Ozjet
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Any truth that CASA is not happy with the antique -200's?
Imagine the fuel bill with those old JT8D's. I’m not having a stab, but I wonder if the Freq Flyers will want to go on these old clunkers, stuck down in WX.
Imagine the fuel bill with those old JT8D's. I’m not having a stab, but I wonder if the Freq Flyers will want to go on these old clunkers, stuck down in WX.
Sprucegoose
Join Date: Sep 2000
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I wish I had a dollar for every time a passenger boarding a clapped out 20-30 year old "clunker" with new paint and flash interior says.....
"Oh were flying in the new one today are we?"
Passengers don't really give a crap, if it looks new then surely it must be new!!
Cheers, HH.
"Oh were flying in the new one today are we?"
Passengers don't really give a crap, if it looks new then surely it must be new!!
Cheers, HH.
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Fair Go ?
I think we must give credit to Ozjet for at least trying to present a clean (inside), reliable product despite its age.
I guess in today's sensitive environment, however I think it unfair for it to operate engines of this type.
From my office in Sydney looking south in the morning there is pollution over Mascot on most days. Perhaps it is not a big issue in Melbourne. But as an asthmatic it is a big issue for me.
I am surprised the department of the transport would allow a 737-200 to still fly from that airport.
That aside I still do not understand the need for Ozjet to even be in the air. It adds nothing of value in my view.
I guess in today's sensitive environment, however I think it unfair for it to operate engines of this type.
From my office in Sydney looking south in the morning there is pollution over Mascot on most days. Perhaps it is not a big issue in Melbourne. But as an asthmatic it is a big issue for me.
I am surprised the department of the transport would allow a 737-200 to still fly from that airport.
That aside I still do not understand the need for Ozjet to even be in the air. It adds nothing of value in my view.
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But it's OK
The fact is that most people are satisfied with the way Aviation has gone in this country. Only a few traditionalists from the legacy airline era are complaining.
I am not worried that Qantas is the only airline providing a full service product, the frequency of service, the network and the availability of two other airlines, is sufficient. Ozjet is not adding anything of tangible value to the network.
When I get a discounted fair for $99 and a meal in a 18 inch wide seat in economy, together with all the benefits of frequency and service, then I might reconsider my current position. And I think most people will agree with me on that point.
I can say there are some innovative ideas yet to be tapped. It doesn't mean you have to compete with the big boys to be profitable. The problem with Ozjet is that it has put its faith on a product with no sustainable advantage. Given that it has taken that position though, it now must deliver at least a basic level of service. It will degenerate to a plain-jane as it struggles for revenue.
I am not worried that Qantas is the only airline providing a full service product, the frequency of service, the network and the availability of two other airlines, is sufficient. Ozjet is not adding anything of tangible value to the network.
When I get a discounted fair for $99 and a meal in a 18 inch wide seat in economy, together with all the benefits of frequency and service, then I might reconsider my current position. And I think most people will agree with me on that point.
I can say there are some innovative ideas yet to be tapped. It doesn't mean you have to compete with the big boys to be profitable. The problem with Ozjet is that it has put its faith on a product with no sustainable advantage. Given that it has taken that position though, it now must deliver at least a basic level of service. It will degenerate to a plain-jane as it struggles for revenue.
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Fly Both Classes
Hi Sunfish,
I sometimes wonder what planet I am from but just to clarify the way I travel:
1. If I need to review an immediate legal case because the sector is long, I will usually book a business class seat. It's because I will usually be travelling with my articled clerk who makes sure may stuff is in the right order when I roll the trolley into court.
2. If I have some days to spare before a case, we usually try to keep the cost down for the client and I will usually take the cheapest fare. I am fairly tall so tend to just ask if something is available at the counter and the staff already know me fairly well.
3. When I visit my mum in Adelaide, I just travel in jeans and smart top or blouse and take whatever I get.
My priority of travel would still be Qantas over Ozjet as I naturally think that Qantas provides our firm with a quality product and the staff are pretty good up front.
My background is in aviation litigation which I basically drifted into when I was studying my MRes in air transport airline failure management at Cranfield in the UK after my sister was serverely burnt in the British Airtours 737-200 accident in 1985 at Manchester. She now lives in Bournemouth but has acquired a fear of flying. It's amazing what plastic surgery can do but she has a slightly scarred tissue area under her hairline where the heat got to her. She was seated one row back from the LH over wing exit.
I sometimes wonder what planet I am from but just to clarify the way I travel:
1. If I need to review an immediate legal case because the sector is long, I will usually book a business class seat. It's because I will usually be travelling with my articled clerk who makes sure may stuff is in the right order when I roll the trolley into court.
2. If I have some days to spare before a case, we usually try to keep the cost down for the client and I will usually take the cheapest fare. I am fairly tall so tend to just ask if something is available at the counter and the staff already know me fairly well.
