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 Economics Of Non-Stop Versus One Stop
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47Posted Mon May 16 2005 02:20:54 UTC (9 years 10 months 2 weeks 5 days 11 hours ago) and read 4363 times:

 32 replies: All unread, showing first 25:
 AeroWesty From United States of America, joined Oct 2004, 20822 posts, RR: 62 Reply 1, posted Mon May 16 2005 02:34:41 UTC (9 years 10 months 2 weeks 5 days 11 hours ago) and read 4337 times:

 Quoting LAXDESI (Thread starter):Have I missed something in my calculations?

Only that CO will be flying a 777-200ER, not a 300ER, which will throw your calculations off considerably.

 International Homo of Mystery
 Aseem From India, joined Feb 2005, 2046 posts, RR: 10 Reply 2, posted Mon May 16 2005 02:45:14 UTC (9 years 10 months 2 weeks 5 days 11 hours ago) and read 4307 times:

thank God the calculations were not done according to B773LR.
cheers!!
VT-ASJ

 ala re ala, VT-ALA ala
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 3, posted Mon May 16 2005 03:49:55 UTC (9 years 10 months 2 weeks 5 days 10 hours ago) and read 4227 times:

 Quoting AeroWesty (Reply 1):Only that CO will be flying a 777-200ER, not a 300ER, which will throw your calculations off considerably.

Thank you AeroWesty for the correction. The 777-200ER has a stated capacity of 305(3 class) seats. The yield advantage changes for 747 to about \$27 million per year (as against 13 million cost disadvantage), resulting in a net advantage of \$14 million per year.

CO will have to charge about \$220/seat more to cover the shortfall of \$14 million. Will the market pay a premium of \$220 and more?

I would also like to point out that load factor for 777 will be higher than 70% during off peak period. It is much harder to fill a 747 at 70% capacity than a 777-200ER. This should tilt the advantage to 777-200ER.

 Zvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64 Reply 4, posted Mon May 16 2005 04:13:18 UTC (9 years 10 months 2 weeks 5 days 10 hours ago) and read 4170 times:

 I don't think the assumption that both flights will have a 70% load is reasonable. I think a nonstop B777-200ER will be full before a competing one-stop B747-400 reaches 70% load. Also, a B777-200ER will burn less fuel than a B777-300ER would.
 AeroWesty From United States of America, joined Oct 2004, 20822 posts, RR: 62 Reply 5, posted Mon May 16 2005 04:39:12 UTC (9 years 10 months 2 weeks 5 days 9 hours ago) and read 4128 times:

 Quoting LAXDESI (Reply 3):Thank you AeroWesty for the correction. The 777-200ER has a stated capacity of 305(3 class) seats.

In CO's configuration, they fly 2-class. BusinessFirst and Coach.

You can get the seating arrangements at either continental.com or seatguru.com

Cheers.

 International Homo of Mystery
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 6, posted Mon May 16 2005 05:06:51 UTC (9 years 10 months 2 weeks 5 days 9 hours ago) and read 4082 times:

 Quoting Zvezda (Reply 4): don't think the assumption that both flights will have a 70% load is reasonable. I think a nonstop B777-200ER will be full before a competing one-stop B747-400 reaches 70% load. Also, a B777-200ER will burn less fuel than a B777-300ER would.

I agree with you. Under the assumption that flights will be full for 747, 1/3rd of the time, 70% full 1/3rd of the time, and 40% full 1/3rd of the time, resulting in a average load factor of 70% for 747, a comparable load factor works out to be 83% for 777-200ER. This gives the 747 yield advantage of 38 seats, comparable to the 36 seat advantage shown in the thread starter.

THEREFORE, IF SA)">CO CAN CHARGE ABOUT \$125 MORE PER SEAT, IT WILL STILL MAKE MORE MONEY USING A 777-200ER THAN A 747 ONE-STOP SERVICE.

