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ANALYSIS: Sukhoi offers Superjet upgrades to appease Interjet

Sukhoi is offering cabin densification as well as fuel-saving winglets for Interjet's Superjet 100s, in ongoing efforts to persuade the Mexican airline to retain the fleet after it faced well-documented operational issues with the type.

"The modifications are on the table, we are committed to doing that with Interjet," SuperJet International (SJI) senior vice-president of commercial Stewart Cordner tells FlightGlobal in an interview. SJI, which is majority-owned by Sukhoi, is responsible for marketing the Superjet to Western customers.

A proposed seat densification will grow the number of seats on Interjet's SSJ100s to as many as 108, from 93 seats currently, says Cordner.

The manufacturer is also offering to retrofit winglets – branded "saberlets" on Interjet's fleet – to improve take-off and landing performance. He expects the saberlets to be certified by June 2019, with the additional seating modifications to follow in the months afterwards.

"It will certainly be in 2019 for sure," says Cordner.

Interjet said in September it will phase out "some" of the SSJ100s without specifying the number of aircraft affected, after denying a FlightGlobal report that it was in talks with Sukhoi to sell the SSJ100 fleet. It declines to comment when asked by FlightGlobal how many aircraft it plans to phase out, saying that it was being finalised.

The carrier currently operates 21 SSJ100s, with one aircraft in storage. It is not clear if all the aircraft will receive the additional seats. Interjet declines to comment, saying that "nothing has been discussed" regarding seat configuration.

The move by Interjet to ditch some of its Superjets follow a history of mechanical issues with the aircraft since it began operating the type in 2013. In early 2017, the airline was forced to ground half of its fleet, for repairs to defects on the stabiliser nodes. Earlier this year, Bloomberg reported that the airline was forced to take four SSJ100s out of service and was cannibalising them for parts to keep the remaining fleet operational.

Sources familiar with the situation say Interjet could reduce its SSJ100 fleet to as few as seven aircraft - or about a third of its Superjet fleet today.

Cordner, however, denies this. While Interjet's troubles with the SSJ100 fleet have been repeatedly reported, Cordner sought to downplay the issues faced by the airline, saying: "The discussion in the press a while ago is very different from where we are right now."

Pointing to Interjet owning most of its SSJ100 fleet, he adds: "It's not like we can take them back, and they are not offering to give them back, they just want to make the airplane more efficient."

In the second quarter, Interjet reported that it received almost $40 million in compensation for contractual recovery of maintenance costs related to the Superjets. Cordner denies that this was paid by Sukhoi or SJI, saying: "SCAC [Sukhoi Civil Aircraft Company] or SJI has never paid a penny of compensation… You have to ask Interjet where the money came from."

Interjet declines to comment, citing confidential agreements with suppliers.

It is common for airlines to request compensation from manufacturers in the event of operational issues, such as if an airline was forced to take aircraft out of service due to aircraft or engine issues out of its control.

Asked to clarify such compensation to operators, Cordner insists that Sukhoi or SJI have not paid anything to the airline. He says that general reports of other manufacturers compensating airlines are hard to prove, since such agreements are usually confidential. "I can say that Sukhoi or SJI haven't paid anything in compensation whatsoever," he adds.

INTERJET'S SUPERJETS: ORDERED IN A DIFFERENT TIME?

Interjet's current seat count on the Superjet comes with a 34in seat pitch, which Cordner believes does not fit with the Mexican market where ultra low-cost carriers have grown significantly in recent years.

"It's business class, quite frankly," he says of Interjet's generous seat pitch, adding that the airline had ordered the aircraft with that configuration in a very different time. Interjet placed its first Superjet order in 2011.

Cordner says the airline still plans to take delivery of the remaining eight SSJ100s in its order, and that these aircraft could be delivered from late 2019 with the saberlets and additional seating installed. Interjet declines to comment on the status of the additional eight aircraft in its orderbook.

It is not clear how the addition of seats to the SSJ100s will fit with a new strategic plan recently unveiled by Interjet, which emphasises a differentiated product from other airlines through "business class legroom" on every seat.

Adding more seats on board the SSJ100s will reduce the seat pitch to around 30in, estimates Cordner. However, he believes the 2-3 seating on the aircraft will still be more comfortable for passengers compared with the 3-3 seating on Interjet's A320 family aircraft.

Interjet, in announcing that it plans to phase out an unknown number of SSJ100s, had said it would do so "with an opportunity for delivery of next-generation Superjet 100 aircraft for use in markets where these aircraft will make operational and economic sense".

Cordner says the "next-generation" SSJ100 is referring to the aircraft with Sukhoi's proposed upgrades, rather than a pure next-generation variant with new engines.

While the eventual size of Interjet's Superjet fleet remains to be seen, the Mexican airline had said it will add 20 more Airbus A320neos in a fleet restructuring that was unveiled as part of the new three-year strategic plan.

The fleet changes are intended to help the airline become more competitive through the optimisation of operating costs, it has said. Interjet declines to comment on when or how it will acquire the A320neos.

The carrier has come under pressure to cut costs amid higher fuel prices. Its full-year operating profit plummeted 77% to Ps210 million ($11.5 million) in 2017, and the airline posted a net loss of Ps236 million. In 2016, Interjet reported a net profit of Ps277 million.

Soon after the airline announced its strategic plan on 14 September, it laid off more than 400 employees including flight and cabin crew and staff in other roles, sources familiar with the situation tell FlightGlobal. Interjet declines to comment when asked about the employee redundancies, saying that personnel issues are confidential.

The privately-owned airline has seen its market share slip in the Mexican domestic market in recent years, as rivals like Volaris and Viva Aerobus have grown. Interjet had a 21% share of the domestic passenger market in December 2017, down from 22.7% in December 2016 and 24% in December 2015, according to Mexican civil aviation agency data.

This August, Viva Aerobus passed Interjet to become the country's third largest domestic carrier behind Aeromexico and Volaris. Viva Aerobus had a 20.3% share in August, just above Interjet's share of 20.1%.

Interjet appears to be eyeing the international market for growth, recently unveiling its first advertising campaign targeted at US and Canadian travellers. The promotional materials highlight how the airline offers a different product on board, including generous legroom, free checked bags and complimentary snacks and drinks.

In the recent year, Interjet has overtaken Volaris to become the second largest airline in Mexico in the international passenger market, data from Mexico's civil aviation agency shows. In August, Interjet had a 25.5% share of the international scheduled service passenger traffic market, after Aeromexico's 54.3% share and ahead of Volaris's 18.3%.

Volaris, citing currency depreciation concerns, has seen transborder softness in its US leisure-bound markets from Mexico in recent months.

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