary of Zodiac Aerospace of France, and is one of the largest manufacturers of airline seats in the world.
The new ‘Dragonfly’ seats offer a double advantage and a disadvantage.
The new seats are thinner, and lighter. Thinner seats free up more legroom. The seats offer between and inch and two of extra legroom. The lighter seats shave off 700kgs from the airline’s aircraft’s operating empty weight. 700kgs on a Bangalore-Delhi sector of 1000NM translates to a saving of about 50kgs of fuel per such flight. The savings are as low as 0.6% for a short (200NM), full flight, and 0.8% for a long (1000NM), full flight, and can touch 1% when load factors are lower. With savings between 10kg and 50kg of fuel, dependant on the flight, an assumed 20kg of saving per flight, on average, translates to a saving of 3.65 million kg of fuel per year, assuming 500 daily flights. This translates to INR 34 Crore per year, with an average fuel price of INR 74.69 per litre.
The disadvantage, as reported by a recent flyer on board IndiGo, is the discomfort associated with such seats. The manufacturer describes, “With its ergonomic stamped backrest, the Dragonfly offers tremendous operational savings, fewer parts and increased cabin density – all the while adapting to finicky passengers’ growing desire for improved living space”. However, comfort isn’t stressed upon as much as the 5600’s, and the thinner cushioning has been reported as relatively uncomfortable.
Further, unlike the model 5600, the Dragonfly seats may not be IFE capable.
The seats on board IndiGo’s A320s are 18 inches wide, inner armrest to inner armrest. Airbus offers customers an option of 17 inches seat width with a 25 inch wide aisle – a configuration designed for quick turnaround times, or 18 inches seat width and a 20 inch wide aisle – a configuration designed for enhanced passenger comfort.
To be fair, the seats on SpiceJet’s 737s – as are all 737s, world over- are only 17 inches wide. Barring the first five rows of ‘SpiceMAX’ seats, and seats on the emergency exit rows, most other seats on SpiceJet’s 737s feature a 29 inches seat pitch, which offer a passenger 25 inches from the backrest to the seat pocket, and 17 inches in seat width. IndiGo’s seats, however, offer one to two inch more legroom, and one inch more seat width, catering to the ever increasing population of those with above-normal BMIs. The new seats allow the airline to offer more space uniformly across the cabin, while saving money, too.
An eye on costs is what the airline is known for: the airline has a very strict fuel policy, wherein the airline, and not the captain, decides on how much extra fuel must be uplifted. This has been possible due to a strong analysis of historical fuel data. The airline also incurs a cost of between INR 4 and 5 for every kg of potable water that is uplifted. The capacity of the potable water tank is 200 litres, but the airline monitored water consumption for every sector, and now only fills between 40 litres and 120 litres, depending on the sector. As a result, the airline saves between INR 320 and INR 640 per sector. Assuming a very conservative saving of INR 300 per sector – the airline saves, over 500 flights a day and over a year, almost INR 5.5 Cr.
Savings – possible through constant innovation, quick adoption of fuel saving technologies, constant analysis, great strategies, and strict implementation.
Last Year, ATR produced 60 ATR 72 aircraft. Bombardier had produced 36 Q400s. 2012 saw ATR selling 115 aircraft (74 firm orders and 41 options), while Bombardier witnessed a sales of 81 aircraft (50 firm orders and 31 option aircraft).
This year, ATR is projected to produce 80 aircraft, almost all being the ATR 72-600. This will widen the gap between deliveries of the ATR 72 and the Q400, in 2013. A sign that the slower of the two turboprops, the ATR 72, is actually racing ahead of the Q400.
Maybe it’s the operating economics of the ATR 72. Or the average regional route lengths suited to its typical missions. Or the large number of operators in a region. Or the access to proximate training facilities. Or the rise of the developing nations while the developed saturate.
The aviation market in Asia, especially South-East Asia, is booming, in contrast to slowdowns and downsizing in Europe and the United States. In the February of 2013, ATR won an order for upto 36 ATR 72-600s, from Malaysia Airlines (MAS). Prior to that order, MAS had ruled out the ATR 72-600 series, on the grounds that there was no -600 simulator in the area. Says ATR’s CEO Filippo Bagnato, “In the last five years, Asia-Pacific has accounted for 50% of sales; so it is quite an important market for us". So important is the market that ATR, in December, set up a ATR 72-600 training centre at Singapore, just because one customer demanded it.
What resulted in the ATR epidemic in Asia, particularly South East Asia?
The rise of the South East, Average regional route lengths, superior operating economics, Aggressive Sales, local availability of ATR type-specific qualified pilots and engineers, Luck #1, and Luck #2.
The Rise of the South East.
Says Neil Dave, Consulting Analyst, Aerospace & Defense, Frost & Sullivan Asia Pacific, “Many ASEAN countries currently lack comprehensive and well developed ground transport infrastructure and countries in these regions are divided by vast seas, therefore there is a demand for a well-knit, flexible air-transport system,” said Dave.
“Also, with the increasing popularity of air-travel as mode of transport, there is a rise in demand for low cost travel among countries in the ASEAN region which are not connected,” Dave continued.
Quoting a CAPA report, “The continued strength of the economies in ASEAN, led by booming Indonesia, and the continued rapid rise of the region’s middle class should ensure another big year of traffic growth for Southeast Asian carriers – particularly LCCs and, to a lesser extent, full-service carriers."
Lucky with Route Lengths:
The ATR 72 is typically packed with 68 -72 passengers. Air Dolomiti in Europe flies its -72s with 66 seats, while Jet Airways (South Asia) has 68 seats, and this number can easily rise to 70-72 seats for South East Asian operators, thanks to the average height of the average male in the respective countries (Germany: 5′ 10″, India: 5′ 5″, Indonesia: 5′ 2.2″), which allow for a lower seat pitch.
