flywithken
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:45 am

If they are hiring Airbus Fleet manager, does this mean they are buying Airbus equipment or just exploring the possibility?

Allegiant Careers Job Details: Airbus

[Edited 2012-06-16 00:11:12 by SA7700]
 
toltommy
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 5:15 am

That being said, if thats the job posting, odds are they are trying to make the economics work. MD80's are only going to get harder to find in the long term. May as well start planning for the future.

[Edited 2012-06-16 07:06:36 by srbmod]
 
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atcsundevil
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 5:19 am

I think it's pretty doubtful. Even ageing A320s would still cost them a lot of money compared to the MD-80s; MD-80s are inefficient enough and old enough so that G4 is really the only carrier wanting to buy them, particularly because they can buy them outright in cash. Not dealing with big lease payments is why their business model has been so successful.

That's aside from the obvious fact that they'd be looking at a third fleet type/third manufacturer. My guess is they'll give it a couple of years running the 757s with the MD-80s and see how it works out. Bringing in the 757 in itself was a huge deviation from their business model.

My guess is that five years from now they'll be running the same fleet, just more of them.
 
PlanesNTrains
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 5:54 am

Well, if they aren't at least toying with the idea of rolling their fleet over to A32X's, then I'm at a loss as to why they'd post a position for it.

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BMI727
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 6:00 am

Quoting flywithken (Thread starter):
Allegiant To Buy Airbus?  

Wouldn't shock me at some point.

The writing went up on the wall for the MD-80s as soon as American signed up for the A320 series. The biggest operator of the type orders replacements and declares bankruptcy and Delta announces an order for 737-900s with rumors of a large narrowbody order later on. Large scale retirements there could leave G4 as the largest MD-80 operator in the world. In the short term that helps them, since airframes would only get cheaper. But in the long run, shrinking of the maintenance pool will cause costs to increase not to mention the possibility of higher fuel prices. The bottom line is that the MD-80's days are numbered whether Allegiant likes it or not.

The logical successor would be the 737 Classics, but those would suffer the same issues on a smaller scale as they are retired. And again, increasing fuel costs swing the pendulum a bit further from the low acquisition cost side of the spectrum as well.

All of this leads up to me thinking that Allegiant might be taking a serious look at the A320 family due to several factors. Besides what I alluded to above, the A320 also offers a larger spread in capacity within the family than the 737 Classic. My thinking is that although I doubt any Airbus Allegiant would buy would be flown to Hawaii, the results of their mainland 757 flying leading up to the start of Hawaii service could have gotten some people thinking. A handful of A321s bought at the right price with about 200 seats might not be so bad for them. The last piece of the puzzle of course is if Allegiant is betting that A320 prices fall off a cliff around 2015 when the NEO hits the street. That's mostly a matter of how big a cliff we're talking about.

Overall, I have to think that someone at Allegiant will have to take a look at the A320 around the middle of this decade.
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CapEd388
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 6:01 am

I feel that Allegiant is very happy with their MD-80 fleet and I think they are going to keep them around for a long time, but it is kinda of interesting that they specifically added "(AIRBUS)".

Maybe someone close to G4 or more info can enlighten us.
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southwest737500
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 6:30 am

In my mine I could see G4 going with the 737-700 just because of the smaller airports they serve
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RWA380
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 8:45 am

I would think G4 may be looking around knowing at some point in the future they will need to start looking at replacements for their M80's, hasn't G4 already picked up any M80's that have life to them that have been available? The AA birds will go into the desert with little life left in them. I'm thinking it's like VX looking for an ETOPS manager, it's not going to happen tomorrow but years down the line. If G4 gets their hands on some decent 320 family frames, that may be a good start to replace their aging M80 fleet a few more years down the road, it's not like G4 squeezes out tons of cycles on their frames.
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scbriml
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 8:48 am

Quoting BMI727 (Reply 5):
Overall, I have to think that someone at Allegiant will have to take a look at the A320 around the middle of this decade.

I'd have thought sooner.

Quoting southwest737500 (Reply 7):
In my mine I could see G4 going with the 737-700 just because of the smaller airports they serve

An A319 would work just as well.

