Assistance appreciated!!!!

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By: tenthije - 11th August 2003 at 15:45

Its from a enthiousiasts website. From the “orders mailing list”, this list is (as the name implies) a mailing list that is used to update people on plane orders and to discuss them. They got quite some interesting messages over there! If you want the messageas can be read on their webpage and/or sent directly to your mail box.

Please note that you do need to have a Yahoo! account to access it. You can freely obtain an account and it can also be used as e-mail address (yourname@yahoo.com).

http://groups.yahoo.com/group/orders/files/

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By: markkipling - 11th August 2003 at 00:13

Thats fascinating, thankyou very much. Any chance you could give me the location of where you found it so I can investigate the source further, it is exactly the sort of thing that would be very helpful.

Mark

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By: tenthije - 10th August 2003 at 18:48

Just kick starting an old thread…

I found this graph and figured it might be of interest to someone here. The graph compares the costs Easyjet has with the costs KLM has with regard to operating their B737-300’s.

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By: Hand87_5 - 3rd August 2003 at 20:21

Tethije: Good analysis.

Let me point out some points about TGV/AF competition.
I don’t think that safety is an issue there. Safety in TGV is …. a shame.
Every little hijacker is able to put a bomb in TGV without any problem. There is no check up at all except in Eurostar.

TGV is successfull on some route because of the fare ,and because PARIS-LYON is TGV is much faster than flying if you consider all the time wasted at the airport in checking in , taxiing , boarding , waiting in line for take off etc…
Tgv is you bought your ticket on the internet , you just have to show off 1 mn early. and the train takes you downtown.

I guess that in the future , the train might be a serious competitor for loco’s.

The problem is that the investment to build a high speed railway is huge.

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By: markkipling - 3rd August 2003 at 11:54

thats great guys thanks so much. In the nest week I may PM some of you if thats OK, after I have a good look at what has been said and I may well have some further questions. This forum is great isnt it!! Never realised that there are so many people out there with a keen an interest as I have!!!! Please feel free to voice your opinions on the topics if you dont mind – the more there merrier and my tutors always talk about getting “a wide range of comment”. I dont have to make it all up now…

Mark

PS You will be credited obviously, and I will mention you all when i pick up my Nobel prize for research…

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By: robc - 2nd August 2003 at 09:04

Jay330 remember that EZY operates out of gatwick, which is a success for them, i know that i personally, and all my friends and family here in surrey would fly easyjet anyday over ryanair, infact i wouldnt even fly with ryanair. thats just me.

However on the point about main airports, i think its fairly safe to say that most people would much rather fly into the middle of a city than an hour away, or even more in cases like Hahn, which is even further, and thats not even a destination only its also a ryanair hub.

Fair enough they are succesful, although with a bad reputation, and i think EZY has that advantage, its seen more of a respectable airline than ryanair, although still not being considered great in the first place. But they do fly to better destinations:) and from gatwick which means it serves surrey, because im not gonna drive to stanstead so i can fly with ryanair.

Also you mentioned the dual fleet, yes that increases costs, but since they are going to wind up with such large numbers of both, its not gonna cost them a leg…but the 2 types keep to the same seating plan both having same number of seats allowing them to be interchangeble on routes.

Also because profits are slowing up for ryanair, i think,(this may be right or wrong) but i think that ryanair should slow down on there expansion, because we have all seen when the capacity is above demand and the airline collapses, ie. all the american airlines with bad route structure…

just my thoughts on ryanair

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By: tenthije - 1st August 2003 at 23:20

(Jay330, I already sent this message to you e-mail before I read your reply here. I’m posting it anyway for Mark)

I personally believe Easyjet ALSO stands a good chance of surviving. Ryanair is quite certain in my opinion.

I do not believe that Ryanair covers more business destinations. They cover more destinations, that is obvious, but that does not tell everything. Business men/women want to travel to the bigger cities. Ryanair’s strategy is to fly anywhere EXCEPT to big cities.
Take Holland as an example. How many business men do you think will be interested in flying to Eindhoven (SE), Groningen (NE) or Maastricht (SE) or Niederrhein (in Germany, very close to the border near Nijmegen). All these airports are the airports that Ryanair flies to in/near Holland. Not all these airports have decent bus links. Endhoven for instance has one bus that leaves after the flight arrives. If you miss it due to customs/baggage problems etc you are stuck. I do not believe Groningen has a bus service at all.
Few business men will fly there. Now take Easyjet, they fly to Schiphol. That’s the place where business men want to go. To the densely populated area of Amsterdam/Rotterdam/the Hague. Moreover, there are more connections which are also what is interesting for business men. Not just planes mind you, trains, busses, cabs you name it Schiphol has it.
Another big bonus for Easyjet is that they offer more frequencies on their routes, whereas a lot of Ryanair routes have only 1 or 2 daily rotations.

Another important point to bare in mind is that Easyjet will get Airbusses. These planes are usually more economical to operate. Since Airbus has pretty much guaranteed maintenance and operating costs (and appparently even pays part of it!), this could prove to be a very good deal for Easyjet.
Note that the A319s are a “new” model. It has 2 overwing exits (A320 style) so they may cram in even more people. This could make the Airbus even more economical.
Of course this is only hypothethical. The operating costs may be much worse then expected or something else may happen. This deal will make or break Easyjet.

