Odds and Ends: Dire outlook for airlines; 787 Deliveries; American-USAirways

Dire Outlook: This article is nothing to cheer about. The author predicts a low growth in global GDP, and this is what Airbus and Boeing rely upon for their growth and production forecasts. It says airlines are emitting much more pollution than generally thought, and if true, this means more costs (especially in Europe) in fees. Also buried in the article is the revelation from Air New Zealand that it costs the airline $1.25m to operate a Boeing 777-300ER round trip from NZ to London, with more than 50% of the cost being in fuel. No wonder the prospect of the Boeing 787 and Airbus A350, with 20% lower fuel costs and 25%-30% lower trip costs, is so important.

787 Deliveries: They are still slow but they are picking up, and it will be about 1 1/2 years before the backlog of airplanes parked at Paine Field in Everett is cleaned out. But it’s progress.

American-US Airways: AirInsight has a podcast discussing the disruptive impact of a merger here.

35 Comments on “Odds and Ends: Dire outlook for airlines; 787 Deliveries; American-USAirways

  1. The fuel costs for the New Zealand – London trip seem to be slightly exaggerated – for the trip from Auckland to London via Singapore and back with 370 pax at 210lbs each I get a fuel burn of just under 140.000 gallons. At $3.50 per gallon that would be just below $490.000, but not something like $750.000 like suggested in the article.

      • But aren’t airline bosses generally the ones with the greatest interest in people believing their statements to be true?

      • Riiight, since an Airline CEO want’s to blab to the world (and his competitors) exactly what his operating costs are… Sorry, I think he threw out some FUD and people are eating it up like candy.

    • The way I read your calculations is that you are doing a one-way flight.

      The way I read Fyfe’s comment is that the approximate cost of fuel for NZ to the UK is $310,000, with another $310,000 for the return trip.

  2. Perhaps they should pack an A380 and fly it twice a week between Auckland and London. Flights to New Zealand are really expensive right now.

  3. I agree with aeroturbopo, the fuel cost sited for an NZ B-77W is exaggerated. The B-77W holds 47,890 US Gallons of fuel. http://www.boeing.com/commercial/777family/pf/pf_lrproduct.html Even using that figuer x 4, = 191,560 US Gallons (that is assuming fuel onloaded to full tanks from empty tanks for each leg) X $3,50 per US Gallon costs $670,460, which is just over the 50% total trip costs they are using. There is no way NZ will fly any airplane to empty tanks before landing. I am using more than 50,000 US Gallons of fuel that aeroturbopo is using. So I am saying each legs, assuming they took off with full tanks about 12,500 gallons, about a 25% fuel load. No airline in their right mind would do that.

    • The original quote:
      An aircraft flying to London and back, a 777-300, it costs $1.25 million to get that aircraft to London and back and over 50% of the cost of fuel, a 737 flying to Auckland – Wellington about 23% of the cost is fuel.SOURCE: Radio New Zealand 2012-07-18 19:29:00

      So, it is probably NZ$ and 51%
      1.25e6(NZ$) * .81(exch.rate) * 51(costpercentile) / 3.5($/gallon) ~= 147,500 gallons fuel
      This fits in with ATP’s expected fuelburn.

  4. Some subscribers will have read “Vulcan 607,” which relates how nine aerial tankers* and 16 air/air refuelings were needed to tanker sufficient gas to get one bomber 7,500 miles from Ascension Island to Port Stanley and back. The airlines are more subtle:they tanker all their fuel.
    So, for ANZ to fly the last few miles into London the fuel will have been tankered all the way from, say, Simgapore… Has anyone calculated how much monery, and more importanly how much fuel, could be saved with a couple more stops? I think we should be told. (The customers, or perhaps more likely their employers, can decide if money or time is the more precious – they won’t live any longer without refueling stops…)
    * obviously not A330Ks and certainly not, er, KC-767s

    • We read Vulcan 607. It is a great read. Highly recommend it to everyone. We met one of the pilots at an Airbus A400M event. Added flavor to the read.

