Base Closures
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Starbear
Very cost effective and efficient..... Just ask the poor souls on the 747 FRA base who were all LHS/RHS qualified and today no longer have a job......CX will do what they want, you just better hope you have a seat at the table when the dust settles...
Very cost effective and efficient..... Just ask the poor souls on the 747 FRA base who were all LHS/RHS qualified and today no longer have a job......CX will do what they want, you just better hope you have a seat at the table when the dust settles...
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At least I am happy that the gravy train of the kitty city canteen clutchers continues unabated.
it must be quite difficult to keep those 17 aircraft flying that they need so many people in the office.
it must be quite difficult to keep those 17 aircraft flying that they need so many people in the office.
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I was enjoying the CX City coffee the other day. You just need those flâneurs there to justify the cheque at the end of the month. I cannot see the boys having anything to do other than sitting down and chatting about the old days over a latte or two.
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should be safety first
ToCatLady
If you would check the statistics, which might be available, but on the other hand might have been suppressed, you might find that there is a substantially higher accident rate with two line captains flying together. It seems that this combination somehow leads to increased stupidity.
If you would check the statistics, which might be available, but on the other hand might have been suppressed, you might find that there is a substantially higher accident rate with two line captains flying together. It seems that this combination somehow leads to increased stupidity.
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I see a lot of inane and ill thought out comments made here (quelle suprise). I thought I might correct, or add to it ;-)
For those that keep stating that the airline will shrink - why? We have ground operations staff/equipment/buildings that are not down scalable. On the contrary, they are more efficient per unit of production as production increases. So the bigger we get, the cheaper per unit we become.
Aircraft are the revenue source - getting rid of a lot or all of our 777s (assuming they are not replaced with some other aircraft) will INCREASE our cost of production per unit. We own or finance lease around 3/4s of our aircraft. It is only the operating lease aircraft that can (presumably) be gotten rid of relatively cheaply. So we are stuck with cheap assets/finance leases for the foreseeable future - why take an even bigger short term hit by selling out now?
We have more aircraft now than we did two years ago since we now have the KA aircraft. We will (eventually) need more pilots than we have ever had before.
Our maximum training rate is around 10% (2015 was our peak training year and the sausage mill was running flat chat).
Looking at past seismic aviation events (9/11, GFC) flying recovered to 90% within 6-12 months - then took another 2-3 years to recover the last 10%. Covid is playing out differently - though in domestic markets (China, US and Australia) actual or forecast flying is above 2019 levels. So when eventually most international travel opens, we should expect at least 90% overall flying in the near term. Will that be xmas 2021? mid 2022? xmas 2022?
If we got rid of say 600 pilots or so - it would take 2 years to recover them in terms of training capacity limitations. Getting rid of the based pilots therefore makes no sense unless driven by some other factor.
If all your flying is done to/from a hub - then it makes sense to base/roster everyone from your hub. If the unit cost per pilot in HK is say $2X per hour - and $1X per hour on the base, then yes JCR will drive the location of some of the pilots to outports. But if the differential is removed (COS18) then the unit cost in HK might be say $1.3X - suddenly the economics aren't so clear. Having said that - I personally don't believe the recent actions are economically driven - I think it is all related to the working visa issues. That does beg the question though - why AOAC first then Oz (and then FRA?). I have no data on that - only opinion so not worth airing here. (after all - I am trying to be as factual as I can be)
I have heard some interesting 'departure rate' rumours (losing one pilot per day).
Here are the departure rates for last 6 years or so
2015 - 63, 2016 - 92, 2017 - 128, 2018 - 168, 2019 - 171, 2020 - 160* (*estimated)
Using data from Oct ASL till today (14May) I would estimate that 60 have left so far this year (101 have left from OctASL till 14May). The 60 so far this year equates to an annual rate of around 170 for 2021 (pre VSS/base closure obviously)
When compared to 2018, 2019 and 2020, the rate for the first 5.5 months is comparable. Base closures and VSS will clearly blow that number up. So I suspect we will be SIGNIFICANTLY short of pilots if you look at 2023 instead of summer 2021 requirements.
