 "Indian aviation going regional will help us: Patrick de Castelbajac")
France-based aircraft manufacturer ATR has 30 aircraft in operation in India. ATR’s turnover stood at $ 1.8 billion in 2014 against $1.63 billion in 2013, and increased its aircraft deliveries to 83 aircraft globally from 74 in 2013. On his first visit to India, ATR Chief Executive Officer Patrick de Castelbajac tells Somesh Jha that the company is in talks with other airlines to provide regional connectivity. Edited excerpts:
How have been ATR’s relations with India so far?
ATR’s journey with India started in 1999, when Jet Airways took the first ATR aircraft. Two-three years later, Air India too started. Then, we had the Kingfisher Airlines and Air Deccan chapter, which started well but ended not on a good note as the company went down — nothing to do with ATR — but that’s what happened.
Our story with India is now resuming. We have two new operators over the past couple of months. We see interest from both existing operators and newcomers. It is clear to everyone in the industry that the next logical step is tapping the regional aviation. India has a competitive advantage compared to other places because of the strong demographics.
How do you see ATR’s revival in the Indian air space?
ATR will grow significantly in India in the next few years. The current government really wants to simplify things to facilitate business. When you compare the regional aviation in India to other countries, it is massively under-represented.
We have 30 aircraft flying here. When you look at Brazil and Indonesia, we have 80 or more aircraft. But when you see the growth of population in India, not only in terms of volume but more in terms of quality, the number of people who can afford to travel today is roughly 300 million, which is more than the size of Europe. In 10 years, these numbers will rise to 500 million. So, India has much more to offer than Europe.
What is the current aircraft order from the Indian airlines?
Today, we don’t have any orders to announce. We are just discussing with people and re-enforcing the partnerships. Industry players also understand the next step is to go regional. We are talking to a lot of players and we are trying to find the right partners. But we don’t want to rush into it, as we have learnt our lessons in the past. It is that things here take time and are complex.
We need to see how we can best respond to that. In the next 10 years, markets will explode and I will not be surprised to see our 200 aircrafts flying here because markets will certainly require it. We can really add a lot of value to develop regional market.
It’s learnt that Bird Group was also in talks with ATR for buying planes…
We don’t disclose discussions with our customers.
What kind of players are you in discussions with?
Indian market is changing all the time. We are discussing with current operators, those who do not operate and those who are looking to operate. Today, we just had preliminary discussions.
What were the challenges you faced in India?
India’s potential is far bigger than that of Brazil. But it’s a very complex country and the interaction between industry and government is complex. We need to understand it a little better. But what would work for us is the opening of Indian market to more international traffic. You have much more aircraft from West Asia and South-east Asia coming into India than 10 years before. These dynamics will soon change into the regional sector and we are confident that aviation will grow in India with regional connectivity.
Can you list out some complexities?
The first challenge is the complexity of the administration. I get a feedback from the airlines that other issues are fuel price and taxes. They say we need to fix these two issues because we are paying more compared to the other countries. The system has to balance itself. Today in India, the airlines are at a little disadvantage because of all these layers of complexity, taxes and high fuel prices.
How do you compete with Q400s or Embraer?
We have a market share of 80 per cent worldwide. Sometime ago, we were roughly on a par with Q400s. But last year, we had 83 deliveries and they delivered 24. If you take the Asean countries, in the past four-five years, we had 92 per cent share versus eight. So, we have a very strong leadership in the regional market. However, in India, it is less than everywhere else. We have 65 per cent share which is lower than the rest of the world.
How have been ATR’s relations with India so far?
ATR’s journey with India started in 1999, when Jet Airways took the first ATR aircraft. Two-three years later, Air India too started. Then, we had the Kingfisher Airlines and Air Deccan chapter, which started well but ended not on a good note as the company went down — nothing to do with ATR — but that’s what happened.
Our story with India is now resuming. We have two new operators over the past couple of months. We see interest from both existing operators and newcomers. It is clear to everyone in the industry that the next logical step is tapping the regional aviation. India has a competitive advantage compared to other places because of the strong demographics.
How do you see ATR’s revival in the Indian air space?
ATR will grow significantly in India in the next few years. The current government really wants to simplify things to facilitate business. When you compare the regional aviation in India to other countries, it is massively under-represented.
We have 30 aircraft flying here. When you look at Brazil and Indonesia, we have 80 or more aircraft. But when you see the growth of population in India, not only in terms of volume but more in terms of quality, the number of people who can afford to travel today is roughly 300 million, which is more than the size of Europe. In 10 years, these numbers will rise to 500 million. So, India has much more to offer than Europe.
What is the current aircraft order from the Indian airlines?
Today, we don’t have any orders to announce. We are just discussing with people and re-enforcing the partnerships. Industry players also understand the next step is to go regional. We are talking to a lot of players and we are trying to find the right partners. But we don’t want to rush into it, as we have learnt our lessons in the past. It is that things here take time and are complex.
We need to see how we can best respond to that. In the next 10 years, markets will explode and I will not be surprised to see our 200 aircrafts flying here because markets will certainly require it. We can really add a lot of value to develop regional market.
It’s learnt that Bird Group was also in talks with ATR for buying planes…
We don’t disclose discussions with our customers.
What kind of players are you in discussions with?
Indian market is changing all the time. We are discussing with current operators, those who do not operate and those who are looking to operate. Today, we just had preliminary discussions.
What were the challenges you faced in India?
India’s potential is far bigger than that of Brazil. But it’s a very complex country and the interaction between industry and government is complex. We need to understand it a little better. But what would work for us is the opening of Indian market to more international traffic. You have much more aircraft from West Asia and South-east Asia coming into India than 10 years before. These dynamics will soon change into the regional sector and we are confident that aviation will grow in India with regional connectivity.
Can you list out some complexities?
The first challenge is the complexity of the administration. I get a feedback from the airlines that other issues are fuel price and taxes. They say we need to fix these two issues because we are paying more compared to the other countries. The system has to balance itself. Today in India, the airlines are at a little disadvantage because of all these layers of complexity, taxes and high fuel prices.
How do you compete with Q400s or Embraer?
We have a market share of 80 per cent worldwide. Sometime ago, we were roughly on a par with Q400s. But last year, we had 83 deliveries and they delivered 24. If you take the Asean countries, in the past four-five years, we had 92 per cent share versus eight. So, we have a very strong leadership in the regional market. However, in India, it is less than everywhere else. We have 65 per cent share which is lower than the rest of the world.