Friday, June 26, 2015

26JUN news edition

Aeroflot has announced that due to the ongoing downturn in the Russian economy combined with an exceptionally weak winter season with outbound tourism declining rapidly to SE Asia, Dubai, South Africa and the Indian Ocean islands, it will be radically reducing its fleet over the course of the year as it does not see any real sign of improvement on the horizon. It has decided to phase out 40 plus aircraft from its fleet of 161 which include all 13 B773ERs + 1 A320 + 8 A333s and 21 A321s. 

In addition, the airline reconfirmed officially that it has cancelled its order with Boeing for 22 Boeing 787-800s as it does not fit in line with the carrier’s new long term plans any more. However the order for 22 A359s is yet to be cancelled and is expected to remain on course but with deferred delivery dates. SU’s long haul fleet once the above aircraft are phased out would exclusively revolve around the A330 family comprising of 5 A332s + 9 A333s only.   



If sanctions on Iran get lifted soon, they should seriously consider obtaining these 8 A333s + 21 A321s in particular from SU or the leasing company dealing with SU as it would provide an easy quick fix to IR’s aging wide body fleet problem. The A333 can easily fly nonstop from Tehran to London and Tokyo nonstop without any payload issues. 

FYI, SU configuration of the A321/A333/B773ER is as follows:

B773ER – 402 seats (30J + 48W + 324Y)
A333 – 302 seats (34J + 268Y)
A321 – 170 seats (28J + 142Y)

Airlines that one reckons would be interested in these aircraft are as follows:

        I.            Delta who loves to buy used modern aircraft if obtained at a bargain price.
      II.            Turkish Airlines who always seems to be in need of aircraft these days!
    III.            Saudia Airlines who is looking to expand aggressively and already has a fair number of A321/A333/B77Ws in its fleet. For them money is not an issue as we all know!
    IV.            South African Airways for the 13 B77Ws in particular (as they are desperately seeking a solution to their A346 problem)
      V.            Philippine Airlines who are on the lookout for few B77Ws to replace their A343s asap as they wish to standardize their entire USA/CAN network around the B773ER exclusively!

TAP of Portugal has officially revealed a new long term business strategy as part of its new ownership structure under David Neeleman (founder of Jetblue and Azul Brazil) of which the main features are as follows:

  • Existing order of TAP for 12 A359s to be exchanged for 53 Airbus jets
  • Future wide body fleet shall consist revolve exclusively around the A330-900NEO of which 14 shall be ordered
  • Narrow bodied fleet to revolve exclusively around 39 A320NEO family line of aircraft, of which the A321NEOLR too shall be ordered in order to fly nonstop from LIS to USA/CAN + Central/West Africa.
  • 8 new routes to USA shall be launched in 2016-17 of which Boston, San Francisco and Miami are certain
  • 8 new routes to South America mainly Brazil shall be launched in 2016-17
  • Focus is to increase market share between Brazil and Europe in particular

The 2015 Paris Air Show recently concluded with over $50 billion worth of orders placed by airlines and leasing companies. Mentioned below is a summary of the main orders received:
  • ALC 1 x A350-900, 3 x A320ceo, 1 A321 ceo (order)
  • GECAS leasing - 60 A320neo family
  • Saudia - 20 A333s + 30 A320s
  • Eva Air 4 A333s 
  • Korean Air - 30 A321NEOs plus 20 options + 2 B773ERs + 30 B738MAXs along with 20 options
  • Vietjet - 6 A321s
  • Garuda Indonesia - 30 B789s + 30 A359s + 50 B738MAXs
  • Eva Air - 5 B77LFs 
  • Philippine Airlines - 2 B773ERs
  • Qatar Airways - 4 B77LFs + 10 B778s
  • Aercap Leasing - 100 B738MAXs
  • Ruili Airlines of China - 30 B738MAXs
  • Volga-Dnepr Group - 20 B748Fs
  • Ethiopian Airlines - 6 B788s  
  • Air Baltic - 13 CS300s
  • Swiss - 10 CS300s

Out of all the orders placed at this event, the one that makes no commercial sense is that placed by Garuda of Indonesia for its wide body fleet. Ordering a bunch load of B789s and A359s to fly on basically the same regional and long haul routes results in nothing but inefficiencies built into the system along with un-required complications. The Indonesian Govt has also mandated (with certain benefits provided) to both Garuda and Lion Air to deploy larger A330s on peak domestic flights within Indonesia in order to ease major slot congestion currently being witnessed at Jakarta airport hence you will see these two airlines using their A333s in particular on multiple daily routes such as CGK-DPS and CGK-SUB in particular.  