End of numbers - beginning of my speculation.
I think we need all the pilots we can get - not today -but for about 1 year to 18months from now. We are training constrained - pre training ban etc we were maxed out at 10% increase in pilot numbers - so clearly we shouldn't let our total pilot numbers drop below say 80-85% of our mid 2023 pilot requirements. Since the training ban - we have more trainers than before plus, thanks to the company response to the training ban, the training courses are more efficient. So maybe the real rate of pilot increase is significantly higher than my 10% - maybe up to 15%?
For those that keep stating that the airline will shrink - why? We have ground operations staff/equipment/buildings that are not down scalable. On the contrary, they are more efficient per unit of production as production increases. So the bigger we get, the cheaper per unit we become.
Aircraft are the revenue source - getting rid of a lot or all of our 777s (assuming they are not replaced with some other aircraft) will INCREASE our cost of production per unit. We own or finance lease around 3/4s of our aircraft. It is only the operating lease aircraft that can (presumably) be gotten rid of relatively cheaply. So we are stuck with cheap assets/finance leases for the foreseeable future - why take an even bigger short term hit by selling out now?
We have more aircraft now than we did two years ago since we now have the KA aircraft. We will (eventually) need more pilots than we have ever had before.
Our maximum training rate is around 10% (2015 was our peak training year and the sausage mill was running flat chat).
Looking at past seismic aviation events (9/11, GFC) flying recovered to 90% within 6-12 months - then took another 2-3 years to recover the last 10%. Covid is playing out differently - though in domestic markets (China, US and Australia) actual or forecast flying is above 2019 levels. So when eventually most international travel opens, we should expect at least 90% overall flying in the near term. Will that be xmas 2021? mid 2022? xmas 2022?
If we got rid of say 600 pilots or so - it would take 2 years to recover them in terms of training capacity limitations. Getting rid of the based pilots therefore makes no sense unless driven by some other factor.
If all your flying is done to/from a hub - then it makes sense to base/roster everyone from your hub. If the unit cost per pilot in HK is say $2X per hour - and $1X per hour on the base, then yes JCR will drive the location of some of the pilots to outports. But if the differential is removed (COS18) then the unit cost in HK might be say $1.3X - suddenly the economics aren't so clear. Having said that - I personally don't believe the recent actions are economically driven - I think it is all related to the working visa issues. That does beg the question though - why AOAC first then Oz (and then FRA?). I have no data on that - only opinion so not worth airing here. (after all - I am trying to be as factual as I can be)
I have heard some interesting 'departure rate' rumours (losing one pilot per day).
Here are the departure rates for last 6 years or so
2015 - 63, 2016 - 92, 2017 - 128, 2018 - 168, 2019 - 171, 2020 - 160* (*estimated)
Using data from Oct ASL till today (14May) I would estimate that 60 have left so far this year (101 have left from OctASL till 14May). The 60 so far this year equates to an annual rate of around 170 for 2021 (pre VSS/base closure obviously)
When compared to 2018, 2019 and 2020, the rate for the first 5.5 months is comparable. Base closures and VSS will clearly blow that number up. So I suspect we will be SIGNIFICANTLY short of pilots if you look at 2023 instead of summer 2021 requirements.
End of numbers - beginning of my speculation.
I think we need all the pilots we can get - not today -but for about 1 year to 18months from now. We are training constrained - pre training ban etc we were maxed out at 10% increase in pilot numbers - so clearly we shouldn't let our total pilot numbers drop below say 80-85% of our mid 2023 pilot requirements. Since the training ban - we have more trainers than before plus, thanks to the company response to the training ban, the training courses are more efficient. So maybe the real rate of pilot increase is significantly higher than my 10% - maybe up to 15%?
Australia likely to remain closed until sometime in 2022.
India’s COVID raging out of control.
Thailand’s cases climbing.
