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LAX772LR
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Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 8:15 am

I know that this is in utter violation of A.net Orthodoxy, but:
We may be to the point where it's completely irresponsible, in both a logistical and fiduciary manner, for major airlines the size of WN/FR/etc to rely on a single aircraft type.

There, I said it.

At some point, the sheer inherent risk of having your entire operation bound to the welfare of a single manufacturer/airframe, could outweigh the obvious and well-known benefit of doing so.... and I'd argue that we're there.

    As bad as this MAX debacle is, if could've been a whole lot worse simply with the addition of time. Instead of 2019, had this occurred just a few years down the road, these airlines would be devastated, as a far larger percentage of their fleet would've been grounded for a year, with no clear return in sight.

    And for anyone who thinks such a scenario is a stretch: realize that it took 27yrs for the 737's rudder issue to manifest, something which in itself almost got the entire 737 fleet grounded as well.

    So while these carriers may talk the talk, in terms of remaining "loyal" to their preferred airframe/manufacturer/etc; there's NO QUESTION that their boards have various departments recalculating the longterm outlook of cost vis-a-vis risk, in terms of fleet and supplier diversity, in light of this. No question there, whatsoever.

The only question is how we're going to see it manifested. FR's already giving us hints, let's see if it follows through.
I myself, suspect a more prosaic motive... ~Thranduil
 
VSMUT
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 8:38 am

LAX772LR wrote:
At some point, the sheer inherent risk of having your entire operation bound to the welfare of a single manufacturer/airframe, could outweigh the obvious and well-known benefit of doing so.... and I'd argue that we're there.
[list]


How relevant is this point though (relying on a single manufacturer)? In the past you didn't have a choice, it was either 737 or A320, but now we are actually in a situation where Airbus can offer 2 different aircraft of roughly similar size (A220 and A320).
 
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LAX772LR
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:02 am

VSMUT wrote:
LAX772LR wrote:
At some point, the sheer inherent risk of having your entire operation bound to the welfare of a single manufacturer/airframe, could outweigh the obvious and well-known benefit of doing so.... and I'd argue that we're there.[list]

How relevant is this point though (relying on a single manufacturer)? In the past you didn't have a choice, it was either 737 or A320

Um, you don't see the inherent flaw in that question? ;)
I myself, suspect a more prosaic motive... ~Thranduil
 
VSMUT
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:10 am

LAX772LR wrote:
VSMUT wrote:
LAX772LR wrote:
At some point, the sheer inherent risk of having your entire operation bound to the welfare of a single manufacturer/airframe, could outweigh the obvious and well-known benefit of doing so.... and I'd argue that we're there.[list]

How relevant is this point though (relying on a single manufacturer)? In the past you didn't have a choice, it was either 737 or A320

Um, you don't see the inherent flaw in that question? ;)


No. Is it relevant to discuss the welfare of the manufacturer? Boeing is undeniably in a bad place, but that is because of the MAX. Nobody has ever claimed that buying a 787 is problematic because the MAX is in trouble.
 
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:11 am

VSMUT wrote:
LAX772LR wrote:
At some point, the sheer inherent risk of having your entire operation bound to the welfare of a single manufacturer/airframe, could outweigh the obvious and well-known benefit of doing so.... and I'd argue that we're there.
[list]


How relevant is this point though (relying on a single manufacturer)? In the past you didn't have a choice, it was either 737 or A320, but now we are actually in a situation where Airbus can offer 2 different aircraft of roughly similar size (A220 and A320).


In the past you could have a relatively balanced fleet: DC-9, 727, 737, 757, a sprinkling of Fokkers and Caravelles, and an odd VC-10 and Trident, not to mention BAC 1-11 and Yak-40. And that's only on narrowbody side. Regional types were quite diverse as well. And that only in the West. Closer to Iron Curtain, Soviet types were in the mix, too.

Airlines indeed tried to spread their risk. Groundings of types (relatively common phenomenon in 50's, no?) were still in the memory of executives, and they would have difficult time convincing themselves and colleagues to go "all in" for a single airplane type.

