Leeham News and Analysis
There's more to real news than a news release.
Costs for IAG’s low-cost airlines
By Bjorn Fehrm
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Introduction
September 07, 2016, ©. Leeham Co: Yesterday we described International Airlines Group’s (IAG) Vueling and LEVEL LCCs. Now we look at their cost and compare these to the direct competition; Ryanair, easyJet, Norwegian and Eurowings.
For Vueling and its competition, we have cost data from 2016 and 1H2017. For LEVEL, it’s too early. It started operations in June 2017. Here we compare the seat-mile costs of the chosen Airbus A330-200 to Norwegian Air Shuttle’s (Norwegian) Boeing 787-8.
Summary:
- Vueling has higher operating costs than its direct competition, mainly caused by lower load factors and lower fleet utilization.
- At present fuel prices, the A330-200 used by LEVEL does not have a Direct Operating Cost (DOC) disadvantage compared with Norwegian’s 787-8.
IAG’s low-cost airlines.
By Bjorn Fehrm
September 06, 2016, ©. Leeham Co: We continue our series about the European legacy carriers’ LCC arms. Now we cover International Airlines Group or IAG.
The LCC approach of IAG has a more local focus than for Lufthansa Group. Europe’s leading LCCs are based in UK/Ireland. Yet IAG, with its main brands, British Airways and IBERIA, only has a Spain-centric LCC, Vueling, and since June a Spain-centric long-haul LCC brand, LEVEL.
Boeing claims WTO victory; not so fast, claims Airbus
Sept. 3, 2017: Boeing once more claimed a sweeping victory in the endless battle over illegal subsidies at the World Trade organization.
Boeing issued a press release today touting a victory at the appellate level in which the WTO body rejected an earlier finding that Washington State tax breaks for the Boeing 777X were a “prohibited” subsidy.
Airbus countered that a parallel case found the tax breaks to be “illegal and actionable.”
The dueling press releases are below.
Potential credit crisis in China would hurt aviation industry
Subscription Required Now open to all readers (11/27/17).
Introduction
Sept. 4, 2017, © Leeham Co.: China, now the world’s second largest economy, appears to be feeling the strains of its long, explosive growth.
The economy is slowing, there are concerns about capital outflow and increased debt by key companies.
HNA Group is one of China’s largest companies and a global investor. Indeed, it’s one of the largest in the world.
Its place in commercial aviation is known among those who are integral parts of the industry, but the depth of its reach may not be well understood.
Due to recent transactions, HNA now is owner of one of the largest aircraft leasing portfolios in the world, with nearly 600 aircraft. Another 253 airplanes are on order.
This includes the acquisition this year of CIT Aerospace, which added more than 300 aircraft to the Avolon portfolio.
Avolon was acquired by HNA in 2015.
However, HNA’s growth means debt, and according to several media reports, the Chinese government is now scrutinizing HNA under a general government “crackdown” on capital leaving the country.
Summary
- Widespread investment in airlines and a few in lessors.
- China’s cracking down on money leaving the country.
- Leverage also concerns the government.
Pontifications: Facial recognition coming to an airport near you
By Scott Hamilton. Would you really want this face in facial recognition?
Sept. 4, 2017, © Leeham Co.: Facial recognition for airport operations is becoming a reality.
The new terminal T4 at Singapore’s Changi Airport is completing testing of the system before the terminal is open.
William Bain, an occasional contributor to LNC, recently was at the airport for a preview. He provided us with several photos.
This is the latest step in an emerging trend away from documents in favor of biometrics, scans and other technology.
Bjorn’s Corner: Electric aircraft, Part 10
By Bjorn Fehrm
September 1, 2017, ©. Leeham Co: in the nine previous Corners, we looked at 50-seat regional jets and turboprops with hybrid electric propulsion systems.
