 "Airbus to set up training centre for pilots in India: Kiran Rao")
With an order backlog of over 500 planes, Airbus has secured dominant position in India's civil aviation market. Airbus executive vice-president (marketing and strategy) Kiran Rao tells Aneesh Phadnis that the company will set up a pilot training centre in India, and it expects issues around A320neo engine to be resolved by June. Edited excerpts:
How is Airbus supporting its customers in resolution of A320neo engine issue? When can we expect complete resolution of the problem?
First of all, I have to say that we have delivered an excellent aircraft to IndiGo. It consumes less fuel and is quieter. This is important for India as taxes on fuel here are high. We delayed the deliveries because we were waiting for the engine software upgrade and that has now been done. Pratt & Whitney said engine software and hardware issues would all be ironed out by June 2016.
Fuel costs are an important component of an airline's operating costs. Airlines are keen to save on fuel expenses irrespective of whether crude oil is at $100 or $40 (a barrel) and with 15 per cent less fuel burn, A320neo helps them to do that. We are not seeing any shortage of demand for the aircraft. In fact, customers are requesting us to advance the deliveries.
Public sector banks are saying Airbus should return pre-delivery payments it took for Kingfisher aircraft (Kingfisher did not take delivery of the planes and there is dispute over advances given to Airbus). How is Airbus addressing the issue?
Airbus does not comment on ongoing legal disputes.
Can you tell us more about Airbus plans to set up a flight training centre in India?
We support IndiGo's and CAE's flight training centre at Delhi and Bengaluru. However, we plan to have our own flight training centre in India. Within this year, we will finalise the location and the plan for the centre.
The centre would be for A320-type aircraft to begin with, given the fact that over 70 per cent of our market share in India is in this segment.
What is the status of Airbus plans to develop a maintenance, repair and operations (MRO) hub in India?
We expect the Indian government to ease the tax structure for MROs. It has been promised on several occasions. We remain committed to develop an MRO in India and are waiting for the tax situation in India to change.
Airbus has not been successful in selling its wide body aircraft in India. Why so?
India is mainly a market for single aisle planes and we have a market share of 70 per cent in that segment. With SpiceJet wet leasing A320 planes, all airlines in India now fly Airbus aircraft. We feel the market for wide body planes is still to evolve in India. Once that happens, I see a greater demand for Airbus A330 and A350 aircraft. In fact, Airbus A350 aircraft will burn 25 per cent less fuel compared to Boeing 777 on India-US non-stop flights. The wide body planes sold by Boeing to Air India and Jet Airways have been a cause of headache for them.
Airbus' flagship product - the A380 - has suffered from a lack of orders in the last couple of years. There are demands from customers for an upgraded version. What are your plans with regard to the aircraft?
It's not correct that we have not received orders. Recently, we received order for A380 from Iran. Since December 2013, we have booked orders for 73 A380s and have delivered 63 aircraft. So our backlog of A380s today is higher today than two years ago - and that's before we count the 12 aircraft ordered by Iran Air.
How is Airbus supporting its customers in resolution of A320neo engine issue? When can we expect complete resolution of the problem?
First of all, I have to say that we have delivered an excellent aircraft to IndiGo. It consumes less fuel and is quieter. This is important for India as taxes on fuel here are high. We delayed the deliveries because we were waiting for the engine software upgrade and that has now been done. Pratt & Whitney said engine software and hardware issues would all be ironed out by June 2016.
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There is a view that cheap fuel can impact the demand and lease premium for A320neo. Do you agree with this?
Fuel costs are an important component of an airline's operating costs. Airlines are keen to save on fuel expenses irrespective of whether crude oil is at $100 or $40 (a barrel) and with 15 per cent less fuel burn, A320neo helps them to do that. We are not seeing any shortage of demand for the aircraft. In fact, customers are requesting us to advance the deliveries.
Public sector banks are saying Airbus should return pre-delivery payments it took for Kingfisher aircraft (Kingfisher did not take delivery of the planes and there is dispute over advances given to Airbus). How is Airbus addressing the issue?
Airbus does not comment on ongoing legal disputes.
Can you tell us more about Airbus plans to set up a flight training centre in India?
We support IndiGo's and CAE's flight training centre at Delhi and Bengaluru. However, we plan to have our own flight training centre in India. Within this year, we will finalise the location and the plan for the centre.
The centre would be for A320-type aircraft to begin with, given the fact that over 70 per cent of our market share in India is in this segment.
What is the status of Airbus plans to develop a maintenance, repair and operations (MRO) hub in India?
We expect the Indian government to ease the tax structure for MROs. It has been promised on several occasions. We remain committed to develop an MRO in India and are waiting for the tax situation in India to change.
Airbus has not been successful in selling its wide body aircraft in India. Why so?
India is mainly a market for single aisle planes and we have a market share of 70 per cent in that segment. With SpiceJet wet leasing A320 planes, all airlines in India now fly Airbus aircraft. We feel the market for wide body planes is still to evolve in India. Once that happens, I see a greater demand for Airbus A330 and A350 aircraft. In fact, Airbus A350 aircraft will burn 25 per cent less fuel compared to Boeing 777 on India-US non-stop flights. The wide body planes sold by Boeing to Air India and Jet Airways have been a cause of headache for them.
Airbus' flagship product - the A380 - has suffered from a lack of orders in the last couple of years. There are demands from customers for an upgraded version. What are your plans with regard to the aircraft?
It's not correct that we have not received orders. Recently, we received order for A380 from Iran. Since December 2013, we have booked orders for 73 A380s and have delivered 63 aircraft. So our backlog of A380s today is higher today than two years ago - and that's before we count the 12 aircraft ordered by Iran Air.