There seems little dispute they must be fairly serious about it. From the job description:

Quote:
POSITION SUMMARY:

The Fleet Manager will be responsible for technical coordination of the fleet activity. This position will develop maintenance policies/ procedures specific to the assigned fleet and support acquisition and dispositions of aircraft and other duties as assigned.
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columba
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 8:52 am

Quoting southwest737500 (Reply 7):
In my mine I could see G4 going with the 737-700 just because of the smaller airports they serve

A319s would do the job just fine as the 73G, they are a lot of 2nd A32x on the market that could be an option for G4.
I could also see them being interested in the A321.
It will forever be a McDonnell Douglas MD 80 , Boeing MD 80 sounds so wrong
 
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atcsundevil
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 10:01 am

Quoting columba (Reply 10):
A319s would do the job just fine as the 73G, they are a lot of 2nd A32x on the market that could be an option for G4.
I could also see them being interested in the A321.

They are all still way too expensive. G4 will not lease aircraft -- they will only buy them outright. They can get a secondhand MD-80 for a couple million. They can't get a secondhand 737 or A320 series for anything close to that. They can buy five MD-80s for the same price. The 757s were an exception to this rule because they wanted to gamble with a new market. This was a one-time thing (at least for the next few years).

If they were any other airline I would think it's possible, but the G4 model isn't like any other airline. They'll stick with the MDs and a handful of 75s for a while.
 
EY460
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 10:13 am

Maybe they will look to buy second hand A32x. Lots of carrier will be upgrading to the NEO and prices of the older versions will drop and frames will be availablr. Older A32x will be more efficient than MD80.
 
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scbriml
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:04 am

Quoting atcsundevil (Reply 11):
If they were any other airline I would think it's possible, but the G4 model isn't like any other airline. They'll stick with the MDs and a handful of 75s for a while.

In the mean time, they're going to pay an Airbus Fleet Manager to do what, exactly?   

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RWA380
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:39 am

Quoting atcsundevil (Reply 11):
They are all still way too expensive. G4 will not lease aircraft -- they will only buy them outright. They can get a secondhand MD-80 for a couple million.

In 5 years from now, 320 family aircraft will be discarded left and right, replaced by newer NEO models and 737-800/900 ER MAX aircraft. IMO, those planes that are being replaced will glut the used plane market and drive the prices way down on earlier built 320 family planes, just what has happened with M80's for the past several years and currently as well. G4 doesn't need to rush it, if they are really going to replace an entire fleet of M80's with 320's down the road, it's best to have done your homework well in advance, IMHO.
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jfklganyc
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 12:24 pm

So what are they hiring an Airbus Fleet Manager for?
 
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kc135topboom
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 1:03 pm

I G4 going to retire some of their MD-80s and replace them with the A-32X family?

They currently have 58 MD-80s and 4 B-757s they own, plus they have another two B-757s they leased.

They just got their ETOPS certficate for thei B-757 Hawaii flights, here is he schedule of when and where th Hawaii flights are and a picture of one of their B-757Es;

Las Vegas – begins June 29
Fresno, Calif. – begins June 30
Bellingham, Wash. – begins November 15
Monterey, Calif – begins November 16
Eugene, Ore. – begins November 17
Santa Maria, Calif. – begins November 17
Stockton, Calif. – begins November 18

Allegiant will also offer nonstop air service to Maui from:
Bellingham, Wash. – begins November 14

Allegiant is still planning to grow and is looking at other route options. Previously Levy has stated that the airline is looking at the possibility of flying to Canada, Mexico and even South America.

http://blog.seattlepi.com/airlinerep...e&utm_campaign=PIMail:%20Aerospace
 
columba
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 1:11 pm

Quoting KC135TopBoom (Reply 17):
They currently have 58 MD-80s

Wow, did not know they have so many, must be the 3rd largest operator behind Delta and AA ?
It will forever be a McDonnell Douglas MD 80 , Boeing MD 80 sounds so wrong
 
jetlanta
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 1:20 pm

Allegiant held a conference with its airport partners in May. At that event, Andrew Levy, the President of the company, stated that the carrier would be moving toward a new aircraft type. The rise in the price of fuel and the fall in the values of some older 320/737 aircraft now make it the time to switch. He publicly stated that Allegiant had acquired its last M80, but that the type would fly on for the carrier for many years.

