ThalesCoelho
Topic Author
Posts: 44
Joined: Sat Feb 18, 2006 1:02 pm

High Capacity Domestic Low Cost

Wed Jan 16, 2019 1:43 am

Hi all,

The lower the CASK, the lower could be the RASK and still maintaining profits at the same level.

So I was thinking about on how to offer a lower fare in my domestic market, Brazil, but my question is valid for almost all domestic markets.

Could a high density high capacity airline, operating something as the A330-300 or used 777-200A (or other wide body like the A300, B763, 773, A340), at their full Y maximum seat capacity, associated with lower labor costs and simplified management structure work against the "common" B738/A320 LCLF?

The idea is to put 400+ seats per flight. Average flight duration of about 1.5 hour, obviously offering less frequencies per city pair than the competition.

Routes like:

GRU-GIG
GRU-CNF
GRU-BSB
GRU-CWB
GRU-POA
GRU-SSA
GRU-REC
GRU-NAT
GRU-FOR

GIG-SSA
GIG-CNF
GIG-BSB
GIG-CWB
GIG-POA
GIG-REC

CNF-SSA
CNF-BSB

BSB-MAO
BSB-BEL
BSB-SSA
BSB-REC

SSA-REC-NAT-FOR

FOR-BEL
BEL-MAO

Competition uses B738, A320/21 or E195 on those routes. Gol, Latam, Avianca and Azul all offer full service with Frequent Flyer programs, live TV, wifi, sacks, some of them even with VIP rooms at selected airports.

My idea is to compete just taking the passenger from A to B, with no amenities.

In Brazil more people still travel long distances by bus than by plane.

Would it work? Why? Why not?
Last edited by ThalesCoelho on Wed Jan 16, 2019 1:50 am, edited 1 time in total.
 
msiebert09
Posts: 19
Joined: Sat Jul 18, 2009 4:35 am

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 1:50 am

Cool idea, but your turn times on a 1.5 hour flight will be higher. Unloading 400 pax and bags vs 180 pax and bags. To increase efficency, you have more people working flights. Also, how may airplanes and turns are you considering? JAL had a high density 747, but Japan is a different market and they have moved to two engine, not so big aircraft.
 
B1168
Posts: 507
Joined: Tue Dec 18, 2018 10:26 pm

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 1:52 am

First, Brazil doesn’t have an extensive rail&highway network. Despite being just 450 km away, it takes 5.5 hours to drive from Rio de Janeiro to São Paulo. Despite ideal distance (1.5h ride) and huge traffic, no HSRs link between them. To fulfill people’s demand of rapid transport, planes are their only option.
Second, Brazil isn’t in the best shape ever to build ground infrastructure. Its coastal cities are not developed into huge megapolises because of landscape; forests and mountains aren’t the best combination for HSR.
Third, Brazil has over 200 million people. And they don’t spread as much compared to US.
So... sort of. If you want to, there will be demand.
But exceeding the scale of Frenchbee 359 will cause overwhelming gate time. No passenger will demand denser cabin, less frequency, nor would airlines want overwhelming turnaround time.
It is a thought worth observing, but it’s hard to draw a conclusion now.
 
c933103
Posts: 3928
Joined: Wed May 18, 2016 7:23 pm

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 4:37 am

Something like the 8-abreast 767 flown by Japanese LCC Skymark back then?
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User avatar
PatrickZ80
Posts: 4009
Joined: Tue Jul 13, 2010 5:33 am

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 6:53 am

400+ seats per flight? That'll be hard to fill, most flights will be half empty because there simply are no passengers for them. Of course, if you can get them filled, you'd have a very low cost per seat. But on most routes the demand simply isn't there. There's a reason LCCs around the world stick to smaller types of aircraft, like Ryanair only flies the 737-800 and EasyJet only the A320-series. Those are easier to fill. Besides, not all airports are able to handle wide bodies. Operating narrow bodies gives you much more flexibility.
 
User avatar
RyanairGuru
Posts: 8104
Joined: Wed Nov 01, 2006 3:59 am

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 7:50 am

Between 07:00-08:00 Qantas have up to SEVEN flights departing Sydney bound for Melbourne. Virgin Australia have four. On face value QF could run, say, four widebodies and still maintain a very high frequency. The problem is that neither SYD or MEL have adequate widebody gates at the domestic terminals to facilitate that. It's one reason why the 767 was perfect for Qantas, it could be accommodated on a standard gate at SYD whereas the A330 can't.
Worked Hard, Flew Right
 
ThalesCoelho
Topic Author
Posts: 44
Joined: Sat Feb 18, 2006 1:02 pm

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 10:45 am

The goal would be to take passengers from the bus. Here we have lot of people taking 2 days long trips by bus via bad roads with lots of accidents 'cause the plane fare is just too high. Is a bigger market than the actual airline market we have.

