32 replies to this topic

[manwest]

Australian low cost carrier shuts down.



http://www.heraldsun...l-1226273367460

[Miles]

What's with the sunglasses smilies?

[seeker]

manwest, on 16 February 2012 - 03:47 PM, said:

Australian low cost carrier shuts down.



http://www.heraldsun...l-1226273367460

Miles, on 17 February 2012 - 12:43 AM, said:

What's with the sunglasses smilies?

I was wondering the same thing - three of them, no less!

[manwest]

The three     cool cool cool  symbols has been my signature at the end to all my posts.  Has been for years.

[dagger]

Manwest isn't mocking anyone. That has been his sig since I can remember.

[malcolm]

Another one in trouble.......


Kingfisher shifts position on flight cancellations



Print
By:   Mavis Toh Singapore
11 hours ago
Source:


Two days after claiming that it cancelled flights because bird strikes rendered its aircraft out of service, struggling Kingfisher Airlines yesterday issued another statement taking an altogether different stance.
"The prime reason for the current disruption in our flight schedules is the sudden attachment of our bank accounts by the income tax department. This has severely affected our ability to make operational payments leading to the present curtailment," said its spokesman Prakash Mirpuri.
He added that the carrier is in talks with the tax authorities to agree on a payment plan to get its "bank accounts unfrozen at the earliest".
With the accounts unfrozen, employee salaries can then be paid and grounded aircraft put back in service to restore its flight schedule, said Mirpuri, adding that about 15% of the carrier's flights, which were operating consistently for the past three months, have been cancelled.
Earlier, the airline said the recent disruptions will last for four days, during which only 208 daily flights will be operated.
The local media, however, reported that the carrier is only flying a quarter of its fleet of about 60 aircraft.
The carrier has also been summoned by the Directorate General of Civil Aviation to account for its flight cancellations.
"We've been in touch with the DGCA to keep them informed of the disruptions," said Mirpuri, adding that the airline will be meeting with the authorities on Tuesday to submit requested details and its plan to restore its full schedule.
Kingfisher also reiterated that it has not approached the local government for any "bail out" and that it had a constructive meeting with its bank consortium last week.
In a previous statement, the carrier said the consortium has accepted "in princple" the viability study prepared by SBI Capital markets and independent consultants and that the carrier's "additional working capital has been acknowledged by the consortium and is subject to individual bank approvals".
While it added that it had enough flight and cabin crew to operate its schedule of flights, the carrier did not state how long the disruptions will last.
The loss-making carrier was first thrown in the spotlight last year when it cancelled a series of flights to reconfigure some of its aircraft to improve revenue production. It was recently suspended from IATA's Clearing House payment system because of its unsettled accounts and its entry into the Oneworld alliance was placed on hold earlier this month for the carrier to first sort out its financial woes.
Kingfisher reported a net loss of Indian rupees (Rs) 15.3 billion ($310 million) in its fiscal third quarter against a net loss of Rs2.54 billion for the same period a year earlier.

http://www.flightglo...lations-368534/

[Thebean]

Iceberg straight ahead.....

Further evidence that it isn't as easy as it looks to start and maintain a profitable LCC.

Edited by Thebean, 21 February 2012 - 08:34 AM.

[malcolm]

and another carrier bites the dust.

Air Zimbabwe suspends flights



By ATWOnline Staff | February 24, 2012
0

Air Zimbabwe MA60. By Rob Finlayson

Air Zimbabwe (UM) has ceased operations after failing to secure a rescue plan, AFP reported Friday. An airline representative confirmed to ATW that it was no longer operating.
"I can confirm all flights are suspended. We are grounded indefinitely," UM CEO Innocent Mavhunga told AFP.
According to the newswire, one of its planes was impounded in London for more than two weeks last year over a $1.2 million debt dispute with a US spares company, prompting the airline to suspend flights to neighboring South Africa over another debt of $500,000 fearing creditors might impound more of its aircraft.
According to UM’s website, the airline had just resumed domestic operations Feb. 20.

[Thebean]

Kingfisher and Vision aren't long for this world either....

http://travel.usatod...estion/634324/1

I am perpetually amused by those who believe that starting a LCC is a no brainer.

Very few people have ever been successful in doing so.