Travel bubble with Singapore looking less and less likely with new restrictions being imposed as cases increase.
Quarantine period increased to 3 weeks in many countries.
Indian COVID variant more transmissible and infecting vaccinated people.
Delays in vaccination programs in many countries.
Travel unlikely to return to pre pandemic levels until 2024.
The recovery will be uneven, whilst domestic air travel in some countries has already recovered and may soon exceed pre pandemic levels, international is still dead in the water. When it gets going again, it will be direct flights between fully vaccinated countries such as UK - USA. Long haul connecting traffic will be the last to come back, particularly in the premium cabins.
CX have done a fantastic job in avoiding layoffs for as long as they have, EK were doing it within a few weeks of the shutdown and SQ a few months later. However you are kidding yourself if you think the airline will remain as it is for the next three years until normality returns. CX will need to downsize into something that can survive the next few years and adapt to what the future will bring.
A shortage of training capacity in the medium term is the last thing on the bean counters minds.
India’s COVID raging out of control.
Thailand’s cases climbing.
Travel bubble with Singapore looking less and less likely with new restrictions being imposed as cases increase.
Quarantine period increased to 3 weeks in many countries.
Indian COVID variant more transmissible and infecting vaccinated people.
Delays in vaccination programs in many countries.
Travel unlikely to return to pre pandemic levels until 2024.
The recovery will be uneven, whilst domestic air travel in some countries has already recovered and may soon exceed pre pandemic levels, international is still dead in the water. When it gets going again, it will be direct flights between fully vaccinated countries such as UK - USA. Long haul connecting traffic will be the last to come back, particularly in the premium cabins.
CX have done a fantastic job in avoiding layoffs for as long as they have, EK were doing it within a few weeks of the shutdown and SQ a few months later. However you are kidding yourself if you think the airline will remain as it is for the next three years until normality returns. CX will need to downsize into something that can survive the next few years and adapt to what the future will bring.
A shortage of training capacity in the medium term is the last thing on the bean counters minds.
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Good to have you back NC.
Tend to agree with those that say this time is different. In fact it’s always different as the world is constantly changing, but a crisis either accelerates the change or moves the change in a different direction. The Insider magazine available on Press Reader has an article regarding everyone’s favourite consultancy firm McKinsey commenting on the current situation. The recommendation to their clients is “Reimagination” and “Reform” if you want to survive. We all know which airline is one of their clients.
As NC points out there have been many aviation downturns in the past few decades which the industry has recovered from. The Asian Financial Crisis, 9-11, SARS, GFC and our own Hong Kong protests. Those downturns were consumer driven, either a personal fear or a hip pocket fear. Once the fear subsided the rebound occurred.
This crisis at the moment is government and bureaucracy driven. As the GMO highlights, finding a way out will be a lot more difficult and time consuming than finding a way in. Then when the red tape is gone will there be a consumer driven downturn? What’s unquestionable is the financial impact of the past 15 months will be immense. Consumers will either pay for all this government debt either through higher taxes, or if governments keep the debt on their books, through inflation.
The airline has already changed significantly. It entered this crisis with a legacy wide body long haul fleet with legacy Conditions of Service including legacy hiring rules. It has now introduced a narrow body short haul fleet with greater hiring flexibility due to our “progressive” new COS. I can envisage that the new training “sausage machine” will be direct entry captains and first officers onto the HKE/CX A320’s with any slack being taken up by the traditional wide body training. The ME carriers without a significant narrow body fleet can comfortably support an attrition rate in excess of 10% while still growing. Even if CX find they are a bit short they still have about 500 crew that are to retire on their 55th birthday. Offering extensions to 55 year olds is hardly unheard of, as you’d know NC.
It’s a valid point that the airline has significant fixed costs that don’t go away by downsizing. Let’s see how their reimagination and reform goes. Do they sell or lease buildings, in part or in full, such as hello kitty city and the freight terminal? I’ve great faith in the ability of the COO to cut until there’s nothing left.
