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Fuel Cost Question. A346 V B777  
User currently offlinereadytotaxi From United Kingdom, joined Dec 2006, 3362 posts, RR: 2
Posted (3 years 10 months 2 days 6 hours ago) and read 8466 times:

Looking at Flightradar24.com I see that BA & Virgin are flying to EWR from LHR.
Ba use B777 and Virgin an A346, assume they both fly the same flight plan will the Virgin plane have the higher fuel bill because of the four engines?


you don't get a second chance to make a first impression!
54 replies: All unread, showing first 25:
 
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 1, posted (3 years 10 months 2 days 5 hours ago) and read 8452 times:

Yes; I believe the difference will be on the order of 10%.


The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlinereadytotaxi From United Kingdom, joined Dec 2006, 3362 posts, RR: 2
Reply 2, posted (3 years 10 months 2 days 5 hours ago) and read 8439 times:

Quoting SEPilot (Reply 1):

WOW, heck of a big margin over a year.  



you don't get a second chance to make a first impression!
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 3, posted (3 years 10 months 2 days 4 hours ago) and read 8424 times:

Quoting readytotaxi (Reply 2):

WOW, heck of a big margin over a year.

That's why the 77W has essentially killed off the A346.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineStitch From United States of America, joined Jul 2005, 31433 posts, RR: 85
Reply 4, posted (3 years 10 months 1 day 2 hours ago) and read 8177 times:
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zeke provided fuel burn figures for CX's A340-600 and 777-300ER as follows:

777-300ER: 8,100kg per hour
A340-600: 8,900kg per hour

So the A340-600 burned about 10% more fuel per hour.


User currently offlineCX Flyboy From Hong Kong, joined Dec 1999, 6642 posts, RR: 55
Reply 5, posted (3 years 10 months 23 hours ago) and read 8078 times:

Quoting Stitch (Reply 4):
zeke provided fuel burn figures for CX's A340-600 and 777-300ER as follows:

777-300ER: 8,100kg per hour
A340-600: 8,900kg per hour

So the A340-600 burned about 10% more fuel per hour.

...and thats just fuel, not even the additional maintenance costs for 4 engines vs 2


User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 6, posted (3 years 10 months 22 hours ago) and read 8060 times:

Quoting CX Flyboy (Reply 5):

...and thats just fuel, not even the additional maintenance costs for 4 engines vs 2

However, from what I understand, the GE90-115's are about the most expensive engines to maintain. Presumably the A346 engines are less expensive, although probably more than half as much.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineStarlionblue From Greenland, joined Feb 2004, 17185 posts, RR: 66
Reply 7, posted (3 years 10 months 22 hours ago) and read 8039 times:

Two factors to consider:
- I believe the 346 costs less to purchase/lease than the 777.
- If an airline needs the aircraft soon, and can get a 346 in six months or a 773ER in 5 years, it makes sense to get the 346 despite the higher operating cost. The 773ER may be more efficient but the 346 is way better than no aircraft at all.



"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlineStitch From United States of America, joined Jul 2005, 31433 posts, RR: 85
Reply 8, posted (3 years 10 months 16 hours ago) and read 7933 times:
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Current average list for an A340-600 is $264 million, which is about $20 million less than the average list of a 777-300ER.

In terms of lease rates, you're looking about $930,000 per month for a brand new A340-600 and about $1.7 million a month for a brand new 777-300ER..


User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 9, posted (3 years 10 months 9 hours ago) and read 7739 times:

Quoting Stitch (Reply 8):
Current average list for an A340-600 is $264 million, which is about $20 million less than the average list of a 777-300ER.

In terms of lease rates, you're looking about $930,000 per month for a brand new A340-600 and about $1.7 million a month for a brand new 777-300ER..

$20 million price difference certainly does not begin to account for almost twice the lease price. That is staggering. And that $20 million savings will probably be eaten up in less than 1 year's fuel costs.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlinemafi29 From Germany, joined Nov 2010, 58 posts, RR: 0
Reply 10, posted (3 years 10 months 5 hours ago) and read 7639 times:

Quoting SEPilot (Reply 9):
$20 million price difference certainly does not begin to account for almost twice the lease price.

I think it just shows that the list prices are virtually arbitrary and that no one actually pays the list prices...