Then, single-type operations beat them at the money game (WN, FR), and fleet standardization made smaller manufacturers marginal, eventually killing them. So here we are...
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LAX772LR
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:25 am

VSMUT wrote:
LAX772LR wrote:
VSMUT wrote:
How relevant is this point though (relying on a single manufacturer)? In the past you didn't have a choice, it was either 737 or A320

Um, you don't see the inherent flaw in that question? ;)


No. Is it relevant to discuss the welfare of the manufacturer? Boeing is undeniably in a bad place, but that is because of the MAX. Nobody has ever claimed that buying a 787 is problematic because the MAX is in trouble.

What I was trying to tell you: is that you claimed there to be no choice, only to describe a easily identifiable choice not 4 words later.... all while seemingly forgetting that the two aren't mutually exclusive (or in short: used an "or" where there's nothing stopping anyone from using an "an") save by-- choice.
I myself, suspect a more prosaic motive... ~Thranduil
 
Kikko19
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:25 am

FR is "secretly" adding a32x. And maybe in the future also a220. Let's see WN if will react to the endless delay of the max that seems like the frog slowly cooking.
 
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:30 am

With only 2 options, it makes little difference. If one OEM sees its product grounded you will still loose 50% of your fleet.
 
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LAX772LR
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:33 am

seahawk wrote:
With only 2 options, it makes little difference. If one OEM sees its product grounded you will still loose 50% of your fleet.

Versus potentially 100%, which would've been the case had this happened a few years down the road....

Mitigation doesn't mean elimination.
I myself, suspect a more prosaic motive... ~Thranduil
 
VSMUT
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:34 am

Phosphorus wrote:
In the past you could have a relatively balanced fleet: DC-9, 727, 737, 757, a sprinkling of Fokkers and Caravelles, and an odd VC-10 and Trident, not to mention BAC 1-11 and Yak-40. And that's only on narrowbody side. Regional types were quite diverse as well. And that only in the West. Closer to Iron Curtain, Soviet types were in the mix, too.

Airlines indeed tried to spread their risk. Groundings of types (relatively common phenomenon in 50's, no?) were still in the memory of executives, and they would have difficult time convincing themselves and colleagues to go "all in" for a single airplane type.

Then, single-type operations beat them at the money game (WN, FR), and fleet standardization made smaller manufacturers marginal, eventually killing them. So here we are...


Was that really the case though?

SAS, KLM, Alitalia, Swissair and Austrian all had short haul fleets consisting of pretty much only DC-9/MD-80s a while in the 70s/80s/90s.
 
ehusmann
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 9:58 am

To identify risk is only one thing. At least two others important factors are how likely is it to occur and how much does it cost to mitigate the risk.
For the first, I do not think you can say these long term and full fleet groundings are too common. But more importantly, you cannot really mitigate the risk. Yes, you can have a mixed fleet, but that will not solve your problem when one half of your fleet is grounded. There are simply not enough planes around to substitute the ones that are grounded. So at the end of the day, if you happen to have picked the wrong plane, you are still out of luck.

With that in mind, perhaps you could better argue the opposite. In the situation where there are only two choices, you have a 50% chance of not getting caught in the grounding if you have a single type fleet. However, you have 0% chance of not getting caught in it if you fly both types.
 
oldannyboy
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 10:49 am

I think it depends also on the type of operation you are running. Low-cost vs 'mainline', and purely short-haul vs a mix of stage lengths. In these latter [second] cases you may as well decide to invest more in order to mitigate and elect to operate a fleet composed of frames built by different manufactures and even have two similar types alongside. But the smaller the operation [even relatively], and more 'simplified' you may want to go, then the chances of operating a mixed fleet whilst striving to maintain profitability become slimmer and slimmer.
In any case, with just two major players in the market, operators have very limited choice. The world needs more producers in order to keep both A and B honest - and by honest I mean precisely that, as in marketing practices as well as 'corporate ethos' [something that has been evidently lacking recently].
 
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Phosphorus
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 10:50 am

VSMUT wrote:
Phosphorus wrote:
In the past you could have a relatively balanced fleet: DC-9, 727, 737, 757, a sprinkling of Fokkers and Caravelles, and an odd VC-10 and Trident, not to mention BAC 1-11 and Yak-40. And that's only on narrowbody side. Regional types were quite diverse as well. And that only in the West. Closer to Iron Curtain, Soviet types were in the mix, too.