Many successful LCC ventures were started by people who started or had significant early involvement with other successful LCC ventures.  In North America, one has to pay attention to the "family tree"  of successful LCC's and the same key names pop up over and over. Conversely, these names seem to never pop up when one looks at the people involved with the unsuccessful ventures.

A reasonable conclusion could be is that new LCC ventures should figure out what names seem to be consistently associated with successful LCC's, and figure out how to take advantage of what ever it is they've seemed to have bottled.

Slightly off topic, I'm very intrigued by what's going on at Frontier.  It's early days now, but I like the direction they are headed, and who've they've brought in to get it done.  Experienced ULCC guys. If they can't make it work, no one can.

[Don Hudson]

I would like to know...what is so attractive about LCC's? Just about everything possible has been wrung out of those few remaining "flexible" areas of cost (employees, pensions, training & standards, resorting to bankruptcy as a way of financing cost control). "LCC" is now the new legacy carrier, so where to from here? Why would anyone actually believe that the LCC model will work in such an environment? How cheap can this industry go before the industry itself is no longer viable?

[Thebean]

Be wary of buying into the concept that legacy airlines are the new LCC.

They aren't.

[DEFCON]

Bean's correct however, his little darling is going to become Canada's new 'legacy' carrier, complete with all the attendant 'new' high cost employees. Next?

[Thebean]

Here's an interesting stat.

In 4Q 2006, WJ's calculated unadjusted for stage length casm was 41.9% lower than its principle competitor and it's rasm was 21.7% lower.

In 4Q 2011, WJ's calculated unadjusted for stage length casm was 35.9% lower than its principle competitor and it's rasm was 20.4% lower.

By this measurement, there's been a narrowing of the gap, but not as much as one might assume.

Do the math adjusting for ASL, where ASL is calculated for both carriers using identical methodology and the numbers become even more deflating.

Oh, and by the way, I'll bet a Greyhound bus gets 40mpg, but only when they start calculating mileage from the top of Rogers Pass to Revelstoke.  You don't want know the mileage the other direction.  Alas, the bus has to travel both ways so the costs of doing both directions have to be included in the final mileage calculation.

Greyhound can't simply take the costs they want to include and ignore the ones they don't want to include when calculating their overall mileage. Similiarly, if they don't include the costs of going up hill, they can't include the revenues either....

[Don Hudson]

Thebean, on 26 February 2012 - 10:57 AM, said:

Be wary of buying into the concept that legacy airlines are the new LCC.

They aren't.

Sorry, perhaps I wasn't very clear. My point wasn't that "legacy airlines are the new LCC", it was precisely the opposite: With the ongoing slow disappearance or restructuring of the old "legacy model", LCC's are already becoming the new "legacy" carriers, "going forward". Stated differently, the bar is set at "LCC" now, and by LCC I mean carriers that originally defined themselves as such, like Southwest, WJ and the host of other new entries since deregulation.

The point more important to me was, What now? With pensions all but gone, wages at generally unattractive levels already and benefits the responsibility of each employee, will New Legacy airlines continue to come to their employees for profitability? The early-investor or profit-sharing models cannot by themselves sustain an employee wage level. The original question remains - with all that can be extracted from fixed prices and fixed, structural processes, regulatory requirements and navigation/airport/government "service charges", where will continued savings and/or significant efficiencies be found such that the business is viable, and provides a career/profession rather than a McJob?, (I say "McJob" not unkindly because $16,000/year wages for a Q400 First Officer are a reality in the LCC world, at Colgan Air, for example).

Edit to add:

Bean, it has never been explained why costs to operate five types/nine variations of type* on a large domestic and international route structure should be the same as a domestic carrier flying one fleet type with three variations. True the pension costs are higher and wages, due to fleet types, are higher on the larger Airbus and Boeing aircraft. While we can argue whether that should be the case or not but this isn't the point.

To me, the Greyhound bus thought experiment doesn't explain this aspect of costs because WJ is not exposed to higher British, European, Chinese, Russian, Japanese and Australian costs of operation and are not exposed to staffing, maintenance, parts, tooling, STCs etc required to operate a fleet of nine aircraft types. The cost of doing business is simply higher in such an operation yet the downward pressure on wages etc is there. Again, employees are just about the only "flexible" cost.