Basically, the economics now favor used 320/737s. Looks like the choice might be the 320 series.
 
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Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 1:44 pm

I think it makes sense for them to explore the possibility just in case fuel really shoots thru the roof. They probably will be fine but allegiant is smart I bet they want to have an Airbus backup plan in place ahead of time. I don't think they have any plans or will anytime soon this is purely exploring the idea and will try to keep the mad dogs
 
srbmod
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 2:43 pm

Quoting jetlanta (Reply 17):
Basically, the economics now favor used 320/737s. Looks like the choice might be the 320 series.

Airlines like Delta will be replacing some of the A320s with 737-900ERs in the coming years, plus with the A320NEO scheduled to enter service in 2015, there will be a bigger supply of A320 a/c on the market in the coming years, not so much with 737NG a/c.

Allegiant could potentially also have interest in A320 a/c that are currently stored as well. Part of the Kingfisher A320 fleet is listed on Airfleets as being stored (along with the Kingfisher Red A320s) and there's also the former Spanair A320s that are currently in storage.
 
dtw9
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 3:26 pm

Why is everybody assuming its for A319/A320's. Maybe Allegiant is thinking about going longhaul with A330's. There are a few 1995 build A330's out there for sale or lease
 
sxf24
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 3:42 pm

While the operating economics of the MD-80s still work, the maintenance costs are becoming increasingly prohibitive as there are fewer acceptable aircraft to scavenge for parts.

Allegiant will absolutely consider leasing aircraft, most likely used, if the price is right.

There are very few used 737NGs on the market and the lease rates are still relatively high.

There are lots of available A320s, and the lease rates are very low, particularly for A319s.

Airbus has lots of airplanes to sell at the end of the A320 Classic line while it transitions to NEOs, which will incentivize it to discount prices further than normal.

This leads me to believe that Allegiant is thinking long term about replacing MD-80s with A320s, both new and used.
 
silentbob
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 3:55 pm

Quoting EY460 (Reply 11):
Lots of carrier will be upgrading to the NEO and prices of the older versions will drop and frames will be availablr. Older A32x will be more efficient than MD80.

I can't believe it took so long for someone to point this out. Smart business people don't just look at the present, they look into the future and make decisions on where the industry is headed.
 
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Stitch
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:01 pm

Quoting scbriml (Reply 12):
In the mean time, they're going to pay an Airbus Fleet Manager to do what, exactly?
Quoting jfklganyc (Reply 14):
So what are they hiring an Airbus Fleet Manager for?

Run numbers and simulations, I imagine, to see how such a fleet would work out when it becomes affordable to acquire. The cost of the employee and software/hardware to do it should not be very expensive.

As noted up-thread, G4 could get 4 MD-90s, 6 MD-88s or 12 MD-82s for what they would pay for an A320-200 of the same vintage (early-to-mid-1990s) so at the moment, adding the A320 family doesn't look cost-effective for G4 with how they currently handle fleet acquisitions.

[Edited 2012-06-16 09:03:10]
 
cargolex
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:16 pm

Quoting sxf24 (Reply 21):

This leads me to believe that Allegiant is thinking long term about replacing MD-80s with A320s, both new and used.

If Allegiant is thinking about A320s, believe me they won't be new.

They may be looking at what the falloff in values may be when there is a glut of A320s on the market as all these new A320 NEOS come online - that's still five years from now. But by new? G4? Never. It would make zero financial sense for them.

Low capital expenditure is key to Allegiant's business. Buying expensive planes to do the same job as cheap ones would be very out of character, even if they do better on fuel.
 
mli717fan
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:42 pm

Quoting dtw9 (Reply 20):
Why is everybody assuming its for A319/A320's. Maybe Allegiant is thinking about going longhaul with A330's. There are a few 1995 build A330's out there for sale or lease

I was kind of thinking that too, but what about A300 or A310? Too old? I would think they could get 767s for cheaper than an A330, although I have no knowledge about that.

