Bombardier Breaks Into Indian Market with Q400s
Indian low-cost carrier SpiceJet took delivery of its fourth Q400 NextGen on September 7 and planned to deploy it late last month along with three others it received starting in late August. A delay in clearance from the Reserve Bank of India forced a postponement of first deliveries from July to the last week of August.
“We decided to strategically focus on improving air connectivity in Tier 2 and Tier 3 towns as we believe there is a large market in India that is yet to be touched by the benefits of the aviation revolution,” SpiceJet CEO Neil Mills told AIN. “We chose the Bombardier Q400 because it is the aircraft best suited to the available infrastructure in India. It can operate from small runways and will be the game-changing aircraft for the Indian aviation industry,” he said.
The deliveries to SpiceJet represent Bombardier’s first foray in the fast-growing Indian commercial aviation market, where rival ATR has already made significant inroads.
SpiceJet planned to launch the first phase of its regional connectivity strategy on September 21 with the 78-seat turboprops, connecting Hyderabad to Aurangabad, Bhopal, Indore, Mangalore, Rajahmundry, Tirupati and Vijayawada.
SpiceJet also plans to add service within its existing destinations using the Q400 and will now operate direct flights from Hyderabad to Goa, Madurai, Nagpur and Pune and Bangalore to Vizag.
SpiceJet chose Hyderabad’s Rajiv Gandhi International Airport (RGIA) as the first base for its regional operations due mainly to its geographic suitability. “Its south-central location reduces flying time to any of the cities in the region and makes it the most suitable location to connect other cities, especially in the south,” said Mills. “The location advantages of Hyderabad also allow exploring and developing markets in the west, central and eastern part of the country.”
SpiceJet expects to acquire seven more Q400s by the end of March and a total of 15 by July. The airline plans to add 100 flights a day over the next six months.
“With Q400s, we’ll increase our flight strength to 300 from the current 202 by the end of March 2012,” said Mills. “We’re busy negotiating landing rights with various airports.”
Many of those airports will host a scheduled airline for the first time.
“The smaller cities in the country are growing faster [than the bigger cities] and operating these smaller aircraft is cheaper because the sales tax on fuel for smaller aircraft is only four percent, and also we do not have to pay parking and landing charges,” added Mills.
Sales tax on fuel in India averages 24 percent, among the highest rates in the world.
SpiceJet has also signed a 10-year agreement under Bombardier’s comprehensive SmartParts program that will provide a wide spectrum of cost-per-flight-hour maintenance for the airline’s Q400s.
“All parts are covered in the program and we don’t have to worry about logistics,” said Mills. “We know exactly what the support costs are and will be able to budget proactively for traditionally variable expenses and count on optimal turnaround times.”