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N202PA
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Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 5:19 pm

Simple question, but one I've been thinking about lately.

It seems that only Allegiant is flying the Mad Dog these days, at least among American LCC's. I know fuel costs would be higher than some other options, but I would think that the extra passenger capacity and lower aircraft purchase cost would make the MD-80 an attractive option for LCC's. On top of that, there is a large supply of them in existence and more to come on the market in the next 5 years (meaning finding parts shouldn't be a problem) and provides good range.

So...is there a reason why new US carriers aren't using the MD-80? Seems like the few that have come along are using either 737 or A319/320 variants almost exclusively.

I recently flew in a chartered MD-83 (Ameristar) and thought it was a great aircraft. Configured with 155 seats, it was really comfortable and pretty roomy. I would think the extra 15-20 or so seats of capacity over a typical 73G or 320 would make them at least halfway attractive to a carrier, especially one that'd want the flexibility to do shorter, high-density routes (ie, EWR or DCA - ORD) as well as longer, medium-density routes (ie, US-Caribbean/Mexico).

Any thoughts?
 
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MD80
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 5:37 pm

Most LCC´s have strategies where an MD-80 wouldn´t fit into the picture. Allegiant Air maintains a different business in many aspects and one factor is a rather low utilization of their MD-80s.

The MD-80 had its success but the times changed. There are only a handful of MD-80-operators left and there are far more advantages to operate Boeing 737s or Airbus A32Xs.
Dedicated to the MD-80, MD-90, MD-95, and DC-9: www.MD-80.com
 
Flighty
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 5:53 pm

If you fly only 2 to 4 hours per day, then yes, the MD-80 is perfect. Ameristar probably does.

If you fly 11 hours a day, that fuel burn does catch up to you. It burns around 200-300 gallons more per hour. That's a thousand dollars an hour extra. So, it could be 250k per month in extra fuel. And you can lease an (edit: nearly new) A320 for that.

[Edited 2014-07-01 10:56:00]
 
lhcvg
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 6:06 pm

Quoting Flighty (Reply 2):

To that point, there was an interview with a DL exec recently where he said flat-out that the Mad Dogs are "great little a/c" (or something like that) given their usage scenario of a few hours' flying a day. So yeah if your business model is like G4's it works great, but not so much with say F9 (longer stage lengths, and/or higher utilization).
 
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lightsaber
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 6:35 pm

Quoting N202PA (Thread starter):
On top of that, there is a large supply of them in existence and more to come on the market in the next 5 years (meaning finding parts shouldn't be a problem)

Parts could be an issue. Not most due to scrapped units. But AA is *done* with heavy maintenance and DL just finished their "End of life" order for the MD-80. The vendors are taking MD-80 parts out of production. So if spares do not meet the need, there will be a long lead time. Due to AA and DL canceling their contracts, vendors are no longer required to keep spares in stock. They'll try... but smaller quantities. Without DL or AA buying more spares, the batch sizes have plummeted and thus the new spares will cost more.

Let me be clear, DL bought what they thought they needed for the remainder of MD-80 operation. But any other operator will hurt for parts once the scrapped spares become more rare. So we're talking a short(ish) time window for cheap parts. G4 has been adroitly buying used spares... so I don't worry for them.

This trailing summary of MD-80 operation has only 585 flying:
http://www.airfleets.net/exploit/production-md80.htm

Expect the 182 AA planes to be retired gracefully.
The 150 for DL already have their spares on order (most should already be delivered).

The remaining 253 MD-80s in operation (per the link) are currently mostly consuming parts from scrapped planes. The vendor chain has dried up for everything that isn't a normal line maintenance item (e.g., tires and breaks) I work at a vendor and we have removed MD-80 from our production schedule for 2H2014 and 2015 as we cannot compete with our own used spares at this time. We are now exempt from providing spares per the old Douglas contract now that we filled the DL order. Since no one is buying new and we would have offer the parts at a prohibitive price due to the small batch sizes... Cest la vie. That is just the stage the MD-80 is at. At any time an airline wanted to buy 25+ of a part, we would make them. Otherwise we wouldn't bother. We won't ever stop offering that as it is a very profitable niche even for one unit per year and the rebuild kits are made up of standard parts so we can 'throw together' a rebuild kit at any time.

Quoting LHCVG (Reply 3):
To that point, there was an interview with a DL exec recently where he said flat-out that the Mad Dogs are "great little a/c" (or something like that) given their usage scenario of a few hours' flying a day.

For G4 and DL who emply a 'High RASM, low utilization' strategy, the MD-80 works well. But only for a few more years until the MD-80s 'age out' (maintenance costs are going up with age and declining 'economies of scale') plus used A320s/738s will become cheap enough to fill the role in just a few years... (and have at some airlines). Hence why DL has clearly signaled an end of life for the MD-80. I estimate they have enough parts for ~6 more years, but then that is it for them too.

G4 has moved on to the A319/A320 for their fleet expansion too...

Quoting Flighty (Reply 2):

If you fly only 2 to 4 hours per day, then yes, the MD-80 is perfect. Ameristar probably does.

If you fly 11 hours a day, that fuel burn does catch up to you. It burns around 200-300 gallons more per hour. That's a thousand dollars an hour extra. So, it could be 250k per month in extra fuel. And you can lease an (edit: nearly new) A320 for that.

Worth repeating... and soon those used A320s will remove any remaining niche for the MD-80.