User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9826 posts, RR: 52
Reply 11, posted (3 years 10 months 3 hours ago) and read 7593 times:

Quoting Starlionblue (Reply 7):
- If an airline needs the aircraft soon, and can get a 346 in six months or a 773ER in 5 years, it makes sense to get the 346 despite the higher operating cost. The 773ER may be more efficient but the 346 is way better than no aircraft at all.

As far as I know, no widebody plane is on a 6 month build plan. I believe they are all on 10-16 month build plans, which means with all the lead time items, an airline needs about a year to allow for their configuration to be produced. Also production slots are not usually firmed up until the 10-16 month cycle starts.

Quoting Stitch (Reply 8):

In terms of lease rates, you're looking about $930,000 per month for a brand new A340-600 and about $1.7 million a month for a brand new 777-300ER..

That seems like an unusually high difference. Also because there are so few A346 operators out there, lessors are going to be more careful with what airlines they work with and might demand higher rates or longer terms. They want a long term customer and not an airline interested in a plane for only 5-10 years. The second hand market would be really bad as it usually is for low production model planes like the A346, A346, and A318.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 12, posted (3 years 10 months 1 hour ago) and read 7547 times:

Quoting mafi29 (Reply 10):

I think it just shows that the list prices are virtually arbitrary and that no one actually pays the list prices...

True, but I believe (with absolutely no supporting evidence whatsoever) that discounts are relatively consistent; if an airline gets 40% off plane A they will also get 40% off plane B. Launch discounts, we all know, are more, but I would suspect that after that they are subject to the usual haggling and will depend on how badly the manufacturer wants this particular deal, but they should be somewhat predictable.

Quoting RoseFlyer (Reply 11):
Quoting Stitch (Reply 8):

In terms of lease rates, you're looking about $930,000 per month for a brand new A340-600 and about $1.7 million a month for a brand new 777-300ER..

That seems like an unusually high difference. Also because there are so few A346 operators out there, lessors are going to be more careful with what airlines they work with and might demand higher rates or longer terms. They want a long term customer and not an airline interested in a plane for only 5-10 years. The second hand market would be really bad as it usually is for low production model planes like the A346, A346, and A318.

This puzzles me as well, as I commented before. But perhaps there have been no recent leases on A346's to compare with, compared to a lot for 777W's. What would be telling would be to see a lease quote for the two planes to the same customer. I would not be surprised to see different lease rates for different customers, depending on the creditworthiness of the customer and how they treat the planes. I cannot believe that the same leasing company would offer such vastly different lease rates to the same airline that was choosing between the A346 and 77W. If they did, the airline would likely choose the A346, which is not what I think the leasing company would want, as they will be stuck with it when the lease expires.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineStitch From United States of America, joined Jul 2005, 31433 posts, RR: 85
Reply 13, posted (3 years 10 months ago) and read 7520 times:
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Quoting RoseFlyer (Reply 11):
That seems like an unusually high difference.

I think it is just a reflection of how desirable the 777-300ER is and the A340-600 is not in the marketplace. Once the 77W entered service, A346 orders were almost all just top-ups to existing fleets.


User currently offlineStarlionblue From Greenland, joined Feb 2004, 17185 posts, RR: 66
Reply 14, posted (3 years 9 months 4 weeks 1 day 23 hours ago) and read 7495 times:

Quoting RoseFlyer (Reply 11):
Quoting Starlionblue (Reply 7):
- If an airline needs the aircraft soon, and can get a 346 in six months or a 773ER in 5 years, it makes sense to get the 346 despite the higher operating cost. The 773ER may be more efficient but the 346 is way better than no aircraft at all.

As far as I know, no widebody plane is on a 6 month build plan. I believe they are all on 10-16 month build plans, which means with all the lead time items, an airline needs about a year to allow for their configuration to be produced. Also production slots are not usually firmed up until the 10-16 month cycle starts.

Fair enough, but I was just taking figures out of thin air to make a point.

Quoting RoseFlyer (Reply 11):
They want a long term customer and not an airline interested in a plane for only 5-10 years.

I don't work in the industry, but I would think 5-10 years is plenty. CX kept their 346s way less than that.



