Jayant Baranwal, Editor-in-Chief, SP’s AirBuz, speaks to Dr Dinesh Keskar during the Boeing presentation on Current Market Outlook (CMO) in the capital.
Jayant Baranwal (JB): You kept Regional Jet less than 1 per cent for the India forecast, what is the scenario in the US market, which is a very mature market for all types of aircraft - single-aisle, wide-body and the regional jet.
Dr Dinesh Keskar (Keskar): United States has significantly more Regional Jets because the per capita GDP, as I shared in the chart is way up there. People who live in smaller cities in the US have significant disposable income and if they are going to a small city like Spokane, which is near Seattle, the traffic will be carried on a regional jet from Spokane to Seattle and from Seattle then to London, or Hong Kong or Singapore any of these places. Because of the long sector and the short sector, the regional jet becomes sustainable. This phenomenon is not quite demonstrated in India, yet people do fly, but there is a huge difference in the road conditions and roads are getting better in India that is what makes a difference.
JB: Does the predator kind of scenario happen in the US, where the large aircraft operators offer aggressive fares to over-ride the market on the regional front?
Keskar: The regional model works well in the US market. Typically the large airlines own the regional jets or a division that operates regional aircraft, like United Express is owned by United Airlines and a couple of others also follow the same. They work within themselves or guarantee fares or guarantee contributions unlike India as these are entirely different airlines.
JB: How do you perceive the MRO industry scenario in India?
Keskar: You saw the numbers and our aspirations to get into the MRO market. It was in December 2005 as a part of our deal with Air India, we built an MRO and handed over to Air India. There is a huge demand for MRO in India. As of date Air India is handling much of their own work, going forward the vision is to take up other planes for the MRO work.
JB: Would you have any policy corrections suggestions for the MRO?
Keskar: On the policy aspect, we would like to see the reduction in the duties. The supply chain needs to be well oiled. The cost of the MRO around the world is different the market will face a fierce completion from the other veterans such as the Lufthansa Technik, SIA Engineering Company, ST Engineering, so many from around the world, these guys will compete very heavily. With the current practices, and low support you will not be able to grow the industry.
Significant work is going on MRO in Asia. The industry should continue to work with the government, MoCA, Finance and Commerce Ministry if the industry can get the support they need it would be a huge advantage in favor of the industry. The labor is cheap here, as compared to Europe, where a man hour costs Euro 100 and in India, it is as low as Euro 30 per hour, I think we stand a substantial chance and the MRO market is pretty big.
A lot of support and skill is needed and a lot is needs to be done and pace to be picked in this market. Despite the challenges, I am very bullish on the MRO market.