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PlymSpotter
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 1:09 pm

Quoting 757gb (Reply 49):
BQB is actually a Uruguayan flag carrier and they requested the route, which was granted to them. The word was that they were going to start MVD-MAD by the end of this year, in cooperation with probably UX. But this was all before the PLUNA fiasco, which in turn distracted resources and put everything else in the back burner

UX taking up MAD-MVD three or four times weekly would not surprise me at all.


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PDPsol
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 3:17 pm

Quoting SCL767 (Reply 26):
If Uruguay wants a non-stop flight from Europe, they will need to step up and just subsidize a European carrier to operate into MVD.
Quoting SCL767 (Reply 34):
LAN's priority is to enhance the synergies from the combination with TAM. What would LAN gain by opening a new route to Europe via MVD with the 787s instead of via Brazil where LATAM has hubs at GRU and GIG? Also, LAN will deploy its initial batch of 787s on its own routes to LAX and MAD as LAN begins to phase out the A343s.
Quoting SCL767 (Reply 43):
Is there still a problem?

The issue here, as others have clearly indicated, is having a NON-STOP flight MVD-MAD, not some connection via, GRU, SCL or wherever.

The market is looking for non-stops, not hops via inconvenient hubs, especially GRU.

UX is clearly a potential for offering MVD-MAD. They are a SkyTeam member, and can even offer onward connections from MAD. MVD-MAD is 6,600nm, within the range for a A330-200. UX also has the B787 on order

The other option could be either AV, TA Peru or even AV Brasil, once they get their hands on a few more A330-200

Conclusion: there is clearly a market for a non-stop to MAD here and someone should make it happen.
 
airbazar
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 3:45 pm

Quoting AR385 (Reply 39):
Because it has a LF of 86%.

LF is irrelevant. IB is probably charging less than it costs to operate the route just so they can put butts in the seats because if they raise the fares to what it really should cost to operate profitably, no one would fly the route. That's why they're dropping the route. If it was profitable they wouldn't be dropping the route.
 
AR385
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 4:23 pm

Quoting PDPsol (Reply 51):
The issue here, as others have clearly indicated, is having a NON-STOP flight MVD-MAD, not some connection via, GRU, SCL or wherever.

The market is looking for non-stops, not hops via inconvenient hubs, especially GRU.

Thank you. That´s the point I´ve been trying to make all along.

Quoting airbazar (Reply 52):
LF is irrelevant. IB is probably charging less than it costs to operate the route just so they can put butts in the seats because if they raise the fares to what it really should cost to operate profitably, no one would fly the route. That's why they're dropping the route. If it was profitable they wouldn't be dropping the route.

You are right. Load factor may be irrelevant in this case. However, I do not think that it is a market problem. I think it´s IB´s problem. They don´t generate enough high yield traffic on this route and in many others as well. I´m sure another airline (not certain if UX) can make it work with that LF.
 
757gb
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 5:21 pm

As I unserstand it an A332 needs approximately 2600 m of runway (just researching Anet posts, could be wrong). MVD has 3200 m. I wonder how well the A332 could perform in that route. The flattest takeoffs you can see @ MVD are IB's 343s.
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airbazar
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 7:20 pm

Quoting AR385 (Reply 53):
You are right. Load factor may be irrelevant in this case. However, I do not think that it is a market problem. I think it´s IB´s problem. They don´t generate enough high yield traffic on this route and in many others as well. I´m sure another airline (not certain if UX) can make it work with that LF.

MAD-MVD is the definition of a long and thin route which are inherently difficult routes to make money on. With the withdrawl of IB from the market, there is no incentive for any airline to serve this market non-stop. Especially LATAM which now controls the deep S.American market. They can connect MVD via any given hub knowing that no one will start non-stop service MVD-Europe.
 
Clydenairways
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 8:26 pm

Quoting airbazar (Reply 55):

MAD-MVD is the definition of a long and thin route which are inherently difficult routes to make money on. With the withdrawl of IB from the market, there is no incentive for any airline to serve this market non-stop. Especially LATAM which now controls the deep S.American market. They can connect MVD via any given hub knowing that no one will start non-stop service MVD-Europe.

IB will be back on the route before you know it once they have their cost base sorted out. They have huge legacy costs and poor productivity still within in the organisation, and it's IAG's goal to finally get rid of these once and for all. This is the primary purpose of these tactics of cancelling routes. It's all to put pressure on the unions.

Once this is achieved, the operating costs for the airline will become significantly lower allowing the current network and even some expansion to be operated profitably.
 
PDPsol
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RE: IB Eliminates MAD-MVD, Effective April 2013

Tue Nov 27, 2012 8:58 pm

Quoting airbazar (Reply 55):
there is no incentive for any airline to serve this market non-stop. Especially LATAM which now controls the deep S.American market. They can connect MVD via any given hub knowing that no one will start non-stop service MVD-Europe.

