Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Could A LCC Make Money With Used 767s?  
User currently offlineDandy_don From United States of America, joined May 2000, 202 posts, RR: 0
Posted (8 years 11 months 2 weeks 3 days 1 hour ago) and read 4679 times:

It would seem that there will be a glut of used 767s on the market in the upcoming years with the seeming success of the 787 but also airliners showing a preference for the A330 as well.

It got me to wondering if a startup carrier could make money buying some used 767s and employing them on long leisure destinations, say DTW-HNL or MSP to Florida/Carribean?

27 replies: All unread, showing first 25:
 
User currently offlineDfwRevolution From United States of America, joined Jan 2010, 912 posts, RR: 51
Reply 1, posted (8 years 11 months 2 weeks 3 days 1 hour ago) and read 4672 times:

Sure... that may be what ATA is planning to do this fall.

Other charter/vacation airlines already opperate the 767... including Brittana (or whatever it's called now), Hawaiian, etc.


User currently offlineB742 From United Kingdom, joined Mar 2005, 3762 posts, RR: 19
Reply 2, posted (8 years 11 months 2 weeks 3 days 1 hour ago) and read 4641 times:

Yeh I think LCC's could make money out of 767's!

Many charter airlines like TOM (BY), MON, XLA.. operate the 767!

Rob!


User currently offlineKC135R From United States of America, joined Apr 2005, 725 posts, RR: 4
Reply 3, posted (8 years 11 months 2 weeks 3 days 1 hour ago) and read 4625 times:

Quoting Dandy_don (Thread starter):
It would seem that there will be a glut of used 767s on the market in the upcoming years with the seeming success of the 787 but also airliners showing a preference for the A330 as well.

There will be no such glut (at least of the 762's - the oldest and thus - likely the first to retire)...why you ask?

The USAF Tanker modernization program, in an effort to save money and quiet those opposed to the deal who said it was "corporate welfare" for Boeing, will purchase retired airliners instead of new 767's and convert them to tankers.  

You know, I am joking, but it could honestly happen - I would not be shocked.

[Edited 2005-05-08 21:40:51]

User currently offlineChiflyer82 From United States of America, joined Apr 2005, 27 posts, RR: 0
Reply 4, posted (8 years 11 months 2 weeks 2 days 23 hours ago) and read 4491 times:

Quoting DfwRevolution (Reply 1):
Sure... that may be what ATA is planning to do this fall.

ATA is scheduled to use them for troop transport ONLY! But like everything else nothing is ever set in stone.


User currently offlineN1120A From United States of America, joined Dec 2003, 26196 posts, RR: 76
Reply 5, posted (8 years 11 months 2 weeks 2 days 23 hours ago) and read 4489 times:

Quoting Chiflyer82 (Reply 4):
ATA is scheduled to use them for troop transport ONLY! But like everything else nothing is ever set in stone.

I am betting they end up on more than a few charter flights taking kids to Mexico



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlinePeppes1980 From Norway, joined Mar 2005, 22 posts, RR: 0
Reply 6, posted (8 years 11 months 2 weeks 2 days 20 hours ago) and read 4349 times:

Danish/Icelandic, Sterling are planning to start long haul LCC from CPH to US with used 767. They apparently are looking after AC for this operations, and will start up this fall. They are looking into big leisure markets like MCO, and I would also guess LAS.

User currently offlineWhiteHatter From , joined Dec 1969, posts, RR:
Reply 7, posted (8 years 11 months 2 weeks 2 days 20 hours ago) and read 4318 times:

Quoting KC135R (Reply 3):

The USAF Tanker modernization program, in an effort to save money and quiet those opposed to the deal who said it was "corporate welfare" for Boeing, will purchase retired airliners instead of new 767's and convert them to tankers.

You know, I am joking, but it could honestly happen - I would not be shocked.

The USAF could do what they did with a substantial number of 707s and buy them up for parting out however. They have the manpower and expertise to recondition components and assemblies which would be common between civilian 767s and the tanker.


User currently offlinePiedmontnut From United States of America, joined Apr 2005, 79 posts, RR: 0
Reply 8, posted (8 years 11 months 2 weeks 2 days 19 hours ago) and read 4270 times:

Could any extra 767s sitting about be converted for freighter use as well? What are the odds?


May the A380 arrive @ MCO in the near future.
User currently offlineJoost From Netherlands, joined Apr 2005, 3149 posts, RR: 4
Reply 9, posted (8 years 11 months 2 weeks 2 days 9 hours ago) and read 4128 times:

As a 767 is mostly suitable for long-haul ops, it seems like we are talking about long-haul LCC. And there are quite some differences between long-haul and short-haul LCC operations.

