Wot's the latest with Gold Airways?

[Jens_Buche]

Load Factor

Thanks for the heads up on Compass Air Ace.

You are not far off the mark actually. Load factors do need to take into acount the type of aircraft you operate. If load factors are consistently at 70% on average, you could extrapolate this to choosing a different aircraft type providing it didn't impact on your peak loading times, subject to route by route market forces, of course. The Gold Airways model can accommodate any of the A320 family aircraft, but to make a mixed fleet of the same family work you need to juggle your sectors so that a replacement aircraft is available on the tarmac that can handle the boardings. This can be at odds with delivering the service with a competitive edge. Thus if you operated an A320 and an A321 side by side, there would come a time when you could not accommodate all the passengers in a one way swap to the A320 because there aren't enough seats. Going for a smaller aircraft then has its own problems as you may need more of them to improve your service delivery at peak times. And at peak times, airport slots are limited, as you know. The Airbus A320 family concept is workable provided you stick to doing it the way Airbus suggest and that then yields good results. Compass I sold seats below cost, it would appear, and that does bring break even load factors beyond the nose of the aircraft and multiple collapses are not impossible to visualise in those circumstances.

In respect of the comment about equity, that is fundamental. Of course the drivers in the product development can be manipulated so that if an investor wanted to, we could bring the Gold airways staged development forward. That would mean that we could compete with a high value product and service delivery very quickly. That means extra cash. This is the case with Virgin America. However, it is not an efficient use of investor's money unless you can see direct tangible benefits. Hence you tend to find airlines starting on a shoe-string budget then, when they've learned to walk, exploiting their industry debut with vigor - usually with huge marketing budgets and securing future aircraft orders.


Regards

Jens