art
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An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 3:36 pm

Ryanair is reported to be parking 80 aircraft this winter.

Is there some way of airlines using aicraft parked during periods of European winter season low demand? Leaving aircraft that cost $billions on the ground earning nothing for months does not seem ideal.

What about looking to start operations somewhere in the southern hemisphere where there is heavy tourist demand when it is low in the northern hemisphere. It's a natural fit, isn't it? In time you might be able to put most of the parked aircraft in Europe earning nothing to good use flying when fare levels in a southern hemisphere market are high. And vice versa.

Any thoughts?
 
skidmarks
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 3:37 pm

One word - logistics

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rfields5421
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 3:43 pm

Quoting art (Thread starter):
What about looking to start operations somewhere in the southern hemisphere where there is heavy tourist demand when it is low in the northern hemisphere.

The various regulatory issues with nations in the southern hemisphere would make it impossible to complete such a plan.

But the biggest thing preventing such a move is population and income.

There simply are not the numbers of people living in the southern hemisphere to match the 'vacation/ tourist' demands of the northern hemisphere, and those who do live there do not have the income to afford such vacations.

The people in Europe are at the top of the economic cycle today. Good incomes, stable taxes, good vacation benefits and the time and ability to enjoy leisure travel by air to vacation desitinations.

Most of the people in the rest of the world are not in such a financial position.
 
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nighthawk
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 3:59 pm

Quoting art (Thread starter):
It's a natural fit, isn't it?

If it was such a natural fit, i'm sure Ryanair and many others would be doing it. It's not like they just park the aircraft and never thought to investigate other possibilities...
 
simairlinenet
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 4:02 pm

1) You can lease the aircraft out. Transavia and Sun Country appear to have done this the last few years, since their traffic peaks are in opposite seasons.


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2) You can diversify your revenue streams, like you pointed out with hemispheres. Certainly it's hard to move aircraft across hemispheres given ownership laws, but airlines do shift capacity around. For example, U.S. carriers reduce European flying in winter and shift it towards Latin America. Domestic capacity shifts to the Caribbean.
 
blueflyer
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 4:52 pm

Quoting art (Thread starter):
Is there some way of airlines using aicraft parked during periods of European winter season low demand?

There is actually. Airlines in North America, such as Sun Country, CanJet or Sunwing will swap aircraft back and forth with the likes of Thomas Cook and Jetairfly between the summer and winter months because, as luck would have it, their peak season is at opposite ends of the calendar.

The reason Ryanair doesn't get to participate is because its aircraft are so customized to its unique needs that they do not match the permanent fleet and the service offerings of North American charter operators, and bringing them up to their standards would be so expensive that it is cheaper to park the planes over the winter months.

For example, Canjet offers complimentary hot meals and duty-free on its flights beyond the US, and its passengers expect seats to recline still. You'd have to change the seats, add/enable ovens in the galley and find storage space for the duty free merchandise, and then also remove all the onboard advertising of course.

Or CanJet could get an aircraft from Jetairfly and all they'd have to do is change the seat pocket safety card (did I mention there's no seat pocket on Ryanair?).
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art
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 5:46 pm

Quoting blueflyer (Reply 5):
The reason Ryanair doesn't get to participate is because its aircraft are so customized to its unique needs that they do not match the permanent fleet and the service offerings of North American charter operators, and bringing them up to their standards would be so expensive that it is cheaper to park the planes over the winter months.

That's one reason I suggested Ryanair starting say Ryanair South - starting up in South America perhaps. Must be a few people in Chile, Argentina, Uruguay, Brazil who would be in the market for flights in their summer. Put Spanish speaking cabin crew on board and what else do you need to change? Not that much, I guess.

I'm suggesting an all round operation that increases capacity in the summer using aircraft from the European fleet that would otherwise be idle.

[Edited 2011-11-09 09:49:04]
 
blueflyer
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RE: An Alternative To Parking Aircraft Off Season?

Wed Nov 09, 2011 6:24 pm

Quoting art (Reply 6):
I'm suggesting an all round operation that increases capacity in the summer using aircraft from the European fleet that would otherwise be idle.

Having a Ryanair South would indeed be a good way to minimize the idle fleet, but it wouldn't be that easy. One of the great benefits Ryanair enjoys in Europe is the single market within the EU as far as traffic rights are concerned. To my knowledge, there's no equivalent in South America so Ryanair South would have to negotiate individually with every country on the continent for traffic rights, and it can certainly count on a tough fight against incumbents every single step of the way.

Ryanair South could try the Australian domestic market instead, but I expect the resistance to be just as fierce, and the market is nowhere near big enough to be able to ingest an influx of 80 aircraft over and above the permanent fleet in the busy summer months.