Short-haul LCC's, in Europe and the US, are taking profit of deregulation and the ability to fly from every A to every B in Europe / US. Long-haul flights are usually more limited due to all kind of traffic rights.

Next to that, on long-haul operations, many economy seats are already heavily discounted, as profits on B/F/Full-Y passengers make up for this.

The long-haul LCC's are, as already said, often the charter companies that offer more and more scheduled service. Like in the Netherlands Martinair is offering scheduled flights to for example MIA, MCO and YYZ. However this would be better characterized as a leisure carrier - however I fully admit the difference is very vague (just writing an article on it but it's hard to get my thoughts clear). In Holland, the cooperation between KL and MP is a nice example how to devide flights. MIA for example didn't have enough high-yielding passengers to support a KL Full-service operation (as they switched to ATL), but for MP's lower-cost operations, with more seats in the same plane, it suits good for the flight.

So basically, IMO, a transatlantic LCC will only work well on lower-yielding destionations. On the destionation with high yielding-passengers, to full-service carriers offer that discounted fares (often there are for examle EUR 299 r/t fares on DL AMS-JFK) in Y, that it's hard to compete. But on the destinations not served by the full-service carriers, a lower cost based LCC/leisuere carrier could work - but this is already normal practice  Smile


User currently offlineRichardw From United Kingdom, joined May 2001, 3744 posts, RR: 0
Reply 10, posted (8 years 11 months 2 weeks 2 days 8 hours ago) and read 4070 times:

Probably with 2-4-2 seating for short haul, 3 exits and a 25 min turnaround and 24 hours a day operations.

User currently offlineMonteycarlos From Australia, joined Mar 2005, 2107 posts, RR: 29
Reply 11, posted (8 years 11 months 2 weeks 2 days 7 hours ago) and read 4025 times:

The thing with the 767 is that it is a BIG aircraft. For any LCC to do anything decent they would have to be pretty well established in the market already, and then they are breaking the traditional LCC model of one aircraft type.

Essentially a 767 would be pretty good, if you could guarantee a decent load on the thing. Otherwise you would face the problem which was faced by Compass Mk.I here in Australia of having an extremely large yet capable aircraft (in this case it was the A300) and having absolutely no demand for it.


View Large View Medium
Click here for bigger photo!

Photo © George Canciani



IMO, LCC's are better to stick with the likes of the 737/A320 simply because they are cheap, proven and efficient and depending how you configure it, can pull a decent load. The 767, IMO, is too big and costly.



It's a beautiful night to fly like a phoenix...
User currently offlineFlashmeister From United States of America, joined Apr 2000, 2896 posts, RR: 6
Reply 12, posted (8 years 11 months 2 weeks 2 days 5 hours ago) and read 3941 times:
Support Airliners.net - become a First Class Member!

Remember what it takes to be a LCC -- unless you work in Crystal City or Elk Grove Village, for instance, an airline doesn't just wake up one day and anoint itself as a LCC. It's not something you decide you are... it's something you take action to become.

And, remember what LCC stands for: Low Cost Carrier. Cost here equals CASM. LCC has absolutely nothing to do with the price of the ticket, except that the lower your CASM, the higher your ability to have ticket prices lower than your competitor.

So, could a LCC make money with used 767s? Sure. They could make money with Ultralights or gliders pulled by donkeys, too, if they had a price that people were willing to pay and the economic model fit.

The real question is, does 767 lend itself to low costs? The answer there, I think, is probably not, especially intercontinental.

There are a lot of barriers to start with. For instance, one thing that helps LCCs is an idea of consistent demand -- not a packed house one day and empty the next. Consistent service and consistent demand lends itself to consistent loads, which prevents reaccomodation and pissed off customers. That lowers costs. To sustain that with 767 means you need a much higher baseline demand level than with, say, 737.

There's also the issue of getting 767 crews to work the planes at low rates. 767 crew, at most shops, are paid more than their 737 or MD-80 brethren, I'd imagine, so the LCC's compensation plan would have to compete, and in some cases, match the higher wages from the legacies.

LCCs also tend to be much more nimble and absolutely frugal when it comes to opening cities, leasing counter and gate space, and staff to work flights. Much easier to do that with one or two 737s for 45 minutes at a time than with 767, which can't realistically be turned in the same amount of time.

Then there's the factor of flying a nearly-orphaned type and having to maintain it, while your LCC peers are zipping around in their new metal.

