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kaitak
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How the landscape may look like for the ME3

Tue Apr 21, 2020 12:02 pm

I was just thinking that, in the aftermath of the last financial crisis (2006-8), lots of pilots went to ME carriers and then, as things got better, the pilots went back home to airlines there.

Might the same thing happen now? Sure, the Big 3 (EY, EK and QR) are hurting as well, but they have large order books (yes, most of EY's will probably go, but QR's and EK's will most likely remain) and already have crew shortages. Might we see them, even at the moment - with their own fleets mostly grounded, start pilot roadshows in Australia, Scandinavia and the UK, to recruit new pilots. By the time the pilots are recruited and complete their type ratings, we could be 6-9 months down the line.

I don't want to go into the whole debate about what airlines will survive and which won't. because I'm sure many employees of endangered airlines are on this forum and I don't want to add to their stress, but I wanted to focus on the start-up after the groundings; many carriers have been discussing whether the middle seat will remain free. I think this is probably a good idea and airlines/airport authorities can hand out free masks (FR will probably charge!). Sure, it means that flights can only take a maximum of 50% (the likes of Embraer jets) to 66% (A320/737), BUT it is going to take a while for traffic to reach those levels. It is going to take airlines probably several months for loads to reach the levels necessary for this to become an issue and during this time, there can be studies and testing to see whether the measures are working, need to be tightened or can be eased off.
 
IWMBH
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Re: How the landscape will look ...

Tue Apr 21, 2020 12:11 pm

I don't know if EK and QR will keep retain their all their orders, normally the government behind these airlines gets most of its money from oil. With oil prices at an all time low I'm not sure if they want to invest in planes that aren't able to make money. So, while I'm convinced they will retain orders in smaller wide-body like the 787 and the A350, I'm not sure about the 777X.

We're going to lose a lot of airlines during and after this crises. Most airlines future is going to depend on help from governments.
 
kaitak
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Re: How the landscape will look ...

Tue Apr 21, 2020 12:24 pm

Indeed, we might see a lot of airlines change to smaller types, in which case I can see the A321NeoLR doing very well, probably the 787.

I agree, lots of airlines will be dependent on government aid and the EU will probably have to look at its rules on state involvement in the airline sector. Didn't Macron, when he was announcing the lockdown, promise that no businesses would be allowed to fail. The airline industry is certainly going to be one of the big losers from this whole crisis, but what can it do to reduce its losses? A lot of airlines are already dumping fleets that were near the end of their lives anyway; I could see BA ending 744 ops altogether, for example, maybe Lufty ending 744 ops. OEMs will be under pressure (as if Boeing needed more!) to help airlines and I could see several airlines dumping the 737 Max altogether, or at least greatly reducing their orders.

There will be winners, though; it will be a buyers market. I can see FR doing again what it did in 2002. Another big problem, I think, will be for feeder carriers. If these smaller airlines are reliant, to a large extent on feed from a parent carrier and that feed can't happen because the parent/larger carrier isn't able to fly all of the long haul routes it used to - and fails as a result, then that's going to cause problems for the parent airline when it is, finally, in a position to operate its full long haul schedule. Does it take some of this feeder business in-house? Seek other providers? Provide assistance to the small carrier, to get it up and running again?
 
0newair0
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Re: How the landscape will look ...

Tue Apr 21, 2020 12:26 pm

I don't think seats will be blocked for long. People are going to be more and more tolerant of the risk as the world starts to reopen.

Capping flights at 50-60% of capacity for an extended period of time would send all airlines into bankruptcy. All of them.

Additionally, domestic carriers will fair much better than any international oriented carrier. As such, the ME3 may be particularly hard hit.
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acavpics
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Re: How the landscape will look ...

Tue Apr 21, 2020 1:16 pm

IWMBH wrote:
I don't know if EK and QR will keep retain their all their orders, normally the government behind these airlines gets most of its money from oil. With oil prices at an all time low I'm not sure if they want to invest in planes that aren't able to make money. So, while I'm convinced they will retain orders in smaller wide-body like the 787 and the A350, I'm not sure about the 777X.

We're going to lose a lot of airlines during and after this crises. Most airlines future is going to depend on help from governments.


Maybe now, EK will finally confirm that A330neo order that they placed last year.
 
jimatkins
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Re: How the landscape will look ...