GA could have easily opted for 60 A359s or 60 B789s and standardized its wide body fleet across one type of airplane only resulting in major cost saving benefits. These planes are also planned to replace their 7 B773ERs + 24 A333s + 11 A332s by the next decade thus resulting in 18 units being ordered as extra for planned expansion. The best plane to meet GA’s needs from all angles over here is undoubtedly the A350-900 as its extra on board capacity in particular versus the B789 gives it a significant competitive advantage operating on both regional and long haul routes as the cost per seat unit reduces in turn. The flying range of the A359 is 16 hours nonstop hence it can easily operate GA’s longest route i.e. AMS-CGK and LGW-CGK without any payload issues. In this manner, GA’s fleet in the 2020-30 decade would have looked like this:

Wide body – A359 exclusively (configured in two layouts i.e. one for long haul with more J class seats and one for regional with more Y class seats)

Narrow body – B738MAX exclusively

Regional jets – CRJ 1000 exclusively (they have 18 ordered of which 15 are in service currently)

Turboprop – ATR 72-600 exclusively (25 ordered out of which 9 are in service currently)  

Malaysia Airlines has today officially released various details of its medium/long haul route network restructuring plan that goes into effect from August 2015 onwards. 

The main highlights are as follows:

HKG - frequencies reduced from 4 daily to 3 daily with all flights operated exclusively by the B738

MNL - frequencies reduced from 5 to 4 daily flights operated exclusively by the B738

PER - frequencies reduced from double daily to daily

ADL - frequencies reduced from daily to 4 weekly

SYD - frequencies reduced from triple daily to double daily

MEL - frequencies reduced from triple daily to double daily

BNE - all flights suspended; currently flown daily using an A333

MLE - all flights suspended; currently flown daily using a B738

CAN - frequencies reduced from double daily to daily

SGN - frequencies reduced from four daily to triple daily

TPE - frequencies reduced from double daily to daily
RGN - frequencies reduced from double daily to 11 weekly

As far as its wide body fleet is concerned, MH gave initial details which were as follows:
  • 6 A380s for sale or dry lease
  • 2 B744Fs for dry lease only
  • 4 B772ERs for sale only
  • 4 A332Fs for sale or dry lease

Turkish Airlines has officially announced that it shall be significantly increasing its presence in both USA and Pakistan effective 08AUG in the below mentioned manner:

ISB - frequencies increased from 4 weekly to daily using an A332. However out of this, 5 flights are operated nonstop and 2 are via GYD-Baku with full 5th freedom traffic rights.
LHE - frequencies increased from 3 weekly to daily nonstop using an A332.
KHI - remains a daily nonstop service using an A332.
MIA – new daily nonstop flights to be launched effective 25OCT using a B773ER
ATL – new daily nonstop flights to be launched effective 01MAY16 using a B773ER
JFK – frequencies increased from double daily to 17 weekly with all flights operated by the A333 

TK has also managed to officially secure additional bilateral rights into Manila effective November 2015. According to the new bilateral accord signed between the Turkish and Filipino Governments, both TK and PAL can operate on a daily basis to/from Manila with PAL allowed 5th freedom traffic rights beyond IST to Frankfurt and Tel Aviv. TK is expected to expand its IST-MNL service from the current 3 weekly nonstop to daily effective 01NOV15 using a B773ER.