No incentive? What about the MVD market, is that not an incentive? No one "controls" the deep SA market, as you characterize. Should the government in Montevideo do the right right thing and open the market to anyone and everyone, permitting unrestricted flights to all carriers, several parties could offer, say, 5x service to MAD. UX is the obvious choice, but deals could be made with AV Brasil or others.

A non-stop choice will always trump a stop over in GRU or, even worse, EZE.
 
airbazar
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RE: IB Eliminates MAD-MVD, Effective April 2013

Wed Nov 28, 2012 6:16 pm

Quoting clydenairways (Reply 56):
IB will be back on the route before you know it once they have their cost base sorted out.
[...]
Once this is achieved, the operating costs for the airline will become significantly lower allowing the current network and even some expansion to be operated profitably.

I hope you're right but I'm not holding my breath for it. You can only cut labor costs so much. But there are other pieces to this equation: the A340's are no longer viable on low yield, long haul routes, and the increased competion that LATAM and TP/AV will bring to S.America. We'll have to wait and see.

Quoting PDPsol (Reply 57):
No incentive? What about the MVD market, is that not an incentive? No one "controls" the deep SA market, as you characterize.

No, not if you can't sell the tickets at a price that makes a profit. you can fly MAD-MVD for the same price as MAD-MIA and MIA is 25% shorter. The best thing IB can do is park the planes and send their passengers via someone else.
And LATAM will absolutely control the price point in S.America. That's why airlines mergers exist. With the ability to serve secondary markets in S.America from its hubs and connect just about every significant city in S.America to every significant city in Europe with only 1 connection, LATAM will be the one dictating fares.

Quoting PDPsol (Reply 57):
A non-stop choice will always trump a stop over in GRU or, even worse, EZE.

Indeed but not enough people may be willing to pay for the real cost of that privilege.
 
PlunaCRJ
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RE: IB Eliminates MAD-MVD, Effective April 2013

Wed Nov 28, 2012 8:33 pm

Quoting airbazar (Reply 58):
No, not if you can't sell the tickets at a price that makes a profit. you can fly MAD-MVD for the same price as MAD-MIA and MIA is 25% shorter. The best thing IB can do is park the planes and send their passengers via someone else.

It was always my understanding that MVD is, regretfully, quite a high yielding destination. This is, of course, consequence of the frightening lack of competition here, a condition that is getting worse and worse.

I am not sure how it was established in this thread the fact that MVD is low yielding....


I have just made dummy bookings in IB.com for trips MVD-MAD and MIA-MAD on March. The lowest fare I can get on MIA-MAD is about $838, including taxes, etc...

The cheapest MVD-MAD goes up to $1560. And on certain dates. On other dates it can go up to $3780 (all Economy) Certainly not "the same".

You could say taxes for Uruguay originating flights are higher, and that´s probably true. But MVD-MAD without taxes is still more expensive than MIA-MAD with taxes.


And these
 
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yellowtail
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RE: IB Eliminates MAD-MVD, Effective April 2013

Wed Nov 28, 2012 10:01 pm

Quoting ferminbrif (Reply 28):
can you please explain a little bit more about this??? I don´t get it. Thanks a lot.

IF you are selling your seats below cost (generally because of competition, you lose money. IF you own a hamburger joint and you are selling your burgers at a loss because the folks down the road do (generally because their costs are lower), it doesn't matter how many burgers you sell you are losing money.
When in doubt, hold on to your altitude. No-one has ever collided with the sky.
 
MAH4546
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RE: IB Eliminates MAD-MVD, Effective April 2013

Wed Nov 28, 2012 10:26 pm

Quoting PlunaCRJ (Reply 59):
I have just made dummy bookings in IB.com for trips MVD-MAD and MIA-MAD on March. The lowest fare I can get on MIA-MAD is about $838, including taxes, etc...

The cheapest MVD-MAD goes up to $1560. And on certain dates. On other dates it can go up to $3780 (all Economy) Certainly not "the same".

You could say taxes for Uruguay originating flights are higher, and that´s probably true. But MVD-MAD without taxes is still more expensive than MIA-MAD with taxes.

There are so many factors that go into determining yield and a route's profitability. Specifically using your example:

1) Overall market size - larger market (and MIAMAD is more than 3x larger than MVDMAD, not to mention Miami-Europe is more than 12x larger than Uruguay-Europe), easier it is to absorb lower fares because it's easier to fill seats.
2) Ratio of business/tourist fares. I assure you Miami has a much higher ratio.
3) Stage length - Miami is much closer to Europe; can absorb lower fares.
4) Sure, Iberia might be charging $3,780. Is anybody actually paying it? If so, how many people?
5) Local opearting costs - it's probably cheaper to operate to/from the U.S. than Uruguay, but that's just a guess.
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