A Next Generation Regional Turboprop Transport: A National Aerospace Project for India 

By Robert S. Metzger

A third “U.S.-India Aviation Summit” was held in October 2013 in Washington, D.C.  India sent a distinguished delegation, led by Ajit Singh, Minster of Civil Aviation, Arun Mishra, Director General of Civil Aviation, Y.S. Bave, Chairman of the Airports Economic Regulatory Authority of India and V.P. Agrawal, Chairman of the Airports Authority of India.  The U.S. responded with Cabinet officers from the Departments of Transportation and of Commerce, and the heads of the Federal Aviation Administration and the Transportation Security administration.

This impressive gathering spoke to the enormous promise as well as the daunting challenges of civil aviation in India.  India is seen as a huge untapped market for both domestic and international air travel, as well as for cargo and private aviation.  Many forecasts anticipate continued growth in civil air traffic and expected demand for many hundreds of new aircraft worth tens of billions of dollars.  Also recognized are the serious restraints on India’s aviation infrastructure.  There are not enough airports and not enough carrier capacity to service growing demand for air travel to non-metro, “Tier II” and “Tier III” cities.

Even if one submits to optimism, and postulates the achievement of new airports and improved infrastructure, how are domestic carriers to add necessary capacity tailored for these emerging markets? How can India participate in the supply of the hundreds of new airplanes and in maintenance and support of its growing domestic fleet?

Today there is neither a coherent nor a realistic national program to answer either of these multi-billion dollar questions.  Yet there is so much at stake.  A commercially viable domestic aviation industry can offer long-term technical and manufacturing employment for thousands.  If India can contribute to the supply chain for the new aircraft its carriers will acquire in coming years, it will help India to manage balance of trade and current account deficit risks and promote national economic growth.

Viewing Government pronouncements over recent years, many airplane initiatives have been touted.  Few have made real progress.  Among this field, however, one prospect shines with opportunity.

A decade ago, Government sources announced intent to develop the “RTA-70,” a Regional Transport Aircraft.  Then, it was to be powered by turboprop engines, designed by the National Aerospace Laboratory with Hindustan Aeronautics Limited (HAL) envisioned for the production role.  As of now, it is only a “paper airplane.”

In December 2006, HAL announced a $700 million joint venture with a Russian company to manufacture a Multi-Role Transport Aircraft (MRTA).  Intended primarily for military purposes, the MRTA was to be jet-powered, carry 18-20 tons of payload or 100+ soldiers, and have a range approaching 3,000 miles.   A “framework” agreement reportedly was signed in October 2012 between HAL and the Russian partner.  Supposedly, 150 designers are working on the plane’s design.  A first flight in 2017 has been promised.  But seasoned observers of aerospace in India know to limit trust to what is verified by observation and demonstration.  Evidence of actual progress on the MRTA is scant.  In any case, it never was realistic to propose to develop a “heavy” military transport aircraft, using advanced technology, for $700 million.  Embraer is reported to expect to spend nearly $2.5 billion to complete development of its KC-390 military transport.  Moreover, if the MRTA aircraft somehow were brought to market, it would compete against established alternatives, such as the Lockheed Martin C-130J, the Airbus A-400M and Embraer’s KC-390.

Another collaboration with Russia also figures into the equation.  India has announced a partnership with Russia to share design, development and production of a Fifth Generation Fighter Aircraft (FGFA).  If this project proceeds, its forecast cost of $35 billion, for 200 fighters, would be much greater than the $15+ billion that has been publicly identified as the price India has agreed to pay Dassault to buy 126 Rafale fourth generation “medium” fighters.

India announced the award to Dassault in January 2012 but the parties have yet to agree upon the commercial terms of the deal.  The problems may be more than contractual.  One question is whether India has sufficient funds, given the slowing economy and adverse effects of the rupee’s decline in value.  Another is the present sufficiency of India’s aerospace industrial base.  India has demanded that Dassault satisfy a huge “offset” requirement set at 50% of the Rafale’s purchase value.  Questions have been raised whether there is enough relevant and competent indigenous industrial capacity for Dassault to meet this obligation.  Reportedly, Dassault and HAL have been unable to reach an understanding on “workshare” division.

Last summer, the Ministry of Defence put out a $3 billion tender to replace 56 aging Avro transport aircraft, inviting eight foreign airframe makers to propose partnerships with the Indian private sector.  The first 16 aircraft would be purchased off-the-shelf, while the remaining 40 would be manufactured in India.