Tue Apr 21, 2020 1:20 pm

Don't think the ME carriers will be the haven of last resort this time. The oil money spigot isn't flowing with the utter turmoil in oil prices.
 
csavel
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Re: How the landscape will look ...

Tue Apr 21, 2020 1:26 pm

OK flame away if you must but I am wondering if an unintended effect of this crisis is to make larger planes like the 747 and A380 more attractive - at least for a while. I maintain it might be less crazy than it appears.

Even after the immediate crisis is over experts say consumers will be wary and recovery will be slow, and business travel will take a very long time to recover. Zoom and virtual conferences will really take a toll on business travel. Conferences are going virtual and maybe some will come back - some won't.

What is an airline like British Airways or Lufthansa to do in that situation? Rather than fly 1/2 full 787s to smaller US destinations, it might herald a return to a hub and spoke system. That would mean the downsides of an A380 are not so down anymore, same for a 747 (apart from age) For instance a European airline might want to consolidate 15 half full 787s on US routes to 4 full A380s and rely on a US partner for feed. Gone are London to New Orleans, Hyderabad, Nashville, Calgary, etc.

We might see the end of interesting ultra long hauls and also inter continental flights to smaller destinations and more of an 80's model. At least for a few years and I maintain for longer than a lot of people think.
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SLCUT2777
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Re: How the landscape will look ...

Tue Apr 21, 2020 2:19 pm

I think the most likely consequence for U.S. carriers will be more consolidation coming 2021-2023. Who will get swallowed up by who? Will be the big question
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DL717
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Re: How the landscape will look ...

Tue Apr 21, 2020 2:30 pm

More consolidation, this time with the smaller carriers and regionals. The daily passenger counts are probably back to 1940s levels or worse. SkyWest was already close to being the last man standing. I think Frontier is the most likely carrier to get absorbed if it doesn't collapse and its assets get gobbled up by Spirit and JetBlue. It will be interesting to see what happens to Allegiant as well. They cater to a bit of an older crowd which will probably be in quarantine longer than the rest of the population as far as travel goes. I'm also curious to see what Alaska does. I can see a lot of downsizing. There will be a lot of older aircraft parked all around which would be good for consolidating training on fewer types and fleet fuel efficiency. While the manufacurers will suffer, as things ramp up over time it could be good for business as the older types will have been parked for so long that it makes better sense to buy new frames. Could be a boon for the A220 as airlines right size during that ramp up with lower demand. Not sure what it wil mean for small markets with a lack of aircraft in the sub 70 seat category. Maybe ATR will see a resurgence. It could take half a decade to recover from this if this quarantine keeps up. It'll be a good time to work on new airport infrastructure with lower material and labor costs. Could end up being a bit of an aviation renaissance.
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DL717
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Re: How the landscape will look ...

Tue Apr 21, 2020 2:47 pm

csavel wrote:
OK flame away if you must but I am wondering if an unintended effect of this crisis is to make larger planes like the 747 and A380 more attractive - at least for a while. I maintain it might be less crazy than it appears.

Even after the immediate crisis is over experts say consumers will be wary and recovery will be slow, and business travel will take a very long time to recover. Zoom and virtual conferences will really take a toll on business travel. Conferences are going virtual and maybe some will come back - some won't.

What is an airline like British Airways or Lufthansa to do in that situation? Rather than fly 1/2 full 787s to smaller US destinations, it might herald a return to a hub and spoke system. That would mean the downsides of an A380 are not so down anymore, same for a 747 (apart from age) For instance a European airline might want to consolidate 15 half full 787s on US routes to 4 full A380s and rely on a US partner for feed. Gone are London to New Orleans, Hyderabad, Nashville, Calgary, etc.

We might see the end of interesting ultra long hauls and also inter continental flights to smaller destinations and more of an 80's model. At least for a few years and I maintain for longer than a lot of people think.


Any "hub" that had an A340, 747 or A380 will see a 777, 787 or A350. Four holers are done save for the handful of new 748s lingering out there. If you were a smaller spoke market that had a 787, your plane is going to a larger spoke market that had a 747, 767 or 777. Your long haul service is done for a while. If you're a 767 long haul market, you'll probably get one of those spare 787s or A359s. Add A330s to the mix of what's left, though some older frames will get parked. Older 772s are also probably toast. The sky will open up with nothing but 787s, 777s, A330s and A350s after the dust settles. Can't say that's a bad thing.