3. When I visit my mum in Adelaide, I just travel in jeans and smart top or blouse and take whatever I get.
My priority of travel would still be Qantas over Ozjet as I naturally think that Qantas provides our firm with a quality product and the staff are pretty good up front.
My background is in aviation litigation which I basically drifted into when I was studying my MRes in air transport airline failure management at Cranfield in the UK after my sister was serverely burnt in the British Airtours 737-200 accident in 1985 at Manchester. She now lives in Bournemouth but has acquired a fear of flying. It's amazing what plastic surgery can do but she has a slightly scarred tissue area under her hairline where the heat got to her. She was seated one row back from the LH over wing exit.
however I think it unfair for it to operate engines of this type
I am surprised the department of the transport would allow a 737-200 to still fly from that airport.
That aside I still do not understand the need for Ozjet to even be in the air. It adds nothing of value in my view.
The fact is that most people are satisfied with the way Aviation has gone in this country. Only a few traditionalists from the legacy airline era are complaining.
I can say there are some innovative ideas yet to be tapped. It doesn't mean you have to compete with the big boys to be profitable. The problem with Ozjet is that it has put its faith on a product with no sustainable advantage.
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The Stats
These markets do not exist in Australia and if you check the facts from DOTARS you would see that between 2003 and 2004 the load factors on average in Australia declined Chronic Snoozer. With a prediction of a cost of a barrel of oil to rise to USD75 by the end of September 2005, Ozjet will be in no position to operate in this market let alone compete. This means the existing carriers will protect what they already have. My prediction is that the arrival of Ozjet is ill timed because it will be forced to charge very high fares just to survive and I just cannot see that happening.
You are right though, some markets can support this product. However, as far as I know, Lufthansa's all-business product does not do as well as its ordinary business product. The problem is, that despite a 10% growth in traffic on Melbourne-Sydney, it was nearly all in the low cost sector.
You are right though, some markets can support this product. However, as far as I know, Lufthansa's all-business product does not do as well as its ordinary business product. The problem is, that despite a 10% growth in traffic on Melbourne-Sydney, it was nearly all in the low cost sector.
Sprucegoose
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The problem is, that despite a 10% growth in traffic on Melbourne-Sydney, it was nearly all in the low cost sector.
Just take a look at Virgin, their product is slowly morphing into a multi class airline, it hasnt happened yet, but I suspect sometime in the next two years they will offer a premium business class on some, if not all of their flights. (Perhaps sooner if Ozjet produces even modest results!!)
Cheers, HH.
PS: By the way the figures from Dotars are not 'facts' they are statistics and like all statistics can be interpreted many ways.
Legal Counsel
If the load factors have decreased according to DOTARS, then to me it means capacity outgrew passenger numbers - however I would imagine passenger numbers are showing healthy growth.
If Ozjet have aircraft free of debt, then who knows how they will fare (pardon the pun), but certainly they appear to be in a position to exploit a market that according to you doesn't exist, but could be developed. Hats off to them for giving it a go. The discerning business traveller will decide, I mean after all, there isn't much on offer from the big/medium-sized three - its all been in the low cost segment.
For comparison here is a link to the way its done over in Europe. Admittedly new aircraft, hence better cost per seat/mile, however on short legs such as MLB-SYD may be sustainable with an older 737 and load factors around 60%. Definitely would be the way to go on the redeye from Perth-Sydney from the comfort angle.
Lufthansa all business service
Interesting article
If the load factors have decreased according to DOTARS, then to me it means capacity outgrew passenger numbers - however I would imagine passenger numbers are showing healthy growth.
These markets do not exist in Australia
For comparison here is a link to the way its done over in Europe. Admittedly new aircraft, hence better cost per seat/mile, however on short legs such as MLB-SYD may be sustainable with an older 737 and load factors around 60%. Definitely would be the way to go on the redeye from Perth-Sydney from the comfort angle.
Lufthansa all business service
Interesting article
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Just take a look at Virgin, their product is slowly morphing into a multi class airline
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Simply not there
With Qantas operating B737NG, A330 on the trunks and the Dash 8 - 400 on Link, the 737-200 cannot compete. Ownership is immaterial for Ozjet on these scales of economy and the market simply cannot be developed in time before an investor sees red. Unless they are blind. With RPT blindness and Investor Blindness, sustainable advantage is difficult to measure and they may go ahead anyway and one might hope and pray they will not use the money they get from a fare until the passenger has flown.
There is another subject post I set up here on PPRUNE for those willing and able to post indicative data about Ozjet. I challenge all to show their skill at backing up what they say on PPRUNE. Figures backed by chckable data is what I would like to see.
Apart from the initial support for Ozjet, the capacity that it will add exceeds the supply of business class travellers in this category (fully flexible) and based on my estimate its load factor will be more like 3% for that many flights. When it realises this it will change its product offering. The problem, in my view, is that Ozjet has already taken the first step to failure by entering the golden triangle too soon and it will run out of cash. Compass 3.
