Can jets work on Regional/Provincial routes?
Join Date: Oct 2000
Location: Sydney, NSW Australia
Posts: 163
Likes: 0
Received 0 Likes
on
0 Posts
Chimbu,
Your couple of lines says it all!
Good business sense says you apply your assets to where you can make the most money. In DJ's case their press releases indicate the EJets primary role was to improve yield (through lower costs) on routes and times that were marginally viable for the 737 and then to use any residual EJet capacity to fly their flag in regional markets capable of supporting the aircraft.
The above business case, however, depended on the price of fuel remaining low and now that fuel is at an historically high price (and may remain so) the business case for the smaller aircraft no longer makes sense as the unit price (for the EJet) has become uncompetitive against the competition (i.e. other jet operators on trunk routes [and turboprop operators on regional routes). Accordingly the DJ board has now deferred some EJet scheduled deliveries (I expect with attendent penalty costs) and they appear to be re-assessing the business case!
The 'tilt' at MQL-MEL seems to be an attempt to set up a typical 'hub and spoke' arrangement, however, these only succeed when there is real frequency from the 'feeder' aircraft into the 'hub' and in time to fill the larger aircraft. A once a day service, however, won't satisfy the needs of the MQL market and any increase in frequency (in Albury, Mildura or Port Macquarie) dilutes their assests from profitable trunk competition.!!
Qantaslink has announced they will be operate the Q400 on certain SYD/ABX services, so it will be interesting to see how the extra capacity affects the EJet business if the 'Link' opt's for any parallel scheduling with DJ.
Alternatively, the Q400 could be parallel scheduled with some of the REX services, however, the REX cost base will enable them to always guarantee the cheapest fare on the day and still make a profit!! Perhaps, if the Q400 proves to be a potent weapon against the EJet they might also consider operating MEL/MQL in the future.
It remains interesting times for airlines in Australia!
Your couple of lines says it all!
Good business sense says you apply your assets to where you can make the most money. In DJ's case their press releases indicate the EJets primary role was to improve yield (through lower costs) on routes and times that were marginally viable for the 737 and then to use any residual EJet capacity to fly their flag in regional markets capable of supporting the aircraft.
The above business case, however, depended on the price of fuel remaining low and now that fuel is at an historically high price (and may remain so) the business case for the smaller aircraft no longer makes sense as the unit price (for the EJet) has become uncompetitive against the competition (i.e. other jet operators on trunk routes [and turboprop operators on regional routes). Accordingly the DJ board has now deferred some EJet scheduled deliveries (I expect with attendent penalty costs) and they appear to be re-assessing the business case!
The 'tilt' at MQL-MEL seems to be an attempt to set up a typical 'hub and spoke' arrangement, however, these only succeed when there is real frequency from the 'feeder' aircraft into the 'hub' and in time to fill the larger aircraft. A once a day service, however, won't satisfy the needs of the MQL market and any increase in frequency (in Albury, Mildura or Port Macquarie) dilutes their assests from profitable trunk competition.!!
Qantaslink has announced they will be operate the Q400 on certain SYD/ABX services, so it will be interesting to see how the extra capacity affects the EJet business if the 'Link' opt's for any parallel scheduling with DJ.
Alternatively, the Q400 could be parallel scheduled with some of the REX services, however, the REX cost base will enable them to always guarantee the cheapest fare on the day and still make a profit!! Perhaps, if the Q400 proves to be a potent weapon against the EJet they might also consider operating MEL/MQL in the future.
It remains interesting times for airlines in Australia!
Last edited by THE ORACLE; 12th Aug 2008 at 02:37.
