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Effects Of Oil Shock On Narrowbody/Widebody Mix  
User currently offlineMoMan From United States of America, joined Aug 2004, 1054 posts, RR: 4
Posted (4 years 8 months 3 weeks 5 days 9 hours ago) and read 1781 times:

We are doing an economic position report on the economy in the face of $200/barrel oil. One area is the economic effects on the airlines and broader economy. There was an interesting discussion that came about and I wanted to hear the consensus from the great enthusiasts and professionals on this site.

A key part of the paper is what happens to the broader economy if airlines were to drastically cut service. Assuming that ground transportation is also expensive, only those travelers with business need or deep pockets would have air service.

Take for instance the route DFW-MCO. AA flies this route 7x daily with MD-80/757 mix, so let's round it to 1000 seats per day. In the event of a major oil shock, AA might pull back 30%, so now we're at 700 seats (5x MD-80 per day). Assuming that the network carriers would retrench to major business markets and reduce overall capacity by 20-30%, at what point would it become more efficient to have 1-2x daily flights DFW-MCO on widebody equipment, to transport the same amount of passengers with less frequency? The key point to remember here is that with such a drastically reduced schedules, many narrowbody aircraft would be parked, so a 30% reduction in flying could result in a 50% (or greater) reduction in aircraft fleet size. Another potential benefit of widebodies is the ability to transport larger amounts of cargo.

If airlines were to use widebodies for domestic service, would it ever make sense to pull retired 767/A300s from the desert, given their costs to return to flying status?

In a real bad scenario resulting in a shortage of twin-widebodies, is there any case that DC-10s/MD-11s could be called back to service to run a lot of passengers with a very small schedule?

Looking forward to the replies (and I hope this never comes true).


AA Platinum Member - American Airlines Forever
6 replies: All unread, jump to last
 
User currently offlineN62NA From United States of America, joined Aug 2003, 4430 posts, RR: 6
Reply 1, posted (4 years 8 months 3 weeks 5 days 8 hours ago) and read 1775 times:

It would make too much sense on so many levels to cut frequency and use widebodies on many domestic USA routes. Congestion and delays would be drastically reduced for one.

However, the old 767s / DC10s are not at all cost-effective when one stacks them up against more modern / ligthweight designs such as the 737NG / A320 series, not to mention the E70/75/90. Even the 757 works much better economically on domestic hops compared to it's sister 767 series.


User currently offlineMoMan From United States of America, joined Aug 2004, 1054 posts, RR: 4
Reply 2, posted (4 years 8 months 3 weeks 3 days 12 hours ago) and read 1596 times:

Come on guys, where's the replies? I'm really curious as to the pros and cons of this model.


AA Platinum Member - American Airlines Forever
User currently offlineSTT757 From United States of America, joined Mar 2000, 16829 posts, RR: 51
Reply 3, posted (4 years 8 months 3 weeks 3 days 12 hours ago) and read 1594 times:

I think it's a huge leap to the Widebody, if airlines want to increase capacity go from the MD-80 to the 737-900ER.


Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offline413X3 From United States of America, joined Jul 2008, 1983 posts, RR: 0
Reply 4, posted (4 years 8 months 3 weeks 3 days 11 hours ago) and read 1554 times:

This has really been discussed to death. In some areas of the world like Asia, frequencies take a back seat to number of seats. In America, most people want the every 15 minute flight options to cater to them. So an airline with only 2 or 3 departures a day will not sell as many tickets as an airline offering departures every hour. I would rather see a whole bunch of 777s flying transcon in less frequencies but until the American flyer will accept it, it won't happen

User currently offlineFrmrCAPCADET From United States of America, joined May 2008, 1710 posts, RR: 1
Reply 5, posted (4 years 8 months 3 weeks 3 days 8 hours ago) and read 1473 times:

Airlines have not been able to cut flights and seats as fast as people reduce flying

It is most likely fuel will be going up in the next few years. No one knows what that will do to the economy - most likely something not good.

While some have disputed fuel increase as creating that much increase in ticket costs we don't know how sensitive ticket prices are.

Discretionary flying could reduce even further, and some required flying done now could become discretionary.

787, 350 really are not optimized for short flights, even 2500 mile ones, so far as I know, and likely will have no impact on US flight patterns. (This could change)

If I would not like to be responsible for long range planning for an airline. They chances of being wrong are enormous.



Buffet: the airline business...has eaten up capital...like..no other (business)
User currently offlineBMI727 From United States of America, joined Feb 2009, 15719 posts, RR: 26
Reply 6, posted (4 years 8 months 3 weeks 3 days 8 hours ago) and read 1459 times:



Quoting MoMan (Thread starter):
Assuming that the network carriers would retrench to major business markets and reduce overall capacity by 20-30%, at what point would it become more efficient to have 1-2x daily flights DFW-MCO on widebody equipment, to transport the same amount of passengers with less frequency?

On the route that you cite, that threshold is probably relatively low. MCO is primarily a leisure destination. Leisure travelers are very price sensitive and do not care so much about frequency. They are also lower yielding for the airlines, so having the lowest CASM possible helps maximize profits on routes that won't make a lot of profit. This is part of what made Allegiant work so well. Their costs are lower than an RJ operator could dream of, and their passengers don't need frequency.

Also, your scenario is almost exactly what AA did with their A300 fleet for the last 5-10 years or so, with the caveat that they had to be able to carry a lot of cargo to the Caribbean and Central American destinations as well. These flights were often low yielding, filled with tourists and VFR traffic. Again, it isn't a perfect match because of the cargo factor.

The biggest problem is that aircraft don't grow on trees. If you want to put a 777 on that route, it means that the aircraft is not going to be able to be used elsewhere in a market that could pull down better yields.



Why do Aerospace Engineering students have to turn things in on time?
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