The decision to cut bases obviously isn’t unanimously endorsed by all of management. You don’t need to read past the first sentence of the CPB latest update to see what he thinks of Debbie Does Frankfurt.
Since B scale and certainly C scale bases have not been so much a direct cost saving measure (the savings being offset by the cost of complying with first world labor laws) as an incentive to attract and retain crew. The company had made noises about a reverse rostering type arrangement to satisfy homesick crew. That idea was dead in the water when the AOA rightly pointed out this would be in breach of the JCR agreement. The company’s policy of reform via the shredder has removed this obstacle.
So I agree, this time is different. It’s always different. It’s a question of how agile the company is now, and how agile it thinks it can be in the future. When it comes to agility I see the company vastly differently to how it sees itself, so I can’t apply my logic as to what happens next.
Tend to agree with those that say this time is different. In fact it’s always different as the world is constantly changing, but a crisis either accelerates the change or moves the change in a different direction. The Insider magazine available on Press Reader has an article regarding everyone’s favourite consultancy firm McKinsey commenting on the current situation. The recommendation to their clients is “Reimagination” and “Reform” if you want to survive. We all know which airline is one of their clients.
As NC points out there have been many aviation downturns in the past few decades which the industry has recovered from. The Asian Financial Crisis, 9-11, SARS, GFC and our own Hong Kong protests. Those downturns were consumer driven, either a personal fear or a hip pocket fear. Once the fear subsided the rebound occurred.
This crisis at the moment is government and bureaucracy driven. As the GMO highlights, finding a way out will be a lot more difficult and time consuming than finding a way in. Then when the red tape is gone will there be a consumer driven downturn? What’s unquestionable is the financial impact of the past 15 months will be immense. Consumers will either pay for all this government debt either through higher taxes, or if governments keep the debt on their books, through inflation.
The airline has already changed significantly. It entered this crisis with a legacy wide body long haul fleet with legacy Conditions of Service including legacy hiring rules. It has now introduced a narrow body short haul fleet with greater hiring flexibility due to our “progressive” new COS. I can envisage that the new training “sausage machine” will be direct entry captains and first officers onto the HKE/CX A320’s with any slack being taken up by the traditional wide body training. The ME carriers without a significant narrow body fleet can comfortably support an attrition rate in excess of 10% while still growing. Even if CX find they are a bit short they still have about 500 crew that are to retire on their 55th birthday. Offering extensions to 55 year olds is hardly unheard of, as you’d know NC.
It’s a valid point that the airline has significant fixed costs that don’t go away by downsizing. Let’s see how their reimagination and reform goes. Do they sell or lease buildings, in part or in full, such as hello kitty city and the freight terminal? I’ve great faith in the ability of the COO to cut until there’s nothing left.
The decision to cut bases obviously isn’t unanimously endorsed by all of management. You don’t need to read past the first sentence of the CPB latest update to see what he thinks of Debbie Does Frankfurt.
Since B scale and certainly C scale bases have not been so much a direct cost saving measure (the savings being offset by the cost of complying with first world labor laws) as an incentive to attract and retain crew. The company had made noises about a reverse rostering type arrangement to satisfy homesick crew. That idea was dead in the water when the AOA rightly pointed out this would be in breach of the JCR agreement. The company’s policy of reform via the shredder has removed this obstacle.
So I agree, this time is different. It’s always different. It’s a question of how agile the company is now, and how agile it thinks it can be in the future. When it comes to agility I see the company vastly differently to how it sees itself, so I can’t apply my logic as to what happens next.
Last edited by Progress Wanchai; 14th May 2021 at 20:12.
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Some reasonable points above but the big white elephant in the room is HK itself and the ChiComm influence. This was changing before COVId and now appears to be more of a factor. HK isn't as attractive for aviation as it once was and that's only changing for the worse, not better. Now, more than ever, it's necessary to take the political and social issues into consideration when predicting the future of CX. That's changed from any other period in past downturns/recoveries.