Airlines indeed tried to spread their risk. Groundings of types (relatively common phenomenon in 50's, no?) were still in the memory of executives, and they would have difficult time convincing themselves and colleagues to go "all in" for a single airplane type.

Then, single-type operations beat them at the money game (WN, FR), and fleet standardization made smaller manufacturers marginal, eventually killing them. So here we are...


Was that really the case though?

SAS, KLM, Alitalia, Swissair and Austrian all had short haul fleets consisting of pretty much only DC-9/MD-80s a while in the 70s/80s/90s.


Well, Easterns and Pan Ams of this world did seem to buy everything that could fly, at some point, didn't they?
And KLM appears to have had Fokkers, too, correct?
AN4 A40 L4T TU3 TU5 IL6 ILW I93 F50 F70 100 146 ARJ AT7 DH4 L10 CRJ ERJ E90 E95 DC-9 MD-8X YK4 YK2 SF3 S20 319 320 321 332 333 343 346 722 732 733 734 735 73G 738 739 744 74M 757 767 777
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MIflyer12
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 1:28 pm

ehusmann wrote:
To identify risk is only one thing. At least two others important factors are how likely is it to occur and how much does it cost to mitigate the risk.
For the first, I do not think you can say these long term and full fleet groundings are too common. But more importantly, you cannot really mitigate the risk. Yes, you can have a mixed fleet, but that will not solve your problem when one half of your fleet is grounded. There are simply not enough planes around to substitute the ones that are grounded. So at the end of the day, if you happen to have picked the wrong plane, you are still out of luck.

With that in mind, perhaps you could better argue the opposite. In the situation where there are only two choices, you have a 50% chance of not getting caught in the grounding if you have a single type fleet. However, you have 0% chance of not getting caught in it if you fly both types.


Congrats on your first post, 15 years after enrollment.

OP isn't asking a bad question but you frame it properly. What is the risk and what is the cost of mitigation? Most costs are pretty well known: multiple pilot groups, training back and forth, loss of pilot productivity, loss of sustitutability, duplicate part inventories...

It will take some time - maybe a decade - to see if major single-type operators agree with the OP's premise.
 
cledaybuck
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 1:33 pm

LAX772LR wrote:
seahawk wrote:
With only 2 options, it makes little difference. If one OEM sees its product grounded you will still loose 50% of your fleet.

Versus potentially 100%, which would've been the case had this happened a few years down the road....

Mitigation doesn't mean elimination.

Would it really make much difference if 1/2 or WN's fleet was grounded vs all of it? They would be screwed either way.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
m1m2
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 1:48 pm

Another point is if the grounding of a fleet occurs because of a failure of a component that is made by a supplier, then it could affect more than one aircraft manufacturer. I'm sure there are many components that are common to the 737 and the A320 (I don't know what they are, just picked those two types as an example). I'm thinking of things such as hydraulic valves, actuators, that sort of thing.
 
TObound
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 2:20 pm

1) Dependency on single type was also common in the past.

2) Groundings are actually more rare today.

3) Since single type operators tend to phase in new models over years, that leaves plenty of time to discover and mitigate risks.

With this grounding, Southwest and Ryanair have continued flying and booking profits. Any flaw with the MAX was bound to be discovered with the first 500 aircraft delivered. Of which most aren't with FR and WN. Really the best mitigation as shown by this crisis is to limit exposure in the first couple of years of a new type.
 
DanniS
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 2:28 pm

No, the risk isn't high enough to justify banning airlines from having a uniform fleet. A) the manufacturer will recover. Airbus and Boeing both are propped up on military contracts if nothing else and will weather the storm. B) It's not like the engineers are stupid. C) The risk is effectively mitigated at the contract and compensation levels. D) Older generation craft of the same type rating can be brought back into service while you wait 3 years for another type. The fiduciaries of the airlines right now are laughing their butts off at the idea a single type fleet is too risky. As long as the contracts provide a counterbalancing safety valve or "out" it's fine. Southwest and Co. can wet-lease where needed if they truly get desperate for fuel savings.

