Boeing's possible answer to A380: B747A

nobody wrote:

However, should the Jazz union merge with that of its mainline, then Air
Canada would lose any artificial advantage it had and would then find itself
in the same situation as JetBlue with the smaller jets costing more per pax
than the bigger ones.

So are you suggesting that Air Canada do nothing but fly regular jets
with their higher cost crews and eventually succumb anyway to the
Westjets, Canjets, and Jetsgos, of the world with their lower labor
rates? They have to do something.

There is a cost to wanting high frequency service. And the irony is that in
chosing low price over frequency, enough people have switched to low cost
carriers that their frequencies are now interestingly competitive with those
of mainlines. But those frequencies are driven by demand, not marketing.

You are missing a huge advantage that the regional jets offer, which is
why airlines like Comair expanded so quickly: They offer non-stop
flights between smaller centers. No longer do passengers trying to fly
between Pittsburgh and Omaha have to be routed through Detroit and
Minneapolis. They fly directly, saving time, and are often willing to
pay more for the ease of travel.

Further, by offloading passengers from their major hubs, there is
savings in the amount of real estate required, baggage handling, checkin
staff, takeoffs and landings, and flight miles. Therefore, even if the
aircraft themselves are slightly more expensive per passenger-mile, they
can save the airline money through other operating cost savings.

The regional jets are quite different from 737s due to their range, cabin
size, toilet size, and general comfort levels not designed for anything about
1.5 hours.

That's plain wrong. There are ER versions of the ERJ, which were
specifically designed to fly 3 to 3.5 hours. I've flown on
Continental's Toronto to Houston route in an ERJ, which was scheduled at
3.5 hours.

And just like there is an artificial dislike of turopprop planes,
there may be some artificial dislike of smaller regional jets in 2-2 or 2-1
config (much narrower fuselage).

I loved the trip. Less hassle getting on and off the aircraft, and no
need to change planes in Chicago, Cleveland or Newark.

Boeing is now somewhat stuck. By making the 7E7 bigger than the 767, and
cancelling the 757, it is giving the 737 a mission to fill the gap between the
737 and the 7E7. Not very likely to see 737s shrink much more.

Why do they need to shrink? They offer several models that fill that
large gap nicely. They are having trouble selling the 717, which is
essentially a large RJ these days.

If legacy airlines stopped being so stubborn about the need for high
frequency, I think we'd all see a much clearer picture of what sort of planes
are really needed.

If the legacy airlines didn't offer high frequency, they'd be toast.
That is the only way they can compete with the low cost carriers.
Business travelers are willing to pay more for the flexibility of
travel. Why would the fly on Jetsgo between Montreal and Toronto with
only a couple of flights, when they can choose Air Canada with dozens?

In essence, what has probably happened at Boeing is that only the 737's price
is set to allow low yield passengers, while its 777 and 747 are too expensive
to fill with low yield pax.

The price of those larger aircraft do allow low yield passengers, since
the cost per seat-mile is below that of the smaller aircraft, like the
737. The problem is that the lower cost carriers can't fill the seats,
can't turn the aircraft around quickly enough, and they recognize the
need for higher frequency, particularly on new routes, to attract
passengers.

On Sat, 22 May 2004 21:30:02 GMT, James Robinson
wrote:

You are missing a huge advantage that the regional jets offer, which is
why airlines like Comair expanded so quickly: They offer non-stop
flights between smaller centers. No longer do passengers trying to fly
between Pittsburgh and Omaha have to be routed through Detroit and
Minneapolis. They fly directly, saving time, and are often willing to
pay more for the ease of travel.

Yes, but the previous poster seemed to be suggesting that the running
cost of the smaller jet was similar to the running cost of a 737 so
you can run the larger plane on the same route without incurring a
cost, and offering more potential revenue - I have no idea if he was
right about that.

Further, by offloading passengers from their major hubs, there is
savings in the amount of real estate required, baggage handling, checkin
staff, takeoffs and landings, and flight miles.

Having staff at a small airport for 2 flights a day say is cheaper
than having staff at a hub handling flights throughout the day?

If legacy airlines stopped being so stubborn about the need for high
frequency, I think we'd all see a much clearer picture of what sort of planes
are really needed.

If the legacy airlines didn't offer high frequency, they'd be toast.
That is the only way they can compete with the low cost carriers.

