Spicing Up its Indian Operations
The C series is set to expand 100-150 seats market. With Spice Jet as one of its major customers by its side, Solem says Indian market has huge potential in regional airports sector.
How was the debut of the C series at Le Bourget?
Oh it was very exciting, to debut the C series at a major airshow, Le Bourget, in Paris. We had CS100 on display, which is fully outfitted with seats and bins. Apart from using it as a static display, we use it for testing and environment control systems like a real-life plane. We had a footfall of a thousand, definitely. Many customers came back several times, bringing their colleagues. They were excited and taking pictures of the interiors, so they can get their color schemes correct. Of course, we also had CS300 that is known for long trips. We flew it there so everybody saw the exteriors. It was nice of airshow authorities to let us fly. It was quite popular and received much applause for the bombardier show.
Did the applause also reflect in the order books?
Everybody talks about our order book. We have 243 full orders and approximately 400 commitments; some are conditional purchase agreements. We are very conservative in counting orders and are okay with where we are. Our book holds 340 orders I guess and we are going to materialise them. Of course, if we want, we will look for more. But we aren’t as big as Boeing or Airbus. We usually get 10 and 20 is a big number for us.
Which part of the world and which segment of the market did the demand come from?
We got interest from around the world. We have customers from Europe, Asia and America. We will keep growing in this manner. It is a kind of airplane, which fits into many markets. It is not just one of those design airplanes. We are sort of creating the market in 100-150 seating space. This space was never well served. Now we have, not just a good one but a great one. It is a highly efficient technology aircraft, which beats anything near it. I am seeing interest from the customers who want to serve that market and they can’t find the economics that work with small versions of the larger airlines.
Did you see any curiosity from India in this aircraft?
Yes. The minister of civil aviation, Ashok Gajapathi Raju, came through. I gave him a tour myself. We showed him CS300 and Q400 – I think he is very interested. He appreciated our success in building an airplane in that category.
How do you rate your performance in India in last five years?
Honestly, we are very small in the Indian aviation market. We do have quite an extensive rail presence. We are a good corporate citizen in India. With our rail presence, we employ lot of people at our engineering centres. In the aviation side we are still small and somewhat new. Right now, our biggest customer is Spicejet.
Some of the other rivals of Spicejet like Air Costa won the deal with Embraer, was it a deal that you were also interested in?
Air Costa is very small. It was questionable in my mind when they signed this deal for 50 E-190-E2s types of aircrafts. They had exactly two aircrafts on lease that were also on ground at that time. They are flying Embraer and are working for getting more of them. Whether they will complete this deal and take delivery of brand new airplanes in 2020 is still a question. We did talk to them. They weren’t interested in C series right now. They have Embraers on lease and they are going to find used Embraers with pilots. The new piece in the deal is quite a bit far in the future. So we are not giving up trying to convince them to take ours.
How big is the Indian market potentially?
It is huge. It’s a big country with many people and lot of difficult terrain and our products are suited for that. We are somewhat small now. Spicejet has fifteen Q400. We need to grow them, we need to work with new owner Ajay Singh who was also present at the Bourget. We did a signing for our small parts agreements for his fleet. We showed him the C series, he was quite impressed. But it is not his thing now, he is focused on 737 fleet and building up queues. Our primary goal now is to make sure that Spicejet with Singh is successful – that they make money and grow their fleet, through that alone we can get to 50 C400 easily.
The Indian government is focusing on promoting regional airports. Do you see a segment of market being created there, which was not there earlier?
Absolutely. That is why Spicejet walked here in the first place. The yield is quite good because people want to fly between smaller places or smaller airports to larger airports without transits. There is a big market there. The road infrastructure isn’t good enough everywhere and some places don’t have the train. So a good turboprop aircraft and 1-1.5 hour plane ride is a great way to go. Q400 is a rugged, high utilisation aircraft and it fits the Indian market well. We need to grow this with Spicejet and thus increase their operations as well in the new airports.
Do you have figure for 10 years down the line? How many aircrafts from bombardier will be flying in India?
As many as possible. You can’t ask me for an operating commitment. I hope it gets to hundreds. It is not difficult, given the market size and the way Indian economy is going. There should be nothing preventing us from getting a hundred. Nothing except competition and ourselves.
How do you plan to take care of the competition?
First, we need to grow Spicejet. We have to take care of our customers and make sure they are successful and grow with them. Being responsible for Asia, I see this every day, high growth economies drive high growth in aviation sectors. It is a known formula. You have seen the GDP chart, everybody in the world follows them, growth one-way or the other. It is true in China, Indonesia and India. If the economy keeps growing there is going to be a large demand for aircrafts. The regional market should grow faster than the GDP. It should at least grow 15 points. Indian GDP under the new prime minister is picking up, so we should grow at 6-7 pc per year. Regional flights should grow over10 pc for a long time.
Are there any new things you need to do internally to make bombardier more vibrant and dynamic in India?
More people and infrastructure is always better – more spare parts, more air capability. We are good at this around the world. We have done it in rail and we have done it in the aviation. We have the right product. We need to just do a little more.