Finally, intercontinentally, you have unique problems to face: you have to compete with premium options on the legacies, trendy options (sorta) on VS, and people's pocketbooks. At the same time, you have ETOPS regulations increasing your MX costs, and the higher labor costs of luring a crew to do 767 across the pond. So if your costs aren't all that much lower, then your ticket prices can't be, and if your ticket prices aren't significantly lower, what's the reason that people would switch?

If there was a niche for bargain-basement 767 carriers, I think we'd see it, and we don't. I doubt we will.


User currently offlineJGPH1A From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 11 months 2 weeks 2 days 4 hours ago) and read 3928 times:

Nationwide Airlines operate a 763 JNB-LGW three times weekly. In theory they are a LCC, and I don't know how much money they are making, but they obviously think they can.

User currently offlineCoronado990 From United States of America, joined Oct 2003, 1593 posts, RR: 2
Reply 14, posted (8 years 11 months 2 weeks 2 days 3 hours ago) and read 3698 times:

If SAN does not get a new airport, you might see some 767 LCC action in the Golden State. I can see an all coach short haul California intrastate operation between SAN/LAX-SFO/SJC/OAK/SMF using twin-aisle aircraft as a way to ease runway congestion. Also, wouldn't that be an effective way to compete with the likes of WN where they now have a monopoly ex-PSA routes?  smile  Come on, say yes and give me a lift.


Uncle SAN at your service!
User currently offlineOssprey From Canada, joined Jul 2004, 36 posts, RR: 0
Reply 15, posted (8 years 11 months 6 days 18 hours ago) and read 2949 times:

We know of some in Canada that have know how to use 762 for low CASM. Sound reasonable plan to start charter service med-long range routes.




Email me to get link. allspec@mts.net



I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
User currently offlineKahala777 From , joined Dec 1969, posts, RR:
Reply 16, posted (8 years 11 months 6 days 18 hours ago) and read 2925 times:

Gulf Traveller anyone?

Regards - Kahala777


User currently offlineLightsaber From United States of America, joined Jan 2005, 12420 posts, RR: 100
Reply 17, posted (8 years 11 months 6 days 18 hours ago) and read 2908 times:
Support Airliners.net - become a First Class Member!

One problem with what I've read in this post comes down to one fact: The 767's building up in the dessert are older 767's that are not the ER's, but instead JT-9D powered aircraft with a lower range. Recall that a JT-9D airframe has about 25% greater TOTAL mx than a pw4000, CF-6, or RB-211 powered airframe of the same vintage. 763ER's are in short supply on the used market last I looked (correct me if I'm wrong). Thus, no long haul LCC off the Mojave 767's.

Also, LCC's thrive by providing frequency at a low cost. When I fly I like either a very early morning flight or a redeye; most of my friends prefer mid-day flights.

Quoting Flashmeister (Reply 12):
There are a lot of barriers to start with. For instance, one thing that helps LCCs is an idea of consistent demand -- not a packed house one day and empty the next. Consistent service and consistent demand lends itself to consistent loads, which prevents reaccomodation and pissed off customers. That lowers costs. To sustain that with 767 means you need a much higher baseline demand level than with, say, 737.

Good point. Its tough to fill a 767 from day one. Much easier to start demand with a smaller airframe and then add a 2nd flight a day.

Although, I think a LCC could probably get a great deal on new 763ER's or 764's!  bigthumbsup  Now where could they get the financing? (e.g., Virgin America's issues)

Lightsaber



I've posted how many times?!?
User currently offlineOssprey From Canada, joined Jul 2004, 36 posts, RR: 0
Reply 18, posted (8 years 11 months 6 days 18 hours ago) and read 2881 times:

Good points and although 763 would be a good aircraft with low years and time cost of lease are roughly 3.5 times higher than a good used slightly vintage 762.
With the right combinations and those 50 missing seats on a 200 as opposed to a 300 the economics bear out that if you begin operations with the sight of replacing the vintage aircraft as your revenue rises you will make some money and have some fun too.



I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
User currently offlineJeb94 From United States of America, joined Oct 2004, 588 posts, RR: 5
Reply 19, posted (8 years 11 months 6 days 17 hours ago) and read 2858 times:

The problem with the 767 for LCC type operations is that it has many exppensive components on it that are required for flight. You must keep a certain supply of these expensive components, like computers, on hand to maintain the aircraft. A 767 is not like its smaller sibling in the baggage/cargo department either. The 767 requires expensive equipment for ground handling efficiently. Belt loaders can't load an aircraft of this size fast enough to make it cost effective. Thats why 767 baggage/cargo is containerized. It takes a whole lot of money to use 767s. The 737NG and A320 family will fly intercontinental US and are much more cost effective at it. The 767 is best suited to international routes and long haul charter flights with high yields to cover the high costs of operations.

