Six7driver. I personally think it is only prudent to look at these outfits very carefully. The aviation field is littered with the corpses of these kinds of airlines in Canada. To name but a few; Canada 3000, Royal Aviation, Root Air, Inter-Canadian, Jetsgo, Nationair, Ports of Call, Worldways, etc, etc. Some of these match the business model that is being pursued by Harmony. And I am sure some of the usual suspects are involved in many of these endeavours, including Harmony. The carnage that the closure of the aforementioned outfits left in the Canadian industry is legendary among employees, passengers, and financial institutions. In the late eighties to late nineties one of Canada’s major export product were its pilots. We are all over the world because our home country wasn’t able to provide a stable job market.
Now I am not saying Harmony is going the same way, but the odds are huge and stacked against them. It looks like a nice outfit, and makes me think of the old Wardair.
When the first round of low cost carriers, and charters started up (early eighties) they competed against a government airline (Air Canada), and a heavily leveraged airline (Canadian Airlines International), with a split in international operation along geographic lines. It gave some of these a brief window to establish themselves and prosper like Westjet (which came in at the depths of the problems at Air Canada). Now the landscape has shifted quite dramatically. Air Canada has a basic monopoly on worldwide long-haul scheduled service, it has been able to change its cost structure, and it encompasses a product range that goes from the nineteen seat aircraft up to 350 seat ultra long haul ship. Air Canada also belongs to the largest global alliance (star). If Harmony is too survive it will do so at the behest of Air Canada and Westjet. If it becomes to greedy in trying to take load away from the 800 pound gorilla, it will strike back. I am sure Harmony is not much more than a minor blip on the Air Canada radar screen for now, so the short term there is no risk to Harmony, but the long term is a whole different kettle of fish.
Mentioning the load-factor on your flights is not relevant. It is the yield that the load generates. I know at my airline in the past there were routes that needed to be filled to 130% capacity in order to break-even. Luckily this wasn’t year round, but still it shows that load-factor aren’t a good indicator of airline profitability. I fly for the worlds largest airline (by turnover) and in a good year our profit margin rarely makes it above 5% of turnover. This works out to a profit of 20 Canadian Dollars per passenger carried. What a pathetic business we are in!
Now with the price of oil again exceeding 65 dollars (US) per barrel and I am sure negligible hedging going on at Harmony (I assume so, because of its lack of scale), the amount they are making off each passenger is pretty dicey.
As far as Harmony seeking new aircraft, that in and off itself means very little about the financial strength of the company. If the 767 that I mentioned in my earlier post is heading your way it will do so via ILFC. It would be via a straight financial lease, you pay they will bring the aircraft, and if Harmony doesn’t pay, the repossession will be quite simple (short drive up the coast). What the 767 gives Harmony is the ability to haul a larger load for marginally higher costs. So it will bring down their seat-mile costs, the 767 can be flown by their 757 crews with a minor type difference course as an additional benefit. Just as a frame of reference, we are still talking about an aircraft designed in the early eighties. The Airbus 330-200 carries 30 more passengers at the same fuel flow as the 767-300ER, so that would be a more ideal cost reducer.
I don’t know anything about the actual state of Harmony Airlines (don’t think anyone on this forum does), but I think your rude post about what pitotman had to say does not speak well for you. It is good to see you are proud of your airline and I wish Harmony all the best. But you don’t need to be an ostrich and stick your head in the sand. There are a lot of pitfalls in our business, and Harmony is no different from any other airline which has tried to establish itself. It hasn’t reinvented the wheel. It’s ownership structure looks to be “private” with Dr. Ho being the principal owner. I am sure some deep pockets from China and Hong Kong are involved. But they are businessmen pure and simple. In my search it is very hard to get any financial information about the company. That is the right of a privately held company. But you can’t dispel the information that pitotman posts as much as he can proof his, it is all hearsay. Certainly nothing in your post gives any credence to your assertions. When things go south for a private company they can do so overnight, not like a publicly traded company that has to openly report to its shareholders, and troubles are revealed at an much earlier stage.
The old adage in the airline business still applies: “How do you become a millionaire in the airline business? Start out being a billionaire!”.
Nonetheless best of luck, and I hope you get the best 767’s that are out there.
Greetings O.
Last edited by Otterman; 26th January 2006 at 10:25.