VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

JQ operates an A320 to PPP once a day and I was surprised how quickly we were back in the air. Though maybe they have expensive machinery there?

Thats probably an exception to the rule but worth bringing up (although there used to be twice daily flights until last year and even the odd weekly SYD flight), PPP is an interesting destination because it was built (as in upgraded to support jet traffic) to allow competition when HTI was a sole AN port, so that QF could service the Whitsundays, I do wonder what the business case is for JQ to keep operating, and how the staff employment works (do they work for two hours a day as a casual)?

 

[ajw373]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Easy, LCCs don't operate one flight a day ports, and where they have it has not lasted long. The 737 allows legacy carriers to operate a variety of ports that get a single flight a day as well as busy ports with multiple same city flights without the expensive container handling equipment needed for an A320, obviously I am not saying high frequency pairings are the domain of the A320 either, it's just that the 737 gives a premium carrier the option to run services into less demand ports at a lower cost while still having the capability to be competitive on the trunks.

An A320 uses 2T less fuel for the same max range as a 737 and has lower capital costs, keeping it in the air means more $$$ for the LCC. With the upcoming next generation of single aisle airliners, the Max has a lower hourly operating cost than the Neo ( projected of course), which is why the tables have turned back to the 737 as being the favoured child in the last few months once the picture matures and Neo loses its first to market advantage,

You still haven't given any real word examples to back up your theory. A look around the world will show that the theory is more or less baseless. Simple fact some LCC's prefer 737, some prefer A320, although the points you raise about loading are valid, but do remmeber that containers on the A320 is an OPTION.

As mentioned Jetstar more or less got the A320's that Qantas(was rumored to have) ordered for itself. Virgin Blue got 737's for reasons unknown, bearing in mind other Virgin airlines at the time were using A320's, but presumably availability related.

 

[eastwest101]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Some fuel burn stats here with the B738 vs A320. To sum up the fuel burn is very slightly in A320's favour over approx 400-500nm but it is very close (if I am reading it right). I think as others have said its also to do with availibility of aircraft and capital cost/lease repayment terms. Comparing QF 737-800 and Jetstar A320's isn't really comparing apples with apples though - I would love to see the stats for an operator with exactly the same overheads that flies both the B738 and the A320 to really nail it down. Possibly Delta Airlines would know.

Odds and Ends: Puzzling math remains puzzling in 737 v A320 debate « Leeham News and Comment

 

[Fruitcake]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

As mentioned Jetstar more or less got the A320's that Qantas(was rumored to have) ordered for itself. Virgin Blue got 737's for reasons unknown, bearing in mind other Virgin airlines at the time were using A320's, but presumably availability related.

Virgin Blue picked up some of their early fleet of classic 737s from Virgin Express in Europe, who I believe were an exclusive 737 operator. I'm not sure if that could have been a factor.

 

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

As mentioned Jetstar more or less got the A320's that Qantas(was rumored to have) ordered for itself. Virgin Blue got 737's for reasons unknown, bearing in mind other Virgin airlines at the time were using A320's, but presumably availability related.

Dixon announced the A320 order the same day Jetstar was announced, having placed the order after the board meeting to sign off on Jetstar, it was never for QF. Not sure where you got the idea from, the announcement was Dec 1. 2003. The contract was signed on Dec 20 at Airbus.

“The A320 family is used by two of the world’s most successful low cost carriers, Jetblue and
EasyJet, and it has an outstanding track record, including excellent fuel efficiency.”

I dont think it was a coincidence that the same announcement included more 738s for mainline!

http://www.qantas.com.au/infodetail/about/investors/trafficStats/October2003.pdf

 

[777]

Virgin Blue picked up some of their early fleet of classic 737s from Virgin Express in Europe, who I believe were an exclusive 737 operator. I'm not sure if that could have been a factor.

DJ actually started with borrowed/leased virgin express planes from memory so the rationale may have been as simple as that.

 

[Jousams]

But isn't the 737 used by the most successful LCC's?


Sent from my iPhone using AustFreqFly app

 

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

DJ actually started with borrowed/leased virgin express planes from memory so the rationale may have been as simple as that.

Probably true, and then took advantage of the pool of ex AN pilots with 737 ratings as well as aircraft, with some AN aircraft serving in DJs fleet. Regardless, we now have two mainline fleets using 737s for the single aisle routes in the majority while their LCC siblings use the A320 family, and their FIFO siblings using 100 seat 20 year old relics.

 

[Fruitcake]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

...and their FIFO siblings using 100 seat 20 year old relics.

My thinking has always been that is the result of the low/unpredictable utilisation nature of the FIFO/charter business requiring very low capital cost airframes, even at the expense of higher operating costs. So if they end up parked for six months of the year, it's not a huge cashflow drain. Is that a reasonable assumption?

 

[Dee Thom]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

and their FIFO siblings using 100 seat 20 year old relics.

But great 'relics' they are for the job they were purchased for. Cheap to by, lots of spare parts, 70 to 100 seat capacity, and good hot and high performance.

What else can do that for the initial outlay, and seat klm price ? Please don't say the RJ300 or 200, not a good craft in the heat.

Cheers,
Dee.

 

[ajw373]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Dixon announced the A320 order the same day Jetstar was announced, having placed the order after the board meeting to sign off on Jetstar, it was never for QF. Not sure where you got the idea from, the announcement was Dec 1. 2003. The contract was signed on Dec 20 at Airbus.