Kenya Airways has officially announced that as part of its on going cost cutting measures attributed to a large loss it incurred in 2014 and also to reduce its current debt of US$ 6 billion, its entire B777-200ER + B777-300ER fleet shall be grounded from September 2015 onwards. It acknowledged that it over estimated the usefulness of the Boeing 777-300ER in its fleet as the aircraft has proven to be way too big (from a capacity stand point) to be deployed on any of its long haul routes such as Amsterdam, Guangzhou, London and Mumbai. The carrier is keen to dispose of these assets as soon as possible as it’s a big financial drain on its balance sheet.
Currently, KQ has 3 B77Ws (400 seats) + 4 B772ERs (322 seats) in its fleet and all 7 aircraft will be retired at the conclusion of the summer peak season. Flights flown presently with the B777s will be replaced by KQ's B787-800s which seat 234 pax in a dual class layout i.e. 30J + 204Y. KQ has at present 6 B788s operating with 3 more units held as optional purchases. The airline is very happy with the performance economics of its B787 fleet and shall be basing its long haul operations for the next three years around the B788 fleet exclusively. 

Emirates’s CEO has announced that the carrier is very serious on placing a follow up order with Boeing for up to 15 new Boeing 777-200LRs as the carrier wants to rapidly retire its entire fleet of aging A332s and A343s to be replaced with the above aircraft type along side the B777-300ER. Some of the B77Ls will be used to further expand EK’s long haul network in USA and Latin America as it has Miami + Atlanta + Detroit on its radar along with a second daily service into Chicago. The order for these aircraft is expected to be announced at this winters Dubai Air show along with another larger order for up to 70 A350-900s or B787-1000Xs (latter being stated as being preferred by EK). 

The airline also announced many capacity enhancements for its medium haul network of which the main highlights are as follows:

BLQ (Bologna, Italy) – new daily nonstop flights to be launched effective 03NOV15 using a B773ER
SGN – capacity significantly increased from daily A343 to a two class 427 seater B773ER (an extra 160 seats per day per direction)
ABV – capacity increased to daily B773ER effective 01MAR16
WAW – capacity increased from daily A332 to daily B773ER effective 01DEC15
KHI – frequencies increased to 7 daily nonstop flights effective 01JUL15
BUD - capacity increased from daily A332 to daily B773ER effective 01DEC15
MUX (Multan) – new 4 weekly nonstop flights to be launched effective 01AUG using a 427 seater B773A
SKT – frequencies increased from 4 weekly to daily effective 02SEP using an A332  

Lufthansa has officially announced that it will be launching new nonstop flights to NBO-Nairobi, Kenya effective 25OCT15. The service will be initially operated in the below mentioned manner:
  • Launched with 4 weekly service using an A343
  • Increasing to 5 effective 17DEC and then further increasing to daily nonstop from 30MAY16.
  • All flights to be exclusively operated by the A343
The schedule is as follows:
LH 590 Dep FRA 1110 Arr NBO 2020
LH 591 Dep NBO 2230 Arr FRA 0555+1

*Excellent connections are on offer for USA/CAN/UK in particular with this schedule
In addition to the above, LH too confirmed that due to higher losses and increasing competition from the GCC carriers, it shall be suspending its operations to CGK-Jakarta effective 25OCT. Currently, its operated 5 times per week via SIN using an A343.

Qatar Airways has officially revealed major plans to expand its presence in the USA marketplace in 2016 with 3 new destinations being announced along with a frequency increase to an existing destination. 

The main highlights are as follows:

LAX - new daily nonstop flights using a B772LR effective 01JAN16

ATL - new daily nonstop flights using a B772LR effective 01JUN16

BOS - new daily nonstop flights using an A359 effective 16MAR16

JFK - frequencies increased to double daily (new flight is on an A359) effective 01MAR16. The new JFK schedule is mentioned below:

QR 703 Dep DOH 0130 Arr JFK 0725
QR 704 Dep JFK 1025 Arr DOH 0600

In addition to the above, QR has also officially announced that it will be reconfiguring its entire fleet of 4 Airbus A340-600s into a more commercially viable high density layout. Currently, QR's A346s have a 3 class configuration seating 306 passengers i.e. 8F + 42J + 256Y
The new layout seats 372 passengers in a two class configuration i.e. 24J + 348Y thus representing an overall increase of 21% in capacity but more importantly 36% increase in the economy cabin. The first routes earmarked for high density A346 are one daily DOH-KUL-DOH rotation alongside a daily DOH-ALG-DOH service. 


