As airlines struggle to find new and innovative ways to make money, regional routes could well prove to be the answer to their financial woes. For passengers, this would mean lower fares and better connectivity as regional routes could usher in an era of fare wars on such routes.
Regional airlines are defined by the Directorate-General of Civil Aviation as those plying between Tier II and Tier III cities. The only exception to the rule is South India, where airlines can connect the three metros, Bangalore, Chennai and Hyderabad to Tier II and Tier III cities and still fall under the category of a regional airline.
“The Tier II-Tier III market is a vast untapped market for domestic airlines.” Says SpiceJet official. The low-cost carrier recently announced its regional service with Hyderabad as hub — with an introductory offer of all-inclusive fares at Rs 999. The fares are lower than two-tier A/C train fares on most of the new regional sectors that SpiceJet will fly.
As traffic volumes are not expected to be very high, the trick lies in the fleet. Turbo-props are smaller, cheaper and more fuel-efficient. SpiceJet's recently acquired Bombardier Q-400 has a fuel burn of 1,200 kg per hour while a Boeing 737-800 has a fuel burn of 2,400 kg per hour. An ATR-72, which is another popular turbo-prop aircraft has a fuel burn of about 800 kg per hour. Turbo-props are cheaper, as well — $27 million while the cheapest Boeing 737 is at $56.9 million.
“Turbo-props have fewer seats, which means slightly higher seat factors make for a better utilisation of the aircraft,” says an ex-Jet Airways official.
According to Bombardier, the Q-400 jet breaks even for the airline even if the aircraft is one-third full. For closely packed seat configuration, the aircraft breaks even if the seats are one-fourth full.
19/00/11 Debabrata Das/Business Line
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