As for the only remaining Southern option, Africa, there's not enough demand, even at Ryanair's lowest price, and operating costs might actually be higher than almost anywhere else in the world.

This being said, there's another reason Ryanair might be parking so many planes over the winter season, however it is only a rumor and it'll never be officially confirmed. Ryanair has always been careful to hire just enough pilots to cover the schedule in order to keep costs low.

According to the rumor, this policy is hurting them this year because several pilots have left or are leaving for Middle Eastern carriers where they get better pay and faster command opportunities, and Ryanair is getting to a point where there aren't enough pilots left with enough hours in their annual quota to fly a normal winter schedule.
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Viscount724
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 1:12 am

Quoting blueflyer (Reply 7):
Quoting art (Reply 6):
I'm suggesting an all round operation that increases capacity in the summer using aircraft from the European fleet that would otherwise be idle.

Having a Ryanair South would indeed be a good way to minimize the idle fleet, but it wouldn't be that easy. One of the great benefits Ryanair enjoys in Europe is the single market within the EU as far as traffic rights are concerned. To my knowledge, there's no equivalent in South America so Ryanair South would have to negotiate individually with every country on the continent for traffic rights, and it can certainly count on a tough fight against incumbents every single step of the way.

And it's not just traffic rights. Also have to consider foreign ownership restrictions. In most if not all cases, Ryanair would only be able to have a minority interest in any subsidiary they estalished in South America (or anywhere outside Europe), meaning they would have to attract local investors and the majority of any profits would go to them, not to Ryanair. If not mistaken, Brazil restricts foreign ownership of airlines to only 20%. One exception is Chile which I believe is unusual in having no foreign ownership restrictions, but that would only work for entirely domestic traffic and Chile is a small market.
 
Gemuser
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 1:35 am

Quoting blueflyer (Reply 7):
Ryanair South could try the Australian domestic market instead, but I expect the resistance to be just as fierce

RyanAir would have no problem setting up an Australian offshoot, which may also be able to operate within and to/from NZ, provided they were prepared to jump through Australian aviation regulatory hoops, BUT:

Quoting blueflyer (Reply 7):
the market is nowhere near big enough to be able to ingest an influx of 80 aircraft over

Damn right, it's not! With QF Group, NZ, DJ & Tiger and 22 + 4(?) million people, the market is very crowded.

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Gemuser
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 1:49 am

Quoting rfields5421 (Reply 2):
There simply are not the numbers of people living in the southern hemisphere to match the 'vacation/ tourist' demands of the northern hemisphere, and those who do live there do not have the income to afford such vacations.

In total numbers of people you are, of course, correct, BUT I do take issue with your blanket statement about income. Yes there are some very poor regions & countries in the Southern Hemisphere (as there are in the Northern), but there are also some very well off regions and countries. Australia, NZ, Chile, Brazil, Argentina and RSA, to name 6, all have large, well off middle classes and are substantial aviation markets.

Quoting rfields5421 (Reply 2):
Most of the people in the rest of the world are not in such a financial position.

True, but developing market in both the Southern and , so called "Eastern" Hemisphere, may very well suprise you. The demand for air travel in China, RFE, India & SE Asia should NOT be under estimated.

Gemuser
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SCL767
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 2:04 am

Quoting Viscount724 (Reply 8):
that would only work for entirely domestic traffic and Chile is a small market.

Depends on your definition of a "small market". However, domestic traffic is increasing rapidly in Chile and has increased by 20% during the first three quarters of this year, as compared to last year.
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VHHYI
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 2:19 am

Quoting art (Thread starter):
What about looking to start operations somewhere in the southern hemisphere where there is heavy tourist demand when it is low in the northern hemisphere

When Qantas got 737-800's originally intended for AA late 2001, there was an agreement that QF & AA could swap planes around in the off season. (the agreement said QF would adopt AA's cabin config). They never did it, though.

[Edited 2011-11-09 18:22:31]
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art
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RE: An Alternative To Parking Aircraft Off Season?

Thu Nov 10, 2011 2:26 am

Quoting Viscount724 (Reply 8):
Also have to consider foreign ownership restrictions. In most if not all cases, Ryanair would only be able to have a minority interest in any subsidiary they estalished in South America (or anywhere outside Europe), meaning they would have to attract local investors and the majority of any profits would go to them, not to Ryanair.

I think it happens in various places. I believe there are countries in the Middle East where companies have to be more than 50% locally owned. Correct me if I'm wrong, anyone who knows for sure.

Regarding the majority of profits going to the entity or entities owning the majority of shares - that's entirely normal, isn't it? What's strange about 51% of the shareholders receiving 51% of any dividend? If Ryanair South were launched and floated 51% of the shares on a national stock exchange, I would imagine that would meet majority local ownership criteria.

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