The typical baggage weight limits for ATR flights in the SE-Asian region are 10kg for cabin and 15 kg for check in, totalling 25kg. With the average assumed body weight of 70kg per passenger, this total weight per passenger, including baggage, is 95kg.
With 95kg/passenger and 72 passengers, the payload goes upto 6840kg. Considering headwinds of upto 80kts at the cruise levels of the ATR, the useful range of the ATR 72-600 can be very safely assumed to be 500 NM. (ATR Literature claims 825NM for the -600 “option" [23,000kg MTOW] under the following conditions: ISA – No wind – JAR Fuel Reserves – Typical European Airline OEW)
500NM circles, centred at Mumbai, Delhi, Kolkata, and Bangalore, cover the whole of India.*
A 500NM circle, centred at Manila, covers almost the whole of the Philippines.*
A 500NM circle, centred at Bangkok, covers the whole of Thailand.*
500NM circles, centred at Kuala Lumpur and Kuching, covers all airports in Malaysia.*
500NM circles centred at Jakarta, Surabaya, Makassar, Ambon and Jambi cover most of Indonesia.*
The regional routes are tailor made for the ATR 72-600. Luck #1.
*Does not consider terrain and elevated airports beyond the performance limits of the ATR 72.
The ATR 72 is less expensive to buy (by list price, though the heavy market demand for the type may make Bombardier offer the Q400 for lesser), less expensive to operate (the Q400 consumes almost 30% more fuel than the ATR 72-600), and due to its simpler design and systems, has a very high dispatch reliability.
The lower operating costs results in a lower breakeven load, of around 35 passengers, which is about 6 to 10 passengers lesser than the Q400.
ATR and Airbus share the same parent company: EADS. The not-spoken-of fact is that if you buy an ATR aircraft, you get a good deal on Airbus airplanes. And vice-versa. On top of this, ATR’s sales team is comprised of an aggressive one, that can help with support from European export credit agencies. Further, ATR goes out of the way to secure a customer.
Bombardier is milder. “The aircraft sells for itself" is the attitude of key sales personnel. Plus, Bombardier has two nearly competing aircraft under its brand: the Q400, and the CRJ700. Both are in the 70 seat category, and have similar range. Bombardier, and the customer, are easily confused.
Bombardier, unlike EADS, does not, as yet, offer a comprehensive product line. The yet to fly C-Series will be Bombardier’s first single aisle mainline solution, which will well complement the Q400. But Bombardier still lacks the entire product line and capacity that would be needed for domestic operations: products the size of the A321 and A320.
Local availability of manpower and training facility.
There are only 5 operators of the Q400, in 4 countries of Asia. ANA and JAC in Japan, Air Niugini in Papua New Guinea, PAL Express in the Philippines, and Spicejet in India. There is no abundance of Asian Q400 pilots and engineers.
Although South and South-East Asia is teeming with ATR type pilots and engineers, the demand for the type is so high that there is a shortage of such qualified crew. This is where luck#2 plays a role.
ATR has one ATR 72-600 training centre at Singapore, which will help significantly reduce the costs of training and sim-checks.
There are ATR-type-rated pilots in Europe who could come to SE countries such as Indonesia. Lufthansa’s ATR operation Air Dolomiti, for example, will be downsizing, which will make ATR pilots available. They will need jobs, and they are in good demand.
The curious case of Citilink Indonesia:
Citilink, the low cost carrier of the national flag carrier, Garuda Indonesia, had considered the Bombardier Q400 for its turboprop fleet. It was believed that the Q400 would be chosen, to differentiate from the competition: Wings Air’s ATR 72 fleet.
Arif Wibowo, the CEO of Citilink, said that there were three key considerations to selecting the aircraft type: economic, such the purchase price; financing; and aircraft performance. In the request for proposals, Citilink required bidders to present a plan to provide pilots, and ATR had agreed to this.
Incidentally, after Citilink announced in the December of 2012 that had decided to order ATR 72-600s, it placed a firm order with Airbus for 25 A320neo, in the January of 2013.
The Head or the Heart?
Just because two or more aircraft are in the same class, it doesn’t mean that they’ll perform to the same standard. An airline’s requirement stems from route demand, and this demand defines the desired capacity, and range; Everything else that define the aircraft then play an important role in deciding the best.
In an airframe market, filled with competition, which results in options, the airline is caught between choosing a product that stands out from the other players, and choosing a product that makes the most economical sense. More often than not, what ego-driven airlines look for, is a differentiator, while truly customer focused airlines that are keen on operational viability, look for, is a suitable performer.
Citilink is a low cost carrier; and no 70-80 seat airplane beats the operating economics of the ATR 72-600. The Q400 has a greater performance (greater range, faster climbs, higher cruise speeds), and promising potential (upto 8 more seats on the same flight), but a potential remains a potential until tapped. Forego the 8 seats and you break even with lesser passengers. Look at the typical routes in South East Asia and they are all suited for an ATR 72, as typified by Wings Air, which is set to becomes the largest operator of the ATR 72. Watch the ever increasing fuel prices and you’ll want a less thirsty aircraft.
The Q400 promises more revenue potential, with more seats and an extra flight. But it has to fly more passengers to break even, and more passengers to make the same amount of profit that operating the ATR 72-600 will make. Not many regional sectors bring in 100% loads to tap that potential.
True that the Q400 flies faster, but there must be customers willing to pay for that speed. In a booming aviation environment that is low-cost driven, where the markets are yet to mature and loads are yet to pick up, economics is paramount.
In short, in most of Asia, a low cost carrier can only beat the ATR 72-600 with an ATR 72-600. For everywhere else, like in North America, you have the Q400.