"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlinebikerthai From United States of America, joined Apr 2010, 2197 posts, RR: 4
Reply 15, posted (3 years 9 months 4 weeks 1 day 8 hours ago) and read 7347 times:

Quoting Stitch (Reply 13):
Quoting RoseFlyer (Reply 11):
That seems like an unusually high difference.

I think it is just a reflection of how desirable the 777-300ER is and the A340-600 is not in the marketplace.

The other possibility is that the lease prices reflect the impact of fuel burn on the total life of the lease. Combine the low lease price with the high fuel burn of the A340 you get the high lease price and lower fuel burn of the 777 over the life of the lease. So in the end those two numbers becomes competitive.

bikerthai



Intelligent seeks knowledge. Enlightened seeks wisdom.
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 16, posted (3 years 9 months 4 weeks 1 day 8 hours ago) and read 7321 times:

Quoting bikerthai (Reply 15):
The other possibility is that the lease prices reflect the impact of fuel burn on the total life of the lease. Combine the low lease price with the high fuel burn of the A340 you get the high lease price and lower fuel burn of the 777 over the life of the lease. So in the end those two numbers becomes competitive.

What you are saying is that the lessors are playing the part of vultures. Fuel burn is of no consequence to them; they are interested in the price of the aircraft and its residual value at the end of the lease. What justification do they have for charging such outrageous prices, and why would an airline be willing to pay outlandish rates for a more fuel efficient aircraft just because they are saving money on fuel? I certainly wouldn't. And if this truly was the case, as I mentioned before, the A346 would be picking up sales because the difference in lease prices would make it competitive. But that is not happening. I fall back on my previous belief that we are comparing apples and pinecones; I think the A346 lease rates are several years old while the 77W lease rates are current. If someone wanted to lease a new A346 today I suspect the lease rate would be very close to the 77W.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlinercair1 From United States of America, joined Oct 2009, 1356 posts, RR: 52
Reply 17, posted (3 years 9 months 4 weeks 1 day 7 hours ago) and read 7298 times:
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Quoting SEPilot (Reply 16):
playing the part of vultures

No - it is called free market. They charge what the customers will pay. If it the price is elastic, then if they lower it, volume will go up. If the price is inelastic - then they can afford to charge more without making a volume impact.
So - the lessors are setting the price at what they think will return best profit. It's not like they have a monopoly - or are holding a gun to their customers head to lease - obviously the customers have the choice of going A346.

Quoting SEPilot (Reply 16):
What justification do they have for charging such outrageous prices, and why would an airline be willing to pay outlandish rates for a more fuel efficient aircraft just because they are saving money on fuel?

The justification is the customers will pay the price. If the customers will not, then they (the lessors) can either go out of business or lower the price.

Quote:
I certainly wouldn't.

And that would be your choice. Nice to have that choice, isn't it. Given the course of US and world governments, - you may have not for long (either because it will be controlled, or you will have no money, so you can't, or policies will drive items out of reach of normal people.).

What is outrageous is that some think they should dictate the relationship between a customer and a buyer.    



rcair1
User currently offlineflipdewaf From United Kingdom, joined Jul 2006, 1578 posts, RR: 0
Reply 18, posted (3 years 9 months 4 weeks 1 day 6 hours ago) and read 7292 times:
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Quoting SEPilot (Reply 16):

It doesn't matter what the aircraft costs to buy but what it is worth. The leasing companies have already bought the A346 so I believe they would rather lease it at a lower rate than not lease it at all, the only way they can lease it is to make the total costs of the similar aircraft close to each other. Sounds like normal business to me.

Fred


User currently offlinemandala499 From Indonesia, joined Aug 2001, 6968 posts, RR: 76
Reply 19, posted (3 years 9 months 4 weeks 1 day 4 hours ago) and read 7253 times:

Quoting SEPilot (Reply 16):
why would an airline be willing to pay outlandish rates for a more fuel efficient aircraft just because they are saving money on fuel?

If the burn difference 500kgs an hour... and 400hrs a month... at $1 a kg, then that's already $200,000 a month difference.
If the maintenance per hour difference is $250 an hour, then it's $100,000 a month difference.
Go and figure...

But, cost is one side of the equation the airlines look at, the other is the revenue potential/expandability.

In the case of the 346 vs 773ER, the 773ER is likely to win hands down on cost, but on some parts of the operating envelope, the 346 may have a revenue potential advantage... I haven't checked the books on those so I can't say much other than "guess". That reduces the 773ER walkover...