There are a couple of valid reasons (in my opinion) why the launch of these USA destinations is pushed into 2016:

1. A359 delivery timetable (obvious for BOS route)

2. More importantly, QR realizes that they face a severe capacity bottle neck situation with regards to their India bound flights in terms of capacity being offered. Their team now has almost a year to sort this out and ensure that they get more access into India in order to allow its entire network to feed it by making the departure timings cater to two different hub wave banks at DOH airport rather than the present one only (2000-2130 departure in particular). If this is not resolved by the time BOS comes online in particular, it will be very difficult attracting decent S/F across their USA services !

FYI, I expect JFK to become a double daily A359 operated service by Summer 2016 season in order to make it easier both for crew rotations + selling capacity.
With regards to the A346 cabin reconfiguration, this is a much required move and makes the operating economics of the aircraft more attractive especially when fuel prices are low and its purpose is to be utilized on capacity constrained routes. I would suggest QR deploy this aircraft variant also on DOH-CAN + DOH-HKG on a daily basis each respectively. 

Fly Dubai has unveiled a major expansion of its Pakistan bound services as a result of a new bilateral accord signed between the UAE and PAK Governments recently. 

The main highlights effective 10JUL15 are as follows:

Karachi - frequencies increased from double daily to four times daily
Sialkot - frequencies increased from four to eight weekly
Multan - frequencies increased from daily to nine weekly

Faisalabad - new daily nonstop flights to be launched

Air France has officially confirmed that due to ongoing cost saving measures as part of its "Perform 2020" business strategy, the French national airline shall be suspending all flights to Kuala Lumpur effective 25OCT15. Currently, AF operates the route 4 times per week nonstop using a Boeing 777-200ER. 

Delta Airlines has officially announced that it has placed another significant order to increase its narrow body and regional fleet into the next decade. 
  • An additional 40 new Boeing 737-900ERs have been ordered new from Boeing
  • 20 used E190s ordered from Boeing which are ex-Air Canada machines which Boeing bought from AC when they had placed a major B737MAX order in 2014

According to Israeli media, Cathay Pacific is seriously examining launching new nonstop flights from Hong Kong to TLV-Tel Aviv effective Summer 2016. The carrier would launch services using its soon to be delivered Airbus A350-900s and is expected to be operated 3-4 times per week maximum.


Another surprise pulled off by CX but something that holds a bit of merit. In 2014, 72,000 pax flew TLV-HKG-TLV with the average fare being $1900 round trip which means that there is good yield to be exploited here on point to point traffic alone.

The other big Asian markets that CX can tap into via HKG for TLV are as follows:


Please note that demand to TLV from MNL is not only 5,000 pax annually as majority of them who go on holy pilgrimages buy a return ticket to AMM or IST and then a seperate ticket to TLV on TK or RJ. Hence the number stated above of 5,000 does not reflect the real bigger picture. CX's new potential service can definitely help further stimulate this demand on the MNL-TLV-MNL market sector along with Australia-TLV !

Etihad Airways has revealed major route adjustments into its network with destinations being cancelled, capacity reduced and increased across the horizon. The main highlights are as follows:

LOS – frequencies reduced from daily to 4 weekly nonstop using an A332 effective 01JUL
BKK – frequencies increased from 3 to 4 daily nonstop i.e. daily A332 + triple daily B773ER effective 01JUL
GYD/TBS and EVN – all flights cancelled
MAN – capacity increased to double daily B773ERs
PEW – service restored from 25OCT but with daily nonstop operations using an A320

LOT of Poland has officially announced that it will be embarking on an ambitious long haul growth strategy in 2016 as restrictions placed on its expansion get lifted from the EU next year. It has confirmed that new 3 weekly nonstop service from WAW-Warsaw to NRT-Tokyo shall be launched from January 2016 using a B787-800 along with new services to Bangkok and Seoul from IATA W16 season.  BKK though would be operated on a seasonal basis only i.e. only in IATA Winter season when demand from Europe to Thailand is at its peak. It has also revealed that it will be looking to add few B788s into its fleet portfolio and make Toronto, Chicago and New York JFK a daily round trip service year round.

Air Canada has officially revealed the launch of two new medium haul routes as part of its Summer 2016 schedule. New 5 weekly nonstop services to Lyon, France shall be launched from Montreal using an A333 alongside new daily services into London Gatwick using a B763ER. The LGW service seems to be a direct attack on Air Transat and planned expansion of Westjet into this airport.

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