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.
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.