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Austrian: None Of Long-haul Routes Are Profitable  
User currently offlineJimyvr From , joined Dec 1969, posts, RR:
Posted (8 years 2 weeks 2 days 20 hours ago) and read 10505 times:

http://www.atwonline.com/news/story.html?storyID=7327

Austrian Airlines seeks to revitalize unprofitable long-haul services
(ATWOnline) Tuesday December 12, 2006

EXCERPT:
Austrian Airlines Group CEO Alfred Oetsch confirmed to ATWOnline during the Star Alliance meeting last week in Istanbul that none of the carrier's long-haul routes are profitable.......

....the long-haul fleet is the right one (removal of Airbus, keeps 767 while accepting 4th 777) for the airline going forward...

49 replies: All unread, showing first 25:
 
User currently offlinePlaneHunter From Germany, joined Mar 2006, 6944 posts, RR: 77
Reply 1, posted (8 years 2 weeks 2 days 20 hours ago) and read 10479 times:

AAG, (...), plans to sell four A330-200s in the near future, he added, noting that the carrier has "requests from 36 interested buyers" for the aircraft.

I had expected there would be many interested buyers, but 36 is immense.


PH



Nothing's worse than flying the same reg twice!
User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 2, posted (8 years 2 weeks 2 days 18 hours ago) and read 10372 times:

Austrian seems to be in a very similar position as Swissair back in the days of the unbridled expansion. Adding routes and frequencies in the longhaul network is one thing, keeping them viable another. The removal of 2 A343 and 4 A332 frames and the dereliction of routes with little or no prospect of making money is but one move to restore the profitability of the longhaul network. Yield analysis for each of the remaining longhaul routes and for the VIE hub at large will be a much more complicated task whilst finding ways to improve the airline's bottom line.

User currently offlineBreiz From France, joined Mar 2005, 1920 posts, RR: 2
Reply 3, posted (8 years 2 weeks 2 days 18 hours ago) and read 10293 times:

Quoting PlaneHunter (Reply 1):
AAG, (...), plans to sell four A330-200s in the near future, he added, noting that the carrier has "requests from 36 interested buyers" for the aircraft.

I had expected there would be many interested buyers, but 36 is immense.

This confirms what was often said on a.net about the selling drive of the A330.


User currently offlineSr176 From Switzerland, joined Feb 2001, 409 posts, RR: 0
Reply 4, posted (8 years 2 weeks 2 days 18 hours ago) and read 10305 times:

I expect (and hope) LX is among them

User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 5, posted (8 years 2 weeks 2 days 17 hours ago) and read 10253 times:

Quoting Sr176 (Reply 4):
I expect (and hope) LX is among them

LX is already getting the two A343s so I would expect the airline to be contending for the A332s as well, although I'd expect the competition to be much fiercer for these relatively younger frames.


User currently offlineCRJ900 From Norway, joined Jun 2004, 2234 posts, RR: 1
Reply 6, posted (8 years 2 weeks 2 days 16 hours ago) and read 10122 times:
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My impression is that OS' profitability has nosedived since integrating Lauda. Is the increasing wage costs the main culprit? I read on this forum that OS cabin crews have higher wages than Lauda cabin crews had, making the former profitable Lauda routes to Asia and Australia unprofitable.

Is Austria a "high-cost-of-living country" like the Scandinavian countries? www.boarding.no reports that SAS have 40% higher wage costs than LH. Cabin crews are supposedly the main culprits because of long seniority. Same with OS?



Come, fly the prevailing winds with me
User currently offlineDanny From Poland, joined Apr 2002, 3516 posts, RR: 3
Reply 7, posted (8 years 2 weeks 2 days 16 hours ago) and read 10108 times:

Quoting PlaneHunter (Reply 1):
AAG, (...), plans to sell four A330-200s in the near future, he added, noting that the carrier has "requests from 36 interested buyers" for the aircraft.

I had expected there would be many interested buyers, but 36 is immense.

Good indication that what OS is doing is wrong. Replacing 332 with 767 is astonishing. It looks like their lost direction completely.


User currently offlineLHStarAlliance From , joined Dec 1969, posts, RR:
Reply 8, posted (8 years 2 weeks 2 days 16 hours ago) and read 10061 times:

Wait´till LH buys them as they did with LX and then all will be all right Big grin , LH is waiting until OS is almost bankrupt and they´ll buy them they did the same with LX.