But this solicitation has proven controversial.  The invited foreign sources may decline to participate because the quantities are too small and co-production in India, on the terms required, may not be realistic.  Moreover, Minister of Heavy Industry Praful Patel has openly questioned the exclusion of the PSUs, suggesting a political push to move the project to HAL.  While it is only public sector unit possessing the relevant competencies, other Government officials have conceded HAL’s order book is full.  As a matter of history, HAL has had trouble finishing and fielding aircraft. Not until late December 2013 was the Indian Air Force able to induct the Tejas Light Combat Aircraft into operational service – nearly 30 years after program inception.

In July 2012, the Prime Minister’s office announced a commitment of $2 billion for the development of a new Regional Transport Aircraft (RTA), to be designed and built in India.  It would carry 70-90 passengers.  Should the RTA proceeds as a jet-powered aircraft, it will find itself squarely in a very crowded market in which competition is presented by Bombardier (Canada), Embraer (Brazil), Comac (China), Mitsubishi (Japan), and Sukhoi (Russia).  As a jet, the RTA will have no commercial credibility, if only because of the surfeit of competition.  For India’s specific needs, it has limited utility, since a jet is most unlikely to be capable of operation from short runways as needed to work routes to India’s under-served cities.

Yet – if properly executed – the RTA holds great promise. As a national initiative, India should champion a long-term program to design, develop, build and support a civil aircraft focused on India’s particular transport needs.  Such an aircraft need not fly fast, but it must be able to operate economically on routes under 1,000 km and from unimproved airfields with short runways.  This points to a next generation turboprop-powered transport aircraft.

Turboprops are undergoing something of a renaissance elsewhere in the world, largely as a function of continuing high prices for aviation fuel that reward the lower cost of operation (versus a jet) of a turboprop.  Indian carriers, the bulk of whom are “low cost carriers” operating with thin margins, no doubt share the motivation to employ next generation aircraft that are miserly in fuel use, as India has among the highest jet fuel costs in the world.  Today, the fuel used for turboprops enjoys a favorable advantage under national and State tax regimes.  And turboprops are comparatively miserly in the use of fuel.

But the dominant reason to look to a next generation turboprop is to answer the infrastructure problem.  However positive the Government’s intentions, it will take many years to add airports and improve infrastructure.  And the costs will be great.  India has announced a national imperative to improve air service beyond the key metro areas to provide more connectivity to Tier II and Tier III cities.  A modern turboprop does a better job to answer this demand than conventional jet transports.  With a suitably optimized design, this aircraft type can operate from shorter runways with less improved ground infrastructure, and can handle high altitude destinations well.  This comports with the Government’s new plans to expand airport connectivity by emphasizing, initially, new airports for lesser served communities that have runways too short for typical jets.  The lower operating costs and potentially reduced maintenance demands for turboprops also can translate into economies that will translate into lower ticket prices as budget carriers will seek to introduce air travel to more passengers.

Today, the Government is contemplating various regulatory and subsidy schemes to compel or encourage domestic air carriers to increase service to the Tier II and III cities.  These have their place, but are not long-term solutions, because such policies do not answer airport infrastructure constraints.  A national program to develop a new airplane optimized for India may prove the right answer to India’s need to offer air carriage to more of its population – and to improve the balance sheets of domestic carriers.

Many considerations figure into the optimum aircraft.  Ability to operate from short runways at high altitude airports is critical.  This will present a design challenge since a high lift wing can produce higher drag that works against range and fuel efficiency.  But low cost of operation and high fuel efficiency are a must, as is reliability and ease of support and maintenance.  Emissions should be minimized.  Also important is the number of passengers that can be carried, comfortably and safely, and passenger flight experience must appeal to the public (including those new to air travel).  Cargo handling is another key consideration.  These factors suggest that a regional aircraft best suited for India will be one that can hold more than 75 passengers.  It should be planned for growth versions that can carry 100 passengers, or more.  India should pursue a new “clean sheet” aircraft rather than a derivative of some existing design.  The aircraft should employ new generation gas turbine engines to achieve double digit reductions in fuel utilization, produce greater power and improve on emissions.  These goals appear achievable, based on various announcements of the world’s leading engine suppliers – but they will require a new powerplant (a “centerline” program, in the parlance of the industry) rather than a derivation of an existing engine.

There are existing turboprops in the market.  Bombardier’s Q-400 and the ATR 72 both carry about 75 passengers and are optimized for short-haul routes.    But neither employs “next generation” advances in materials, propulsion, aerodynamics and flight controls.  Both are at the practical limits of their existing design.  There is room in the market for a new turboprop that can carry more passengers and operate efficiently from small airports over regional routes.  Powerful advances have occurred in many areas of aviation design over the past decade, but few have been realized in turboprop-powered aircraft, thus far.