767 > 787 or A359/A330Neo
A340 > A359, 772, or A3510/A330Neo
747 > 773 or A3510
A380 > 773 or A3510

Who's knows where the 777X is going to land with this. What a mess.

There is no room for poor A340 fuel efficiency and the A380s and 747s just had their lifespans shortened.
Last edited by DL717 on Tue Apr 21, 2020 2:58 pm, edited 6 times in total.
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scbriml
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Re: How the landscape will look ...

Tue Apr 21, 2020 2:54 pm

acavpics wrote:
IWMBH wrote:
I don't know if EK and QR will keep retain their all their orders, normally the government behind these airlines gets most of its money from oil. With oil prices at an all time low I'm not sure if they want to invest in planes that aren't able to make money. So, while I'm convinced they will retain orders in smaller wide-body like the 787 and the A350, I'm not sure about the 777X.

We're going to lose a lot of airlines during and after this crises. Most airlines future is going to depend on help from governments.


Maybe now, EK will finally confirm that A330neo order that they placed last year.


I may have blinked, but which "order" was that?
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acavpics
Posts: 397
Joined: Thu Dec 20, 2018 2:54 am

Re: How the landscape will look ...

Tue Apr 21, 2020 3:03 pm

scbriml wrote:
acavpics wrote:
IWMBH wrote:
I don't know if EK and QR will keep retain their all their orders, normally the government behind these airlines gets most of its money from oil. With oil prices at an all time low I'm not sure if they want to invest in planes that aren't able to make money. So, while I'm convinced they will retain orders in smaller wide-body like the 787 and the A350, I'm not sure about the 777X.

We're going to lose a lot of airlines during and after this crises. Most airlines future is going to depend on help from governments.


Maybe now, EK will finally confirm that A330neo order that they placed last year.


I may have blinked, but which "order" was that?


Didn't they order the A330's alogn with the A350's last year? I know that they later confirmed the A350 order but not the A330-900s. Maybe now is a good time to do that, given that they will probably need thinner planes given the demand forecast for the months or even years following COVID-19.
 
CALMSP
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Re: How the landscape may look like for the ME3

Tue Apr 21, 2020 3:51 pm

I see EK/EY making adjustments, but I honestly cannot see QR making any adjustments. They continue to market themselves right now of flying as many places as they possibly can right now, and as more borders open up, they will only continue to do so.
 
dredgy
Posts: 496
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Re: How the landscape will look ...

Tue Apr 21, 2020 4:10 pm

IWMBH wrote:
I don't know if EK and QR will keep retain their all their orders, normally the government behind these airlines gets most of its money from oil..


While the UAE does derive a lot of business from oil, there isn’t actually much, if any, oil left in Dubai itself. Most of its in Abu Dhabi. Emirates is not dependant on oil though it does carry oil traffic. Dubai’s source of wealth comes from government fees and corporate tax on international banking and services.

Qatar’s resource is natural gas and is also isolated from oil prices (in fact natural gas prices are soaring and Qatar the country is going to make a tonne of money from it). Judging by the way Qatar keeps operating and even opening new routes in this time they can’t be too worried about conserving cash, so I’d say they’ve already reached a deal with their government.
 
AMALH747430
Posts: 196
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Re: How the landscape will look ...

Tue Apr 21, 2020 4:36 pm

csavel wrote:
OK flame away if you must but I am wondering if an unintended effect of this crisis is to make larger planes like the 747 and A380 more attractive - at least for a while. I maintain it might be less crazy than it appears.

Even after the immediate crisis is over experts say consumers will be wary and recovery will be slow, and business travel will take a very long time to recover. Zoom and virtual conferences will really take a toll on business travel. Conferences are going virtual and maybe some will come back - some won't.

What is an airline like British Airways or Lufthansa to do in that situation? Rather than fly 1/2 full 787s to smaller US destinations, it might herald a return to a hub and spoke system. That would mean the downsides of an A380 are not so down anymore, same for a 747 (apart from age) For instance a European airline might want to consolidate 15 half full 787s on US routes to 4 full A380s and rely on a US partner for feed. Gone are London to New Orleans, Hyderabad, Nashville, Calgary, etc.

We might see the end of interesting ultra long hauls and also inter continental flights to smaller destinations and more of an 80's model. At least for a few years and I maintain for longer than a lot of people think.


