scotron11
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IAG Lauds Ownership costs on Level 330s

Wed Nov 08, 2017 9:41 am

WW has said the A330 was the right aircraft for startup Level at that time, and that the cost ownership outweighed the 787. However he hasn't ruled out the 787 in the future, citing a lack of 787 pilots as main reason.

Interestingly he said the difference in fuel costs between the A330 and B787 BCN-LAX was only $3500.00!

https://www.flightglobal.com/news/artic ... 0s-442905/
 
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PatrickZ80
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Re: IAG Lauds Ownership costs on Level 330s

Wed Nov 08, 2017 9:54 am

Each aircraft has it's pros and cons. As Level is growing, there might come a point when the 787 becomes attractive to them. Or they might stick to Airbus and maybe even shift to the A350 one day. Who knows?
 
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frigatebird
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Re: IAG Lauds Ownership costs on Level 330s

Wed Nov 08, 2017 10:42 am

This why you have seen quite a substantial amount of orders for 'older generation' aircraft like the A330ceo, 77W, A32Xceo, 737NG and even CRJ and Emb 'E1' the past few years - higher discounts by the manufacturers as the development costs have been paid off, and low fuel prices which make investing in NG aircraft like A330neo, 777X, A350-1000, 787-10, Emb E2 and BBD Cseries less attractive. If you need capacity at short notice, old gen aircraft are good choices.

But this will change, when manufacturers start phasing out production of old aircraft, and fuel prices rise again.
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MoKa777
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Re: IAG Lauds Ownership costs on Level 330s

Wed Nov 08, 2017 10:52 am

Any LCC looking at widebodies should give 9-abreast A330ceo/neo a good look. A 9-abreast 787 or 8-abreast A330, like everyone else operates, does not offer any edge and advantage.
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leghorn
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Old tech is good for long haul LCC

Thu Nov 09, 2017 1:44 pm

https://leehamnews.com/2017/11/09/airbu ... long-haul/

If this is true then surely the old Boeing 777 planes which the middle eastern airlines have been removing from service and parking are good for the job too since they are supposed to be A330 competitors especially as there is no major freight conversion program.
 
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PatrickZ80
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:22 pm

However, it ain't true. That article is based on false assumptions and statistics that speak in their convenience, but all information that doesn't suit their statement is carefully hidden and not used.
 
ahmetdouas
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:22 pm

No chance. You need brand new and fuel efficient planes, like DY with their 787's!
 
leghorn
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:26 pm

old hardware seems like a good way to head off expansion in a market in which you don't want competitors to expand. Might not make money but it is a cheap way to neutralise attack on one front while concentration efforts elsewhere and it stops Norwegian and the likes finding profitable routes trans-atlantic. If they can't find profitable routes then those costs on the new 787s will drag them down.
 
Flighty
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:34 pm

LCC tend to run high utilization and get low yields. To survive that, they need to use newer airplanes. The exceptions are those LCCs that run low-utilization charter-type models. The airlines that can run older equipment profitably every day are actually the high-yielding legacies like Delta, partly by capitalizing on their maintenance expertise. Something a new LCC can't do. It is also easier for a bigger airline to run less-reliable old airplanes because they can swap a spare airplane in at a hub.
 
EIANV
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:48 pm

I would be very much inclined to think that Mr. Walsh would know exactly what he is talking about. He presides over multiple carriers that have years of experience operating
B777/A330/B787/B747/A340 and is in a good position to get a better deal on any aircraft from any manufacturer.
 
leghorn
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 3:52 pm

I expect old A330s which have been crossing the Atlantic everyday for Aer Lingus will find their way elsewhere within the group when/if the new planes ever arrive.
 
GripenFan
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 4:22 pm

I couldn't read the entire article since it's behind a paywall, but my immediate thought was this is another example of Leeham's decidedly anti-Boeing stance creeping into their analyses. I won't argue that Boeing hasn't done a lot recently to endear themselves to people in the Pacific Northwest, but Leeham has a lot of good information so I wish they'd just stick to the facts and at least try to minimize the editorial slant...
 
leghorn
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 4:24 pm

787 was chosen because it is the weapon of choice for Norweigan. I don't see there being an agenda.
my opening post suggested that the 787 is as vulnerable to early 777 as the 330 assuming the price of both falls through the floor.
 
Breathe
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 4:53 pm

leghorn wrote:
I expect old A330s which have been crossing the Atlantic everyday for Aer Lingus will find their way elsewhere within the group when/if the new planes ever arrive.

