|Quoting Stitch (Reply 90):|
Because BA wants to replace their oldest 747-400s and can get 747-8Is years before they can get A380-800s. Also, the 748I is a more measured increase in capacity then the A388 and since we're talking "near term" here, BA likely doesn't want to make an immediate large capacity jump in those replacements. The 748I can replace the oldest 744s on the highest-density routes now, and the remaining 744s can be shuffled around.
And there it is at last! WHilst we all like to discuss/dream/fantasise/hope that BA
will go for A or B or both, and demonstrate our knowledge to support our claims, the truth is we do not know the airlines plans for its flying program for the next 20 years. Even BA
will have a number of scenarios as there is considerable uncertainty at this time. Perhaps ironically the timing of this INITIAL order comes at a most problematic time for the industry.
At a simple level many have argued that as the largest operator of 744, BA
will be compelled to buy at least some 748i /773 together with A380. But that depends on whether BA
believe they will increase capacity modestly, significantly or not at all. It also depends on whether there are sufficient markets that they operate which would support increased frequency. Or enough viable new routes to expand into.
In order to simulate the deliberations of the Directors of BA
we should surely consider the following:
1. the BA
route network is largely highly competitive. Its historic strength has been LHR
ironically, which was a natural connection hub for flights ex USA to middle east, Africa, India etc. Not that long ago traffic had to touch down somewhere on route and so flying BA
and connecting through LHR
was the obvious choice for, for example, DXB
, or BOM
. But aircraft advances mean these are now capable non stop and the number of such non stops is increasing taking away transfer connecting traffic from BA
. How much more market is at risk from this technical advance?
2. the LCC model is starting to enter the long haul market (Oasis, AIrAsia Express...). and London seems to be on everyones destinations list. What impact does this have on Y volumes in 10 years time.....How does the airline respond? Smaller planes with more premium seats? Same size planes with more premium seats? Reduced frequencies and therefore reduced Y and F/J capacity?
3. Fuel. Just what does happen when oil hits $100 (next year?). And what will oil cost in 10 years and 20 years time? Is this a return to the golden age of high fares and high profits on a smaller flying program? Or does it just kill the industry. What is the replacement and when?
4. Environmental politics. Really like point 3 above. How far will politicians go, how far will they have gone in 10 and 20 years time. What should the replacement cycle be for new fleet going forward to mitigate this. Will demand collapse?
5. Global infrastructure. It isnt just LHR
that is bursting at the seams. Its not just airlines that need to spend billions of dollars over the next 10 years to accomodate (currently forecast) demand growth. Airport terminals, runways, ATC all need to be significantly invested in to keep the industry going. What phytsical restrictions on profitable growth will there be? eg BA
has a large presence at JFK
, rumoured to be expanding with US/EU flights. Yet JFK
is at risk of being slot rationed. SO how far could BA
expand profits out of JFK
The decision is most certainly NOT being taken on the basis that A is quicker than B or B is prettier to look at than A or A is larger than B or cheaper CASM or whatever in isolation of business planning propositions. It is not even about which is the better plane. It is about which plane best fits the business plan.
And on that basis if the benefits support it, ultimately when it comes to the real (big follow up) order, you could see A and B flying side by side, even 787 and 350, 773 and 380 and 748. SO we can all be right!!
When we have built the business plan with sufficient flexibility accomodating these key scenarios we will be closer to the answer when it comes!