Southeast Asia suited for smaller narrowbody jets, AirBorneo could benefit: Experts

KUALA LUMPUR: Smaller narrowbody aircraft such as the Airbus A220 and Embraer E2 family could open new opportunities for airlines in Southeast Asia, particularly on thinner and underserved routes.

Endau Analytics aviation analyst Shukor Yusof said Southeast Asia's geography made the region suitable for smaller jet aircraft.

"Southeast Asia has a very good opportunity for regional jets. By geography, our region is perfect for something that's less than a 100-seater," he told Business Times when contacted last week.

Shukor was commenting on AirAsia X Bhd's landmark order for 150 Airbus A220-300 aircraft in a deal valued at about US$19 billion at list prices, marking the largest single firm order ever for the A220 programme.

The agreement, announced earlier this month in Canada, also includes options for up to 150 additional aircraft.

An aviation industry expert said smaller narrowbody aircraft could be useful for airlines looking to match aircraft capacity more closely with thinner routes.

"It's right-sizing for thin routes. It's a strategy of frequency over capacity and it's good for secondary city connectivity," the expert, who asked not to be named, said.

The industry expert added that smaller narrowbody aircraft could also serve as network feeders and offer lower trip costs and better fuel efficiency.

He said the aircraft could work in markets requiring capacity larger than turboprop aircraft such as the ATR but smaller than an Airbus A320 or Boeing 737.

"It may work for the Asean region where the market is a bit too small for an ATR but too big for an A320 or B737," he said.

Shukor said smaller narrowbody aircraft could potentially benefit Sarawak-owned AirBorneo, particularly for operations within Borneo.

"Borneo is a fantastic place for regional jets. It's a big island but small enough for hopping around small airports. You don't need big airports."

"It would make perfect sense if AirBorneo considered regional jets. The cost associated with it is also lower and the size of the population also means that you don't necessarily need 150- or 160-seater aircraft," he added.

However, Shukor and the industry expert said airlines would still to carefully balance operating economics, fleet strategy and technical requirements before introducing a new aircraft type.

Shukor said larger narrowbody aircraft such as the A320 and B737 often have an advantage because the operating cost difference with smaller single-aisle aircraft was not significant in many cases.

"The cost of running that compared to a regional jet is not that much. Airlines tend to go for bigger ones (aircraft)," he said.

The industry expert said smaller narrowbody aircraft worked best when integrated into a broader airline network rather than used mainly for standalone point-to-point operations.

"Regional jets make perfect sense for dual-brand or multi-platform strategies because they fit into a bigger network," he said.

He cited the example of Singapore Airlines and its budget carrier subsidiary Scoot where the latter's operations with smaller aircraft worked because they fed into Singapore Airlines' network.

"Success in Asean depends on using them specifically to unlock virgin markets where narrowbody aircraft are simply too much capacity," he added.

Shukor said Scoot is an example of how smaller aircraft could be deployed in Southeast Asia.

Scoot currently operates Embraer E190-E2 aircraft on selected regional routes including flights between Singapore and Melaka.

"The Embraers have worked very well for Scoot because the number is just nice for them and it suits their current business model," he said.

Both Shukor and the industry expert said introducing smaller narrowbody aircraft would require airlines to make additional investments in training, maintenance and operational support.

Shukor said the A220 differed significantly from the A320 family.

"It's important to understand that even though the A220 is an Airbus aircraft, it's very different from the A320 and all the other Airbus aircraft.

"The cockpit is slightly different. Pilots would need separate type certification and training even though they are already flying the A320 or A330," he said.

The industry expert also said Southeast Asia's maintenance, repair and overhaul (MRO) ecosystem is still developing in terms of supporting smaller narrowbody aircraft.

"Currently, the technical and MRO ecosystem in the Asean region is not really fully geared up yet for regional jets. But if more airlines onboard regional jets, maybe in time the ecosystem would be able to support them," he said.