I think EI are due to start receiving their in 2019. LEVEL would probably be the most obvious place for them to cascade down to.
 
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Jayafe
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 5:16 pm

Breathe wrote:
leghorn wrote:
I expect old A330s which have been crossing the Atlantic everyday for Aer Lingus will find their way elsewhere within the group when/if the new planes ever arrive.

I think EI are due to start receiving their in 2019. LEVEL would probably be the most obvious place for them to cascade down to.


Interesting then that when LEVEL was launched, instead of repainting one of the EI birds for LEVEL and locate the new A330s in Ireland, they dedicated the brand new ones for the LCC.....
 
Luxair747SP
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 5:26 pm

I could see 77W with low cost carriers but that is a lot of plane to fill. But these planes are good for charter operators as base costs are low and they don't need to fly them 20+ hours every day. For example Nordwind just recently took 2 77W from EVA and fly them for tour operators to the carribean and Asia.
 
skipness1E
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 5:32 pm

Perfectly possible to make money with A330s against B787s in many markets. The B787 doesn't come cheap and whilst fuel burn is one factor, so is the difference in CAPEX. There's no right answer here, it's whatever works for you.
 
Planesmart
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 10:04 pm

leghorn wrote:
https://leehamnews.com/2017/11/09/airbus-a330-boeings-787-lcc-long-haul/

If this is true then surely the old Boeing 777 planes which the middle eastern airlines have been removing from service and parking are good for the job too since they are supposed to be A330 competitors especially as there is no major freight conversion program.

Obsolescence is increasingly based on software, not hardware.

Airlines operating older 777's using Honeywell AIMS-1 have two options. Retire the aircraft, or pay Honeywell for bespoke support. Some, like BA and US3 are paying for support incurring the cost spread over many units, others are paying for support on an interim basis until they can quit / replace the aircraft, and others have already done so.

Ironic that at a time when aircraft manufacturers are building aircraft to last longer, software and engine support costs have the reverse effect.

Fewer potential customers for used aircraft in the future. Only the very largest airlines, with significant in-house support resources will be able to buy and operate older, used aircraft cost-effectively.
 
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lightsaber
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 11:07 pm

Currently US and Europe is about $590/metric on.

http://www.iata.org/publications/econom ... lysis.aspx

6 tons per flight or $3,540 per flight. Assuming 2 flights per day $7,080 more in fuel per day or with 350 days of utilization, just under $2.5 million per year in fuel more.

So I'd the plane is at least $25 million cheaper, the used strategy works.

This is for moderate missions. The further out the payload/range Delta, the more the fuel burn difference.

Until a plane is going through the 3rd heavy maintenance cycle. Then repairs start adding up.

So if EK and others dump used widebodies, buying used for good examples works.

Where it doesn't work is high utilization. Then there are not the hours to fix older frames. Used works with long turn tines.

Lightsaber
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MoKa777
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 11:32 pm

GripenFan wrote:
I couldn't read the entire article since it's behind a paywall, but my immediate thought was this is another example of Leeham's decidedly anti-Boeing stance creeping into their analyses. I won't argue that Boeing hasn't done a lot recently to endear themselves to people in the Pacific Northwest, but Leeham has a lot of good information so I wish they'd just stick to the facts and at least try to minimize the editorial slant...


I also once noticed Leeham's anti-Boeing stance, however, that stance has shifted slightly since then. Me and a few members on here even argued about it.

I must say that this time Leeham is not being biased. They are corroborating a claim made by Mr. Walsh of BA about the operating economics of the A332 (they currently operate) and the 787 (they know very well and on which they have sufficient information).

Nothing sinister. It clears the bias check. LOL
Never be proud. Always be grateful.
 
drdisque
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 11:32 pm

The problem is that for this strategy to work you have to configure a 777-200 to have like 360 seats or more and actually fill them. That's a lot of seats to fill, even if you're an LCC.

360 pax is also a huge liability if your operation and maintenance sucks and you have to cancel or heavily delay a flight.
 
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MoKa777
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 11:38 pm

lightsaber wrote:
Currently US and Europe is about $590/metric on.

http://www.iata.org/publications/econom ... lysis.aspx

6 tons per flight or $3,540 per flight. Assuming 2 flights per day $7,080 more in fuel per day or with 350 days of utilization, just under $2.5 million per year in fuel more.

So I'd the plane is at least $25 million cheaper, the used strategy works.

