AirTran Orders a Boatload of Full Size Planes (or, What'' Wrong With This Picture?)

[wings396]

They are going to need all of the A/C that they can get a hold of. With the way that we are pulling back mainline service, Airtran can now fill the void. We are Shrinking, and they are expanding...this picture is bad for certain.
The thought of RJ''s saving the day is a fairy tale that CCY will find out does not have a happy ending, at least not for US Airways.

 

[deelmakur]

AirTran has placed a huge order with Boeing, all for mainline type aircraft. All this, while carriers like US are buying (leasing) RJ''s. While AirTran obviously targets Delta primarily, it''s just another example of how these level 2 carriers have been able to accomplish growth they never imagined possible, in the wake of decisions taken by the trunks. Just because CCY thinks people will fly thousands of miles in commuter aircraft, doesn''t make it so. In competitive business, half of what you get, the other guy has to give you. You can only grow the way these new entrant guys do, if the majors leave the holes to expand into. Evidently, somebody forgot to tell them they can''t.

 

[USA320Pilot]

Deelmakur & Wings:

The difference between FL and US is that the Orlando-based carrier has a much lower CASM than US. The stage length adjusted CASM (excluding fuel) for FL is about 6.5 cents and for US is 10.6 cents (which is expected to average down to 9.9 cents in 2004).

There is very little difference in the Embraer and Boeing order from a passenger experience perspective in that the EMB-170/175/190/195 will have the feel and look of a mainline aircraft. In fact, the EMB cabin is more spacious than the B737 and will have a lower unit cost.

At a previous mainline airline analyst confernece, DL CEO Leo Mullin said the 50-seat RJs provide double the profits of a hub and spoke carrier 100 to 120-seat aircraft and I believe the MAA EMB-170-175 will have an even greater profit margin than a 50-seat and lower RJ.

The US MAA Embraer product will have extremely low unit costs, has a break even load factor of 50%, and all of the profits will be kept by US Group. The EMB-170/175 will help lower US Group's CASM to a more competitive level.

In regard to FL, the order for up 110 new aircraft; including the B737-700, solidifies the company's long-term growth story and I believe investors under appreciate FL's potential.

Even though today's announcement has been widely anticipated, it should solidify in the minds of industry the airline is a fairly compelling long-term growth story.

As with B6, the additional fleet type adds some complexity and will raise its CASM, but B6 has proven it can successfully operate an extremely low cost airline with two fleet types in the past, the B717s and the DC-9s that are now dormant.

In my opinion, the FL announcement will eliminate its long-haul restraints and should provide an opportunity for the carrier to expand its franchise and further improve its RASM, which will further squeeze mainline profits in longer haul markets.

Best regards,

Chip

 

[Joshua]

This is going to be even more depressing when I board my Dash-8 while watching the shiny new
AirTran 737s with premium cabin pull in to the gate...

Hang in there guys,
Joshua

 

[DHC8Driver]

----------------
On 7/1/2003 10:23:31 AM Chip Munn wrote:



There is very little difference in the Embraer and Boeing order from a passenger experience perspective in that the EMB-170/175/190/195 will have the feel and look of a mainline aircraft. In fact, the EMB cabin is more spacious than the B737 and will have a lower unit cost.



----------------​

Chip
The EMB 170/190 cabin is not as roomy as the 737 from what I read. The EMB 170/190 cabin is 8.27 wide X 6.5 high, the
737 is 11.61 wide X 7.01 high.

The smaller jets- both CRJ and ERJ 50 pax versions - are smaller than the DHC8 cabin. Passengers will probably like the RJ''s over a prop simply beacuse it is a jet, But I have to agree with other posters that the average passenger is going to prefer a full size mainline aircraft over any of the RJ''s Airways is looking at. If a passenger has the choice between a Dash and an RJ, they very well might pick the RJ. But that same passenger, given the choice between an RJ and a 737 or 757 is going to pick the Boeing. If Airways insists on competing with Delta and also the low cost carriers with RJ aircraft, the passengers might migrate to the larger size aircraft just like they migrate to Rj''s from props.

 

[wings396]

Chip, I agree with your post. My point is that AirTran is licking their chops as we pull back and shrink. The mentality of our management MUST change, or we will perish. They are only focused on cost cutting, and nothing else. Not Marketing, Not good passenger service, Not employee morale. We have cut costs more than any other carrier, but still fail to come close to making a tiny profit. We continue to hand over some of our old core markets to them as well as Southwest and Delta. When the dust settles and we only dominate PHL & CLT, then what? That is where we are headed. I have already been told that we are willing to sacrifice some of our small stations to the competition, as long as they don''t hurt us in the HUB''s...what kind of stratigy is that?