I fully agree with this assessment. I think US carries and their international partners will operate much like the did in the late 90s/2000s. TPAC will be served by west coast hubs, TATL will be served by east coast hubs, and inland hubs will be mainly domestic with only major international markets (i.e. LHR, FRA, AMS, CDG, NRT/HND) served. I don't think routes like BA's LHR-AUS/MSY/BNA/CHS services will survive in the short term.

If international demand is slow to recover, I see this as a problem for the ME3 + TK. The US3 and EU3 can consolidate Europe, Africa, Middle East, and Indian subcontinent traffic over their European hubs. The ME3 hubs don't work for Europe and parts of North Africa which will lessen their appeal from the US traveler's standpoint.

Airlines are going to retrench to core strengths after this crisis is over. Unfortunately, the business that is the ME3's core strength may not recover in the near term.
 
SCQ83
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Re: How the landscape will look ...

Tue Apr 21, 2020 7:35 pm

AMALH747430 wrote:
If international demand is slow to recover, I see this as a problem for the ME3 + TK. The US3 and EU3 can consolidate Europe, Africa, Middle East, and Indian subcontinent traffic over their European hubs. The ME3 hubs don't work for Europe and parts of North Africa which will lessen their appeal from the US traveler's standpoint.

Airlines are going to retrench to core strengths after this crisis is over. Unfortunately, the business that is the ME3's core strength may not recover in the near term.


I think the ME3 will be the biggest losers of COVID.

After all the ME3 and their cities are the epitome of hyperglobalisation. They benefited from the rise of Asia in the world and the globalisation over the last 10 years.

They carried an Indian student to her college in Boston. Or a Belgian holidaymaker to Bali. Or a Nigerian businessman to Guangzhou. But much of it seems it will be gone. The world is likely to become more regional so those connections will become less relevant.
 
SNN707
Posts: 254
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Re: How the landscape will look ...

Fri Apr 24, 2020 2:02 pm

AMALH747430 wrote:
csavel wrote:
OK flame away if you must but I am wondering if an unintended effect of this crisis is to make larger planes like the 747 and A380 more attractive - at least for a while. I maintain it might be less crazy than it appears.

Even after the immediate crisis is over experts say consumers will be wary and recovery will be slow, and business travel will take a very long time to recover. Zoom and virtual conferences will really take a toll on business travel. Conferences are going virtual and maybe some will come back - some won't.

What is an airline like British Airways or Lufthansa to do in that situation? Rather than fly 1/2 full 787s to smaller US destinations, it might herald a return to a hub and spoke system. That would mean the downsides of an A380 are not so down anymore, same for a 747 (apart from age) For instance a European airline might want to consolidate 15 half full 787s on US routes to 4 full A380s and rely on a US partner for feed. Gone are London to New Orleans, Hyderabad, Nashville, Calgary, etc.

We might see the end of interesting ultra long hauls and also inter continental flights to smaller destinations and more of an 80's model. At least for a few years and I maintain for longer than a lot of people think.


I fully agree with this assessment. I think US carries and their international partners will operate much like the did in the late 90s/2000s. TPAC will be served by west coast hubs, TATL will be served by east coast hubs, and inland hubs will be mainly domestic with only major international markets (i.e. LHR, FRA, AMS, CDG, NRT/HND) served. I don't think routes like BA's LHR-AUS/MSY/BNA/CHS services will survive in the short term.

If international demand is slow to recover, I see this as a problem for the ME3 + TK. The US3 and EU3 can consolidate Europe, Africa, Middle East, and Indian subcontinent traffic over their European hubs. The ME3 hubs don't work for Europe and parts of North Africa which will lessen their appeal from the US traveler's standpoint.

Airlines are going to retrench to core strengths after this crisis is over. Unfortunately, the business that is the ME3's core strength may not recover in the near term.


I fully agree with everything you say - except for keeping 747s/380s around. I think your concept will be fulfilled using 777/350 types. I live in MSY and that BA 787 route to LHR (which was doing very well) I believe is not coming back for a while, if at all. Those 787s from MSY/CHS/BNA/AUS etc will be used to backfill the 777/350s that move up to the main hub trunks. Shrinkage is the key. I wouldn't be surprised if BA consolidated at LHR with Level handling LGW (if at all). 4 holers are history. Zero oil won't be around forever. Hub and spoke will be around for a while as they can offer more freq but less P2P. DL will run everything thru ATL to maintain its investment there.

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