Turboprop maker ATR is the undisputed leader in India's small aircraft segment, with a 90 per cent market share.
But in view of dynamic changes in the regional sector and the recently announced fuel tax exemption for regional jets, Bombardier is looking to make a dent in the market.
Despite its global market share of 60 per cent, Bombardier has made no break-even deals with Indian companies yet. Its last significant deal was a lease of seven aircraft to Air Sahara.
Industry sources say Bombardier offered Air Deccan and Spice Jet aircraft at reduced prices, but both chose to stick to their current family of aircraft.
"We don't have any plans of buying Bombardiers yet. There were some informal talks and they even offered revised prices. But the talks never progressed further since we clearly said we were not interested," confirmed Spice Jet chairman Ajay Singh.
Analysts also say it might take time for the two manufacturers to break even in the Indian aircraft market. "ATR already has a large presence in India and a huge support structure. Bombardier has to sell some aircraft first, build a support structure and thereby make its presence felt in India. That is going to take some time," said aviation analyst Kapil Kaul.
To combat factors such as unavailability of spare parts and adequate maintenance facilities, Bombardier is now planning a maintenance repair and overhaul (MRO) facility at Mumbai or Hyderabad.
Analysts are positive that Bombardier's time will eventually come, especially going by recent developments in the aviation scenario.
"With the recent budget announcement and the regional sector being opened up, long-term prospects for these players and regional jet aircraft are extremely high. Even existing players like Jet Airways might look at companies such as Bombardier for future regional operations," said Kaul.
New norms announced in the latest budget exempted aviation turbine fuel (ATF) used in regional jets from sales tax, which was earlier about 30 per cent. Finance Minister P Chidambaram had extended "declared goods status" for ATF sold to new generation scheduled airlines that operate small aircraft with a maximum take-off mass of less than 40,000 kg.
Earlier, ATRs were the only aircraft to enjoy the exemption. The budget revision means that it also applies to regional jets such as Bombardier CRJ700 or CRJ900.
Also, with the opening up of new airports and more point to point services, regional routes might not necessarily mean only short-haul flights, but also long-haul direct flights from one corner of the country to another.
"That is where people would prefer jets which have more capacity and comfort. It would not be sensible to make a six-hour journey crammed in a 50-seater turboprop," says Srinivas Duvvuri, vice-president and chief country representative, Bombardier.
In terms of turboprops too, the Bombardier Q400 could be tough competition for ATRs, which are currently ruling the roost, claim Bombardier officials. According to industry experts, Q400s are more cost-effective than ATRs, especially in terms of speed, capacity and turnaround time. Start-up airline MDLR is looking at both CRJ900s and the Q400 turboprops for their regional operations.
"The Q400 gives you most of the benefits of the jet engine. It is a wider aircraft than the ATR turboprop, the fuel efficiency is at par or lower, and most importantly, the aircraft has great operational efficiency in terms of range and speed," said Kaustav Dhar, president commercial, MDLR.
However, ATR does not see these aircraft as formidable competition. "We enjoy a clear majority in market share. We already have firm orders from names like Kingfisher and Air Deccan. There will be more from Jet Airways. There is no competition from these players," said a senior ATR official.
When asked about the possibility of price wars, he said, "Our turboprops already enjoy a concession regarding aviation turbine fuel. There is no question of reducing prices."