While I know there are currently some exceptions with bragging rights, it seems to me that most carriers surviving these days have extracted every dime they can and still can't make money for their investors. If labour gave it all back and worked for food, that wouldn't solve the profitability problem. What am I missing about missed efficiencies and outright cost-savings?

Regards,

Don

*http://www.aircanada...leet/index.html

Edited by Don Hudson, 26 February 2012 - 05:18 PM.

[Thebean]

The successful  LCC's were able to exploit the cavernous gap between the cost structures of legacy airlines and themselves. Some succeeded, most failed.

Consolidation and rationalization has narrowed the gap to a certain extent in some, but not in all regions.  As legacies cut costs, so too have LCC's, but because they were already profitable, their efforts rarely made headline news.

ULCC's have appeared in the marketplace, but largely in densely populated regions with, compared to Canada, far lower inflationary taxes to drive up prices. They rely largely on big markets and "oh my gosh" pricing.  Anyone can throw a $59 fare into the market to garner attention and stimulate demand.  The key is to abide by what I call "Hersh's Rule".  ULCC's have done so, often with "ancilliary revenue".

I don't see a new generation of ULCC's arriving in the Canadian marketplace anytime soon, be they Cdn based or US based.

The day a new venture can produce a stage length adjusted CASM 20% lower than an incumbent, (and not as a result of densing up airplanes, which can easily be matched by existing airlines not operating at max seat capacity), in exploitable markets is the day we'll see the potential of a viable new entrant in Canada.

WJ's reported plan is to take their model and replicate it with 75 seat (give or take) turboprop aircraft.  I've a had a wee bit of experience in this area and am quite comfortable in saying that, theoretically, it will work.

The key, as is always the case with start up LCC's,  will be impeccable execution.

Edited by Thebean, 26 February 2012 - 09:21 PM.

[Fido]

Comparing airlines by CASM is a waste of time and only has relevance with people om Airliners.net.

In the real world using that measurement between an airline that only operates in the North American sphere with aircraft that cannot fly more then 6 hours to an airline that operates flights to 5 continents and sectors that are up to 13 hours in length is a waste of time.  They are too dissimilar

Stage length adjust to your hearts content but it means nothing.

[Don Hudson]

Fido, on 26 February 2012 - 06:26 PM, said:

Comparing airlines by CASM is a waste of time and only has relevance with people om Airliners.net.

In the real world using that measurement between an airline that only operates in the North American sphere with aircraft that cannot fly more then 6 hours to an airline that operates flights to 5 continents and sectors that are up to 13 hours in length is a waste of time.  They are too dissimilar

Stage length adjust to your hearts content but it means nothing.

Yes, that is my sense of the comparison which is constantly made between the two carriers and that is why I asked my question, which was not answered in the post by Thebean. I'm just interested in understanding and believe me I'm even more interested in hearing about ways to reduce costs that don't leave employees in the same straits as many of our U.S. counterparts. There can't be many true secrets out there and there is no royal jelly in this business so I would like to know why the continued comparisons and listings of this and that when it's apples and pomegranates and each must solve its own unique problems in ways best suited to each.

Don

[Thebean]

There was a time when that opinion was joyful music to my ears.

Now, after almost 20 years it's a little sad to see that there are still those out there that continue to deny the obvious.

It's the basis of the fundamental economics that have resulted in LCC's growing from modest beginnings everywhere to near domination of  and the driver of change the marketplace.

There's a good reason why you've never seen a  start up with 10 Dash 8's, 10 737's and 10 A330's.  The costs would be out of this world.

[Fido]

Once again Beano has diverted from the discussion.

No one talked about a startup LCC with a diverse fleet.

[Thebean]

Fido, on 26 February 2012 - 11:29 PM, said:

Once again Beano has diverted from the discussion.

No one talked about a startup LCC with a diverse fleet.

Reread the thread and you'll see the point I am reinforcing.

There are some who still can't seem to grasp the concept that a business that is able to focus all it's efforts on a particular niche is going to be miles ahead, and have far lower unit costs than the business that tries to focus its efforts on all niches.

LCC unit costs are achieved not by accident, but by design.

By the way, I'll guarantee you that the CASM on a 777  or A380 flying across the pacific is dramatically lower than any LCC's casm over an asl of about 950 miles.  How does that jibe with your theory that the costs of international flying are so much higher than domestic / transborder / medium haul international?

Edited by Thebean, 27 February 2012 - 08:58 AM.