Quoting cargolex (Reply 24):
Low capital expenditure is key to Allegiant's business. Buying expensive planes to do the same job as cheap ones would be very out of character, even if they do better on fuel.

On average, don't A320s have lower resale value than the 737s? If so, that would make sense.
 
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lightsaber
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:47 pm

Quoting BMI727 (Reply 4):
The writing went up on the wall for the MD-80s as soon as American signed up for the A320 series. The biggest operator of the type orders replacements and declares bankruptcy and Delta announces an order for 737-900s with rumors of a large narrowbody order later on. Large scale retirements there could leave G4 as the largest MD-80 operator in the world. In the short term that helps them, since airframes would only get cheaper. But in the long run, shrinking of the maintenance pool will cause costs to increase not to mention the possibility of higher fuel prices. The bottom line is that the MD-80's days are numbered whether Allegiant likes it or not.

  

How many MD-80s are flying? As soon as the number drops below 250, the costs to support the type go up and that means higher maintenance bills. Allergiant is currently riding on AA, DL and other large MD-80 operators to help provide economy of scale. When parts go from regular serial production to custom production, the cost goes up by a factor of 4! Boeing (via Douglas) would have set up contracts this way (its typical in the industry). Boeing is then free to find another vendor (paying a licensing fee) to make the parts, but that can often be pricier (unless the parts are outsourced to low labor cost nations).

There another issue with the MD-80 and that is declining numbers of JT8Ds with the FedEx fleet retirements. It is not an issue today, but when the global fleet of engines drops below 400, the cost of making engine parts goes up.

To exacerbate the trend, the rapid retirements will produce so many used parts that more than a few vendors will exercise minimum quantity clauses to get out of a money losing business. This is when specialized shops often buy the rights to make all the parts, in particular if they have hoarded a good number of the used parts, to become the 'one stop shop.' If that happens, then the MD-80 support costs are lower as they are supporting a small company's overhead vs. Boeing's.

Quoting Stitch (Reply 23):
As noted up-thread, G4 could get 4 MD-90s, 6 MD-88s or 12 MD-82s for what they would pay for an A320-200 of the same vintage (early-to-mid-1990s) so at the moment, adding the A320 family doesn't look cost-effective for G4 with how they currently handle fleet acquisitions.

Today I agree. However, what if G4 had a small subfleet highly utilized. Under that scenario, the fuel cost savings overcome the lease payment difference. Now, I do not know the G4 route structure in that detail. Do they have enough routes that a few bases have a high utilization where the lowest demand days are met by the A320 and during peak times the MD-80s are brought out?

Quoting sxf24 (Reply 21):
While the operating economics of the MD-80s still work, the maintenance costs are becoming increasingly prohibitive as there are fewer acceptable aircraft to scavenge for parts.

The AA and DL MD-80 fleet retirements will solve that problem.   Then in a few years the issue will be worse due to the lack of vendors producing the parts.

Quoting sxf24 (Reply 21):
Airbus has lots of airplanes to sell at the end of the A320 Classic line while it transitions to NEOs, which will incentivize it to discount prices further than normal.

   There is also a reason most airlines have phased out or are planning to phase out the MD-80s. The economics are better with new aircraft. It is a question of utilization that drives the break even time frame. An MD-80 burns 25% more fuel than a 738NG on the same mission. The fuel savings are 4% to 8% cost savings (mission length dependent). A highly used narrowbody has the lease about 10% of total costs. Put in maintenance savings, and eventually it is worth moving on.

But not for Allergiant's low utilization airframes. I think perhaps they have learned with the 757 that it is worth having a more efficient subfleet that is operated at higher utilization with the MD-80 playing its traditional role.

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oflanigan
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 4:54 pm

It would seem odd for G4 to buy "new" A320s, but like others have said, if the discount is great closer to NEO introduction, who wouldn't grab new build vs used.
 
srbmod
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 5:31 pm

Allegiant operates every version of the MD-80 family from the MD-81 through the MD-88. Their fleet is predominantly MD-82 and MD-83 a/c. They've got a few MD-87s stored and the few they have in service are primarily used for their charter program with Caesars Entertainment.