And then, one could look into asset management support for each aircraft... and financing terms for lease purchases etc.

All those are probably going to reduce the differences between the 346 vs 773ER lease rates.

Mandala499



When losing situational awareness, pray Cumulus Granitus isn't nearby !
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 20, posted (3 years 9 months 4 weeks 1 day 4 hours ago) and read 7233 times:

Quoting rcair1 (Reply 17):

And that would be your choice. Nice to have that choice, isn't it. Given the course of US and world governments, - you may have not for long (either because it will be controlled, or you will have no money, so you can't, or policies will drive items out of reach of normal people.).

What is outrageous is that some think they should dictate the relationship between a customer and a buyer.

I agree with your statements in general-my point (perhaps poorly expressed) is that I cannot see how the free market would tolerate such vastly different lease prices for aircraft that had very close purchase prices under the same conditions. It is not that I think it should be controlled or regulated; I just do not see how the situation could arise, except as follows.

Quoting flipdewaf (Reply 18):
It doesn't matter what the aircraft costs to buy but what it is worth. The leasing companies have already bought the A346 so I believe they would rather lease it at a lower rate than not lease it at all, the only way they can lease it is to make the total costs of the similar aircraft close to each other. Sounds like normal business to me.

Yes; I certainly can see if a lessor already has the A346 that they would lease it out for what they could get. The situation I could not understand is how a lessor would lease out a brand new A346 for little more than half the lease rate that they would get for a brand new 77W. But if it is a second lease then we are again comparing apples to pinecones. What I would be interested what prices a lease company would quote to the same airline for a 77W or an A346 that was purchased new for them. I don't think there would be much difference.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlinebikerthai From United States of America, joined Apr 2010, 2197 posts, RR: 4
Reply 21, posted (3 years 9 months 4 weeks 1 day 3 hours ago) and read 7220 times:

Quoting SEPilot (Reply 16):
What you are saying is that the lessors are playing the part of vultures. Fuel burn is of no consequence to them; they are interested in the price of the aircraft and its residual value at the end of the lease.

Lesser whether of cars or of airplanes, are out to maximize their profit.

What is not being clear here is whether the lease comparison was wet for one vs. dry for the other. Could that account for the difference?

bikerthai



Intelligent seeks knowledge. Enlightened seeks wisdom.
User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 22, posted (3 years 9 months 4 weeks 1 day 3 hours ago) and read 7189 times:

Quoting bikerthai (Reply 21):

Lesser whether of cars or of airplanes, are out to maximize their profit.

Granted. But I cannot see the market permitting the kind of price difference for a similarly priced plane with all other things being equal.

Quoting bikerthai (Reply 21):
What is not being clear here is whether the lease comparison was wet for one vs. dry for the other. Could that account for the difference?

Ask Stitch; he was the one who quoted the prices. But on looking back on his post, I see that he specified that both were brand new. That throws my previous post into a cocked hat, and renews my total lack of comprehension as to how this situation could exist.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineflipdewaf From United Kingdom, joined Jul 2006, 1578 posts, RR: 0
Reply 23, posted (3 years 9 months 4 weeks 1 day 2 hours ago) and read 7175 times:
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Quoting SEPilot (Reply 22):

I don't think that his specific situation could exist. If the 77W is that much better then the lessor would not purchase the A346 unless they had a customer who specifically required it over the 77W then the lease rate would be back up.

Fred


User currently offlineSEPilot From United States of America, joined Dec 2006, 7190 posts, RR: 46
Reply 24, posted (3 years 9 months 4 weeks 1 day 2 hours ago) and read 7164 times:

Quoting flipdewaf (Reply 23):

I don't think that his specific situation could exist. If the 77W is that much better then the lessor would not purchase the A346 unless they had a customer who specifically required it over the 77W then the lease rate would be back up.