 

[deelmakur]

You will never convince the average customer that an enlarged Embraer is the equal of a Boeing or Airbus. That''s not a knock on the Brazilian product (which appears to be a fine aircraft), but rather, a commentary on perceptions. It''s too identified with the commuter sector. If you end up having to use half your marketing message to try and correct that, it won''t work.

 

[FrugalFlyer]

----------------
On 7/1/2003 10:23:31 AM Chip Munn wrote:
There is very little difference in the Embraer and Boeing order from a passenger experience perspective in that the EMB-170/175/190/195 will have the feel and look of a mainline aircraft. In fact, the EMB cabin is more spacious than the B737 and will have a lower unit cost.
----------------​

Chip, I have a couple points to add here:

1) I think that whenever the traveling public hears the words Embraer nowadays, the majority of them automatically thinks RJs. Alhtough the EMB-170/175/190/195 will be larger than the EMB-145 for example, the perception will still be there that it is a RJ.

2) To me (and maybe to a good number of the traveling public), these aircraft (EMB-170/175/190/195) are still RJs with a few first class seats thrown in. While I myself am not picky about the aircraft (prop, RJ, mainline) that takes me from a spoke to a hub, there are customers who are. If US is operating Embraers whereas DL, AA, NW operates larger equipment (MD80, DC-9, 737) US will be the looser no matter how low the costs of operating the aircraft are or how low the BELF is.

3) While I don''t have the aircraft specs handy (and am too lazy to look them
up), I seriosly doubt the EMB-170/175/190/195 have a larger cabin than a mainline Boeing 737 or Airbus 319/320.

4) IMHO, a better aircraft order for US would have been a mix: the classic bunch of RJs (CRJ200/700s, ERJ-145s) plus some B717s and/or A318. This way, if US ordered the A318 there would be commonality, but if US was going to introduce another aircraft type then the B717 may have been the best 100ish seater aircraft suited for their needs.

 

[ITRADE]

Was that the perception with the F-100 or DC-9-30?

 

[algflyr]

----------------
On 7/1/2003 3:59:01 PM FrugalFlyer wrote:

I seriosly doubt the EMB-170/175/190/195 have a larger cabin than a mainline Boeing 737 or Airbus 319/320.

----------------​

As stated above the EMB 170/190 cabin is 8.27 wide X 6.5 high, the 737 is 11.61 wide X 7.01 high.

Keep in mind, the 737 is 3x3 seating while the EMB will be 2x2 seating. The 737 is just over 3 feet wider and has six seats across as opposed to just 4 seats across. The 737 crams 2 extra seats in that 3 feet.

 

[tadjr]

----------------
On 7/1/2003 3:42:11 PM deelmakur wrote:

If you end up having to use half your marketing message to try and correct that, it won''t work.

----------------​

And half of not much is not going to work....

 

[USA320Pilot]

Frugal Flyer said: "I seriosly doubt the EMB-170/175/190/195 have a larger cabin than a mainline Boeing 737 or Airbus 319/320."
Algflyr said: "As stated above the EMB 170/190 cabin is 8.27 wide X 6.5 high, the 737 is 11.61 wide X 7.01 high. Keep in mind, the 737 is 3x3 seating while the EMB will be 2x2 seating. The 737 is just over 3 feet wider and has six seats across as opposed to just 4 seats across. The 737 crams 2 extra seats in that 3 feet."

Chip comments: I believe the majority of today’s fliers will not know the difference between a EMB-170 or an A318/B737. The EMB product has over wing engines, looks like a mini Airbus, and has wider cabin seating than the Boeing product. Algflyr makes a good point and is what I was referring to in that the EMB seats are wider than the Boeing or Airbus product. Furthermore, with 2x2 seating, no middle seats, and large overhead compartments, I agree with US CEO Dave Siegel that this airplane will be revolutionary. Why? Economics. This "mainline like" aircraft will be flown at Express costs, which will permit the aircraft to be very profitable.

In regard to the FL order, I believe after initial start up costs, over time the new aircraft should enhance its overall franchise and revenue production. However, integrating a new fleet type carries both risk and reward for the Orlando-based company. Similar to B6, execution could eventually bring fundamental upside in the company's core market of Atlanta and beyond.

The key for US to compete is for the company to further lower its unit costs and maintain its revenue premium.

Best regards,

Chip