Dang, Leary is good!
Huh? Casm on the A380 is about 14% lower than the 77W. Thus, it is cheaper to fly each person on an A380 with 70+ empty seats versus a 100% 77W. However, CASM is 'Cost per Available Seat Mile.' So it doesn't matter if a seat is full or not. Same with RASM. (Revenue per Available Seat Mile.) That is the big advantage of the A380: it can be "abused" (in SQ
's words) and flown with many empty seats and yet still make more profit than a 77W (assuming the route is low cargo or poor cargo yield).
And peak RASM is never with consistent 100% full seats. One should always keep some percentage of seats open for last minute business fares. Trust me on this. I've sat next to someone who paid 20% of what my company paid for my last minute fare. Due to the extremely high fares of last minute walk on business people, a flight will keep 5% to 100% of the seats open for full fares only.
The best example is when SQ
put an A388 onto ZRH
week (each city) instead of 10X/week of smaller aircraft. There was a cost savings of 5% despite a high increase in the number of seats. In that case, the premium for the added 3X
/week flights was less than than the cost savings.
Since we're discussing HKG
, Hong Kong airlines will be able to use the A380s to quite a few destinations where having a lower CASM will allow entry into markets they otherwise wouldn't be able to enter.
In fact, I see an issue for whomever is not currently the most popular on several HKG
routes unless they fly A380s with their low CASM.
|Quoting ikramerica (Reply 44):|
It's a fine aircraft, and one to be proud of from a "it got built" point of view and probably from a jobs program point of view, but it's business case is far from proven by these numbers.
It is also a fine aircraft for the airlines that operate it. At this point, the cost to manufacture each airframe is less than the sales price. The 'sunk costs' make it a bad business case. But the 1st rule of business is ignore 'sunk costs' and do business.