I dont think it was a coincidence that the same announcement included more 738s for mainline!

http://www.qantas.com.au/infodetail/about/investors/trafficStats/October2003.pdf

My source is magazines like Australia Aviation etc from the time. If you recall during 2000 and 2001 Qantas was looking at the replacement of the 737 classics. The beleif at the time was Qantas had ordered or was close to ordering (but not annouced) the A320 to replace the 737 classics, but due to the Ansett collapse they needed more capacity quicker. Of course with 9/11 at the same time there suddenly became available AA's orders for 737's but no A320's that Qantas was able to very quickly able to snap up and integrate into their fleet. The rest of course is history, so yes in 2003 Qantas then annouced the A320 order for Jetstar and additional 737's for Qantas. Clearly by this time the 737-800's had been introduced into the Qantas fleet so there was no point changing. Had it not been for these two events I think it is safe to say the Qantas single isle fleet would be very very different to what it is today.

 

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Of course with 9/11 at the same time there suddenly became available AA's orders for 737's but no A320's that Qantas was able to very quickly able to snap up and integrate into their fleet.

There were plenty of A320s available at the time, including 20 in AN colors if new was not your fancy, while new slots from Air Canada were floating around, of course most aircraft were under the AWAS ownership which QF would have been reluctant to deal with given history.

As for why LCCs may favor the A320, and how it works for the more successful carriers, lets look at a US carrier up against Southwest as a good example, being Spirit, note the CASM and utilization:


The economics of the A320 are covered here: A320 [AirlineEconomics]

 

[ajw373]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

There were plenty of A320s available at the time, including 20 in AN colors if new was not your fancy, while new slots from Air Canada were floating around, of course most aircraft were under the AWAS ownership which QF would have been reluctant to deal with given history.

As for why LCCs may favor the A320, and how it works for the more successful carriers, lets look at a US carrier up against Southwest as a good example, being Spirit, note the CASM and utilization:
View attachment 10682

The economics of the A320 are covered here: A320 [AirlineEconomics]

Even if A320 slots were available Qantas would not have been able to introduce A320's into their fleet as quick as what they needed, wheras they already had 737's and the integration of the 737-800 was minor.

Interesting you mention Southwest, there is a large LCC that exclusivly flies 737's. You will find that there are large number of LCC's flying 737's, large number of non LCC's flying 737's, you also have a large number of LCC's flying A320's with containers, large numbers with A320's without containers as well as large numbers of non LCC's flying A320's with and without containers.

Not sure what the document you presented is meant to show. I agree 100% that a container A320 can be turned quicker than a 737 or a manual load A320, just don't beleive your assertion that LCC's choose the A320 for this reason when there are clearly a large number of LCC's that operate 737's and a large number of non LCC's that operate A320's.

 

[eastwest101]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Excellent stats - thanks for that! Spirit has a mix of A319's and A320's, Southwest a mix of B733s B735s B737s and B738s. Jetblue mostly A320's with some E190s - remember that Jetblue went against the trend and only packs 150 PAX into their A320's which is pretty civilized for a LCC.....

Do you reckon the slightly higher JetBlue CASM is maybe due also to wages and maybe slightly higher landing charges?

 

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Interesting you mention Southwest

No point comparing an A320 operator with a similar denisty A320 operator in the context of the discussion , also why Jetblue is there as an example of a less packed LCC I suspect, making its density closer to mainline.

Not sure what the document you presented is meant to show

CASM is what is costs to put that seat to work, utilization is how hard that seat works. As the industry has matured in the LCC context, some carriers have recognized their errors and changed, Air Asia being a local significant one that was a former Boeing customer, with the advent of the max, the swing goes the other way, at least for now.

 

[straitman]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

.... the swing goes the other way, at least for now.

I personally believe that sums it up pretty well. It is not as simple as comparing one or two items as some here have tried to do.

When any particular airline looks at an operation they weigh up all the factors that are relevant at the time. These include but are not restricted to:

1. Aircraft availability,
2. Aircraft purchase cost,
3. Aircraft operating costs,
4. Pilot availability,
5. Pilot training needs,
6. Pilot training costs,
7. The routes to be flown,
8. Hours to be flown,
9. Maintenance costs,
10. Maintenance intervals,
11. Maintenance down times,
12. Maintenance frequency,
13. etc....

Each one of these headings has many subheadings. For example all the maintenance items also need to reflect scheduled versus unscheduled times. etc, etc, etc

There are many, many things to consider and it is possible that in any situation the answer can be quite different from one operator to another.


What was the topic again ..:?:

 

[markis10]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

What was the topic again ..:?:

Virgin becoming an A320 operator

 

[ajw373]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

CASM is what is costs to put that seat to work, utilization is how hard that seat works. As the industry has matured in the LCC context, some carriers have recognized their errors and changed, Air Asia being a local significant one that was a former Boeing customer, with the advent of the max, the swing goes the other way, at least for now.

I know what the figures say, not sure it confirms your agument, when an A320 LCC operator has a cost per seat double another A320 LCC operator.

And getting back on topic lets not forget that Virgin Aus was once a LCC that happily operates 737's.

 

[samh004]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Thats probably an exception to the rule but worth bringing up (although there used to be twice daily flights until last year and even the odd weekly SYD flight), PPP is an interesting destination because it was built (as in upgraded to support jet traffic) to allow competition when HTI was a sole AN port, so that QF could service the Whitsundays, I do wonder what the business case is for JQ to keep operating, and how the staff employment works (do they work for two hours a day as a casual)?

Having flown the route in a day recently, the plane was full in both directions, and the crew appeared set to operate a service to CNS after returning to BNE. I didn't make sure they did leave on the same bird though, as I was back in the lounge pretty quickly.

 

[psi999]

re: VA invests in Tiger, buys Skywest, SQ investment & ACCC Concerns

Was thinking about this lastnight, and how VA could turn around Tiger’s poor reputation.

Rename to….. Virgin Blue, and instantly capitalise on existing brand recognition and LCC travel base.

Virgin Australia - Full Service
Virgin Blue - LCC

Either way, interesting times ahead.