777-300ER has the range to do the EWR-DEL sector. If a 777-300ER were used instead of a 777-200ER, the yield advantage of 747 is only \$6,000,000, against the cost disadvantage of \$13 million.

THIS MEANS AN AIRLINE USING 777-300ER ON EWR-DEL NON-STOP WILL MAKE \$6 MILLION MORE PER YEAR OVER 747 ONE-STOP, EVEN IF IT CHARGES THE SAME AMOUNT. IT CAN EASILY ADD \$8 MILLION TO THAT FIGURE IF IT CAN CHARGE \$100 MORE PER SEAT FOR THE NON-STOP.

This suggests that many routes to India from USA will become non-stop, even if the market will not pay a premium. Air India's decision to order 777-200LR and 777-300 makes a lot of sense.

 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 7, posted Mon May 16 2005 05:28:52 UTC (9 years 10 months 2 weeks 5 days 8 hours ago) and read 4039 times:

 Just read on the Economic Times site that Sahara and United will jointly operate a non-stop from Chicago to Delhi. I wonder who will be the first to announce a non-stop to Bombay.
 Aseem From India, joined Feb 2005, 2046 posts, RR: 10 Reply 8, posted Mon May 16 2005 05:37:43 UTC (9 years 10 months 2 weeks 5 days 8 hours ago) and read 4013 times:

http://economictimes.indiatimes.com/...ticleshow/msid-1111048,curpg-1.cms
wonder what do they mean by jointly operating non-stop flight. That shall need commonality of equipment as well. Next, so S2 should be looking for kind of aircraft UA has.
The article clearly states that Rono Dutta is using his good ol' links with UA. No harm as long as it works.
rgds
VT-ASJ

 ala re ala, VT-ALA ala
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 9, posted Mon May 16 2005 05:41:02 UTC (9 years 10 months 2 weeks 5 days 8 hours ago) and read 4003 times:

 Quoting Aseem (Reply 8):wonder what do they mean by jointly operating non-stop flight

I think they will be using existing UA equipment. Article suggests that they will jointly share all costs and revenues.

 AeroWesty From United States of America, joined Oct 2004, 20822 posts, RR: 62 Reply 10, posted Mon May 16 2005 05:43:16 UTC (9 years 10 months 2 weeks 5 days 8 hours ago) and read 3993 times:

 Quoting Aseem (Reply 8):That shall need commonality of equipment as well. Next, so S2 should be looking for kind of aircraft UA has.

Not unless it's like the arrangement NW/KL have on revenue-sharing on U.S.-AMS flights.

 International Homo of Mystery
 Aseem From India, joined Feb 2005, 2046 posts, RR: 10 Reply 11, posted Mon May 16 2005 05:44:56 UTC (9 years 10 months 2 weeks 5 days 8 hours ago) and read 3989 times:

 Quoting LAXDESI (Reply 9):I think they will be using existing UA equipment. Article suggests that they will jointly share all costs and revenues

you mean more UA rustbuckets coming!
should be interesting to see who actually operates them. Whose F/A are being used? Will it be UA's livery or will S2 paint few in its own? Some of the interesting thoughts that crossed my mind.
rgds
VT-ASJ

 ala re ala, VT-ALA ala
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 12, posted Mon May 16 2005 06:29:24 UTC (9 years 10 months 2 weeks 5 days 7 hours ago) and read 3958 times:

 Non-stops from USA to southern cities of India, MAA-BLR-HYD, will require 777-200LR, 787-800 or 787-900. It is safe to assume that southern cities will not get a non-stop service for a few years unless some A340-500 or 340-600 become available. It seems to me that Bombay can not be reached non-stop by 777-200-300- ER series from USA. Is that correct? It is my understanding that 787 will be 20% more fuel efficient than 777. 787-900 can seat 257(3 class) and 777-200LR can seat 300(3 class). For the southern cities, 787 would be ideal. SFO-MAA(city that I grew up in), SFO-BLR-HYD could easily fill a 787, on thrice weekly basis. Again, Air India has ordered 787 to cater to this market. If the 787 is expected to be 20% more fuel efficient than 777, it is about 40% more fuel efficient than a 747 on a one-stop like MAA-LON-SFO on BA. My calculations show that 787 will beat a 747 on a medium density route like MAA-SFO or BLR-SFO. BA and LH should begin to worry and expect to lose a big chunk of their market share in India to likes of Air India and Jet(if they order these aircrafts) in about 3-5 years.
 Atmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37 Reply 13, posted Mon May 16 2005 06:46:43 UTC (9 years 10 months 2 weeks 5 days 7 hours ago) and read 3937 times:

