Wednesday, December 16, 2015

Sri Lankan Airlines to restructure Airbus order

Sri Lankan Airlines CEO has officially confirmed that the airline is looking to renegotiate an existing order with Airbus that was for 7 Airbus A350-900s as the carrier feels that due to a changing market dynamic as well as less focus on Europe-Asia connectivity, it is better off pursuing the option of procuring more narrow bodied aircraft. 

UL's current long haul fleet consists of 7 A332s + 5 A333s (2 more yet to be delivered). Its narrow body fleet after the merger with Mihin Lanka comprises of 6 A320s + 2 A321s. 


This is a sound move undertaken by the top level management team of UL as the correct way to move forward for the carrier is to boost its narrow body fleet by ordering a bunch load of A321NEOs. The Sri Lankan market segment largely consists of VFR, leisure and labor passengers bound to GCC, UK and East Asia with very little corporate premium demand. This is evident by the configuration of its A332s which have only 18 business class seats in them (flat beds) versus the standard 24-30 that one sees in other airlines. 

The A321NEO is the perfect aircraft for UL to meet both its medium and short haul needs with a low risk aircraft that can almost offer the capacity of a wide body but with narrow body operational costs. It can easily fly up to 6.5 hours nonstop from CMB airport with a full payload of pax and up to 4 tons of cargo. This means to the East it can fly CMB-PVG nonstop and JED to the West without any operational issues. With particular reference to markets such as BKK/KUL/SIN/GCC where demand is primarily in the Y class cabin, operating the A321 makes much more sense as it provides 25-30% more capacity versus the A320 against only 7% higher cost of flying. This is precisely why airlines such as Dragon Air, Etihad, Qatar Airways, American and Jetblue use this particular aircraft type on high density short/medium haul routes where there is predominantly more leisure versus premium demand. 

The A320NEO is relevant only to UL's Indian subcontinent network where it operates multiple daily frequencies to many markets where the lower capacity of the A320 comes in handy due to many flights on offer as they feed into UL's different arrival/departure hub wave banks. 

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