We have seen that at the state of technology until the mid-next decade, such aircraft have dubious efficiency. The hybrid propulsion chain weighs too much, and can at best match the propulsion efficiency of gas turbine based aircraft when one includes any airframe gains that can be made.
We will now finish the series by looking at a pure electric concept, designed for extremely short-haul routes. The Zunum Aero 10-seat commuter in Figure 1 will be our reference for such a design.
Figure 1. Zunum Aero’s short-haul turbofan commuter. Source: Zunum Aero.
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Eurowings’ costs compared with the competition
By Bjorn Fehrm
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Introduction
August 31, 2017, © Leeham Co.: We presented Lufthansa Group’s LCC, Eurowings, yesterday. It’s an amalgamation of different companies; some started out as LCCs (Germanwings), others, the remains of defunct Legacies (Brussels Airlines).
The mix is spiced with leased-in parts of the non-Legacy, non-LCC Air Berlin. Can such a cocktail compete with the LCC specialists?
We look at operational and financial data for Eurowings and its competition. How far from the competition is the costs today and will the outlined improvements close the gap?
Summary:
- Eurowings of today is not competitive on costs with equivalent LCCs.
- The announced changes up to 2020 will narrow the gap but not close it.
Eurowings, Lufthansa Group’s LCC
By Bjorn Fehrm
August 30, 2016, ©. Leeham Co: The European leading legacy carriers are all forming LCC arms. First for short-haul and now for long-haul. For Lufthansa, the LCC operations are gradually consolidated under its Eurowings brand.
The route there has been a roller coaster of airlines and brands. In the end, the regional Eurowings brand became the umbrella under which all Lufthansa Group low cost airlines consolidate.
Worries increase over Middle Eastern airlines
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Introduction
Aug. 28, 2017, © Leeham Co.: Market sources are increasingly pointing to weakness in the Middle East airline sphere as a threat to existing Airbus and Boeing
Emirates Airline holds the future of the Airbus A380 in its hand, so-to-speak. Source: Emirates.
orders.
Emirates Airline, Etihad Airways and Qatar Airways are the Top 3 of Boeing’s Top 10 wide-body customers.
These three also represent 73% of Boeing’s 777X order backlog.
Qatar and Etihad are the Nos. 2 and 3 wide-body customers at Airbus (after AirAsiaX); Emirates has slipped to No. 8.
The financial trouble at Etihad, exacerbated by its poor investments in the now-bankrupt Alitalia Airlines and AirBerlin, have been well documented.
Emirates’ profits have fallen dramatically and is facing over-capacity. Qatar Airways is now isolated by intra-geopolitical events.
Summary
- Emirates and Etihad already deferred Boeing orders.
- Lessors beginning to express concerns.
- Customer concentration for 777X worries some.
- A380 future rests largely with Emirates.
Pontifications: Jets took 30 years to match piston efficiency
The Douglas DC-6B was considered the finest, most efficient and most reliable of the piston engine airliners. Photo via Google.
By Scott Hamilton
Aug. 28, 2017, © Leeham Co.: Airline officials want their airplanes to sip fuel and the engine and airframe manufacturers work mightily to shave even 1% off of consumption.
The Airbus A320neo, Boeing 737 MAX, A330neo, A350 and 787 all made big strides in cutting fuel costs.
Bombardier’s CSeries, Embraer’s EJet-E2, the Mitsubishi MRJ and even the COMAC C919 and Irkut MC-21 are touted to be double-digit more fuel efficient than the jets these are intended to replace.
Pratt & Whitney, Rolls-Royce, CFM and GE Aviation spend billions of dollars developing engines that drive the fuel efficiencies sought by the airlines. After all, typically airframe improvements only account for about 5% of fuel reductions. Engines account for 15% or more.
It took 30 years for the most fuel efficient jets matched the fuel efficiency of the best piston airliners from the 1950s, according a recent presentation by AeroDynamics Advisory at the ADSE conference at the Abbotsford Air Show early this month.