Quoting lightsaber (Reply 26):
How many MD-80s are flying? As soon as the number drops below 250, the costs to support the type go up and that means higher maintenance bills. Allergiant is currently riding on AA, DL and other large MD-80 operators to help provide economy of scale. When parts go from regular serial production to custom production, the cost goes up by a factor of 4! Boeing (via Douglas) would have set up contracts this way (its typical in the industry). Boeing is then free to find another vendor (paying a licensing fee) to make the parts, but that can often be pricier (unless the parts are outsourced to low labor cost nations).

A number of MD-80 a/c they've bought in recent years were for parts so to keep their other a/c flying. In the deals with airlines like SAS, engines and all sorts of parts were included as well. Even when airlines like AA and DL start to retire their MD-80 a/c, most of those a/c are destined to the scrapper as opposed to another airline, so there may be a limited number of a/c available for airlines like G4 as well as a limited number of spare parts. G4 obviously doesn't want to be in the same situation AA ended up in with their F100s.
 
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 5:46 pm

Quoting MLI717fan (Reply 25):
I was kind of thinking that too, but what about A300 or A310?

Although most likely wishful thinking, I like this idea! The economics, though, would probably be pretty bad; anyone have numbers for these versus A330s/767s? Also, how many airworthy A300/A310 frames are out there?
 
FATFlyer
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 6:59 pm

This thread started after I left last night for dinner with my wife.

Allegiant has said for the last couple of years that they were looking at acquiring a new type.

Jude Bricker in 2010 (he's currently Allegiant's SVP Planning but at the time was the treasurer and previously was manager of fleet planning) said at a conference that Allegiant would first spend a couple of years integrating the 757s into the fleet for Hawaii then would be adding another type. Bricker said Allegiant would look at 737-800s and A320s and make a choice.

As jetlanta said Andrew Levy repeated that info last month.

So its beginning to sound like Airbus may be added to the fleet in the near future.

[Edited 2012-06-16 12:18:13]
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BMI727
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 7:10 pm

Quoting lightsaber (Reply 26):
How many MD-80s are flying?

According to Wikipedia the number stood at 886 in 2009. American and Delta account for over 300 of them plus 38 at Allegiant. When retirements start they'll come quickly.

Quoting FATFlyer (Reply 31):
So its beginning to sound like Airbus may be added to the fleet in the near future.

I think the A320 has to be the clear front runner at this point. They are cheaper to buy now and the value will fall off sooner than the 737NG.
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FATFlyer
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 7:22 pm

Quoting BMI727 (Reply 32):
I think the A320 has to be the clear front runner at this point. They are cheaper to buy now and the value will fall off sooner than the 737NG.

I should have said A320 instead of just Airbus. Yes I agree that appears to be the front runner.

Following Allegiant's fleet history they will probably look at buying a large number from a single operator (a la their purchase of MDs from SAS).
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 8:38 pm



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usxguy
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:02 pm

Ya'll are thinking the wrong direction. Think "bigger" airplanes.

Allegiant's current structure would bankrupt the company if the MD-80s were replaced by Airbus, which will come with a hefty per-month lease or finance rates, and the company doesn't have the money to flat out buy them.

So, everything I'm hearing is they are looking at the bigger bus's.
xx
 
srbmod
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:15 pm

Quoting usxguy (Reply 34):

Ya'll are thinking the wrong direction. Think "bigger" airplanes.

Allegiant's current structure would bankrupt the company if the MD-80s were replaced by Airbus, which will come with a hefty per-month lease or finance rates, and the company doesn't have the money to flat out buy them.

So, everything I'm hearing is they are looking at the bigger bus's.

Widebodies might make sense, especially on the Hawaii runs. especially if they maintain strong bookings and loads on those routes. Perhaps they're thinking about making a run for the contract that Omni Air has with Boyd Gaming to run charters between HNL and LAS and Boyd has preferred a mix of narrowbodies and widebodies on those charters in recent years. Then again, it could always be a logical offshoot of their charter program with Caesars Entertainment or perhaps tie these flights in with say MGM Resorts or Las Vegas Sands.

The value of A320s will start to drop once airlines replace them with A320NEO a/c in a few years. Things being as they are now, they might be able to get some favorable leasing terms on some stored examples as well.
 