There is another subject post I set up here on PPRUNE for those willing and able to post indicative data about Ozjet. I challenge all to show their skill at backing up what they say on PPRUNE. Figures backed by chckable data is what I would like to see.
Apart from the initial support for Ozjet, the capacity that it will add exceeds the supply of business class travellers in this category (fully flexible) and based on my estimate its load factor will be more like 3% for that many flights. When it realises this it will change its product offering. The problem, in my view, is that Ozjet has already taken the first step to failure by entering the golden triangle too soon and it will run out of cash. Compass 3.
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Soooo LC, if they change their plan to have 737-300's, according to your theory, then can succeed?
The capitalist society in which we live gives everyone the right to attempt to spend their or their investors money however they see fit. If it works good luck. If it doesn't, then good luck to qf or dj or whoever else wants to have a go. As i said before, if everyone took your attitude towards a start up venture, we'd still be flying DC-3's. Good luck to them. At least they are making an attempt. The words of a certain U.S President to be of many years ago comes to mind...... Teddy Roosevelt it were...
The capitalist society in which we live gives everyone the right to attempt to spend their or their investors money however they see fit. If it works good luck. If it doesn't, then good luck to qf or dj or whoever else wants to have a go. As i said before, if everyone took your attitude towards a start up venture, we'd still be flying DC-3's. Good luck to them. At least they are making an attempt. The words of a certain U.S President to be of many years ago comes to mind...... Teddy Roosevelt it were...
Last edited by morning mungrel; 15th Aug 2005 at 01:48.
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Legal_Counsel
It seems that any way you do the numbers you get a whole lot of blue sky.
As the author and auditor of more than few business plans over the years, the amount of "blue sky" in them, is directly proportional going towards asymptotic to the level of risk, it's not even paradoxical, the more there is, the less you need/want to go there.
At least he is not asking for somebody elses money. The major cash outflows will be, fuel, waaay out in front of crew and Enroute/Terminal ANCs and Airport.
The fuel companies are generally unwilling to be "silent" shareholders and they will be on real short terms.
Deep pockets he will need for start up, before the cash flow starts
Can ya let us in on the secret hiding spot of your indicative data about Ozjet
It seems that any way you do the numbers you get a whole lot of blue sky.
As the author and auditor of more than few business plans over the years, the amount of "blue sky" in them, is directly proportional going towards asymptotic to the level of risk, it's not even paradoxical, the more there is, the less you need/want to go there.
At least he is not asking for somebody elses money. The major cash outflows will be, fuel, waaay out in front of crew and Enroute/Terminal ANCs and Airport.
The fuel companies are generally unwilling to be "silent" shareholders and they will be on real short terms.
Deep pockets he will need for start up, before the cash flow starts
Can ya let us in on the secret hiding spot of your indicative data about Ozjet
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I think that anyone with a Formula One team (albeit not a crash hot one (excuse the pun), has deep pockets. I think it's not whether he can stay afloat, it's whether he can make a reasonable return on his investment. No point running an airline for a 5% return when he could get higher with a term deposit 
Although I suppose it would be fun to own an airline.
Although I suppose it would be fun to own an airline.
Sprucegoose
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LC,
So would we, where do you get this figure from, it is mere speculation your honour?
Ozjet is going to provide a business class service at a fully flexible economy airfare (around $368*). The current going rate for a business class seat Mel-Syd is more like $562*.
Now given that around 70% of people I meet who travel for business, travel fully flexible economy (ie: pay $368*). Now if Ozjet can convince 1-2% of these people to switch, then back it up with reasonable service that keeps the people returning, they will have a more than profitable business.
Surely people will be at least willing to try the product, they will receive a larger seat with more workspace, a greater carry on luggage allowance, more personalised service and all for the SAME PRICE they already pay.
You seem to be forgetting that Ozjet are not trying to capture the "business class" market, but the economy punters who travel for business!
Whilst this will not affect the majors significantly, I do believe that they will create a profitable niche market for themselves.
Chers, HH.
PS: Given that they own their aircraft, their break even could be as low as 15 seats based on todays prices.
* based on market prices as at 15-8-2005.
Figures backed by checkable data is what I would like to see.
and based on my estimate its load factor will be more like 3% for that many flights
Ozjet is going to provide a business class service at a fully flexible economy airfare (around $368*). The current going rate for a business class seat Mel-Syd is more like $562*.
Now given that around 70% of people I meet who travel for business, travel fully flexible economy (ie: pay $368*). Now if Ozjet can convince 1-2% of these people to switch, then back it up with reasonable service that keeps the people returning, they will have a more than profitable business.
