Friday, 10 November 2017

HAL pitching the country's first civilian aircraft to prospective buyers

HAL pitching the country's first civilian aircraft to prospective buyers

Prime Minister Narendra Modi's ambitious Make in India programme is set to get a major boost if the state-owned Hindustan Aeronautics Limited (HAL) finds a buyer for the country's first civilian aircraft - HAL DO-228. The aircraft developed at HAL's Kanpur facility is used by defence forces for more than two decades. HAL is waiting for its first break in the civil aviation space and pitching to airline operators, especially start-up carriers, to buy these aircrafts.

HAL says that the aircraft has considerably lower list price, operational costs and can land at most regional/small airports in the country. For instance, the price of DO-228 is around Rs 60 crore as compared to an estimated price of over Rs 160 crore for ATR-72. IndiGo, the largest carrier in terms of market share, has signed agreement with French-Italian aircraft maker ATR for the purchase of 50 ATR 72-600s. IndiGo, which primarily operates narrow-body Airbus A320s, will deploy ATRs for regional connectivity.

A large majority of airlines in India, and even globally, don't buy aircraft. They choose leasing - finance or operational. If the cost of ATR is higher, its leasing cost will also be higher. HAL officials say that the operational costs of ATRs are over Rs 2 lakh per flying hour in comparison to DO-228's Rs 85,000 per hour. The operational expenses of aircraft includes crew cost, maintenance costs, airport infrastructure costs, marketing, landing and parking charges, and distribution costs. HAL says that this aircraft is ideal for start-up carriers.

To cover these costs, ATRs need to have a minimum occupancy of 70 per cent. The typical seating plan of ATR 72-600 is 70 seats. The operators will have to sell around 50 seats per flight. DO-228, which is made in India turboprop with some imported components and imported engine (from Honeywell), has a seating capacity of 19. "It's not difficult to fill up those many seats. ATRs may not be profitable on regional routes as some operators are expecting," says a HAL official.

According to HAL, the aircraft requires runway length of 2,100 feet for take-off and 1,800 feet for landing which makes it suitable to operate in almost 99 per cent of airports in India. There are an estimated 450 airstrips and airports in the country. HAL is currently in the process of acquiring certification from the civil aviation regulator DGCA (director general of civil aviation) which is expected by December.

Some 140 DO-228s are already operated by defence forces where the aircraft has recorded a clean track record on safety, and has no major complaints on the maintenance side. Depending on the order book, HAL has a capability to produce 10 aircraft annually. HAL says that the biggest hurdle in selling of aircraft is the non-availability of aircraft leasing companies in India. "We are getting responses from operators but they want these aircraft on lease. We are a manufacturer; and cannot do leasing. We are talking to lessors on this issue but since they are foreign entities, they prefer foreign products over us," says a HAL official.

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