I said before 400+ seats per flight, but the idea is to achieve a better CASK then the A321neo with is 200 and something passengers. Wich would be the adequate aircraft with what seat config that would permit the company to be disruptive at that market?

Maybe its true that those seats would be hard to fill, but that company wouldnt be flying so many frequencies at all.

Take for exemple the SAO-SSA city pair, it hás more than 20 daily flights by the competition, that wide body company would entre with what? 4 daily frequencies with a 380-420 seater?

What Skymark do with their 8 abreast 767?

How is the FrenchBee A350 operation?

Could something similar work at the US or Europe, providing even cheaper fares than Spirit or Ryanair?

Thanks everyone for your answers!
 
wave46
Posts: 185
Joined: Mon Jan 29, 2018 12:02 am

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 11:08 am

There are problems with even 400+ passengers on a widebody aircraft:
- the aircraft has more structural weight per passenger than a 737/A320 due to it being optimized for another mission (i.e. long-haul), which means more fuel consumption per passenger. Since you'll be using it short-haul, you'll be spending more time climbing and with all that extra weight, you'll burn more fuel.
- turnaround times increase as you have to board/disembark 400+ people
- except at peak times, it is unlikely that all seats will be close to full at other times - a key component of low-cost operations
- limited operations at some airports
 
mjoelnir
Posts: 9215
Joined: Sun Feb 03, 2013 11:06 pm

Re: High Capacity Domestic Low Cost

Wed Jan 16, 2019 11:27 am

The most economical way is to move 400 passengers in 2 A321. You will not find a way to a lower CASM with going to a bigger frame. The bus passengers that are talked about, usually travel with luggage, (including live animals sometimes). So no bare bone tickets, but perhaps there is a way to simplify baggage handling. No flight connections. A new check in for a second leg.
 
bsbisland
Posts: 349
Joined: Thu Jul 21, 2005 2:45 am

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 12:35 pm

ThalesCoelho wrote:
Hi all,

The idea is to put 400+ seats per flight. Average flight duration of about 1.5 hour, obviously offering less frequencies per city pair than the competition.

Routes like:

GRU-GIG
GRU-CNF
GRU-BSB
GRU-CWB
GRU-POA
GRU-SSA
GRU-REC
GRU-NAT
GRU-FOR

GIG-SSA
GIG-CNF
GIG-BSB
GIG-CWB
GIG-POA
GIG-REC

CNF-SSA
CNF-BSB

BSB-MAO
BSB-BEL
BSB-SSA
BSB-REC

SSA-REC-NAT-FOR

FOR-BEL
BEL-MAO

Competition uses B738, A320/21 or E195 on those routes. Gol, Latam, Avianca and Azul all offer full service with Frequent Flyer programs, live TV, wifi, sacks, some of them even with VIP rooms at selected airports.

My idea is to compete just taking the passenger from A to B, with no amenities.

In Brazil more people still travel long distances by bus than by plane.

Would it work? Why? Why not?


On most of those routes, if not all, you can fly cheaper than the bus ticket, and the majority of people traveling between those city pairs will fly.

I believe in Brazil it wouldn't work with the passenger profile of the routes you mentioned. I believe the extension of regional flight networks would get the bus passengers. Regional flights in general are still very expensive.
 
TWFlyGuy
Posts: 407
Joined: Mon Apr 17, 2017 5:10 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 2:17 pm

ThalesCoelho wrote:
The goal would be to take passengers from the bus. Here we have lot of people taking 2 days long trips by bus via bad roads with lots of accidents 'cause the plane fare is just too high. Is a bigger market than the actual airline market we have.

I said before 400+ seats per flight, but the idea is to achieve a better CASK then the A321neo with is 200 and something passengers. Wich would be the adequate aircraft with what seat config that would permit the company to be disruptive at that market?

Maybe its true that those seats would be hard to fill, but that company wouldnt be flying so many frequencies at all.

Take for exemple the SAO-SSA city pair, it hás more than 20 daily flights by the competition, that wide body company would entre with what? 4 daily frequencies with a 380-420 seater?

What Skymark do with their 8 abreast 767?

How is the FrenchBee A350 operation?

Could something similar work at the US or Europe, providing even cheaper fares than Spirit or Ryanair?

Thanks everyone for your answers!


"but that company wouldnt be flying so many frequencies at all" That comment just killed the lower CASK you're hoping to achieve. By flying a smaller plane you match capacity to demand more effectively. The demand may be 500 per day so if you fly 3 trips on a 738/321 you spread the ownership costs, etc. across those flights and meet the demand. If you only fly 1 flight a day, it's very inefficient use of the aircraft.