Except of course I managed to get LON-MAD on a low cost, when there
were no scheduled available (to vaguely tie up with a SFO-LON) the
supposed higher frequencies didn't offer me anything - of course I
could've perhaps interlined on major and saved myself some potential
hassle if I miss the connection, but so what, the risk is low, and the
flight was cheap enough anyway.

Business travelers are willing to pay more for the flexibility of
travel. Why would the fly on Jetsgo between Montreal and Toronto with
only a couple of flights, when they can choose Air Canada with dozens?

There's a tiny, tiny minority of people who need to be able to pick 1
of 12 flights on a day for a route, just knowing when is all they
need, and if cost really doesn't matter for the business, the business
will soon be losing to it's more rational competitors - how many
companies still have any but their most senior staff flying cattle
class on "regional jet" distances.

Jim.

James Robinson wrote:
The price of those larger aircraft do allow low yield passengers, since
the cost per seat-mile is below that of the smaller aircraft, like the
737.

But airlines also have to factor in the purchase and/or leasing costs, not
just operating costs. If you can buy 2 midsized aircraft for not far from the
cost of a single 747, then airlines are artificially forced to buy the less
efficient aircraft versus the 747. That was the point made by Max Ward (and
what wardair ended up having to do.

Jim Ley wrote:

James Robinson wrote:

Further, by offloading passengers from their major hubs, there is
savings in the amount of real estate required, baggage handling, checkin
staff, takeoffs and landings, and flight miles.

Having staff at a small airport for 2 flights a day say is cheaper
than having staff at a hub handling flights throughout the day?

Who said that? You would need staff at the smaller airport to handle
any number of passengers. There might be some cost saving with an RJ,
as you might not need as many counter staff to check people in.
Overall, if there are fewer passengers passing through the hub, you
might be able to reduce staff a bit at the hub.

In any event, Comair was able to steal a sufficient number of passengers
from the hubs to profitably fill their planes.

Business travelers are willing to pay more for the flexibility of
travel. Why would the fly on Jetsgo between Montreal and Toronto with
only a couple of flights, when they can choose Air Canada with dozens?

There's a tiny, tiny minority of people who need to be able to pick 1
of 12 flights on a day for a route, just knowing when is all they
need, and if cost really doesn't matter for the business, the business
will soon be losing to it's more rational competitors - how many
companies still have any but their most senior staff flying cattle
class on "regional jet" distances.

It's not that tiny. They are passengers who pay the big bucks for
flexibility. They make reservations on certain flights, but are allowed
to take earlier flights on most tickets if their business is done
early. Business passengers don't want to wait for the one flight back
home on a budget carrier, or worse miss it because they had to stay
longer. Having a frequent schedule is a real selling point for the
major carriers.

nobody wrote:

James Robinson wrote:

The price of those larger aircraft do allow low yield passengers, since
the cost per seat-mile is below that of the smaller aircraft, like the
737.

But airlines also have to factor in the purchase and/or leasing costs, not
just operating costs. If you can buy 2 midsized aircraft for not far from the
cost of a single 747, then airlines are artificially forced to buy the less
efficient aircraft versus the 747. That was the point made by Max Ward (and
what wardair ended up having to do.

That makes no sense. If the smaller aircraft are about the same price
per seat as the larger one, and if the larger one is more efficient,
they will buy the larger aircraft if they can fill the seats.

Air Canada's problem was that they couldn't consistently fill all the
seats on a 747, hence the preference for combos and smaller aircraft.

Wardair had the same problem as competition built up on the routes they
were serving.

(Jim Ley) wrote:

Yes, but the previous poster seemed to be suggesting that the running
cost of the smaller jet was similar to the running cost of a 737 so
you can run the larger plane on the same route without incurring a
cost, and offering more potential revenue - I have no idea if he was
right about that.

The cost per seat of running an RJ is higher than the cost per seat for a 737.
But then, the cost per seat for a 737 is higher than a 747.

My point was that the RJ manufacturers are rapidly increasing the scope of their
product line and already have models similar to 737s. It's not hard to see them
continuing in the future.

"Clark W. Griswold, Jr." wrote:

... RJ manufacturers are rapidly increasing the scope of their
product line and already have models similar to 737s. It's not
hard to see them continuing in the future.

The RJ manufacturers have a ways to go to match the size of the current
737 products. They hold 189 people in a single class configuration.
That is much larger than any RJ currently available.

Only the 717 at 117 seats is close to the current large RJs.