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lightsaber
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:16 pm

Quoting FATFlyer (Reply 31):
Allegiant has said for the last couple of years that they were looking at acquiring a new type.

Interesting. I wonder if oil prices have accelerated their replacement schedule?

Quoting BMI727 (Reply 32):
According to Wikipedia the number stood at 886 in 2009.

Thank you. But as oil prices climbed, MD-80s were parked in high numbers. Going from memory, since 2009, AA has parked ~80, SAS sold off their fleet (some for parts) to G4, etc. I'm curious as to today's flying number.

Quoting usxguy (Reply 34):
So, everything I'm hearing is they are looking at the bigger bus's.

Used A330s also have high resale values. I doubt they would consider the A300. The passenger versions are too old and have a higher maintenance burden than G4's model.

I still think it is for a 'core subfleet' that would be highly utilized. Keep the current G4 structure with the MD-80s parked an even higher fraction of the time.

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TZTriStar500
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:24 pm

Quoting lightsaber (Reply 36):
Thank you. But as oil prices climbed, MD-80s were parked in high numbers. Going from memory, since 2009, AA has parked ~80, SAS sold off their fleet (some for parts) to G4, etc. I'm curious as to today's flying number.

My source shows 613 active so about half total production.
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gilesdavies
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RE: Allegiant To Buy Airbus Aircraft?

Sat Jun 16, 2012 11:36 pm

Quoting MLI717fan (Reply 25):
I was kind of thinking that too, but what about A300 or A310? Too old? I would think they could get 767s for cheaper than an A330, although I have no knowledge about that.

One airline that comes to mind that will be off loading a load of A310's soon, is Air Transat... They are replacing all of theirs with A330's over the next year or two.

I think they have 11-13 in the fleet.

Quoting Stitch (Reply 23):
As noted up-thread, G4 could get 4 MD-90s, 6 MD-88s or 12 MD-82s for what they would pay for an A320-200 of the same vintage (early-to-mid-1990s)

Seriously?!...

Wow, never knew the Mad Dogs had lost so much value...

How do the costs of running an MD-88 or MD-90 compare to an A320? As these aircraft's were MD's answer to competing with Airbus.

Fuel prices might have dropped in recent weeks with the weakening global economy, but recently fuel has been at over $120 per barrel... Could these fuel costs finally be taking a toll on the likes of Allegiant and making the economics of running MD-80's difficult?
 
LAXDESI
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 12:04 am

Quoting columba (Reply 9):
A319s would do the job just fine as the 73G, they are a lot of 2nd A32x on the market that could be an option for G4.

A319(or 73G) would be almost 1:1 repacement for its MD-83(150 seats @30" pitch). However, A319 is about 12% heavier than MD-83(wikipedia figures).

I have not looked into fuel burn myself, but here is what I found in reply #14 by user AUAE in the following thread :
Md-80 Operating Costs Compared To A320 (by BWIA330 Feb 2 2005 in Tech Ops)

Quote:
For 12 months ending Mar 2004 for US based reporting airlines....from Eclat

Average Block Hour costs (ave seats):
MD80 - $2,725 (134)
A320 - $2,387 (147)
737-800/900 - $2,498 (153)

Does anyone have updated numbers? Fuel prices were less than $1 for the above period. Fuel is about 3 times higher today, and difference in block hour cost between A320 and MD-83 should be around $700.

Assuming 8 block hours per day, A320 saves about $5,600 per day($2 million per year). Add to it revenue potential of 20 additional seats at 70% load factor at $100 on A320 over MD-83, one expects an additional benefit of nearly $3 million per year.

My back of the envelope calculations suggest nearly $5 million dollars in additional operating profits from using A320 over MD-83. A319 would provide a much lower benefit as it is unlikely to offer revenue from additional seats with nearly the same cost as A320.
 
aztrainer
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 1:02 am

Quoting MLI717fan (Reply 25):
Quoting dtw9 (Reply 20):
Why is everybody assuming its for A319/A320's. Maybe Allegiant is thinking about going longhaul with A330's. There are a few 1995 build A330's out there for sale or lease

I was kind of thinking that too, but what about A300 or A310? Too old? I would think they could get 767s for cheaper than an A330, although I have no knowledge about that.