 Quoting Aseem (Reply 8):here is the link http://economictimes.indiatimes.com/...ticleshow/msid-1111048,curpg-1.cms wonder what do they mean by jointly operating non-stop flight. That shall need commonality of equipment as well. Next, so S2 should be looking for kind of aircraft UA has. The article clearly states that Rono Dutta is using his good ol' links with UA.

Kind of strange, considering that UA is a Star Alliance carrier, and AI is codesharing with LH.

 ConcordeBoy is a twin supremacist!! He supports quadicide!!
 Leskova From Germany, joined Oct 2003, 6075 posts, RR: 69 Reply 14, posted Mon May 16 2005 10:20:46 UTC (9 years 10 months 2 weeks 5 days 3 hours ago) and read 3835 times:

 Have you taken into account that most of the one-stops through Europe, as well as those through Asia, have traffic rights on the partial legs as well? The B747-400 flying from EWR to LON can carry passengers only flying that segment, while it can also carry passengers that are only travelling from LON to DEL. Both routes also have their fair share of premium traffic, the effects of which have - so far - been completely neglected in your calculation. Regards, Frank
 Smile - it confuses people!
 Mrniji From , joined Dec 1969, posts, RR: Reply 15, posted Mon May 16 2005 10:51:37 UTC (9 years 10 months 2 weeks 5 days 3 hours ago) and read 3796 times:

 Quoting Leskova (Reply 14):Have you taken into account that most of the one-stops through Europe, as well as those through Asia, have traffic rights on the partial legs as well?

This is a crucial point. A one stop serves three masrkets, a nonstop merely one (which does not mean that the nonstop is not the favorable option). It depends case-by-case. Let's say AI decides to serve Portland. A nonstop from India could be uneconomic, while a one-stop with 5th freedom could be economic (a simplified example, but did you get my point?)

I personally (and I know that I am in a minority) could never imagine to travel more than 12 hrs in a plane, so would decode for a one-stop. Flying nonstop India-states somehow horifies me. However, I recognize that a market is available.

 RJ111 From , joined Dec 1969, posts, RR: Reply 16, posted Mon May 16 2005 13:20:44 UTC (9 years 10 months 2 weeks 5 days ago) and read 3715 times:

 Quoting LAXDESI (Thread starter):On the yield side, a 747 will have 36 more revenue seats on an average. Assuming an average yield of \$1200/seat, it will translate to about \$12.96 million additional revenue per year. Therefore, 747 one stop makes up for its cost disadvantage by having higher yield on high density routes like EWR-DEL.

But the 747 JFK-LHR-DEL will be able to carry up to a 63 ton payload compared to 40t on your 773ER on the ERW-DEL route. 365 pax and baggage allowance is around 35t's, 415 about 39t. So that gives your avaliable payload for cargo at around 5t for the 773ER and 24t for the 744!

Now that's significant!

