India could gain valuable systems integration experience developing a regional aircraft, but the domestic market for airliners with fewer than 120 seats is far from proven.

Earlier this week, India took an important step on the long road to becoming a commercial aircraft producer, when the prime minister's office said that a high level manufacturing committee had made the strategic decision to produce a new 70-90 seat aircraft.

"This is a strategic sector where there is a need to have a presence in the long term, particularly in view of the rapid growth of our aviation sector," it added.

A special purpose vehicle will be set up for the development and production of the aircraft.

For some years, India's National Aerospace Laboratories (NAL) has been developing plans for a regional transport aircraft (RTA). Although it is unclear whether the new aircraft will be a jet or turboprop, NAL told Flightglobal Pro in late 2012 that a turboprop would be preferable because the aircraft is envisaged as flying missions of 500nm (926km), and it would also be more suitable for military operations.

Even though developing the RTA will likely be less risky than the course taken by China, with its Comac ARJ21 and C919 airliner programmes, India will face major hurdles in developing an aircraft that the country's airlines will want to buy.

NAL believes that there is demand for up to 500 RTAs in India, from both commercial and military operators. For the time being, however, the Indian market for aircraft that seat between 40 and 120 passengers is negligible.

Flightglobal's Ascend Online database shows that there are merely 25 40-69 seat aircraft serving in India. These are mainly ATR 72-500s operated by Jet Airways and ATR 42-300s operated by Air India.

As for 70-119 seaters, there are but 17 aircraft in service. These are mainly the Bombardier Dash 8 Q400 aircraft used by SpiceJet. Flightglobal's Ascend Online database shows that Air India Regional is the country's only operator of regional jets, with four Bombardier CRJ700s, one of which is in storage.

This means that regional aircraft, either jets or turboprops, comprise just 11.4% of India's total commercial aircraft market of 367 aircraft.

India commercial aircraft pie chart

Flightglobal Ascend

As for deployment, FlightMaps Analytics shows that Air India primarily deploys its CRJ700s on thin, point-to-point routes from New Delhi. These aircraft operate exclusively in the north of India, serving destinations such as Dehradun, Guwahati, Allahabad, Jabalpur, Bhubaneshwar and Port Blair.

India's regional jet routes

Regional jet routes India

FlightMaps Analytics

FlightMaps Analytics also shows that turboprops are used mainly on feeder routes in both north and south India. Notable turboprop hubs are New Delhi, Chennai, Bengaluru and Hyderabad.

India's turboprop routes

India turboprop routes

FlightMaps Analytics

Major international airframers are divided on the outlook for regional aircraft in India.

In September 2012, Boeing - which does not make regional jets - predicted that of the 1,450 new aircraft that India will need by 2032, only 15 are regional jets.

However, in February 2013, Embraer - which does produce regional jets - told Flightglobal Pro that the outlook for regional jets in India is rosy.

"If you look at the yield in India today on the metro markets, it is one of the lowest yields in the world," said Embraer's vice-president Asia airline market Alex Glock.

"However if you look at the tier three markets, there is a 20% premium yield in those markets that cannot be served by the larger aircraft, and these markets are growing at 70%."

Those markets are largely served by turboprop aircraft, such as the ATR 72 and Q400, but Glock believes that carriers will soon look to regional jets to open up new city pairs, potentially between cities across the country.

Should NAL and Embraer be right about the future potential of India's regional aircraft market, India's new RTA will face merciless competition from established players. India's record of developing new aircraft is highly suspect. The country has yet to attempt a major commercial aircraft, but military programmes such as NAL's Saras and Hindustan Aeronautics' Tejas fighter have suffered legions of problems in their long, difficult development programmes.

Source: Air Transport Intelligence news