I remember a picture of a Frontier A318 being parted out as they were more valuable as parts than as total airframes. Could they get some of these 318's and then build a network of higher cycles 319 and 320"s?
 
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lightsaber
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 1:09 am

Quoting LAXDESI (Reply 39):
Average Block Hour costs (ave seats):

I found a 2007 thread with 05 numbers (post #8):
MD-80 Vs 737-800 Operating Costs (by 1337Delta764 Aug 18 2007 in Civil Aviation)

DL 05 Q2
738
Flight Crew Cost $748
Fuel Cost $1,266
Other Costs $87

Total Flying Cost $2,101

Direct Main. - Airframe $219
Direct Main. - Engines $132
Total Direct Maintenance $351
Maintenance Burden $153

Total Maintenance Costs $504

Depreciation $373
Aircraft Rent $96

Total Cost per Block Hour $3,098


MD80
Flight Crew Cost $694
Fuel Cost $1,457
Other Costs $92

Total Flying Cost $2,242

Direct Main. - Airframe $203
Direct Main. - Engines $139
Total Direct Maintenance $342
Maintenance Burden $138

Total Maintenance Costs $480

Depreciation $247
Aircraft Rent $216

Total Cost per Block Hour $3,226

We need to adjust the numbers for a few changes:
1. Increased fuel prices (about 2X above)
2. Decreased 738 engine maintenance costs due to longer overhaul intervals. (About a 10% maintenance bill cut due to the engines going from ~12k to 14k cycles per overhaul to 20k)
3. Pretty much an end to MD-80 depreciation (they have little to go now).
4. Greater MD-80 airframe maintenance (engine maintenance will have dropped a little, but not a significant amount due to lower cost parts).

So I would expect about a $500/hr block advantage in high utilization.

Doing a quick estimate (with errors) from the above numbers

Variable costs (using above assumptions):
MD-80: $4,200, but I estimate the depreciation/rent is $1,000/day or less.
738: $3,792 with daily depreciation/rent of $4,400

The costs go equal at 8 hours a day (high for G4, low for other airlines). But the revenue should make it cost advantageous to switch over at 5 hours a day utilization.

I would expect the A320 to trend very closely to the 738.

Thus, G4 should replace aircraft being used more than 5 hours per day with A320s (or 738s). Keep the MD-80s for surge service/seasonal.

Either way, G4 isn't set up to go against a high utilization airline such as B6 (which they don't).

Quoting TZTriStar500 (Reply 37):
My source shows 613 active so about half total production.

   That is about 200 more than I was estimating, so thank you for the information. That implies post AA there will still be ~400 flying and that is still a sustainable fleet. That gives Allergiant a few more years to replace the MD-80s.

Quoting LAXDESI (Reply 39):
and difference in block hour cost between A320 and MD-83 should be around $700.

Shouldn't it be more as new A320s have entered the fleet and the MD-83 exited production. In other words, the average MD-83 age grew with time (even with the oldest examples scrapped) faster than the A320. The V2500 A320 fleet also had an engine PIP during that time that should help reduce costs.

Quoting LAXDESI (Reply 39):
My back of the envelope calculations suggest nearly $5 million dollars in additional operating profits from using A320 over MD-83.

That number sounds reasonable. However, your example was at a higher utilization than G4 often flies. Thus why I propose the A320 to replace high utilization routes and use the MD-80, due to its low fixed costs, as the part time aircraft.

Lightsaber
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gulfstream650
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 1:58 am

Apparently they will be buying Spanair's A320s.
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sunking737
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 2:22 am

Quoting Gulfstream650 (Reply 42):
Apparently they will be buying Spanair's A320s.

They only had 5 A320 vs 19 MD80's per http://www.airfleets.net/flottecie/Spanair.htm
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LAXDESI
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 2:58 am

Quoting lightsaber (Reply 41):
Shouldn't it be more as new A320s have entered the fleet and the MD-83 exited production. In other words, the average MD-83 age grew with time (even with the oldest examples scrapped) faster than the A320. The V2500 A320 fleet also had an engine PIP during that time that should help reduce costs.

