On January 13, 2015, Embraer unveiled its communication approach to capture the imagination of the empowered passenger in Asia-Pacific. At the year beginning press conference, Mark Dunnachie, Vice President, Asia-Pacific, Embraer Commercial Aviation showcased the approach which gives precedence to the ‘empowered passenger’ over the aircraft.

In Asia-Pacific, the dynamics of a huge middle class in India and China which constitutes 40 per cent of the global middle class, is going to be a major determining factors in the growth of aviation. And to dive into this market, Embraer has drawn up plans of expanding its footprint, considering that the 70-to 130-seat segment is breaking out of a duopoly situation with other players surfacing particularly in the Asia-Pacific region.

Of major significance to airlines is that, more than ever before, the world loves to fly. With more discretionary money at their disposal, people are eager to spend it on air travel, particularly in markets where there is new demand for connectivity. Increased prosperity and air transport demand go hand in hand.

Kalstar Aviation becomes first E-Jets operator in Indonesia

(Left to Right) Mark Dunnachie and John Slattery of Embraer with Andi Mansyur, Kalstar Aviation

Embraer announced in Singapore that two Embraer E195s will start operations with Kalstar Aviation, a regional operator based in the Indonesian province of Kalimantan on Borneo Island. The two aircraft are being sourced from Aldus Aviation, Ireland.

“We are proud to be the first Embraer operator in Indonesia and we look forward to enhancing our operations, especially in the Kalimantan area, with the introduction of these E195s,” said Andi Masyhur, CEO Kalstar Aviation. “The E195 gives us an opportunity to open new routes and provide better connectivity, frequency and passenger comfort to the people of Kalimantan. We believe that passengers will greatly value the two-plus-two cabin layout that offers unrivalled comfort in this segment.”

“Indonesia’s geography presents an ideal platform for the E-Jets. Its secondary and tertiary cities spread across many islands offer opportunities for enhanced connectivity and frequency,” said Paulo Cesar Silva, President and CEO of Embraer Commercial Aviation. “I would like to congratulate Kalstar Aviation as they boost their fleet and enter their next growth phase. We are confident that the E-Jets’ sound economics and enhanced passenger comfort will add value to their operations.”

Established in 2007, Kalstar Aviation, named after ‘Kalimantan Star’, has been connecting passengers to cities in the province of Kalimantan – an area known for mining and agriculture. The E195s will operate to and from Kalimantan on routes within Indonesia. These routes will be announced by Kalstar Aviation in due course.

Sharing information, Mark Dunnachie said the projected growth rate in Asia-Pacific middle class consumption is a stunning 570 per cent by 2030. Consumers are highly brand-driven and brands that lead the Asian market sit at the top end of the consumer curve. This represents an opportunity for airlines to position the exact image that they wish to capture. The E-Jets E2 is being looked at with this discerning consumer in mind. “We believe that choosing an airline will become a consumer choice based on the driving needs of the empowered passengers, balancing all the key elements in their decision – flexibility, choice, connectivity and price.”

Demand on the Rise

The compound annual growth rate (CAGR) in revenue passenger kilometres for Asia-Pacific is projected to average at six per cent between 2014 and 2033, a higher annual rate than any other region of the globe. According to the International Air Transport Association (IATA), by 2034, nearly half of all air travel, some 2.9 billion journeys, will touch the Asia-Pacific region up from around 40 per cent today.

Understanding the aspirations of the empowered passengers, Embraer has outlined three main consumer types that characterise the preferences of the major passenger types with the Asia-Pacific market – travelling on business, travelling on leisure and travelling on a budget. All passengers share a desire to travel as effortlessly and comfortably as possible and Embraer understands this and has configured the E2 not just with interiors, in flight entertainment but also performance.

In a well-planned approach to the Asia-Pacific market, Mark Dunnachie mentioned the distinction between a ‘Red Ocean’ and ‘Blue Oceans’. In the ‘Red Ocean’, as demand for air travel surged in the region over the last decade, the rise of low-cost carriers was a direct and natural response. Some primary markets, however, are becoming over-competitive, which means that large-capacity aircraft are harder to fill, resulting in downward pressure on fares and return on investment (ROI) whilst other markets are demanding direct connectivity and frequency. The large volume of capacity inflow has had an effect on ticket prices. Yields, as measured by fare per kilometre, have been declining. We are witnessing this presently in India with fare wars.

Embraer sees merits of a Blue Ocean approach in which competition is made less relevant by expanding market boundaries with the use of smaller-capacity narrow-bodies to serve secondary cities where operation of larger-capacity aircraft is not viable. Embraer believes that there are vast sums of revenue to harvest by serving secondary cities in the Asia-Pacific region. But to succeed in these markets, airlines will need smaller capacity jet aircraft that require less financial risk while providing the advantage of going where the competition cannot go and serving the increasing demands of the empowered consumer. The E-Jets E2 is a product of such a necessity.

The E2 family offers the right capacity, the right range, comfort, reliability and economics to succeed. They span all business models and satisfy the expectations of the three primary types of Asia-Pacific travellers Business—Leisure and Budget.