I read that OS is now at the stock exchange as valued as 1 B777 so ~ 250mill. could that be true?


User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 9, posted (8 years 2 weeks 2 days 16 hours ago) and read 10059 times:

Quoting Danny (Reply 7):
Replacing 332 with 767 is astonishing.

The thing is, they are not replacing the A332s with anything, they are just doing away with this subfleet as they are dramatically shrinking their longhaul network. Only a single B772ER will join the fleet while 1 remaining A342, 2 A343s and 4 A332s are leaving.


User currently offlineCrazyHorse From Austria, joined Nov 2005, 328 posts, RR: 0
Reply 10, posted (8 years 2 weeks 2 days 16 hours ago) and read 9987 times:

It´s hard to belive that none of Austrian´s Long-Haul Routes are not profitable, but it´s shows how big the problems of OS´s Long-haul network are.
OS´s cabin crew´s and flight crew´s and their high wages are surly a problem, but the bigger problem of OS are the incredible cost of their administration in Vienna.
OS will become a regional airline with good connetions to east europea in the near future, OS will become a feeder for LH´s Long-Haul Routes from MUC and FRA.


User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 11, posted (8 years 2 weeks 2 days 15 hours ago) and read 9944 times:

Quoting CrazyHorse (Reply 10):
OS´s cabin crew´s and flight crew´s and their high wages are surly a problem, but the bigger problem of OS are the incredible cost of their administration in Vienna.

In a discussion of the profitability of longhaul routes, the question of the relative cost of the airline's administration would not even be part of the picture. Route profitability is largely a function of both operating costs and revenue distribution. I would imagine that OS' operating costs may be on the high end of industry standards because of issues like relative seniority of crews, yet the bigger problem is likely the yields the airline is able to extract from different markets feeding into its longhaul network.


User currently offlineCrazyHorse From Austria, joined Nov 2005, 328 posts, RR: 0
Reply 12, posted (8 years 2 weeks 2 days 15 hours ago) and read 9886 times:

Quoting HB-IWC (Reply 11):
In a discussion of the profitability of longhaul routes, the question of the relative cost of the airline's administration would not even be part of the picture. Route profitability is largely a function of both operating costs and revenue distribution. I would imagine that OS' operating costs may be on the high end of industry standards because of issues like relative seniority of crews, yet the bigger problem is likely the yields the airline is able to extract from different markets feeding into its longhaul network.

I agree, but the OS cabin crew is not willing to cut their pay, because of the high cost in the airline´s administration and the management is not willing to cut their pay and privileges.
So the high cost in the administration are an factor of the high costs of the cabin crew and the operation cost of OS long haul routes.


User currently offlineWINGS From Portugal, joined May 2005, 2831 posts, RR: 68
Reply 13, posted (8 years 2 weeks 2 days 15 hours ago) and read 9807 times:

Well people it seems that Tap Portugal is the prime candidate to receive 3 of Austrians A332's.

This move by Tap Portugal would work well as they currently operate 3x A332´s (PW)

Does anyone know when Austrian is expected to withdraw the A332 from it's fleet?

Regards,
Wings



Aviation Is A Passion.
User currently offlineStarGoldLHR From Heard and McDonald Islands, joined Feb 2004, 1529 posts, RR: 1
Reply 14, posted (8 years 2 weeks 2 days 14 hours ago) and read 9749 times:

OS isnt competitive on airfares, is part of the problem.

Austrians dont appear to be deserting their country in droves for business and pleasure to the far ends of the earth..

Germans go via LH, so this leaves competition from AZ and LX for long haul, or a connecting hub from other parts of europe... but that increases costs even more.

They need to adopt BA's policy...

budget europe, milk it long haul.

BA pretty much give away a LHR connection free when buying a long haul ticket from LHR



So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 15, posted (8 years 2 weeks 2 days 14 hours ago) and read 9712 times:

Quoting WINGS (Reply 13):
Does anyone know when Austrian is expected to withdraw the A332 from it's fleet?

The A332s seem to be all gone from the schedules for the next summer season, so this is all happening pretty fast.


User currently offlineMagyarorszag From , joined Dec 1969, posts, RR:
Reply 16, posted (8 years 2 weeks 2 days 14 hours ago) and read 9685 times:

Quoting HB-IWC (Reply 15):
The A332s seem to be all gone from the schedules for the next summer season, so this is all happening pretty fast.

