The Hindu Business Line : Paramount to buy over 30 Embraer aircraft by 2011

Bangalore, Sept. 30 Paramount Airways will buy over 30 more Embraer aircraft as part of its pan-India roll out plan which is expected to be completed by 2011. As per the listed price, each of the Embraer costs about $45 million and hence 30 of these would cost $1.35 billion.

Paramount Airways’ Managing Director, Mr M. Thiagarajan, told Business Line that the airline already flies seven Embraer aircraft, with two more expected towards the end of the year. Another 30 more aircraft are expected to be added to the fleet in a phased manner till 2011.

The airline will have a total of about 40 Embraer aircraft by 2011. Paramount Airways currently flies two types of Embraer aircraft: The 170-100, with 72 business class seats, and the 170-200, which has 11 first class and 64 business class seats.

Funding options

Mr Thiagarajan said Paramount will not raise money to fund the aircraft purchase. “It will be partly carried out through internal accruals and through the typical aircraft funding options like the EXIM Bank. “…but we are certainly not in the market for raising funds,” he said. The airline also plans to buy large-bodied aircraft either from Airbus or Boeing for its international operations which should kickstart by 2011.

The airline’s managing director said that in spite of a downturn in the airline industry, his airline will go ahead with the pan-India roll out because Paramount was confident of sailing through these tough times as its business model was different from the rest.

“We are going completely against the industry grain. We are not fighting the battle of price,” he pointed out. He said the airline’s business model, which is based on high value service, has now been replicated by airlines such as Singapore Airways, Lufthansa and Air Nippon.

By example

“Lufthansa now flies an all business class flight from Pune to Frankfurt and even Singapore Airlines has a similar model for some of its flights to the US,” he said. Such examples clearly show that our model has been successful, with air fares being priced between 5 per cent and 10 per cent higher than full service carriers, he said.

Mr Thiagarajan said the challenge lies in being cost effective and at the same time delivering service excellence. “We are never overstaffed and hence there has never been an occasion for us to reduce staff,” he said. “Our airline has benefited from being positioned as an aspirational brand,” he said. The airline has about 150 pilots on its rolls.