James Robinson wrote:
That makes no sense. If the smaller aircraft are about the same price
per seat as the larger one, and if the larger one is more efficient,
they will buy the larger aircraft if they can fill the seats.

No, the point Max Ward was making is that the purchase cost of 747s went up
dramatically, which eradicated the per-seat operating costs once you factored
in the higher per-seat leasing/financing costs.

From $25 million to $180 million is a big step.

Air Canada's problem was that they couldn't consistently fill all the
seats on a 747, hence the preference for combos and smaller aircraft.

They could fill those seats, and they still do. In fact there are rumours they
will be ordering new 747s once they escape from bankrupcy protection. Remember
that with the mistake of integrating CP, AC had a lot of contract issues with
leassors of the CP fleet and this is the main reason they had to let go the CP 747s.

Also, at the time AC was competing against CP, it was trying to kill it with
overcapacity. So the arguments that AC couldn't fill their aircraft is not
valid. They didn't have a business plan that called for full aircrtaft. They
had a business plan designed to lose money in order to weaken CP to death.
They judt didn't realise that in doing so, they also weakened themselves to death.

Wardair had the same problem as competition built up on the routes they
were serving.

Wrong. Wardair's original routes only had AC as competition, and AC didn't
take wardair seriously. CP bought Wardair to get transtlantic routes which it
had been prevented from having due to the AC monopoly. Max Ward in his book
did state he woudl have prefered keeping the 747s, but the financial aspects
of the planes was such that it was better to sell the ones they already had
and buy Airbus planes. had the 747 remained reasonably priced, he would have
bought more.

However, in late 1980s, Wardair decided to buy MD-88s to increase domestic
presence, and this was at a time with record interest rates (18% etc), and
that drove Wardair's financing costs way up and drive Wardair into oblivion.
They grew at the wrong time, and ironically, they never took delivery of those
MD-88s (order cancelled by CP as soon as CP got Wardair).

"Clark W. Griswold, Jr." wrote:
My point was that the RJ manufacturers are rapidly increasing the scope of their
product line and already have models similar to 737s. It's not hard to see them
continuing in the future.

The new Embraer 100 seater is not quite a 737 and doesn't really scale. It is
a 2*2 plane with 25 rows. Better than Embraer's smaller 2*1 fuselages, but
still not quite a 3*3 or even 2*3 fuselage.

It is not clear to me if Bombardier will go ahead with its 100 pax plane. But
I can see Embraer's 2*2 fuselage for its new jets slowly being scaled down to
replace its 2*1 aircraft.

Airlines who still have massive wage difference between RJ and mainline pilots
for planes that aren't that far away will not survive. They need to fix those
wage issues to allow the most efficient cost structure.

And since 70 pax seems to be the limit unions have set between RJ and
mainline, airlines that order 100 seaters from RJ manufacturers will be stuck
with mainline expensive pilots, so there won't be any cost advantages.

However, if the RJ manufacturers have a plane of the same size as the 737 but
which costs much less, then yes, it will be fierce competition, and Boeing
will have to start crying foul over brazilian and canadian subsidies. But if
Boeing is unable to compete with an established aircraft (737) whose
development was paid a long time ago, then there is something seriously wrong
with Boeing.

Boing doesn't have a behemouth to develop like Airbus. So while one can
understand Airbus needing to charge the big bucks for existing planes to help
pay for the A380 development, where is all the money Boeing is getting for its
jets going to ?

"nobody" wrote in message
s.com...
James Robinson wrote:
The price of those larger aircraft do allow low yield passengers, since
the cost per seat-mile is below that of the smaller aircraft, like the
737.

But airlines also have to factor in the purchase and/or leasing costs, not
just operating costs. If you can buy 2 midsized aircraft for not far from
the
cost of a single 747, then airlines are artificially forced to buy the
less
efficient aircraft versus the 747. That was the point made by Max Ward
(and
what wardair ended up having to do.

The 747 is less efficient that two 330's and cost only slightly less than
the two combined. Not only would each of the two 330's be able to take more
cargo than the 747 and combined fly more passengers. They also use -
combined - far less fuel. Please understand that it is the inefficiency of
the 747 that is the problem. It's no more than a flying Dino. The real
interesting thing is to see what will happen when the A380 gets flying and
we for the first time for a long period get a really efficient high volume
aircraft on the marked that would be able to compete with combinations of
mid size aircrafts!! It might change the industry more than we might now be
able to imagine!



nik