Originally Posted by
nomess
Attempting to run a negative net debt operation off cheap as chips aircraft is a fine art that only the likes of Allegiant managed to have success with.
The only issue is, as mentioned above, you need to maintain low utilisation rates, otherwise costs will cripple you. Allegiant ran with about 5 hours a day usage. They have since been caught out by switching to mid life Airbus aircraft, with higher than originally forecasted costs, and have now started buying factory fresh in order to get some stability on expenses.
The biggest challenge for Bonza’s survival is simply getting the revenue high enough. That prospect is very challenging as the population catchments they are flying to are small. It’s clear as mud, the business model they are running today, will never be sustainable on the current network. So what is Plan B? Perhaps become a transcontinental operator, could be a gap in that area.
Nobody seems to like dealing with Perth Airport however.
Allegiant has managed just fine moving into midlife A320s, which was necessitated by parts availability with the Maddogs. Their fixed costs will go up again with the new-build Maxes, but they got a great deal on them. Allegiant has also evolved to become effectively the Ryanair of the USA, so watch their utilisation rise, while they will still make money on resorts and hotel bookings.
EJets or A319s can do high utilisation and won't hurt the maintenance too much, but the lower capital cost will also help to ensure that if they have to sit on the ground for extended periods that it doesn't hurt. Having a Max on the ground awaiting spares is a killer, and doubly so if you're paying another airline to fly your schedule for you.
They're in a challenging position, but it can work as long as the chequebook it available, and that's looking shaky.