DJ Turboprops announced in Skywest tie up
Firstly, The Oracle (and many others) it is "Skywest" with a little w, as its all the one word. SkyWest is an American airline. 
Secondly, this operation (as has been stated MANY, many times) is essentially "turn-key" for Virgin. It is a very similar business relationship to Qantas and Cobham. Skywest is probably paid an agreed 'rate' for operating the ATR's, which would include the leasing costs of the aircraft. Virgin probably get to keep the rest on top of that rate. So if they promote the proverbial out of the services and get full ATR's running around the place, then thats how they make their money. Skywest doesn't care if they are flying around 68 or 6 bums on seats. So essentially half of your post is just bunkam.
I do agree however that things will get interesting over in the west now that Sunstate are putting Q400's in. If utilised correctly they will do really well with the long distances between ports in WA. If the economics fit, they would make a killing with some smaller Pilbara mines, if the runway infrastructure is up for it. Shaving 30-40mins of a 3hr flight in a F50 or Q300 would make some of those routes viable to be done in a TP, rather than a jet.
Finally I think some perspective is in order in terms of what has been done with the ATR setup. Skywest has had to put into service 4 brand new to the AOC aircraft serving routes that includes 3 major capital airports, including the most TP unfriendly- Sydney. What are Qantaslink doing in the West? Putting 2 x an established on AOC type into 2 routes in WA. Big deal.
Secondly, this operation (as has been stated MANY, many times) is essentially "turn-key" for Virgin. It is a very similar business relationship to Qantas and Cobham. Skywest is probably paid an agreed 'rate' for operating the ATR's, which would include the leasing costs of the aircraft. Virgin probably get to keep the rest on top of that rate. So if they promote the proverbial out of the services and get full ATR's running around the place, then thats how they make their money. Skywest doesn't care if they are flying around 68 or 6 bums on seats. So essentially half of your post is just bunkam.
I do agree however that things will get interesting over in the west now that Sunstate are putting Q400's in. If utilised correctly they will do really well with the long distances between ports in WA. If the economics fit, they would make a killing with some smaller Pilbara mines, if the runway infrastructure is up for it. Shaving 30-40mins of a 3hr flight in a F50 or Q300 would make some of those routes viable to be done in a TP, rather than a jet.
Finally I think some perspective is in order in terms of what has been done with the ATR setup. Skywest has had to put into service 4 brand new to the AOC aircraft serving routes that includes 3 major capital airports, including the most TP unfriendly- Sydney. What are Qantaslink doing in the West? Putting 2 x an established on AOC type into 2 routes in WA. Big deal.
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From Will Horton (CAPA Aviation)
The Virgin/Skywest deal was four -500s (three delivered so far), four -600s (to be delivered starting next year), and options on five -600s. Leasing company “Aviation” owns the aircraft, which are operated by Skywest for Virgin — an arrangement conducted as Virgin did not have the time and resources, particularly pilot training, to launch its own operation. This deal has since caused some friction between Virgin and Skywest as their CEOs disagree over how/where the ATRs should be deployed. Virgin envisions one day operating its ATRs by itself without Skywest, with some potentially interesting tie-ins and synergies with Air New Zealand, who last week ordered 12 ATR72-600s to complement its -500 fleet and is keen to work with Virgin.
The Skywest operation has cost commands and base transfers at Virgin Australia and if they had of taken a few of the pilots who put in EOI's it would have shown the Virgin pilot group that Skywest pilots understood the situation and perhaps opened the door for movement from the ATR into Virgin Australia. Instead the actions taken have now rocked the boat of the second biggest pilot group in Australia and both VIPA and the AFAP have put clauses in their log of claims for Virgin Australia's new EBA to ensure it doesn't happen again.
As you can see from what Will wrote, the only reason Skywest got the gig was due to a resource issue. The routes and bases (and size) will depend on where Virgin want's the aircraft to go. Some of these routes will always be turboprop routes while others will grow to be all jet or a mix of both. The contract between Virgin and Skywest will have get out clauses for both parties should they decide to end it before the 10 years (almost 9 years now) are up.