      • I have to correct myself: Fuel burn for the route via Singapore would be close to 735.500lbs or 110,000 gallons (not 935,500lbs/140,000 gallons as stated before), thus fuel costs would be about US-$ 385,000 or 475,310 NZ$.
        Flying the 10.400nm in three legs would yield in 6 x 118,000lbs or 105,200 gallons of fuel burn. All fuel burn calculations are in still air and optimal routing. Calculating for wind would not add very much as we go in both directions, but the routing could add up to 10% I guess.
        I found earlier that the lowest fuel burn per mile for both the A380 and the B787 is for ranges near 3000nm. But the resulting lower fuel burn would be eaten up by landing fees and additional crew costs easily.

        • We received this from a reader:

          777-300ER can only hold 48000 gallons of fuel. $600,000 of fuel (rough 50% of trip cost) would net 150,000 gallons of fuel at a conservative $4 / gallon (spot price is more like $3.60, contract rate much lower). If they are burning 3-4 tanks of gas to make the round trip, we can conclude that their enroute stops are well outside the great circle route from NZ to UK.

          So I looked up ANZ between Auckland and London – the flight connects in Los Angeles. Mystery solved.

          “Rough guess says they burn about 175,000 gallons for the round trip through LAX, which yields about $600k US or $750k NZ at $3.4 US / gal

      • I wonder how airlines can make any money at all. If I look at a return flight from Auckland to London, I get the following:

        244 economy * 3,500 NZD + 44 premium * 6,900 + 44 business * 12,000 = 1,685,600 NZD

        If fuel is 750K NZD and is around 50% of trip cost they will make around 160K NZD with 100% load factor.

        The other day, I took a cab home from work, and the cost was 55 Euros for 30km. I have a return MUC – LHR flight booked on Lufthansa for just over 100 Euros. Lufthansa will take me 365km for the price of cab fare home!

  5. I am not sure if countercurrents.org is a good source when it comes to predicting the outlook for airlines. Looking at the statement at the bottom: “Andrew McKay is a trained ecologist currently working as fisheries observer in New Zealand. When not out on the ocean he blogs about peak oil and related issues from a New Zealand perspective at Southern Limits.”.
    Oil pricing has become a major driver of how airlines operate, but I don’t think any of conclusions is comprehensive enough to reflex the complexities involved.

    While the increasing push towards LCC is clear, it does not mean that LCC is the only way to travel. I read an article 2-days ago (can not find the reference right now) stating that airlines are accelerating cabin upgrades as for long distance flights data is starting to show a difference in yield for flights with up-to-date interiors and service vs flights with lower levels of amenities and service – which effectively means that the flight is selected not only based on lowest fare as it is in most cases for short distance flights. It stated that the average time between major upgrades of the cabins has shortened from 10-years to less than 5 with the US legacy carriers making the biggest improvements after years of neglect and it covers all classes, not only F and J.

    And now it goes back to the age old fact that revenue vs expense is the driver of profitability and both factors need to be managed equally. And if that would be simple enough that it could be captured in a single blog, I think that far fewer airlines would be in the red.

  6. Boeing has 17 787s that have passed FAL and EMC, ready for delivery, this number was below 10 in june…

    Production is not the problem anymore, delivery is, frames that are ready wait for first flight more than 2 months…

    More mechanics and test pilots maybe needed?!

    • Do you mean ready for first flight, or ready for delivery? Perhaps there is an agreement between OEM and customer re delivery date. What’;s the hurry to fly if the airplane ain’t goin’ no place any time soon?

    • commendable.
      deliveries have become sparse again: 3 in june, 1 in july, 1 in august ( 30th/31th : LAN delivery planned )
      GENX : All Quiet on the Western Front ;-?

  7. His quote about France running into trouble is over 9 months old. Gordon Brown made that prediction last November. I wonder how many other of his links are as out of date.

    Also I was under the impression that premium economy was the way of the future.

  8. talking about Pack Like Sardines, Ryanair has confirmed it is back in talks on a massive aircraft order – believed to be with Boeing, believed to be for 300 aircraft.

