Embraer is calling on Asia-Pacific carriers to pursue more secondary markets using regional aircraft, to increase connectivity within the region.
Speaking to Flightglobal, Embraer’s vice president of Asia-Pacific, Mark Dunnachie says airlines, both full-service and low-cost, have become "too focused" on growing their business at main hubs – causing them to operate in a “red ocean environment".
This has seen airlines try to outperform each other in a crowded market, dampening profit and growth and engaging in "bloody battles".
“When competition has caused you (airline companies) to drop your fares so much that you have to start to sell ancillary services on-board, it’s definitely time to rethink your business model,” he says.
An airline can however produce a 15% yield by offering direct services to the right secondary cities, using the right-size aircraft, says Embraer.
Dunnachie is of the view that carriers’ “obsession” with using narrowbodies to service its routes is a key reason for the over capacity in Asia-Pacific.
“A hammer may not always be as effective as a screwdriver, and the idea that you have one tool to do everything is limited,” he adds.
He believes one factor for the success of European and American carriers is their ability to integrate regional aircraft with narrowbodies and widebodies.
“We’re not talking about replacement of narrowbodies, but we are hoping more Asia-Pacific airlines see our products as playing a complementary role to the rest of its fleet," Dunnachie adds, pointing out that carriers can use regional jets for less crowded flights, such as lunch time services.
At the recent Singapore Airshow, Embraer projected a demand of 1,570 new deliveries of 70 to 130-seat jets in Asia-Pacific over the next 20 years, valued at $75 billion and representing 25% of the worldwide demand for the segment.
Source: Cirium Dashboard