The Virgin/Skywest deal was four -500s (three delivered so far), four -600s (to be delivered starting next year), and options on five -600s. Leasing company “Aviation” owns the aircraft, which are operated by Skywest for Virgin — an arrangement conducted as Virgin did not have the time and resources, particularly pilot training, to launch its own operation. This deal has since caused some friction between Virgin and Skywest as their CEOs disagree over how/where the ATRs should be deployed. Virgin envisions one day operating its ATRs by itself without Skywest, with some potentially interesting tie-ins and synergies with Air New Zealand, who last week ordered 12 ATR72-600s to complement its -500 fleet and is keen to work with Virgin.
The Skywest operation has cost commands and base transfers at Virgin Australia and if they had of taken a few of the pilots who put in EOI's it would have shown the Virgin pilot group that Skywest pilots understood the situation and perhaps opened the door for movement from the ATR into Virgin Australia. Instead the actions taken have now rocked the boat of the second biggest pilot group in Australia and both VIPA and the AFAP have put clauses in their log of claims for Virgin Australia's new EBA to ensure it doesn't happen again.
As you can see from what Will wrote, the only reason Skywest got the gig was due to a resource issue. The routes and bases (and size) will depend on where Virgin want's the aircraft to go. Some of these routes will always be turboprop routes while others will grow to be all jet or a mix of both. The contract between Virgin and Skywest will have get out clauses for both parties should they decide to end it before the 10 years (almost 9 years now) are up.
if they had of taken a few of the pilots who put in EOI's it would have shown the Virgin pilot group that Skywest pilots understood the situation
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Chadzat,
Let's just get this straight.
Let's discuss my 'bunkam' to use your words. Virgin Australia, who LOST $80 Million last financial year are going to pay 'Skywest' (spelling error corrected) under a wet/damp lease arrangement sufficient $$ to cover SXR's fixed and direct costs as well as provide what would esentially be a guaranteed profit contribution to SXR regardless of whether SXR carry '68 or 6 bums on seats'. I hope you will agree there must be a sufficient profit element in the lease rate to cover SXR's financial risk, unless of course SXR has decided to register itself as a charity rather than remain as a commercial airline business with hopes of paying future dividends to its shareholders.
Chum, I don't think Mr Borghetti is a chump, nor father christmas giving away financial 'gifts' to SXR to ensure their future profitability. Only Governments offer those types of subsidies to airlines and the ministerial minders try to shave every public penny during such negotiations. Virgin would certainly have bargained hard on the lease rate, because being a loss maker, they too must count every penny. I think certainly there will be some $$ for 'slack' during the start up phase, but down the road the 'tensioning clauses' will certainly come into play and throughout all this Qlink will be deep discounting on any contested routes to ensure passengers stick with the 'ROO'.
You also mentioned Cobham/QLink as an example of the type of business model jointly struck by SXR/DJ, however, the NJS (now Cobham)/Qantaslink model was originally struck many year ago to provide essential services over remote and what were then largely uncontested routes.
Contesting established east coast regional markets to take business away from aggressive and well funded existing operators is a very different dynamic to the business previously and currently existing between Cobham/Qantaslink. Cobham in its own right is a $ Billion company with extensive financial resources whereas SXR made a very small profit last year and declared a $00.01 cent dividend and Virgin lost $80 Million.
Do the math!!!
The Oracle
Let's just get this straight.
Let's discuss my 'bunkam' to use your words. Virgin Australia, who LOST $80 Million last financial year are going to pay 'Skywest' (spelling error corrected) under a wet/damp lease arrangement sufficient $$ to cover SXR's fixed and direct costs as well as provide what would esentially be a guaranteed profit contribution to SXR regardless of whether SXR carry '68 or 6 bums on seats'. I hope you will agree there must be a sufficient profit element in the lease rate to cover SXR's financial risk, unless of course SXR has decided to register itself as a charity rather than remain as a commercial airline business with hopes of paying future dividends to its shareholders.
