Embraer cautions about pax treatment

Paris Air Show » 2007
June 19, 2007, 5:38 AM

Could Embraer have become the first voice in aviation to commit to the notion that passengers aren’t necessarily all enthralled with the “no frills” concept of air travel and that they may be prepared to pay a little bit extra to feel less like self-loading cargo?

Speaking at the show, the Brazilian manufacturer’s new executive vice president for the airline market, Mauro Kern, launched “The Pax Factor: Part Two–Passenger Empowerment and the Profit Equation.” Following some research with consultants, the company said it can now take “empowered consumers” into account–empowered through access to information so that they can take decisions based on knowledge, add in their “value sensitivity” and cut the airline marketing machines out of the loop.

Passenger behavior is showing that “although cost control is of the utmost importance, you cannot compromise quality of service,” said Kern, who quoted Gordon Bethune (famous for rescuing Continental but since August 31 last year chairman of Aloha Airlines) as saying: “You can’t sell a pizza without cheese.”

On a more serious note, Kern announced that the company had firmed up the sale of E-Jets to Lufthansa: 30 Embraer 190s but with the option to convert to any member of the E-Jet family (which also includes the Embraer 170, 175 and 195). The order does not increase Embraer’s announced orderbook, as it is a conversion from previously announced Swiss orders that have now been cancelled, but Lufthansa has also signed up to “purchase rights” for a further 20 aircraft and options for 30.

Embraer also announced an order for ten 170s to Japan Airlines, with a further five options. The Japanese order illustrates the attraction of the E-Jets to airlines wishing to “right-size” aircraft to match demand, which usually involves taking narrowbodies such as A320s off routes and replacing them with regional jets, which run more frequently while not reducing total passenger capacity on the route. Narrowbodies are sometimes left on to cover peak demand periods (as Finnair has done with its mix of E-Jets and A320s). Wholly owned JAL subsidiary J-AIR will operate the E-170s which, said Kern, have a 20 percent lower fuel burn than an A320-family aircraft.

As well as highlighting the demand for “right-sizing,” Kern was bullish about the industry’s economic prospects and brushed off suggestions of a possible slow-down.

He also rallied against suggestions that other manufacturers might threaten its position. Of Bombardier’s announcement at the show that it has agreed to cooperate with AVIC I of China on an ARJ 21-900, he said that Embraer would need to “analyze and better understand” the details, but he claimed that the E-190 was the “right aircraft at the right time for China.”

Meanwhile, moves by Mitsubishi to design and build a regional jet in Japan were treated with an element of disdain. “Building aircraft is much more than building structures for someone else,” retorted Kern. Embraer vice  president of airline market intelligence, Luis Sergio Chiessi, said, “We don’t doubt that they can get there, but building a reliable and responsive customer support organization around the world takes years and years and years… and they also have lack of experience as an integrator.”

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