Smaller planes in demand in Asia

SINGAPORE - Smaller passenger planes are increasingly in demand in Asia as budget carriers cash in on the region's growing middle classes by expanding their reach to less prominent cities, industry executives say.

So-called ''regional'' jets - short to medium-haul aircraft that generally seat under 100 passengers - were among the best-sellers at the Singapore Airshow which ended at the weekend.

Jimmy Lau, managing director of show organiser Experia Events, said demand for smaller aircraft will rise as Asia's burgeoning middle class sustains the growth in air travel that began in metropolitan areas.

''The people who will be likely making good inroads are the Embraers and the Bombardiers who will be selling their smaller regional jets to countries like Indonesia, Thailand and Malaysia,'' Mr Lau told reporters as the Airshow ended with deals totalling a record US$32 billion (1,055 billion baht).

Embraer, the Brazilian plane maker, forecasts that Asia-Pacific carriers will take delivery of 1,500 new jets in the 70- to 130-seat segment over the next 20 years, with a total value of $70 billion. This would represent nearly 20 percent of global demand.

Canada's Bombardier expects the region to get one-third of the 12,800 aircraft in the 20 to 150-seat segment it forecasts to be delivered worldwide in the next two decades.

The company's vice president for marketing Philippe Poutissou told AFP that Bombardier sold almost 80% of its planes to Western countries in the past.

Four-month-old Indian carrier Air Costa sprang the biggest surprise at the event when it ordered 50 E-Jets E2 planes from Brazilian manufacturer Embraer worth $2.94 billion, with purchase rights for 50 more.

Air Costa wants to connect cities in southern India such as Bangalore, Chennai, Hyderabad and Vijayawada, as well as key secondary cities in the country's north and northwest.

''Our philosophy is that we believe that 70% of the population, of the huge 1.2 billion population in India, still reside in these non-metros,'' Air Costa chief financial officer Vivek Choudhary said.

Bangkok Airways, which describes itself as a ''boutique'' airline that serves popular tourist destinations in the country as well as the Maldives, Laos and Cambodia, ordered six 72-600 planes from European plane maker ATR for $150 million.

Budget carrier Nok Air ordered two Q4 100 aircraft - which can seat 70-80 passengers - from Bombardier to help it expand into smaller cities in Thailand and neighbouring countries, and may buy six more.

Nok Air chief executive Patee Sarasin said the airline's strategy is to use 33-seater planes to penetrate small towns and stimulate air travel, and then to increase frequency or use bigger aircraft as demand rises.

''There are so many airports in Thailand that are underutilised and so many towns that are underdeveloped in terms of the flying experience,'' Mr Patee said.

Mr Poutissou of Bombardier said his company is also aiming at a slightly larger aircraft class with its C Series of planes that can seat up to 150 passengers, competing directly with popular single-aisle planes made by Boeing and Airbus.

The Airbus A320 and Boeing B737 - currently favoured by Asia's major budget carriers - can seat between 126 and 200 passengers.

Mr Poutissou said regional jets and single-aisle planes can complement each other, and he expects airlines to have a combination of both.

Boeing and Airbus are watching their smaller challengers.

''They are moving up into that part of the market (single aisle) in order to compete directly with us,'' said Randy Tinseth, vice president for marketing at Boeing.

Mr Tinseth said Boeing and Airbus must assume that one of the smaller aircraft manufacturers, including some from China, will become successful.

''It's not a question of whether they will be successful, but when,'' he said.

John Leahy, Airbus chief operating officer, said he was not ``overly concerned'' about the upcoming competition.

But he added: ''If you ask: Will Airbus and Boeing be under threat in the next 10 years? The answer is no. And 20 years? The answer is probably yes.''

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