 Eha From France, joined May 2005, 211 posts, RR: 0 Reply 17, posted Mon May 16 2005 13:39:45 UTC (9 years 10 months 2 weeks 5 days ago) and read 3693 times:

 Your calculation does not take into account the financing of the A/C, or does it? I assume loan impact of a brand new 777 vs several years old 747s is not the same...Plus what if one of the A/C is leased, or both ?? Crew costs : do you include training/salary ? Air Traffic control charges ? Depend on routes, and A/C type. Are you sure landing fees are on a per pax basis ? Maintenance costs ? E.
 Rmenon From Trinidad and Tobago, joined Jun 2001, 116 posts, RR: 0 Reply 18, posted Mon May 16 2005 13:42:02 UTC (9 years 10 months 2 weeks 5 days ago) and read 3690 times:

 Quoting Atmx2000 (Reply 13):Kind of strange, considering that UA is a Star Alliance carrier, and AI is codesharing with LH.

Even stranger since UA has announced code sharing with Jet Airways already.

 Mrniji From , joined Dec 1969, posts, RR: Reply 19, posted Mon May 16 2005 13:47:27 UTC (9 years 10 months 2 weeks 5 days ago) and read 3676 times:

 Quoting Eha (Reply 17):Your calculation does not take into account the financing of the A/C, or does it?

His calculation can only be very vague at this point, which is nothing to be worried about..

 OzGlobal From France, joined Nov 2004, 2790 posts, RR: 4 Reply 20, posted Mon May 16 2005 14:07:24 UTC (9 years 10 months 2 weeks 5 days ago) and read 3654 times:

 With the advent of ultra long range aircraft (A345, 772LR) you need to add to your list of parameters the Y class passenger health / comfort factor. I estimate the 15hrs is the max anyone SHOULD sit in Y class due to mobility and sleep limitations, before a break of at least one hour. This works well on the Kangaroo route (18,000 KM or 23hrs with a 1hr stop in Asia). DVT and other dangers make it, in my view, unwise to run STANDARD Y class on longer segments. This factor should be seen as at least as important as the other limiting economic factors, particularly after a very large class action against BA and QF recently. If you do as SQ has and include only premium Y and J on ultra long haul routes, you change the target market and therefore need to operate a one-stop service as well to cater for the standard Y class market.
 When all's said and done, there'll be more said than done.
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 21, posted Mon May 16 2005 17:21:08 UTC (9 years 10 months 2 weeks 4 days 20 hours ago) and read 3510 times:

 Quoting Leskova (Reply 14):Have you taken into account that most of the one-stops through Europe, as well as those through Asia, have traffic rights on the partial legs as well? The B747-400 flying from EWR to LON can carry passengers only flying that segment, while it can also carry passengers that are only traveling from LON to DEL.

In general, your point is valid. Yields should be higher on a one stop given that fares on two tickets, EWR-LON, and LON-BOM combined should be higher than fares on non-stop EWR-BOM. This may not apply to Air India. I flew AI several times from JFK when I lived in New Jersey. Again, very few non-Indians on JFK-LON, and LON-BOM sector. They do not attract many non-Indians low fares notwithstanding.

Your point applies TO LAX-NRT-BKK sector on Thai. I have flown this sector several times on Thai, and noticed a large Japanese market on LAX-NRT leg and then a new set of passengers for NRT-BKK leg.

[Edited 2005-05-16 17:27:44]

 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 22, posted Mon May 16 2005 17:45:51 UTC (9 years 10 months 2 weeks 4 days 20 hours ago) and read 3462 times:

 Quoting RJ111 (Reply 16):But the 747 JFK-LHR-DEL will be able to carry up to a 63 ton payload compared to 40t on your 773ER on the ERW-DEL route. 365 pax and baggage allowance is around 35t's, 415 about 39t. So that gives your available payload for cargo at around 5t for the 773ER and 24t for the 744!

Does anyone have average yield figures for this extra payload?

 Quoting Eha (Reply 17):Your calculation does not take into account the financing of the A/C, or does it? I assume loan impact of a brand new 777 vs several years old 747s is not the same...Plus What if one of the A/C is leased, or both ??

I assumed that both 747 and 777 were brand new in my analysis. An older 747 may have a lower capital cost:opportunity cost or lease cost, but may be more than offset by higher maintenance cost.