This is for moderate missions. The further out the payload/range Delta, the more the fuel burn difference.

Until a plane is going through the 3rd heavy maintenance cycle. Then repairs start adding up.

So if EK and others dump used widebodies, buying used for good examples works.

Where it doesn't work is high utilization. Then there are not the hours to fix older frames. Used works with long turn tines.

Lightsaber


I was running these calculations in my mind earlier today after reading Mr. Walsh's comments yesterday.

$2.5 million per year is over $200,000 per month. If the lease of a 787 is more than $200,000 more expensive per month, the A330 offers a real benefit.
Never be proud. Always be grateful.
 
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MoKa777
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Re: Old tech is good for long haul LCC

Thu Nov 09, 2017 11:44 pm

Planesmart wrote:
leghorn wrote:
https://leehamnews.com/2017/11/09/airbus-a330-boeings-787-lcc-long-haul/

If this is true then surely the old Boeing 777 planes which the middle eastern airlines have been removing from service and parking are good for the job too since they are supposed to be A330 competitors especially as there is no major freight conversion program.

Obsolescence is increasingly based on software, not hardware.

Airlines operating older 777's using Honeywell AIMS-1 have two options. Retire the aircraft, or pay Honeywell for bespoke support. Some, like BA and US3 are paying for support incurring the cost spread over many units, others are paying for support on an interim basis until they can quit / replace the aircraft, and others have already done so.

Ironic that at a time when aircraft manufacturers are building aircraft to last longer, software and engine support costs have the reverse effect.

Fewer potential customers for used aircraft in the future. Only the very largest airlines, with significant in-house support resources will be able to buy and operate older, used aircraft cost-effectively.


Can you or someone else please explain this whole AIMS-1/2 predicament.

I believe 777s from 2003 onwards have AIMS-2 already. Only those manufactured before have the 1st generation as standard.

What does it cost for an airline, per frame, to fit and maintain support for AIMS-2? Is the cost really high enough to retire an aircraft (possibly earlier) or for a retired aircraft to rather be scrapped than resold for commercial use?

Is there an existing thread on this fascinating subject? I would be interested to know about similar limitations on other aircrafy types.
Never be proud. Always be grateful.
 
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lightsaber
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 3:52 am

MoKa777 wrote:
lightsaber wrote:
Currently US and Europe is about $590/metric on.

http://www.iata.org/publications/econom ... lysis.aspx

6 tons per flight or $3,540 per flight. Assuming 2 flights per day $7,080 more in fuel per day or with 350 days of utilization, just under $2.5 million per year in fuel more.

So I'd the plane is at least $25 million cheaper, the used strategy works.

This is for moderate missions. The further out the payload/range Delta, the more the fuel burn difference.

Until a plane is going through the 3rd heavy maintenance cycle. Then repairs start adding up.

So if EK and others dump used widebodies, buying used for good examples works.

Where it doesn't work is high utilization. Then there are not the hours to fix older frames. Used works with long turn tines.

Lightsaber


I was running these calculations in my mind earlier today after reading Mr. Walsh's comments yesterday.

$2.5 million per year is over $200,000 per month. If the lease of a 787 is more than $200,000 more expensive per month, the A330 offers a real benefit.

Yep... There is a dollar value to fuel savings.

All the talk of going green and such ends up losing to economics.
However, we need to include maintenance and the extreme costs of downtime. Buying hotel rooms quickly turns a flight's economics down... So there is a limit. Generally, the lease rates match out with the expected costs with a small discount for more variable costs.

And A332 leases for $255k to $725k per month
A 789 for $800k to $1M. So there is more than just fuel burn going on...

viewtopic.php?t=1361025
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Planesmart
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 6:23 am

MoKa777 wrote:
Planesmart wrote:
leghorn wrote:
https://leehamnews.com/2017/11/09/airbus-a330-boeings-787-lcc-long-haul/

If this is true then surely the old Boeing 777 planes which the middle eastern airlines have been removing from service and parking are good for the job too since they are supposed to be A330 competitors especially as there is no major freight conversion program.

Obsolescence is increasingly based on software, not hardware.

Airlines operating older 777's using Honeywell AIMS-1 have two options. Retire the aircraft, or pay Honeywell for bespoke support. Some, like BA and US3 are paying for support incurring the cost spread over many units, others are paying for support on an interim basis until they can quit / replace the aircraft, and others have already done so.

