Leeham News and Analysis
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Regional aircraft for US Scope clause operations. Part 3.
By Bjorn Fehrm
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Introduction
May 18, 2017, © Leeham Co.: In the second article about the US regional aircraft market, we looked at the cabins for the regional aircraft we examine. We started with looking at the typical classes and their seat ratios for the mainline aircraft the regional aircraft are feeding to/from. Then we mimicked that on the regional aircraft.
We filled the cabin with domestic First-class seats, then Premium economy and finally Economy until we got 76 seats or the cabin said stop.
Now we complete the picture by comparing the economics of the aircraft after which we summarize our findings.
Summary:
- The benchmark aircraft for the US scope clauses is the E175 from Embraer. It was designed for the scope clause market.
- It’s larger dimensions means the operating costs are slightly higher than the CRJ900.
- A scope clause-bound operator can compensate the Bombardier CRJ900’s tighter cabin with more seat pitch. It has the longest cabin of all compared aircraft.
- The MRJ70 and CRJ700 are too short for scope clause flying with 76 seat cabins and the MRJ90 is too heavy for the 86,000lb maximum weight limit.
Air industry uncertain about Trump policies
Adam Pilarski
May 17, 2017, © Leeham Co.: The US airline industry remains uncertain where the Trump Administration is going, said Adam Pilarski, chief economist of Avitas Aviation, at the annual Airfinance Journal conference in New York.
“There are huge differences between candidate Trump and President Trump,” he said. China was not declared a currency manipulator. There is no border wall. The US embassy has not been moved to Jerusalem. Trump now supports ExIm Bank and NATO.
“Let’s not get too involved in what he said, because he didn’t mean it,” said Pilarski.
Pontifications: Emirates profits drop 83%, MC-21 and more news last week
By Scott Hamilton
May 15, 2017, © Leeham Co.: It was a busy news week last week.
- Emirates Airline headlined its 29th consecutive year of profits, but downplayed an 83% decline.
- The Irkut MC-21 moved to the tarmac, an indication first flight may be coming shortly.
- Multiple media reports indicate that electronics flight ban from the Middle East may be extended in part to all of Europe.
- Boeing suspended test flights on the 737 MAX after CFM discovered some quality issues in some LEAP 1B engines.
Let’s look at these events.
Bjorn’s Corner: Keeping airliners operational. Part 4
By Bjorn Fehrm
May 12, 2017, ©. Leeham Co: Last week we explained how maintenance philosophies were developed for airliners, from Maintenance Steering Group one (MSG-1), through to Maintenance Steering Group 3 (MSG-3), today’s standard.
The way in which today’s complex systems shall be analyzed should be top down instead of bottom up. And safety concerns should be separated from economical considerations.
Figure 1. The first modern maintenance program was formed around the Boeing 747. Source: Wikipedia.
Now we will go through what this means in practice. We will develop a maintenance plan for a new aircraft, according to the latest standards.
But first, the structure of the work we have in front of us.
WestJet’s 787, international strategy fraught with risks
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Introduction
Boeing 787-9. WestJet ordered 10 and placed an option for 10 more. Deliveries begin in 2019. Boeing photo.
May 8, 2017, © Leeham Co.: WestJet, Canada’s #2 airline behind Air Canada, is making dramatic departures from its low-cost, low-fare strategy since the company began operations in February 1996.
The company earlier announced it will form an Ultra Low-Cost Carrier (ULCC). Last week came an order for 10 Boeing 787-9s and options for 10 more. Deliveries begin in 2019.
Summary
- WestJet is taking on Air Canada and its LCC unit, Rouge, in LCC and long-haul LCC markets.
- “Too much going on to get comfortable,” writes analyst.
- Capital costs will go up significantly.
Pontifications: Bombardier’s challenges beyond Boeing complaint
By Scott Hamilton
May 8, 2017, © Leeham Co.: The fallout and speculation continues after Boeing filed a complaint April 27 over Bombardier’s deal for 75+50 CSeries with Delta Air Lines.
The complaint was filed with the US government and the International Trade Commission.
Our stories are here, here and here.
Read more
Turkish Airlines, 2016 a difficult year
By Bjorn Fehrm
May 03, 2017, ©. Leeham Co: Turkish Airlines had its first growth setback in modern times last year.
The attempted state coup in Turkey in June hit passenger confidence and thereby its international traffic. After the political unrest, the international traffic, which accounts for 75% of revenue, decreased by 10% after years of double-digit growth.
The result was losses for the first time for the modern Turkish Airlines. Will this growth machine make a comeback?
Employee Expenses, Fuel Costs Hit Southwest Earnings
- Rising fuel supports introduction of 737 MAX in October
By William DiBenedetto
May 1, 2017: Southwest Airlines’ first quarter profits fell by nearly 32% to $351m, driven largely by big increases in employee union contract expenses and fuel costs.
During a conference call with analysts, Gary C. Kelly, chairman and CEO, characterized the quarter as “another strong performance with an operating margin of almost 13% despite higher fuel prices.” He also noted that revenue expectations were reset in March, down 2% to 3% for the quarter, adding that the quarter included “a lot of noise with year-over-year union contract increases and settlements.”
Bjorn’s Corner: Keeping airliners operational. Part 2
By Bjorn Fehrm
April 20, 2017, ©. Leeham Co: We will start the second article in series on keeping airliners operational by discussing how the structure is kept fit.
There are three areas that are more key to flight safety of an airliner than others. The aircraft’s structure, the engines (already discussed) and the flight control system. We will start with the structure.
Figure 1. The first modern maintenance program was formed around the Boeing 747. Source: Wikipedia.
Aeroflot, the route to a modern airline. Part 3
By Bjorn Fehrm
April 26, 2017, ©. Leeham Co: In our third article about Aeroflot, we cover the period from 2010 to today. During this period, Aeroflot started a strategic change. The airline decided to grow to a global world leader.
To get there, the group needed a multi-brand strategy. The top brand, Aeroflot, should develop into a top tier premium airline. To understand the considerable changes Aeroflot needed to go trough for this strategy, we talked to Aeroflot’s Deputy CEO Strategy and Alliances, Giorgio Callegari, about the transformation.
Callegari took us through the journey to a Four-star airline and the ranking of Aeroflot as the world strongest airline brand in its area of operation. To validate the improved ratings, we contacted Skytrax and Brand Finance, the issuers of the ratings. Read more