If it pursues a “clean sheet” advanced turboprop regional aircraft as a national project, rather than accept an existing design and accommodate its limitations, India can design to its unique requirements and the business needs of its carriers.  This may mean that the program takes a decade to reach fruition – but that is par for the course, considering the experience of China and Brazil, for example.  And India can “aim high.”  The long-term objective is to build hundreds of airplanes that will be relied upon by Indian flag carriers for hundreds of domestic routes.  The Government can encourage domestic adoption by tax benefits or other subsidy or preference.

Outside of India, a next generation regional turboprop can find markets in other countries, such as the Philippines or the Indonesian archipelago, with similar tension between growing demand for domestic air travel and infrastructure limitations.  These markets similarly will favor airplanes that are inexpensive to operate and relatively easy to service.

India cannot achieve this promise by going it alone.  Nor will it get done by reliance upon the DPSUs.  Rather, to succeed such a project virtually “demands” the active commitment of foreign airframe and engine prime contractors.  To get that commitment, with all that it implies as to transfer of technology and sharing of IP and know-how, India must end its pattern of active and passive frustration of foreign investment and ownership in aerospace industries.

In fact, this national aerospace project would be a great vehicle for India to “pilot” reforms which, once demonstrated, could be employed in other areas where national industrial base growth is sought and foreign assistance is needed.  India could create a specially-chartered national agency to champion this airplane project.  Suitably empowered, this agency would resolve permits and licenses, clarify disputes among agencies and serve as a “single window” for permits.  Corruption risks could be greatly reduced by concentrating the decision making authority in a few officials and using modern information systems that assure high transparency and efficient decision-making.  It would act as the accountable national authority to oversee the private sector partners who manage the design, development, test and production of the aircraft.

For such a project, India must involve its leading private sector industrial firms and resist the political demands of the DPSUs to dominate the project.  India also must welcome new foreign investment and actively encourage the participation of existing foreign-owned companies already doing business in India.  In addition, participation should be open to Indian companies whose products are “dual use,” suitable for military or civil application.  Offset obligations, owed by foreign sellers of military equipment, can be leveraged by awarding “multipliers” on credits earned though investments or technology transferred to the new national aerospace program.

The national aerospace program must be commercially viable.  That presents some hard decisions up-front.  The development expense likely will be several billion dollars.  The market is too uncertain for private companies to shoulder that expense and risk.  Accordingly, the Government must be prepared to underwrite the development, and perhaps initial production as well.  This may mean abbreviation or early termination of other projects, such as several cited above, that are not producing results sufficient to justify their costs.  The national benefits of a successful advanced regional turboprop aircraft project are enormous.  The Government’s investment can be recouped in a number of ways, such as manufacturer payment of license fees or use of debt financing for later project stages.

Of fundamental importance, a national aerospace project to field an Indian advanced regional turboprop aircraft would be a civil project intended for commercial application. This will greatly reduce the development cost and time to flight, and will focus design and development attention on the low operating costs and passenger safety and comfort that are key to profitable operation by commercial air carriers.  Foreign participation will be facilitated as technology release and export are much less problematic when the product is civil in character.  It is fine to anticipate military derivatives, and the design should recognize eventual military applications, but the project should not be driven by military requirements.  The market is too small, the costs are too high and a military program will take too long.  Moreover, for near-term military airlift needs, India has many choices, as evidenced by the recent decision to purchase additional C-130J aircraft from Lockheed Martin.

A national aerospace project, as here described, requires a long-term vision, an investment mentality and a business-like approach.  These may be different from the norm of Government-sponsored projects in India, but they can be accomplished with the will and the necessary organizational and financial commitment.  As the project proceeds, even before a first aircraft taxis out to test, it will help India to develop an indigenous aerospace industrial base.  As that base matures, its benefits to India’s economy are self-evident.  It also will assist India in realizing the long-held national goals of achieving genuine, world-class indigenous aerospace and defence capabilities.  More Indian companies can occupy roles as trusted suppliers in the global aerospace supply chain.  A successful advanced turboprop aircraft, once certified under international standards, could position India to exploit international markets with a product that is distinguished from of other rivals.   India can become, at last, an aerospace leader and aviation exporter.

Robert S. Metzger is a lawyer with Rogers Joseph O’Donnell, P.C., based in Washington, D.C.  He advises U.S. and international companies on aerospace and defense matters, and has written frequently about the U.S.-India defense industrial relationship and aviation matters.  He is a member of the International Institute of Strategic Studies (London) and was a Research Fellow at the Harvard Kennedy School Center for Science & International Affairs.  He can be reached at RMetzger@rjo.com.

An earlier and shorter version of this article was previously published in the Economic Times on November 13, 2013.



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