SINGAPORE 2016: Asia-Pacific LFAs should reassess business models, says Embraer

The low-cost model is not sustainable in its current form and low-fare airlines (LFAs) in the Asia-Pacific should consider alternative strategies, according to Mark Dunnachie, vice-president Asia-Pacific, Embraer Commercial Aviation.

Dunnachie highlighted that for every two routes opened in 2015 by low-fare airlines, one route was cancelled and that these carriers should look to access lower-density markets to sustain growth. He suggested that the LFAs look to airlines such as JetBlue and adopt a second fleet to serve those routes with fewer passengers-daily-each-way (PDEW). “Only 28% of markets across the region have more than 300 PDEW, so that leaves 72% which need aircraft of the right size,” he remarked. “The first LFAs to [adopt a second fleet] will have a considerable advantage.”

Referring to all business models, the VP noted, “This is the region of growth and we see 550 deliveries in 70-130 seat jet market in this region between now and 2034.”

With regard to orders, the company’s chief commercial officer John Slattery reported that the E-Jet programme has had 1,704 orders to date, with 513 in backlog. “We’ve added nine new airlines since the beginning of 2015. We’re excited about the new operators – Air Burkina, TAP, Austrian, GX Airlines, Delta Air Lines, Kalstar Aviation, AnadoluJet, Colorful Guizhou Airlines and Cobham.

“With a book-to-bill ratio of just over 1.5:1 from 176 sales in 2015, we’re achieving momentum right across the board,” Slattery declared.

Dunnachie reinforced the CCO’s point by noting recent successes in his region with both new and pre-owned aircraft. “We’ve just achieved our first customer in South Korea, with Korea Express Air taking delivery of an ERJ 145 during January from our subsidiary ECC Leasing. We’re also looking forward to delivering the first E190 for Japan Air Lines in April,” he commented.

Photo shows (l-r): Embraer Commercial Aviation’s chief commercial officer John Slattery; president and chief executive officer Paulo Cesar Silva; and vice-president Asia-Pacific, Mark Dunnachie.

Bernie Baldwin, editor, Low-Fare & Regional Airlines/

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