It's going pretty fast, but if you read the following link excerpt, its pretty clear how they intend to do that.

"The cut of the A330 fleet will streamline the Austrian long-haul route network. In concrete terms, scheduled services to Shanghai will be terminated from 7 January 2007, flights to Phuket, Mauritius and Colombo/Male from the end of April, and those to Kathmandu in May 2007. Lauda Air will withdraw from the long-haul charter segment in 2007. The routes to the cities of Karachi in Pakistan and Chennai (Madras) in India that have been under evaluation in recent month will not now be opened up. The new US destination Chicago will be incorporated into the network from 29 May 2007."

Supervisory Board approves acceleration of long-haul restructuring and fleet harmonisation

Servus.

[Edited 2006-12-12 13:20:27]

User currently onlineHB-IWC From Indonesia, joined Sep 2000, 4516 posts, RR: 72
Reply 17, posted (8 years 2 weeks 2 days 14 hours ago) and read 9631 times:

Quoting Magyarorszag (Reply 16):
"The cut of the A330 fleet will streamline the Austrian long-haul route network. In concrete terms, scheduled services to Shanghai will be terminated from 7 January 2007, flights to Phuket, Mauritius and Colombo/Male from the end of April, and those to Kathmandu in May 2007. Lauda Air will withdraw from the long-haul charter segment in 2007. The routes to the cities of Karachi in Pakistan and Chennai (Madras) in India that have been under evaluation in recent month will not now be opened up. The new US destination Chicago will be incorporated into the network from 29 May 2007."

That and the earlier announced withdrawal from Sydney, Melbourne, Singapore and Kuala Lumpur, freeing up the B772s for deployment to IAD and NRT. Also, planned increases in service between VIE and JFK during the summer months are off the table. Next summer, it seems OS' longhaul operation will be but a shadow of its former self.


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 18, posted (8 years 2 weeks 2 days 14 hours ago) and read 9574 times:

Bear in mind MUC is just as convenient, if not more so, than VIE for many Austrians. If prices are cheaper with LH out of MUC then national loyalty to yuor flag carrier tends to go out the window. And if you can get all the same FF benefits too then it makes it even more attractive.

The biggest problem for OS is that its main partner is in reality its biggest competitor.....



Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlineMagyarorszag From , joined Dec 1969, posts, RR:
Reply 19, posted (8 years 2 weeks 2 days 13 hours ago) and read 9519 times:

Quoting HB-IWC (Reply 17):
That and the earlier announced withdrawal from Sydney, Melbourne, Singapore and Kuala Lumpur

I didn't mention the Australian routes because I felt that that change was much more talked about than the other routes withdrawal. But you are of course right.

Servus.


User currently offlineBehramjee From Canada, joined Aug 2003, 4852 posts, RR: 44
Reply 20, posted (8 years 2 weeks 2 days 11 hours ago) and read 9303 times:

OS has mentioned that there is 36 interested buyers for their 4 A 332s.

Lets see who will be the highest bidder.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 21, posted (8 years 2 weeks 2 days 10 hours ago) and read 9269 times:

Quoting Danny (Reply 7):

Good indication that what OS is doing is wrong. Replacing 332 with 767 is astonishing. It looks like their lost direction completely.

Why am I not surprised with your comment...?  sarcastic 

According to some Airbus kool-aid drinkers, flying a B767 instead of an A330 means going from a profit to a loss...the same with Boeing....some Boeing kool-aid cheerleaders believe flying an A346 instead of a B777 will lead to a loss also.. sarcastic ....

As stated above, elminating a subfleet and refocusing on routes, yields, etc. will help them achive profitability..not "flying an A330 instead of a B767"....



"Up the Irons!"
User currently offlineMk777 From United States of America, joined Oct 2006, 1195 posts, RR: 0
Reply 22, posted (8 years 2 weeks 2 days 10 hours ago) and read 9187 times:

I can't believe OS routes being not pofitable, I have flown OS many times IAD-VIE-DEL and the plane is always full, so i am wondering why the cut-back, but i guess after reading this thread, it all makes sense.

Yup, IAD now sees the OS 763ER, just saw it sunday flying right over my house turning for 19L approach. the days of A332 in OS colors is history at IAD.



come fly with me
User currently offlineCRJ900 From Norway, joined Jun 2004, 2234 posts, RR: 1
Reply 23, posted (8 years 2 weeks 2 days 10 hours ago) and read 9136 times:
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Quoting Jacobin777 (Reply 21):
As stated above, elminating a subfleet and refocusing on routes, yields, etc. will help them achive profitability..not "flying an A330 instead of a B767"....