This teachable moment will pass into the annals of history, and Boeing will stop trying to grandfather a type within such a tight box. The 737 type will be phased out, the A220 will continue to sell like hot cakes, the A320 NEO will have even higher demand and possibly justify opening ANOTHER manufacturing site, and the world will spin on.
 
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par13del
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 2:41 pm

LAX772LR wrote:
seahawk wrote:
With only 2 options, it makes little difference. If one OEM sees its product grounded you will still loose 50% of your fleet.

Versus potentially 100%, which would've been the case had this happened a few years down the road....

Mitigation doesn't mean elimination.

Is that or this really a viable proposition since upgrades and updates and done on a frequent basis.
At present how many versions of the 737, A320 exist, yes the MAX is grounded but the NG carries on. If the A320CEO gets grounded for some new error like happened with the 737 rudder the chances of it also affecting the NEO and A321 any variant may be minimal to the point that risk outweighs rewards.

I accept that there is a risk, but since models are updated so frequently I think it is diminished. Where I think we have greater risk is with the engines, the exclusivity of GE on the 777W did not create a problem, the inability to financially change engines on the 787 has resulted in airlines with rollers suffering at the pump to the extent of lengthy groundings.
It is a miracle that the problems of the 787 engines has had no effect on the A350, just imagine if it did.

Interesting topic worthy of discussion, unfortunately, I think the A versus B will simply take over where the need to see WN, FR operating Airbus is drowned out by the silence of any Airbus operator using Boeing, I guess IAG order for BA will get some traction.
 
DanniS
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 2:52 pm

par13del wrote:
LAX772LR wrote:
seahawk wrote:
With only 2 options, it makes little difference. If one OEM sees its product grounded you will still loose 50% of your fleet.

Versus potentially 100%, which would've been the case had this happened a few years down the road....

Mitigation doesn't mean elimination.

Is that or this really a viable proposition since upgrades and updates and done on a frequent basis.
At present how many versions of the 737, A320 exist, yes the MAX is grounded but the NG carries on. If the A320CEO gets grounded for some new error like happened with the 737 rudder the chances of it also affecting the NEO and A321 any variant may be minimal to the point that risk outweighs rewards.

I accept that there is a risk, but since models are updated so frequently I think it is diminished. Where I think we have greater risk is with the engines, the exclusivity of GE on the 777W did not create a problem, the inability to financially change engines on the 787 has resulted in airlines with rollers suffering at the pump to the extent of lengthy groundings.
It is a miracle that the problems of the 787 engines has had no effect on the A350, just imagine if it did.

Interesting topic worthy of discussion, unfortunately, I think the A versus B will simply take over where the need to see WN, FR operating Airbus is drowned out by the silence of any Airbus operator using Boeing, I guess IAG order for BA will get some traction.

If the Trent 1000 issues extended to the A350 and A330 NEO, Rolls Royce would be bankrupt and lost forever within a year. I'd expect Safran to snap up the IP and staff since GE and PW likely would not be allowed to due to their size/marketshare and similar IP respectfully to avoid creating monopolies.
 
airlinerart
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 3:08 pm

This argument isn't sound because if Ryanair, for example, was half Boeing and half Airbus and they lost one of those fleets at short notice their network and scheduling will still be crippled to the point the airline barely functions.
 
UpNAWAy
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 3:17 pm

Its really more about the size of the airline. When one is small or just starting out you have no choice but once one reaches a certain size (and Southwest is way past that) the single fleet benefits are diminished and the risk is exponentially higher. And this would be true regardless if there is a duopoly or 100 OEMs of aircraft.
 
oldannyboy
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 3:19 pm

TObound wrote:
Really the best mitigation as shown by this crisis is to limit exposure in the first couple of years of a new type.


Agree with you.
I'd venture out and say that is the golden rule to follow if hesitant about a new type and subsequent teething problems, including groundings.
 
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scbriml
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Re: Inherent risk of being large single-fleet airline, now too great?

Fri Jan 24, 2020 3:23 pm

airlinerart wrote:
This argument isn't sound because if Ryanair, for example, was half Boeing and half Airbus and they lost one of those fleets at short notice their network and scheduling will still be crippled to the point the airline barely functions.


But, they'd still be a lot better off than if they only operated the grounded type. :yes:

If Ryanair had been a MAX only airline last March, they'd probably be history now.
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