Lease or ownership: Ownership has an opportunity cost too. Generally speaking, Leasing is more expensive than ownership. This is true for Aircrafts as well as Automobiles.

 Quoting Eha (Reply 17):Are you sure landing fees are on a per pax basis ?

You can google this to confirm.

 Quoting OzGlobal (Reply 20):If you do as SQ has and include only premium Y and J on ultra long haul routes, you change the target market and therefore need to operate a one-stop service as well to cater for the standard Y class market.

I agree completely. As I understand from another thread, SQ is surprised at the demand for F and J class on their non-stop service to USA. They could easily raise the no. of seats in these two classes and raise their yields substantially.

 Jacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59 Reply 23, posted Mon May 16 2005 18:58:03 UTC (9 years 10 months 2 weeks 4 days 19 hours ago) and read 3392 times:

 Quoting LAXDESI (Reply 12): It seems to me that Bombay can not be reached non-stop by 777-200-300- ER series from USA. Is that correct?

according to Boeings website, the -200ER and -300ER can easily make it to Mumbai (Bombay) from the East Coast, while the -200ER will not make it and the -300ER proabably wouldn't make it from the Left Coast..of course, as you said, the -200LR will do it easily..

 "Up the Irons!"
 LAXDESI From United States of America, joined May 2005, 5086 posts, RR: 47 Reply 24, posted Mon May 16 2005 19:46:12 UTC (9 years 10 months 2 weeks 4 days 18 hours ago) and read 3351 times:

 Quoting RJ111 (Reply 16):But the 747 JFK-LHR-DEL will be able to carry up to a 63 ton payload compared to 40t on your 773ER on the ERW-DEL route. 365 pax and baggage allowance is around 35t's, 415 about 39t. So that gives your available payload for cargo at around 5t for the 773ER and 24t for the 744!

I was able to pick some cargo yield from the web. Average Cargo yield is about US\$0.30 per tonne mile. That translates to \$48,000 additional yield per flight from cargo(Based on additional cargo of 19 tonnes and a distance of 7300 miles). The annual figure for additional cargo yield then is about \$14 million, a substantial figure indeed.

Given the above, the advantage shifts to 747 over 777-300ER by \$8 million, assuming equal pricing for non-stop and one-stop on passenger side. A US\$100 premium per ticket on 777-300ER non-stop will make it a wash. A \$200 premium per ticket on non-stop will bring 777-300ER ahead by \$8 million.
IS \$200 PREMIUM A REASONABLE/ACCEPTABLE PREMIUM? I WOULD APPRECIATE SOME FEEDBACK FROM EWR-DEL PASSENGERS.

EWR-DEL is a 14 hour flight(15 hour on return) and will not require premium Economy to attract passengers.

 25 DesertJets : Just a quick timetable search shows me that NYC-BOM runs anywhere from 16h 55min (AI EWR-CDG-BOM) to 20h (AI JFK-LHR-DEL-BOM), with most everything el
 26 Rmenon : For a passenger who is able to fly directly out of EWR the premium may well be worth it. It becomes a bit fuzzier for someone who makes a connection t
 27 LAXDESI :
 28 LAXDESI : UA in alliance with Sahara will offer a non-stop from ORD-DEL, possibly using a 747-400(Aircraft that was to be used Pre 9/11 for their ORD-DEL non-st
 29 6thfreedom : This is from the opposite end of the world, but FYI, EK charges around an A\$200 premium (US\$150) to take it's non-stop SYD/DXB & MEL/DXB services in
 30 LAXDESI : The time savings for USA-INDIA non-stops will be greater than that for SYD/DXB, MEL/DXB. Given a premium of US\$150 for SYD/DXB, then a premium of US\$
 31 AADC10 : You are forgetting about cargo, which is important on flights to developing countries. The 747 has substantially more cargo lift capability than the
 32 LAXDESI : I did pick up the cargo factor in my reply no. 24 in this thread. 777-300ER still comes out ahead if there is a premium of more than \$100 per seat fo
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