They'll also get a higher price for selling the A332s as they are in big demand, unlike the B767 - which are still good but doesn't have the same demand. OS is smart to keep the B767 and make money selling the A332.



Come, fly the prevailing winds with me
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 24, posted (8 years 2 weeks 2 days 10 hours ago) and read 9094 times:

Quoting CRJ900 (Reply 23):

They'll also get a higher price for selling the A332s as they are in big demand, unlike the B767 - which are still good but doesn't have the same demand. OS is smart to keep the B767 and make money selling the A332.

Actually both are in high demand...and the years, cycles, m/x, etc. play a majour role in resale value of an aircraft..

but I agree..on average, the A332 will command more money than its corresponding B767....



"Up the Irons!"
25 MrComet : All widebodies are in demand everywhere. There are no 767s on the market either (there was a chicago tribune article about this). There appears to be
26 Konrad : Incredible. VIE-IAD-VIE is always full in C, always full in Y. Now with the capacity reduced to 763 the fares to Europe on OS/VIE are higher than LH/
27 Johnnybgoode : I heard a rumbling that LH is interested in purchasing/leasing the soon to be ex-OS A332s, despite LH receiving additional A333s/A346s next year.
28 HB-IWC : Not only US-originating passengers are on board these flights. To really assess the profitability of this route, one would have to look at its entire
29 RoseFlyer : I noticed the last line and saw that they are removing seats in order to improve comfort. Has this been discussed elsewhere? It is interesting to see
30 USADreamliner : Austrian is the only airline serving USA and Canada from Vienna nonstop, and still they are not profitable!?
31 Kiramakora : I am very surprised to hear this. Every VIE-DEL-VIE flight I have been has had almost full loads in J; 80% of the connections come from their other al
32 Freedom747 : Just shows everybody how unimpressed carriers are with A-340 to meet their needs.
33 B773ER : VIE-BOM .is one route i give guarantee is profitable . All they need to do is. replace the B767 by B777 !!
34 Post contains images PlaneHunter : Just shows that certain people aren't aware of the fact that currently not a single A340 is in longterm storage... PH
35 Post contains images Magyarorszag : Some lessons are harder to learn than others....
36 OB1504 : Austrian has a larger 777 fleet and another one slated for delivery soon. It made more sense to eliminate the A340, which, as PlaneHunter said, is in
37 Post contains images ZRHnerd : Comet, do you wanna reconsider your statement?
38 Magyarorszag : At the moment, OS has three A340s and three B777s. But one year ago that was four A340s and three B777s. The upcoming higher number of T7 is only due
39 Konrad : There is plenty of those passengers in the back cabin. However, the C cabin is always full as well. I don't think those are cheap upgrades.
40 PlaneHunter : There are definitely more used B767s on the market than A330s. That was discussed to death some weeks ago in another thread. To make it short: OS doe
41 WorldTraveler : Delta is adding ATL-VIE service next summer .... on a 763. And DL's costs are about half of OS'. This is all part of the restructuring of the Europea
42 CRGsFuture : Again I think OS staying in Star is hurting more than helping and this annoucement just proves it. Sad that OS can't see that LH is hurting them.
43 FlyDreamliner : Well, it's like NW getting rid of A319's but keeping DC-9s, the A332 is newer and worth more money. The 763ER does the job just as well, so why not s
44 FLYYUL : The costs on the 763 are better than the 332. And OS puts as manty seats on a 763 as a 332. As a result, CASM or unit cost, is significantly cheaper v
45 Atmx2000 : I agree. Star has too many central European airlines. They are destined to become feeders for LH if they stay in it. I think OneWorld needs a central
46 Mk777 : I think in summer of 2007, OS will fly the 772ER to IAD
47 Boeing744 : Does anyone know what the future of the YYZ route will be? I am booked to fly this in January, but my return isn't until July of 2007. Is this a safe
48 DABTH747 : last time I heard for the summer of 2007 they fly daily with a B763 so you should be fine!
49 Tockeyhockey : this makes me very sad, as OS is the finest airline i have ever flown on. the flight attendants switched flawlessly and energetically between english,
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