Chum, I don't think Mr Borghetti is a chump, nor father christmas giving away financial 'gifts' to SXR to ensure their future profitability. Only Governments offer those types of subsidies to airlines and the ministerial minders try to shave every public penny during such negotiations. Virgin would certainly have bargained hard on the lease rate, because being a loss maker, they too must count every penny. I think certainly there will be some $$ for 'slack' during the start up phase, but down the road the 'tensioning clauses' will certainly come into play and throughout all this Qlink will be deep discounting on any contested routes to ensure passengers stick with the 'ROO'.
You also mentioned Cobham/QLink as an example of the type of business model jointly struck by SXR/DJ, however, the NJS (now Cobham)/Qantaslink model was originally struck many year ago to provide essential services over remote and what were then largely uncontested routes.
Contesting established east coast regional markets to take business away from aggressive and well funded existing operators is a very different dynamic to the business previously and currently existing between Cobham/Qantaslink. Cobham in its own right is a $ Billion company with extensive financial resources whereas SXR made a very small profit last year and declared a $00.01 cent dividend and Virgin lost $80 Million.
Do the math!!!
The Oracle
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Silly ORACLE. Don't you know that the ONLY secret to running an airline is a) only buy aircraft pilots like and want to fly and; b) only managers that pilots like run successful businesses. There's no room for maths in the airline business.
I am amazed that no one looks at this objectively; the ATR deal puts 18 large turboprops into a market that is already serviced. Is there that much additional demand? This is an enormously risky deal, and pits Virgin against the real superstar in the QF Group, QFLink. Who has ever beaten QF Link in the regional game?
I am amazed that no one looks at this objectively; the ATR deal puts 18 large turboprops into a market that is already serviced. Is there that much additional demand? This is an enormously risky deal, and pits Virgin against the real superstar in the QF Group, QFLink. Who has ever beaten QF Link in the regional game?
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Considering the ATR's are only replacing E170/190's at the moment, I hardly see how they can be losing more money for Virginwest, when they cost less to run than the Ejets over the short sectors they're being operated on.
I think the ATR's are a very smart move for Virgin's economy shuttle runs from Sydney to Canberra and to be honest, with the prices Qantas link charge for their regional tickets, I expect Virginwest to make good inroads into regional transport.
The ATR crews can't be doing too badly with route familiarisation/ airport familiarisation, they're always within 15-20 mins of schedule at the end of the day here in Canberra when they terminate.
I think the ATR's are a very smart move for Virgin's economy shuttle runs from Sydney to Canberra and to be honest, with the prices Qantas link charge for their regional tickets, I expect Virginwest to make good inroads into regional transport.
The ATR crews can't be doing too badly with route familiarisation/ airport familiarisation, they're always within 15-20 mins of schedule at the end of the day here in Canberra when they terminate.
:BUMP:
Ok - lots of Skywest threads running - this one seems to have the most info in it.
Anyone got some more up to date info on arrival dates of new frames, and/or expansion plans such as new bases etc?
What's current CONFIRMED number of frames they're getting?
Ok - lots of Skywest threads running - this one seems to have the most info in it.
Anyone got some more up to date info on arrival dates of new frames, and/or expansion plans such as new bases etc?
What's current CONFIRMED number of frames they're getting?
From this morning's NEWS.....
ACCC to approve Skywest-Virgin alliance | Latest Business & Australian Stock market News | Perth Now
Cheers
ACCC to approve Skywest-Virgin alliance | Latest Business & Australian Stock market News | Perth Now
Cheers
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Since this is a rumor network......
Heard 5th hand that CASA will not give approval for more ATRs until Slywest pick up there act. Don't have the resources to support what they already have.
Heard 5th hand that CASA will not give approval for more ATRs until Slywest pick up there act. Don't have the resources to support what they already have.