In the US we had Tower Air which was popular but shut down over safety issues. They ran an all 747 fleet. Something like they had could work but all their flights were longer. JFK-LAX/MIA for example. Even the JFK-MIA flight ate up ~2.5 hours each way. So think of an aircraft going JFK-MIA @ 0800, arrive at 1030. MIA-JFK 1200-1430. JFK-LAX 1600-1800 then LAX-JFK 2200-0600. These times are approximate but if you look at a routing like that you can see how that level of utilization on high demand routes can work.
 
frmrCapCadet
Posts: 3429
Joined: Thu May 29, 2008 8:24 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 3:53 pm

So far not a really insightful answer to the OP question. With a reliable large used plane how cheaply can you fly 1000 or 2000 miles, how many flights a day do you have to do, or is one or two enough. Turn around time probably is not a problem. One flight a day per city pair, or even 4 a week could be enough. Number would be helpful. Cargo flights in the US are doing this sort of thing for Amazon and others. I think the OP is say comfort, service and amenities are not required, just safety and reliability. Those long bus rides can be memorably horrible - I've done a number of them myself.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
ThalesCoelho
Topic Author
Posts: 44
Joined: Sat Feb 18, 2006 1:02 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 9:31 pm

In fact all those city pairs I have mentioned are conecting large metropolitan areas of the country, with more than 2 million people living in each of those metro areas. So they are not regional links but big national trunk routes.
 
SCQ83
Posts: 5500
Joined: Wed Oct 03, 2012 8:32 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 9:39 pm

In Spain you have Air Europa doing MAD-BCN with wide bodies. That route is 3-4 daily of which 2 daily frequencies are flown with A330s. Those are intended to make connections in MAD (mainly to LATAM), but you often have very cheap fares (25 or 30 EUR) in O&D. However you must add the train/metro to get to the airport in both Madrid and Barcelona.
 
User avatar
PatrickZ80
Posts: 4009
Joined: Tue Jul 13, 2010 5:33 am

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 10:19 pm

ThalesCoelho wrote:
In fact all those city pairs I have mentioned are conecting large metropolitan areas of the country, with more than 2 million people living in each of those metro areas. So they are not regional links but big national trunk routes.


Even on trunk routes, large aircraft are hard to fill specially when it's O/D only.

SCQ83 wrote:
In Spain you have Air Europa doing MAD-BCN with wide bodies. That route is 3-4 daily of which 2 daily frequencies are flown with A330s. Those are intended to make connections in MAD (mainly to LATAM), but you often have very cheap fares (25 or 30 EUR) in O&D. However you must add the train/metro to get to the airport in both Madrid and Barcelona.


That's more than just a trunk route, it's one of the busiest routes in Europe. Way busier than those routes in Brazil. They may be large metropolitan areas, but that's not enough. Madrid and Barcelona are more than large metropolitan areas, they're also large economical centers. And even then, most people on those A330s are connecting at one end or the other. Without connecting passengers the A330 would be too big.

Besides, city size or metro size doesn't mean anything. Certainly in Brazil, most of that metro area is made out of townships, people hardly got money for food. They don't fly anyway, not even on a cheap flight so you shouldn't count them when counting market size. A city can have 2 million citizens, but if 75 percent of them are too poor to fly you only have a potential market size of 500.000 people. Still a good amount, but nothing compared to 2 million.

Now compare that to Madrid and Barcelona where almost nobody is too poor to fly. There are no townships in those cities, the average wealth level is much higher as is the lowest wealth level. The Madrid metro area has over 6 million people who are all financially able to fly. And even then it's hard to fill a wide body aircraft to Barcelona, even then you need connecting passengers to fill the seats that can't be filled by O/D demand. The Sao Paulo metro area has almost 9 million people, so that's more than Madrid. However, if 75 percent of them will never fly you ultimately keep just over 2 million people that would possibly fly. Only about a third of Madrid, not enough to fill a wide body.
 
ThalesCoelho
Topic Author
Posts: 44
Joined: Sat Feb 18, 2006 1:02 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 10:59 pm

TWFlyGuy wrote:
"but that company wouldnt be flying so many frequencies at all" That comment just killed the lower CASK you're hoping to achieve. By flying a smaller plane you match capacity to demand more effectively. The demand may be 500 per day so if you fly 3 trips on a 738/321 you spread the ownership costs, etc. across those flights and meet the demand. If you only fly 1 flight a day, it's very inefficient use of the aircraft.