User currently offlineWilax From United States of America, joined Jun 2002, 465 posts, RR: 3
Reply 20, posted (8 years 11 months 6 days 17 hours ago) and read 2828 times:

What about Latin America? I could see high load factors between major US and LA cities. Currently Varig/TAM and the legacies offer the only flights to Rio De Janeiro or Sao Paulo from the US without a customs stop in a third country. Such a route is too long to even be served by a 757 without payload restrictions. A 763, MIA-GRU, set up Jetblue-style at 75% the ticket price of AA could make money...

Couldn't it?


User currently offlineOssprey From Canada, joined Jul 2004, 36 posts, RR: 0
Reply 21, posted (8 years 11 months 6 days 17 hours ago) and read 2823 times:

The 767 is best suited to international routes and long haul charter flights with high yields to cover the high costs of operations.



That is exactly what the group I referred to have in mind.

Who needs to invest in costly belt loaders when you can contract out for a fixed cost per boarded and de-planed passengers.

For a start-up these are better priced out to sub-contractors, not in the empire building like the legacy carriers.



I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
User currently offlineCarpethead From Japan, joined Aug 2004, 2910 posts, RR: 3
Reply 22, posted (8 years 11 months 6 days 17 hours ago) and read 2812 times:

Only place so far that has worked is Japan. Skymark & AirDo are not exactly LCCs because, although their CASM is not public knowledge, it still has high-cost due to the operating environment in Japan.

767 is much too big of an aircraft for Europe or US. Could it work in the future, who knows but the best odds are Asia/Middle East where populations can be moved.


User currently offlineOssprey From Canada, joined Jul 2004, 36 posts, RR: 0
Reply 23, posted (8 years 11 months 6 days 17 hours ago) and read 2793 times:

Canadian used to operate many flights a week from Western Canada to Asia. AC cut service when they absorbed CAI.

With this market rebounding in the double digits and the middle class of China (about 250,000,000)now have Canada as an approved destination I think the problem will be too few aircraft for the demand and companies like AC and others reaping high margins on these routes.



I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
User currently offlineOssprey From Canada, joined Jul 2004, 36 posts, RR: 0
Reply 24, posted (8 years 11 months 6 days 17 hours ago) and read 2788 times:

Quoting Wilax (Reply 20):



Quoting Wilax (Reply 20):
What about Latin America? I could see high load factors between major US and LA cities. Currently Varig/TAM and the legacies offer the only flights to Rio De Janeiro or Sao Paulo from the US without a customs stop in a third country. Such a route is too long to even be served by a 757 without payload restrictions. A 763, MIA-GRU, set up Jetblue-style at 75% the ticket price of AA could make money...

Couldn't it?

Routes that could be serviced direct are as you state above. Some developing CEO's of LLC can see the niche markets. 762 Western Canada to Latin America's very feasible.



I love the touch of aluminum in the morning. Walk arounds in the snow pumping out floats polishing aluminum by hand!!NOT
25 Kahala777 : What? The following routes have a great many flights and O/D passenger demand day in and day out! U.S. JFK/LGA/EWR - FLL, PBI, MIA JFK/LGA/EWR - TPA,
26 Carpethead : Kahala777, Indeed in the list of cities you posted, there are sufficient pax on the route (on some), but again frequency rules at least in the US. Big
27 Ossprey : With a charter operation you only go when your full. Charter ad hock mean non schedule.
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Would CX + SQ Make Money With US-type Competition posted Wed Mar 29 2006 21:55:05 by Superhub
Could My Idea Make Money posted Tue Mar 19 2002 18:12:41 by Sbe727
Airline Food - Way To Make Money? posted Tue Dec 5 2006 20:05:29 by Jelle
TK On Expansion -make JV With DO&CO On Catering posted Fri Nov 3 2006 14:39:24 by Beaucaire
Could Airbus Make A Shorter-range A350? posted Sat May 13 2006 20:42:55 by 1337Delta764
How Will Carriers Make Money On $300 SFO-LHR-SFO? posted Fri Feb 24 2006 06:50:36 by Jacobin777
Does Lufthansa Make Money On The BBJ A319? posted Mon Jan 23 2006 09:03:58 by OyKIE
299-499 Pounds Return UK/OZ-how Do U Make Money? posted Sun Jan 8 2006 15:33:41 by Simpilicity
Another Way To Make Money For Ryanair posted Mon Nov 14 2005 13:45:01 by Futurestar68
How Does Ryanair Make Money? posted Tue Sep 20 2005 07:31:29 by AR1300