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I presume for safety all those on frankfurt base have been removed from flying and all the who were refused VSS have temporarily been removed from flying as well. In a first world airline to be offered VSS with a short timeframe and the pressures of that decision and some under the cloud of visa issues you would assume the safety managers would advise that these crew members would need some time to re-adjust again. As the job is not one of a paper shuffler where your error may only be a spell check issue.
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Yep, a friend who is senior in a medium sized MNC, with operations all over the globe, has said that what has surprised them isn't the cost savings, but how more effective conference calls are than face to face. They can have all the right people on the calls, rather than just the senior people and/or flying out that marketing expert for just a one hour meeting. Business travel will still happen, but likely to just be the diplomatic "press the flesh - attaboy" tours rather than for substantive meetings.
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One of my mates is an Ozzie businessman. He reckon that business travel will resume as zoom meeting are good for preliminary approach to a deal but closing it’s a whole different matter.
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90% domestic business travel. You would presume shorter flights and fewer overall seats , making it slightly easier to drive the stats. But it is Good news
Last edited by fatbus; 15th May 2021 at 03:19.
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90% ???
90% of intra NZ 'business" travel that is.. Corporate BS at its best.
Carriers world over spouting the same crap trying to prop up a long term major reduction in ALL travel to keep gullible shareholders from dumping their stock..
No matter which way you look at the airline world & travel; you can't make a silk purse out of a sows ear, PERIOD!
Carriers world over spouting the same crap trying to prop up a long term major reduction in ALL travel to keep gullible shareholders from dumping their stock..
No matter which way you look at the airline world & travel; you can't make a silk purse out of a sows ear, PERIOD!
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NC, while I admire your optimism, speculation and Einstein numbers, there is a line between the real world and lah lah land.
What Drc40 and others said, CXi ‘s gripes started a few years ago already, long before the china scamdemic, it’s all political and pressure from LCCs.
HKIA as a hub worked fine for CXi over the past decades, but that ship has sailed too. Direct flights from the mainland to wherever is the future.
Looking at who will be flying CXi in the future, if 40% of expats (in a recent survey) are talking about leaving the HKSAR - national security law concerns, that only leaves us with some cheap local tours around the “Rice Bowl” and that’s where HK Expresso comes in handy. But hold on: GBA (and possibly more players) will debut soon, so there goes that monopoly plan up in smoke too - again the pressure from LCCs.
Even a company like PAL has seen the writing on the wall, and started a major restructuring plan.
Philippine Airlines Seeks To Cut Boeing 777 And Airbus A350 Fleet
https://simpleflying.com/philippine-...es-cuts-fleet/
What CXi needs to do is to grow HKE, get rid of all 777s, cancel future orders, keep a few “A50s” to serve a handful of money making cities, and expand the cargo ops. With my primary school math: Fewer aeroplanes = fewer pilots.
The few changes CXi “management” have done until now, it might already be too little - too late.
What Drc40 and others said, CXi ‘s gripes started a few years ago already, long before the china scamdemic, it’s all political and pressure from LCCs.
HKIA as a hub worked fine for CXi over the past decades, but that ship has sailed too. Direct flights from the mainland to wherever is the future.
Looking at who will be flying CXi in the future, if 40% of expats (in a recent survey) are talking about leaving the HKSAR - national security law concerns, that only leaves us with some cheap local tours around the “Rice Bowl” and that’s where HK Expresso comes in handy. But hold on: GBA (and possibly more players) will debut soon, so there goes that monopoly plan up in smoke too - again the pressure from LCCs.
Even a company like PAL has seen the writing on the wall, and started a major restructuring plan.
Philippine Airlines Seeks To Cut Boeing 777 And Airbus A350 Fleet
https://simpleflying.com/philippine-...es-cuts-fleet/
What CXi needs to do is to grow HKE, get rid of all 777s, cancel future orders, keep a few “A50s” to serve a handful of money making cities, and expand the cargo ops. With my primary school math: Fewer aeroplanes = fewer pilots.
The few changes CXi “management” have done until now, it might already be too little - too late.