DJ Turboprops announced in Skywest tie up
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No hope for Qantas... will they even have a reaction?
Thinking we're playing with the boys - taking on the world ....again. Gotta admire the chutzpah.
I look forward to returning to this thread in 10 years......but i doubt that'll have any meaning.
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Goat,
I welcome your contrary view. A primary object of all business is to make money and if you only have to cover your direct costs (labour. fuel. ANC, etc), by owning the aircraft, buildings, other systems etc, you will be able to compete better and make more money than having to pay both the fixed costs (monthly leasing rent on airframes and engines - regardless of the utilisation level, buildings, other systems, etc) AND the direct costs.
This is further complicated when you also have to pay passenger royaties to a third party. Many of the failed third party regionals in the US leased their aircraft and came unstuck when the code-share partner refused to pay sufficient and necessary royalty tax increases during successive re-negotiations.
If Virgin thought there was real money to be easily made from regional flying do you think they would have entered into such code-sharing arrangement? No, they would be doing it themselves in order to maximise profit.
Virgin is going about it this way because they know there are real risks and they want a buffer to mitigate and direct those risks away from their weak core business.
The Oracle
I welcome your contrary view. A primary object of all business is to make money and if you only have to cover your direct costs (labour. fuel. ANC, etc), by owning the aircraft, buildings, other systems etc, you will be able to compete better and make more money than having to pay both the fixed costs (monthly leasing rent on airframes and engines - regardless of the utilisation level, buildings, other systems, etc) AND the direct costs.
This is further complicated when you also have to pay passenger royaties to a third party. Many of the failed third party regionals in the US leased their aircraft and came unstuck when the code-share partner refused to pay sufficient and necessary royalty tax increases during successive re-negotiations.
If Virgin thought there was real money to be easily made from regional flying do you think they would have entered into such code-sharing arrangement? No, they would be doing it themselves in order to maximise profit.
Virgin is going about it this way because they know there are real risks and they want a buffer to mitigate and direct those risks away from their weak core business.
The Oracle
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If anyone was questioning the sim... There is already an atr sim parked next to the currently used F50 in KL. Would mean no change to current training requirements and destinations...
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The Oracle, you wouldnt believe it but I would be 99% sure that they would simply be an ACMI cost and wouldnt be bothered farting around with that American based royalities crap.
Unlike the US airlines, Skywest won't have a stake /risk exposure to the pax loads and yields of the DJ flights they will operate.
So long as they operate the flights on time it will be irrelevant to them how many people they carry and at what fare level; they will get paid. It's a wet lease arrangement. Not so simple as ACMI, more CM.
The west coast flights Skywest operate with the same type will be different: the risk is all Skywest's. The code share allows Virgin to offer the flights in conjunction with their own, with baggage and points benefits. Skywest sell the flight to VB who package it with a DJ flight and sell to the consumer.
So long as they operate the flights on time it will be irrelevant to them how many people they carry and at what fare level; they will get paid. It's a wet lease arrangement. Not so simple as ACMI, more CM.
The west coast flights Skywest operate with the same type will be different: the risk is all Skywest's. The code share allows Virgin to offer the flights in conjunction with their own, with baggage and points benefits. Skywest sell the flight to VB who package it with a DJ flight and sell to the consumer.
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I think time is the motivating factor here for VB. The regional operation of these turbo props will be profitable, especially coming from operating the E170 (albeit on some different routes). If they had the time VB may have considered doing this in-house however a few factors come into play.
VB are flat out- arrival of the A330, rebranding of the product, an agreement with Air NZ and Etihad etc. How on earth would they have the available resources to get this new type up and running in the required time frame?
It has been identified that the 170 is not working and needs to be replaced, asap.
Qantas have made a move out west and this is a necessary counter. Of all current stand-alone turbo prop operators in the country able to achieve this it seems to me that Skywest would be the pick of the bunch, especially as they are based in WA.
Just my 2 cents.
VB are flat out- arrival of the A330, rebranding of the product, an agreement with Air NZ and Etihad etc. How on earth would they have the available resources to get this new type up and running in the required time frame?
It has been identified that the 170 is not working and needs to be replaced, asap.
Qantas have made a move out west and this is a necessary counter. Of all current stand-alone turbo prop operators in the country able to achieve this it seems to me that Skywest would be the pick of the bunch, especially as they are based in WA.
Just my 2 cents.
WOW! which ever way you want to look at it, this is a serious high risk venture, somebody is going to get seriously spanked and somehow I doubt thats going to be Qantas. Goodluck with that!