Ironic that at a time when aircraft manufacturers are building aircraft to last longer, software and engine support costs have the reverse effect.

Fewer potential customers for used aircraft in the future. Only the very largest airlines, with significant in-house support resources will be able to buy and operate older, used aircraft cost-effectively.


Can you or someone else please explain this whole AIMS-1/2 predicament.

I believe 777s from 2003 onwards have AIMS-2 already. Only those manufactured before have the 1st generation as standard.

What does it cost for an airline, per frame, to fit and maintain support for AIMS-2? Is the cost really high enough to retire an aircraft (possibly earlier) or for a retired aircraft to rather be scrapped than resold for commercial use?

Is there an existing thread on this fascinating subject? I would be interested to know about similar limitations on other aircrafy types.

Microsoft has withdrawn support for many versions of Windows like Vista and 7. For large users with deep pockets, they provide ongoing support, virus protection and enhancements, on a bespoke basis (ie MS to individual customer).

Honeywell no longer supports AIM-1 software, or the hardware it runs on.

There is no economic upgrade path from 1 to 2.

Owners of young or low time/cycle AIMS-1 aircraft have, or will enter bespoke support contracts, or sell the aircraft to those airlines that already have support in place, or scrap them.

Surely no surprise to owners that it gets more expensive and difficult to obtain support for operating software, code and hardware first developed in the late 80's. Where do you find the staff with the knowledge for a start.

I doubt the 777X will use AIMS-2, which by launch will be 20 plus years old.

Airlines and leasing companies purchasing new 777's now, are future bespoke support clients.

MS makes as much money providing bespoke support to customers of old operating systems, as it does selling new licences.
 
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MoKa777
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 7:40 am

lightsaber wrote:
Yep... There is a dollar value to fuel savings.

All the talk of going green and such ends up losing to economics.
However, we need to include maintenance and the extreme costs of downtime. Buying hotel rooms quickly turns a flight's economics down... So there is a limit. Generally, the lease rates match out with the expected costs with a small discount for more variable costs.

And A332 leases for $255k to $725k per month
A 789 for $800k to $1M. So there is more than just fuel burn going on...

viewtopic.php?t=1361025


Agreed

Planesmart wrote:
Microsoft has withdrawn support for many versions of Windows like Vista and 7. For large users with deep pockets, they provide ongoing support, virus protection and enhancements, on a bespoke basis (ie MS to individual customer).

Honeywell no longer supports AIM-1 software, or the hardware it runs on.

There is no economic upgrade path from 1 to 2.

Owners of young or low time/cycle AIMS-1 aircraft have, or will enter bespoke support contracts, or sell the aircraft to those airlines that already have support in place, or scrap them.

Surely no surprise to owners that it gets more expensive and difficult to obtain support for operating software, code and hardware first developed in the late 80's. Where do you find the staff with the knowledge for a start.

I doubt the 777X will use AIMS-2, which by launch will be 20 plus years old.

Airlines and leasing companies purchasing new 777's now, are future bespoke support clients.

MS makes as much money providing bespoke support to customers of old operating systems, as it does selling new licences.


Thank you for that analogy and explanation. I understand the situation better now.
Never be proud. Always be grateful.
 
oldannyboy
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 10:19 am

Mmm.. I wouldn't really dismiss factory-new A330s ceo as "old technology". The LEVEL ones are spanking new. Not sure how terribly inefficient a brand new 330 is compared to a 787...
 
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lightsaber
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 2:10 pm

oldannyboy wrote:
Mmm.. I wouldn't really dismiss factory-new A330s ceo as "old technology". The LEVEL ones are spanking new. Not sure how terribly inefficient a brand new 330 is compared to a 787...

As per the OP link, 6T per flight or about $200,000 more in fuel per month at today's prices or $25 million value difference in purchase price.

The 787 entered the market with fuel at about twice the price of today, or $400,000 per month or so, or worth $50 million in purchase price.

So the A330s are competitive today. But what happens if oil prices climb? I don't think oil prices will get as ridiculously high as they were due to fracking. But I think the price of a ton of Jet A will climb to $800. Or just about $10,000/day. $300,000 a month. We're talking a difference in sales price of $35 million or so then. Plus maintenance advantages. All new aircraft do better with maintenance, that is the trend (thanks to engineering investment).

Lightsaber
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albertocsc
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Re: Old tech is good for long haul LCC

Fri Nov 10, 2017 2:47 pm

And then you have airlines doing LHLC with A343s, like Plus Ultra :D

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