That's my opinion as well; my problem is that I have found Stitch to be usually pretty accurate. I have been endeavoring to find a scenario where his figures work, and have utterly failed. The only thing that comes close to making sense is that the A346 figures are old while the 77W figures are new, and even that doesn't add up.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
25 Stitch : The prices are averages from the second half of 2010 and are all based on a dry lease. They come from Aircraft Value News, which is an industry trade
26 Aesma : If the 346 burned more than 20 millions $ more fuel per year than the 77W, I doubt there would be one still in the air ! Fortunately you didn't use m
27 irelayer : If acquisition cost and availability could sway customers away from more fuel efficient aircraft then we'd see a lot more Soviet era airliners gracing
28 Starlionblue : Well, "there are limits" I guess. Also those airliners probably have "issues" when it comes to maintenance, standards and so forth. Not saying they a
29 hal9213 : That seems a bit too much. I have the figures for one particular 777-300ER from Emirates, who pays 1.216.000 dollars / month for a sold and leased ba
30 Stitch : EK is a huge 77W operator so if they're leasing a large number of frames from one company, they're likely getting a better deal than someone looking
31 hal9213 : No, the particular figure I have is for exactly one lease-and-buyback contract for one aircraft, A6-ECQ. (Why am I saying "I have", you can actually
32 CargoLex : Aircraft Commerce did a comparison of the 77W, A346, and 744 last fall using routes out of DXB flown on all three types to highlight the differences.
33 LAXDESI : Thanks for sharing. For the above mission, A346 burns nearly 1,000 gallons more at a cost of $3,000. B77W could earn nearly $9,000 more on the additi
34 Stitch : The 777-300ER is an airframe that is in demand and the A340-600 is one that is not, so I expect there are a whole host of reasons why a 77W commanded
35 LAXDESI : Agree. A.netters like you and me will never have the information set that industry insiders have that can easily explain large differences in lease r
36 sunrisevalley : In my view there is no reality in this exercise. So far as the 744 is concerned , after allowing for baggage, there is space for 19 half-width contai
37 zeke : Agreed, the 744 has the same belly space as an A330-300 or 777-200. The 346 will carry 10 more LD3 containers than a 744, and has better takeoff perf
38 Stitch : The 747-400 payload figure of 75t is 8t more than Boeing's ACAP shows is the maximum (67t). The A346 is going out 14t below it's ACAP maximum (of 75t)
39 OldAeroGuy : Thanks for correcting the spin. Hot day performance is the deciding performance factor for airlines operating out of DXB. Now I understand why the 77
40 zeke : Sectors that would be representative of the fuel load given above would be for example GRU (dep 08:35), JFK (dep 02:15 & 08:30), SYD (08:50, 19:5
41 OldAeroGuy : Then why bring up hot day departure performance as an example of "spin" by the article? I'm surprised the fuel burn topic between these two airplanes
42 zeke : The spin is that they are comparing the fuel burn to payload ratio without stating the underlying assumptions. As highlighted in reply 38, the 346 &a
43 OldAeroGuy : And you"re assuming that EK would think that there is a need to depart at the hottest time of the day, therefore they would have a need for the A346.
44 Stitch : Per an EK Flight Ops guy, if DXB temp is 37°C, a 77W must unload 1.7t of cargo to make JFK.
45 zeke : Be for the same reason CX does not have a sub fleet of 346 for the routes where they are more profitable. The cost of running the two fleets is more
46 An225 : Something with these figures doesn't make sense... If I want to establish an aircraft leasing firm and I buy an A346 for 264 million, and than I leas
47 sunrisevalley : Perhaps something to do with depreciation and tax.
48 flipdewaf : Missing the point that Both the 77W and the 346 are already owned, paid for, there is nothing you can do about that. The 77W will command a price of
49 Stitch : Well for a start you likely would not be paying anywhere near list price for the plane. So that $265 million list price is more like $185 million. An
50 Starlionblue : If nothing else the aircraft is not worth zero after you're done with it. You can still sell it, if only for parts and scrap. But those parts and tha
51 SEPilot : If this is the case, your analysis makes sense. However, I am interested in the case where an airline approaches a leasing company and wants them to
52 Stitch : KG Funds published in 2009 some figures for completed and active aircraft leasing deals. They show four EK 77Ws (with deliveries between 2007 and 200
53 flipdewaf : Well then it would depend on what price they could get them from the vendor I suppose but I dare say that even then boeing would give less deep disco
54 JayinKitsap : I would guess that the 'new' prices in Aircraft Value News that Stitch are for planes already under contract. As such, the Lessor already owns the as
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