Agree. That only makes the A320 even more attractive.

I see price for an A320(2001 year) around $19 million, and 1991 MD-83 at $2.8 million. It would be more appropriate to compare 2001 A320 to 1999 MD-83(last year of delivery), but could not find any price. However, I did find suggestion that a late model MD-83 should run about $10-12 million in the following thread:
Price Of MD80 (used) (by Legolars Sep 25 2001 in Civil Aviation)

Based on my estimate of $5 million per year advantage to A320 over MD-83, it takes about two years(with high utilisation) to recover the additional acquisition cost of an A320.
 
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lightsaber
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 4:23 am

Quoting LAXDESI (Reply 44):
Based on my estimate of $5 million per year advantage to A320 over MD-83, it takes about two years(with high utilisation) to recover the additional acquisition cost of an A320.

Then it is time to start acquiring a new type.

Note: I see Allergiant still buying MD-80s for the seasonal/part time fleet. But it is time for a sub-fleet of highly utilized aircraft (well, by Allergiant standards...). I see LAS being an obvious starting base. However, if Allergiant takes a few years to 'digest' the 757s, I also understand that.

Note2: To me this is just an extension of the Allergiant model.

Quoting Gulfstream650 (Reply 42):
Apparently they will be buying Spanair's A320s.

I would like to know more about the reasons behind this. Any links?

Lightsaber
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sunking737
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 5:02 am

Maybe G4 will take advantage of DL/UA replacing their Airbuses. Could be a couple of hundred planes to chose from. Any other carriers replacing Airbus.

US has 40 737-400 going off line soon. Maybe too many hours on the airframe??
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BMI727
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 5:09 am

Quoting lightsaber (Reply 45):
Note: I see Allergiant still buying MD-80s for the seasonal/part time fleet. But it is time for a sub-fleet of highly utilized aircraft (well, by Allergiant standards...).

I kind of doubt that there will be a stable coexistence of Airbus and MD-80s at Allegiant. I think you're right that A320s would be the most highly utilized when they arrive, but I think it will be a reasonably steady transition from MD-80s to A320s.

I also think that it will be A320s rather than A319s initially in the Allegiant fleet. Although the A319 is a better match to replace MD-80s in terms of capacity, you also have to remember that those entered service in 1996. Even with somewhat depressed values due to economics I would tend to doubt those would be better deals than early 1990s A320s, a few of which I've seen for around six million. And I can't help but wonder if they found out a few things flying 757s around the CONUS for a while.
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jetlanta
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 6:52 am

After looking through the comments above, I've come to the conclusion that this industry changes faster the

Quoting usxguy (Reply 34):

Ya'll are thinking the wrong direction. Think "bigger" airplanes.

Allegiant's current structure would bankrupt the company if the MD-80s were replaced by Airbus, which will come with a hefty per-month lease or finance rates, and the company doesn't have the money to flat out buy them.

So, everything I'm hearing is they are looking at the bigger bus's.

You couldn't be more wrong if you tried. Everything your said here is flat incorrect.
 
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scbriml
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RE: Allegiant To Buy Airbus Aircraft?

Sun Jun 17, 2012 9:55 am

Quoting Stitch (Reply 23):
Run numbers and simulations, I imagine, to see how such a fleet would work out when it becomes affordable to acquire. The cost of the employee and software/hardware to do it should not be very expensive.

Yes, but any of their existing fleet managers could do that. It seems to me you wouldn't hire an Airbus Fleet Manager unless a decision had already been made.

Quoting Stitch (Reply 23):
As noted up-thread, G4 could get 4 MD-90s, 6 MD-88s or 12 MD-82s for what they would pay for an A320-200 of the same vintage (early-to-mid-1990s) so at the moment, adding the A320 family doesn't look cost-effective for G4 with how they currently handle fleet acquisitions.

There's no doubt A320s would attract higher acquisition costs, but others have shown that they could be used and provide a pretty quick ROI even with the higher purchase price.

One thing's for sure:

Quoting QANTAS747-438 (Reply 33):

that's one sharp-looking A319.  
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