In the US we had Tower Air which was popular but shut down over safety issues. They ran an all 747 fleet. Something like they had could work but all their flights were longer. JFK-LAX/MIA for example. Even the JFK-MIA flight ate up ~2.5 hours each way. So think of an aircraft going JFK-MIA @ 0800, arrive at 1030. MIA-JFK 1200-1430. JFK-LAX 1600-1800 then LAX-JFK 2200-0600. These times are approximate but if you look at a routing like that you can see how that level of utilization on high demand routes can work.


I understand what you are talking about aircraft usage. What I mean with that phrase is that ok, competition files 10x daily with B738 in a specific city-pair, and "my" company would do, lets say, 4x daily at the same route.
 
c933103
Posts: 3928
Joined: Wed May 18, 2016 7:23 pm

Re: High Capacity Domestic Low Cost

Thu Jan 17, 2019 11:51 pm

PatrickZ80 wrote:
ThalesCoelho wrote:
In fact all those city pairs I have mentioned are conecting large metropolitan areas of the country, with more than 2 million people living in each of those metro areas. So they are not regional links but big national trunk routes.


Even on trunk routes, large aircraft are hard to fill specially when it's O/D only.

SCQ83 wrote:
In Spain you have Air Europa doing MAD-BCN with wide bodies. That route is 3-4 daily of which 2 daily frequencies are flown with A330s. Those are intended to make connections in MAD (mainly to LATAM), but you often have very cheap fares (25 or 30 EUR) in O&D. However you must add the train/metro to get to the airport in both Madrid and Barcelona.


That's more than just a trunk route, it's one of the busiest routes in Europe. Way busier than those routes in Brazil. They may be large metropolitan areas, but that's not enough. Madrid and Barcelona are more than large metropolitan areas, they're also large economical centers. And even then, most people on those A330s are connecting at one end or the other. Without connecting passengers the A330 would be too big.

Besides, city size or metro size doesn't mean anything. Certainly in Brazil, most of that metro area is made out of townships, people hardly got money for food. They don't fly anyway, not even on a cheap flight so you shouldn't count them when counting market size. A city can have 2 million citizens, but if 75 percent of them are too poor to fly you only have a potential market size of 500.000 people. Still a good amount, but nothing compared to 2 million.

Now compare that to Madrid and Barcelona where almost nobody is too poor to fly. There are no townships in those cities, the average wealth level is much higher as is the lowest wealth level. The Madrid metro area has over 6 million people who are all financially able to fly. And even then it's hard to fill a wide body aircraft to Barcelona, even then you need connecting passengers to fill the seats that can't be filled by O/D demand. The Sao Paulo metro area has almost 9 million people, so that's more than Madrid. However, if 75 percent of them will never fly you ultimately keep just over 2 million people that would possibly fly. Only about a third of Madrid, not enough to fill a wide body.

But what does "financially able to fly" mean when OP want to have a LCC that he hope it will undercut bus fare?
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ThalesCoelho
Topic Author
Posts: 44
Joined: Sat Feb 18, 2006 1:02 pm

Re: High Capacity Domestic Low Cost

Fri Jan 18, 2019 12:30 am

MAD to BCN is a big market but also is a much more fast travel by road then São Paulo to Rio, also having a HSR to compete. Its in a completely different situation of its brazilian counterparts.
 
TWFlyGuy
Posts: 407
Joined: Mon Apr 17, 2017 5:10 pm

Re: High Capacity Domestic Low Cost

Fri Jan 18, 2019 2:43 pm

ThalesCoelho wrote:
TWFlyGuy wrote:
"but that company wouldnt be flying so many frequencies at all" That comment just killed the lower CASK you're hoping to achieve. By flying a smaller plane you match capacity to demand more effectively. The demand may be 500 per day so if you fly 3 trips on a 738/321 you spread the ownership costs, etc. across those flights and meet the demand. If you only fly 1 flight a day, it's very inefficient use of the aircraft.

In the US we had Tower Air which was popular but shut down over safety issues. They ran an all 747 fleet. Something like they had could work but all their flights were longer. JFK-LAX/MIA for example. Even the JFK-MIA flight ate up ~2.5 hours each way. So think of an aircraft going JFK-MIA @ 0800, arrive at 1030. MIA-JFK 1200-1430. JFK-LAX 1600-1800 then LAX-JFK 2200-0600. These times are approximate but if you look at a routing like that you can see how that level of utilization on high demand routes can work.


I understand what you are talking about aircraft usage. What I mean with that phrase is that ok, competition files 10x daily with B738 in a specific city-pair, and "my" company would do, lets say, 4x daily at the same route.


You run into the same problem. You get lower utilization on an expensive plane. Your competition still wins.

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