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190s staying, with 3 more coming this year. Company is in the process of switching on the ACARS in them and a lot of money and time has been spent on this. Like it's been said before they are/will be used on the thinner routes which is where they make money. The dispatch rate is equal to the 737 now.
Last edited by F111; 15th Jan 2011 at 04:03.
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So long as they operate the flights on time it will be irrelevant to them how many people they carry and at what fare level; they will get paid. It's a wet lease arrangement. Not so simple as ACMI, more CM.
ACMI operator
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......and DJ will supply the paint job for the aircraft, that is as far as it goes in regards to who operates the aircraft.
No DJ pilots
No DJ Cabin Crew
No DJ Maintenance
the only thing DJ about this venture is the paint job, a copy of DJ's inflight mag and earning points with Velocity.
No DJ pilots
No DJ Cabin Crew
No DJ Maintenance
the only thing DJ about this venture is the paint job, a copy of DJ's inflight mag and earning points with Velocity.
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Like it's been said before they are/will be used on the thinner routes which is where they make money
Is starting to sound a bit Ansett like.
Big difference was the 717 is a DC-9 made more efficient, a proven low cost airliner which is why boeing persisted with the type. The E-Jets and the like have not proven any real profitability world wide, with straight forward economic issues like fuel burn and reliability.
The main reason anyone who knew the issues in europe and the US knocked the type when VB announced its introduction.
The same will apply if they choose the wrong turboprop for the market.
The main reason anyone who knew the issues in europe and the US knocked the type when VB announced its introduction.
The same will apply if they choose the wrong turboprop for the market.
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Boeing persisted with 717s until about 150 of them had been built. The Embraers 170/175/190/195 have sold over 500. One European airline - FlyBe recently announced an order for up to 140 of the E-175 with 88 seats (this is a version which has not been used in Australia). In FlyBe operation, these new planes will do some jobs that their fleet of Q400s have been doing.
There are limits to how far you can compare an operation in Europe with Australian conditions, but there will be a sweet spot of about 800 kilometres where the E jets start to have advantages over the Q400.
The distances where the Q400 would be better than the ATR would probably start at about 500 km - if most of the routes that Virgin want Skywest to operate are less than 500km, the ATR has a lower acquisition cost. The ATR with 66 seats would be the ideal plane for Sydney to Canberra.
There are limits to how far you can compare an operation in Europe with Australian conditions, but there will be a sweet spot of about 800 kilometres where the E jets start to have advantages over the Q400.
The distances where the Q400 would be better than the ATR would probably start at about 500 km - if most of the routes that Virgin want Skywest to operate are less than 500km, the ATR has a lower acquisition cost. The ATR with 66 seats would be the ideal plane for Sydney to Canberra.
The E170 burns 2X what a Q400 does.
It carries 4 extra passengers
It needs 1 extra Flight Attendant
And the crew are on $30-40K more.
I can see why it fails to compete with QLink.
It carries 4 extra passengers
It needs 1 extra Flight Attendant
And the crew are on $30-40K more.
I can see why it fails to compete with QLink.
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Forget about the E170 - there are only 6 of them in the VirginBlue fleet. Any small jet - the CRJ-700 or the Fokker 70 will look bad compared with a TP of the same size.
How would the fuel burn per seat of a Q400 compare on a 1000 mile distance compared with an E190 102 seats?
How would the fuel burn per seat of a Q400 compare on a 1000 mile distance compared with an E190 102 seats?
I'm with the oracle. There's not much DJ in this venture, as for XR an F50 fleet replacement program is one thing, a venture of this magnitude without even a ready available market is just simply pie in the sky stuff. This is not do-able let alone likely to be successful.
I'm inclined to think it's in reality, an F50 "RPT" fleet replacement program for XR in DJ colours, with the potential to expand into DJ's market as a joint venture or code share agreement.
I'm tipping if they attempt to expand into Q-link and Rex's market on the east coast. the're going to get spanked.
I'm inclined to think it's in reality, an F50 "RPT" fleet replacement program for XR in DJ colours, with the potential to expand into DJ's market as a joint venture or code share agreement.
I'm tipping if they attempt to expand into Q-link and Rex's market on the east coast. the're going to get spanked.
Last edited by Xeptu; 16th Jan 2011 at 01:21.
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How would the fuel burn per seat of a Q400 compare on a 1000 mile distance compared with an E190 102 seats?