Surely people will be at least willing to try the product, they will receive a larger seat with more workspace, a greater carry on luggage allowance, more personalised service and all for the SAME PRICE they already pay.
You seem to be forgetting that Ozjet are not trying to capture the "business class" market, but the economy punters who travel for business!
Whilst this will not affect the majors significantly, I do believe that they will create a profitable niche market for themselves.
Chers, HH.
PS: Given that they own their aircraft, their break even could be as low as 15 seats based on todays prices.
* based on market prices as at 15-8-2005.
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Things could be better
If Ozjet was flying 737-300s and owned them that would go some way toward rearranging the numbers.
However, an Ozjet operation based in Canberra using a Dash 8-400 fleet spoking out to regional QLD, NSW, VIC, TAS and SA would pull far better profits for the owners than that proposed.
Keeping within a differentiable niche market and exploiting it is the key to success but although the Ozjet product appears visibly different, it is in effect no different to what already flies in these markets.
If you fly a plane like a 737 from Sydney to Melbourne with 15 passengers to break even, do you have any idea what it will cost the passenger?
Let's take stock of some numbers:
Fuel Consumption = Jet A1 approx 3,500 Litres. Cost $0.77/L (unhedged today) Fuel Cost = $2,737 or $182 per passenger.
Crew Cost = 1.5 hours Capt = $130K/900 x 1.5 = $144 x 1.5 = $216 F/O = $60K/900 x 1.5 = $67 x 1.5 = $100 Flight Attendants x 2, $45K/1976 x 1.5 x 2 = $68
So $182 + ($216 + $100 + $68)/15 = $208 approx.
Applying the NAV Charges/Landing Fees etc using a formula these amount to about $1,000 or $66 per passenger. This varies with the number of passengers and aircraft weight.
The maintenance burden (excluding spares) for the aircraft would be typically $400 for a sector like this for this aircraft or about $27 per passenger.
For the low cost of ownership, we can give some credit for hull insurance and spares so say $2 per pax.
Of course the airline has an overhead and ground handling contracts to satisfy and we can apply a notional figure to this as representative of a tightly negotiated contract. $61 per passenger in this case.
Adding up:
$208 + $66 + $27 + $2 + $61 = $ 364 plus $36.40 GST
Total fare $400.
Did I forget some costs? Oh yes of course, Superannuation, Company Tax, OH&S expenses, electricity, paper, telephone, breakdown insurance, petrol for the mercedes.....mmmmm
I think if CASA gives them one soon they can go broke sooner and spare us the pain.
As far as I can work out from the press they made an application around June 10, 2005 so I would expect they should have it this month.
Needless to say, I would be watching that other lot as well as they have gone very quiet but on the grapevine I heard they were backed by Lufthansa (don\'t quote me on it though).
However, an Ozjet operation based in Canberra using a Dash 8-400 fleet spoking out to regional QLD, NSW, VIC, TAS and SA would pull far better profits for the owners than that proposed.
Keeping within a differentiable niche market and exploiting it is the key to success but although the Ozjet product appears visibly different, it is in effect no different to what already flies in these markets.
If you fly a plane like a 737 from Sydney to Melbourne with 15 passengers to break even, do you have any idea what it will cost the passenger?
Let's take stock of some numbers:
Fuel Consumption = Jet A1 approx 3,500 Litres. Cost $0.77/L (unhedged today) Fuel Cost = $2,737 or $182 per passenger.
Crew Cost = 1.5 hours Capt = $130K/900 x 1.5 = $144 x 1.5 = $216 F/O = $60K/900 x 1.5 = $67 x 1.5 = $100 Flight Attendants x 2, $45K/1976 x 1.5 x 2 = $68
So $182 + ($216 + $100 + $68)/15 = $208 approx.
Applying the NAV Charges/Landing Fees etc using a formula these amount to about $1,000 or $66 per passenger. This varies with the number of passengers and aircraft weight.
The maintenance burden (excluding spares) for the aircraft would be typically $400 for a sector like this for this aircraft or about $27 per passenger.
For the low cost of ownership, we can give some credit for hull insurance and spares so say $2 per pax.
Of course the airline has an overhead and ground handling contracts to satisfy and we can apply a notional figure to this as representative of a tightly negotiated contract. $61 per passenger in this case.
Adding up:
$208 + $66 + $27 + $2 + $61 = $ 364 plus $36.40 GST
Total fare $400.
Did I forget some costs? Oh yes of course, Superannuation, Company Tax, OH&S expenses, electricity, paper, telephone, breakdown insurance, petrol for the mercedes.....mmmmm
I think if CASA gives them one soon they can go broke sooner and spare us the pain.
As far as I can work out from the press they made an application around June 10, 2005 so I would expect they should have it this month.
Needless to say, I would be watching that other lot as well as they have gone very quiet but on the grapevine I heard they were backed by Lufthansa (don\'t quote me on it though).