  9. keesje :I doubt if he wanted to take the risks. Anyway MOL wants wider doors, smalller galleys, dislikes the 737 MAXhttp://www.flightglobal.com/news/articles/ryanair-offers-scathing-verdict-on-737-max-368895/
    and wants a 199 seater..http://www.flightglobal.com/news/articles/ryanair-199-seat-aircraft-would-hit-capacity-sweet-spot-350946/
    Maybe Airbus could pick up the opportunity and launch an A320 stretch with wider doors, smaller galleys etc.. 300 aircraft is a lot and O’Leary might even be willing to pay for them.. http://i191.photobucket.com/albums/z160/keesje_pics/AirbusA320NEOPlusFamily.jpg

    Dream oin – it won’t happen just because you brought it up once again. Even if he would pay (something) for it, he would not pay for the development. And who would do that???

  10. aeroturbopower, in my experience good ideas are dismissed as bad until they are good, everybody agrees & forgot they ever said they were bad 🙂 luckily Google has a good memory these days

  11. Aeroturbo I think the issue for Airbus is real. There is an enormous A320 replacement market and many airlines might be willing to grow capacity per aircraft (as stated in the previous post).

    The A321 is an entirely different beast, 7 meters longer, 6t heavier. Ignoring this with dozens of loyal customers can become a risk. As said, the 737-8 and -9 fall right inbetween the A320 and A321 capacity wise.

    What’s more profitable, the more efficient engines of the NEO or the 12 extra revenue seats of a 737-8..

    I’m of the opinion Airbus might be holding the option under the table because they have a full backlog / don’t want to provoke Boeing to do an NSA EIS sooner afterall. Big operators like KL/AF, AA, the Chinese and Delta operate mixed 737/A320 fleets & leave all options open.

    • Looks like United has a mixed class A320 that seats 138. As premium economy gains traction, a mixed class A320plus that seats 150 could be a standard platform for many airlines. Will the warrant a version with only four doors? Looks like your rendition has six. Maybe six doors and no overwing exits.

      • TCook excellent example. For UA replacing their old A320s with new A320s could mean even a capacity reduction. Although the A320 proved an excellent aircraft and is a market leader, it might have become smallish for the next 25 years of operational use. UA ordered 737-9s, a capacity bump replacing older A320s..

        http://www.nycaviation.com/2012/07/united-airlines-orders-150-boeing-737s/#.UDP1UamTtbw

        `.. United CEO Jeff Smisek said the new 737-900ERs would be used to replace the airline’s older domestic 757-200 fleet, while the 737 MAX 9s might be used to replace other less fuel efficient aircraft, such as the Airbus A320.`

        • You guys sure dream big. Airbus has their plate overflowing now. Where are they going to get the engineers to strech the A-320? Airbus is currently working on the NEO, with two seperate engines, the A-350 (late), the A-380, plus the A-380 rib feet cracking problems, and the “forever a retirement program to work on”, the A-400M.

  12. Just a little more patience Keesje !

    Airbus has to stretch the A320, to get on par with the 738, the sooner will be better !
    May be it comes through the next round of the MC war (2017-18 for the next Airbus move !)
    3-4 plugs more, and some Al-Li, to get the weight under control !
    And may be wider doors too, just a very good idea from MOL !
    I think Easy-Jet may be a launch candidate for 100 or more of a 200 Pax A320, the sweet pot for EU LCC !
    And Air Asia, will not be far behind !

    It’s a 500 millions bet** for a 7-8 years /1000 sales, so, not a too heavy investment per A/C, the main problem is timing !
    And I just think the original A320 may be dumped progressively by the marketing people, in the same movement !
    **May be one billion, if they choose to go widely Al-Li, just to offer the same empty weight !

  13. KC135TopBoom :
    You guys sure dream big. Airbus has their plate overflowing now. Where are they going to get the engineers to strech the A-320? Airbus is currently working on the NEO, with two seperate engines, the A-350 (late), the A-380, plus the A-380 rib feet cracking problems, and the “forever a retirement program to work on”, the A-400M.

    Not standing back in the big dreams arena, are you 😉

    It would be quite interesting to know the real numbers that each of these tasks actually bind ( and the departments involved: design, manufacture planning, contractor liaison, certification,.. )

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