Moneycontrol PRO
Access insightful & curated financial content with Moneycontrol PRO at just Re. 1/- per day. Use code PRO365.
you are here: HomeNewsBusiness

Trujet has survived in the world’s toughest aviation market, but what next?

The airline has been operating without many hitches for six years thanks to subsidy and other benefits of UDAN. It is betting on smaller jets to fend off competition from the likes of IndiGo.

April 19, 2021 / 02:00 PM IST
Hyderabad, Telangana, India - November 07 2018: Trujet Airplane at RajivGandhi International Airport
Editorial credit: Anitham Raju Yaragorla /

Hyderabad, Telangana, India - November 07 2018: Trujet Airplane at RajivGandhi International Airport Editorial credit: Anitham Raju Yaragorla /

Last week, Interups fund from the USA talked about investing in Indian regional carrier Trujet. While investments are not new in Indian aviation space, what would make any analyst take note is the interest expressed in a smaller jet.

Trujet took to the skies in July 2015 and with seven aircraft has managed to do something which many of its compatriots in the regional space haven't been able to— surive. The history of Indian aviation is littered with dead airlines. The list includes recent casualties such as Air Costa, Air Pegasus, Paramount and Air Carnival.

Trujet’s six years have been eventful. True, Trujet had an advantage in the form of subsidy under Regional Connectivity Scheme (RCS) under the aegis of UDAN (Ude Desh ka Aam Nagrik) . But Indian aviation is too brutal for airlines to surive on the basis of subsidy alone. Remember, the subsidy too is restricted to three years after which competition will either gobble up routes or they would become unsustainable.

The airline also benefited from the demise of Jet Airways but UDAN 1.0 was helpful because it secured monopoly on some routes. This helped the airline establish some good routes like those to Salem from Chennai, Cuddapah and Vidyanagar. Not only were these monopoly airports, but they also boasted immense tourist or commercial importance.

Trujet also showed the smarts to stick to only two bases—Hyderabad and Ahmedabad— as opposed to going all out and being scattered all across the country. This focussed apprach has helped it consolidate sales and distribution efforts, which is a significant cost for airlines and could make or break its revenue stream.


But UDAN remains the fount of its success. That means it also leaves Trujet with little options.

With a fleet of ATR72s and a fleet of just 7 aircraft in six years, the conditions make it ripe for competition like IndiGo to poach pilots making it unsustainable for smaller operators.

The big question is how does an airline grow without deep pockets? Investments in aviation, assuming they go through after all relevant approvals, would require a war chest.

Fleet refresh—a game changer?

The airline is apparently in talks with both Airbus and Embraer for 54 A220 or the same number of E2 family aircraft. The A220 has its origins with Bombardier in Canada,  with the program being purchased by Airbus and rechristened the A220 from C-Series. The aircraft is available in two variants, namely A220-100 and A220-300. The Embraer E2 family is available in three—the E175-E2, E190-E2 and the E195-E2.

The new generation smaller jets come with a new generation of comfort, economics and range which could give a run for money for the A320s and B737s if deployed effectively. Traditionally, airlines in India have focused on beating down the costs.

This involved finding ways to keep the CASK (Cost per Available Seat Kilometer) low. CASK is a measure of unit cost per seat per kilometer and an increase in the number of seats in an aircraft reduces the CASK. An example is that of IndiGo or GoAir which opted for 186 seats in their A320neos, helping reduce the costs over the 180 seat A320ceo.

The smaller jets, on the other hand, work with a measure called “Trip Cost”. It is the cost of completing a trip or a sector.

For a smaller jet, the trip cost is lower than say, the popular A320 or B737s. However, as the smaller jets have lesser seats, the cost per seat is higher than the A320 or B737s.

So how does it work? An airline will spend or burn less cash to complete the same sector with a smaller jet but at a higher cost per seat. Considering how long it takes to start making money in India, this directly translates to losing lesser money until you break even.

Globally, while older and larger airplanes are being retired, smaller jets continue to be in demand. So much so that few airlines like Bamboo in Vietnam decided to wet lease a few Embraers.

Since the outbreak of the pandemic, airlines have regularly taken deliveries of the A220 or the Embraer E2s. These include Delta or Air Canada who inducted the A220s and KLM, Belavia, Helvetica, Air Astana and others who continue to induct the E2 family.

The fact that Boeing was about to gobble up Embraer and Airbus bought C-Series shows the seriousness with which the two biggies see this space and its future.

A new aircraft type is full of challenges. While typically airlines can poach pilots, maintenance staff, cabin crew and almost everybody else from another airline, this is not the case when a new type is being introduced. There simply isn't enough manpower in India who is trained to fly the A220 or the E2 family, if at all there is any. Aircraft manufacturers are known to handhold airlines in such cases.

Tail Note

The A220 is a clean sheet design while the E2 family is a mix of the learnings of the E1 family and a clean sheet design. The E195-E2 claims to have a CASK which equals the A320neo but a lower trip cost.

Both these aircraft have innovations incorporated in them, which the A320neo does not since the savings come merely from the upgraded engine. While the largest window in its class and no middle seat could be the Embraer selling points, airlines mostly avoid passenger amenities in deciding which plane to buy or lease. The focus is always on costs.

Over the last year, Interrupts fund and its founder Laxmi Prasad have spoken a lot about investments in Indian aviation and infrastructure space but little has materialised on ground. Aviation in India is also a very capital-intensive business and while the fund may have the money, does it have the know how to turn around and give returns to its own investors?

Time will tell what eventually happens but in a country dominated by IndiGo, you cannot try and become another IndiGo and compete. You need to differentiate and a different fleet type is the right start.
Ameya Joshi runs the aviation analysis website Network Thoughts.
Tags: #Trujet
first published: Apr 19, 2021 02:00 pm

stay updated

Get Daily News on your Browser
ISO 27001 - BSI Assurance Mark