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lhcvg
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 6:51 pm

Quoting lightsaber (Reply 4):
For G4 and DL who emply a 'High RASM, low utilization' strategy, the MD-80 works well. But only for a few more years until the MD-80s 'age out' (maintenance costs are going up with age and declining 'economies of scale') plus used A320s/738s will become cheap enough to fill the role in just a few years... (and have at some airlines). Hence why DL has clearly signaled an end of life for the MD-80. I estimate they have enough parts for ~6 more years, but then that is it for them too.

G4 has moved on to the A319/A320 for their fleet expansion too...

In fact, didn't DL just buy the very last of certain MD80 parts off the line? Something like the manufacturer said they will be shutting down that line after the DL order because there just won't be enough scale to justify it anymore.
 
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lightsaber
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RE: Would The MD-80 Work For A New LCC?

Tue Jul 01, 2014 7:51 pm

Quoting LHCVG (Reply 5):
In fact, didn't DL just buy the very last of certain MD80 parts off the line?

More precisely, DL terminated their support contracts with vendors *after* buying a last large batch of spares. The lines weren't stopping... there were profitable before when there was volume. But once AA began mass retirement of the MD-80s, the volume dropped out and DL came in with an offer to buy a large number of parts, but only if at a discount.

The issue is after DL, there is no airline left operating the MD-80 buying significant quantities of new parts. (e.g., G4 specializes in utilizing used parts very economically). For many (most?) of the MD-80 spares, the production lines are done with those parts. But those same production lines are now gearing up for parts for the Leap/PurePower/C-series/MRJ and soon MS-21 (Yak 242 rename in process...).    These are not specialized production lines by airframe, but rather product type. We switch what airframe we're making parts for regularly.

The lines can make MD-80 parts again. With a long lead time...

Quoting LHCVG (Reply 5):
Something like the manufacturer said they will be shutting down that line after the DL order because there just won't be enough scale to justify it anymore.

The parts are going out of production due to low volumes. DL just stepped in before the lines stopped making the parts. If you want to buy new, any vendor would sell parts. It is cost. The minimum batch size that is economical is 25. What a change from a few years ago when batches of a hundred were the standard... (and provided economy of scale).

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TrijetsRMissed
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RE: Would The MD-80 Work For A New LCC?

Fri Jul 04, 2014 5:23 am

To the OP: The best bet for new MD-80 operations is in Eastern Europe, South America, parts of the Middle East and Africa. Surprisingly, we are still seeing several new MD-80 operators pop up yearly, particularly with charter firms or small budget carriers in developing countries. New operators can sustain MD-80 fleets of 10-15 aircraft on the high end. Above that, and the complexities of building and maintaining a larger fleet will become too much to absorb for a new LCC carrier.

Quoting lightsaber (Reply 4):
DL just finished their "End of life" order for the MD-80.

I work at a vendor and we have removed MD-80 from our production schedule for 2H2014 and 2015 as we cannot compete with our own used spares at this time. We are now exempt from providing spares per the old Douglas contract now that we filled the DL order.

Thank you for confirming this information on the final OEM parts order.

Quoting lightsaber (Reply 4):
But any other operator will hurt for parts once the scrapped spares become more rare.

   That's true. It will be a lot harder for any new operators to build an MD-80 infrastructure to sizable economies of scale. Ironically, the poor after-market for the MD-80 will benefit DL's fleet greatly. DL are able to acquire 20-25 year old MD-80s for near scrap value, salvaging many engine/landing gear parts, etc., that are well-below the age of the frame. At present, later build MD-80s (circa 1995-1999) still carry enough demand for lessors. In time, they too will have no market value and will be snatched by DL for parts.

Quoting lightsaber (Reply 4):
Hence why DL has clearly signaled an end of life for the MD-80. I estimate they have enough parts for ~6 more years, but then that is it for them too.

This supports a 10-year service life remaining for the active MD-88s and complete phaseout in 2024-25, IMO. At 26 parts aircraft and counting, and with another 200+ to be retired by domestic operators alone, there is far beyond enough of a used parts supply for another 4+ years of additional operation. If you add the cannibalization of early-build MD-88s, DL could technically operate the MD-88 up to 2030. Though they will not - fuel costs will inevitably catch up to the MD-88 next decade as MAX/NEO deliveries run rampant.

Quoting lightsaber (Reply 6):
The issue is after DL, there is no airline left operating the MD-80 buying significant quantities of new parts. (e.g., G4 specializes in utilizing used parts very economically). For many (most?) of the MD-80 spares, the production lines are done with those parts. But those same production lines are now gearing up for parts for the Leap/PurePower/C-series/MRJ

One struggle is the inventory obsolescence of the MD-80 parts supply. The EFIS CRTs are a perfect example. It is estimated that DL will save millions right off the bat with the flightdeck upgrade mod on maintenance costs, among other factors. The avionics will largely be checked off the list for parts concerns for the MD-88/90 post 2015.
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lightsaber
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RE: Would The MD-80 Work For A New LCC?

Fri Jul 04, 2014 2:42 pm

Quoting TrijetsRMissed (Reply 7):
This supports a 10-year service life remaining for the active MD-88s and complete phaseout in 2024-25,

I only have insight to a small snapshot. I estimate DL bought about enough parts for 6 years of operation. If your estimate of another 4 years with scrapped parts is certainly feasible. As you correctly surmise, the life limiting constraint will the obsolescence of the MD-80 parts supply chain. Once any required part runs out... that will incur a high expense a la the L1011. I wouldn't doubt that DL is changing avionics to avoid the maintenance costs on the avionics. I find it ironic that old avionics often cost more *and* are less durable. Cest la vie, that is Moore's law...

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