Another factor few people know is the way Easyjet buys its fuel. Easyjet is one of the few airlines that does not buy its fuel in advance. Most companies go to the futures exchange and agree with the fuel companies to take their fuel for a period of # months. The price they pay is fixed. The fuel company makes a guess of how high the fuel costs will be in # months and adapts their price accordingly.
This system changes variable costs into fixed costs. It is a double edged sword though. If the fuel prices lower then Easyjet can buy the fuel at a low price whereas other airlines are stuck with their contracts. This will give Easyjet an cost advantage. On the other hand, if the fuel prices increase then Easyjet will have to buy the expensive fuel whereas the competitors get their fuel cheaper because they bought the fuel in advance.
I got this information from my international economics teacher approximately 1 year ago. I am assuming this system is still in use (can any Easyjet worker confirm this perhaps?). It is interesting to note that the amount of airlines using this system can be counted almost on your hands. One of the airlines that also used this system was Swissair. If its latest incarnation, Swiss, also uses this system is unknown to me.

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By: Jay330 - 1st August 2003 at 22:57

This message goes against all of my views,

however, the only UK budget airline I view in my personal opinion will be a success is ryanair (I cant beleive I said that). However, what you have to take into account is that cover destinations in lots of countires, which are only just over an hour away from major cities (for business teavllers) but they also do leisure cities as well which are going to be very important in any future business plan.

I know there is a lot of people who dont like what ryanair do, but they have to be congratulated on how they have done it and the important links they have built after september 11th in terms of providing stuggling businesses with an affordable way of meeting clients etc and in such difficult times I do think ryanair has a very good future.

Also, with ryanair ordering a single type fleet (unlkie ejet with a mixed a319/b737) they will be keeping costs down, and antoher important factor with ryanair is even though they do fly to smaller airports that might be an hours drive away from city centres you have to consider landing at congested airports can mean delays and it can take passengers a long time to clear security/check in/passport control etc. So my personal view is that between ryanair and easyjet I would expect ryanair to be the most successful considering easyjets recent profits against ryanairs and the sheer number of business and leisure destinations.

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By: tenthije - 1st August 2003 at 20:51

Bit long, sorry?

Strengths:

They are making money;
Reputation for being cheap. The first thing a passenger nowadays does is check the webste of the local loco;
They are making money;
Passenger numbers are increasing;
They are making money;
More business travellers decide to go loco;
Did I mention they are making money? 😀

Weaknesses:

They offer good value for money, that’s for sure. But they do not offer any services. This may backfire on the longer term. Maybe if a “Jetblue” where to be introduced to Europe Easyjet will get a tougher time. Ryanair will be in even more difficulty since they fly to places that aren’t even on the map. :D;
They tend to pay their personnel lower. Still their personnel definitely work harder and do more tasks (for instance also cleaning the plane). Eventually the personnel will want to see a bigger share of the profit.
Demanding unions already brought down a sizeable amount of once succesful airlines. Remember the good old days, when UA actually made money (generalization of course, the problem was not only personnel costs but still…)?

Opportunities:

For low costs you need little bureaucracy. That’s why low costs have generally only been introduced in single markets (US, EU) and large nations (India, Australia). In a few months the EU will be expanded with a dozen or so countries. Just think of all the new destinations and passengers that are suddenly available;
LH is now flying A319s and BBJ’s across the atlantic for business passengers. That may open up a nice market!
At the moment not all European nations have an open-skies agreement with the US, but some have (the Netherlands for instance).
Admittedly this is a long shot though. The 737/320 will not suffice since they are to small. The 757 might though, and they are getting readily secondhand. Impossible you say? Then how come charter flights to the caribbean are cheaper then a regular flight? If the loco obtains the costs of a charter (or less) then it might be doable.
Icelandair I believe comes closest to a trans-atlantic loco, and Virgin Atlantic of course!

Threats:

Other forms of transportation. In France domestic flights by Air France have been pretty much removed entirely. Not because of the low cost, AF’s domestic flights where already gone before low cost arrived in France. The reason domestic AF flights disappeared was because of the TGV high speed trains. Introduce them between all mayor city pairs in Europe and low cost will find a squeeze.
Now I realise that AF has a higher cost base then Easyjet and Ryanair and will therefore find it harder to compete. But consider this, how many flights are actually sold at the advertised value? The majority is sold at high prices, not as high as BA, AF or KLM but still high;
If one low cost plane crashes, no matter the airline, all low costs will be affected. The media likes scandals. One of the first things they will stress is that the loco’s are cheap immediately followed by a story telling how expensive maintaining planes are… you do the math what the average person with no knowledge of planes concludes?
This can already be seen in the UK. A few months ago there where a lot of rumours that a loco (Ryanair?) ignored ATC demands. For a few days/weeks the sales say a small decrease. Now combine that reaction with an actual crash and a few weeks might take a few months. Well funded though they may be, can a loco last that long?
Some loco’s (BMI Baby, Jet2) will definitely not survive that. Easyjet will also suffer since they are stretched thinly with their merger with Go, the introduction of the A319s and the expansion program;
Terrorism. You might wonder why a terrorist would highjack a loco 737 when they can chose a BA 747? Well, security at Charleroi (sorry, I of course mean Brussels South :D) is lower than at Heathrow;
Oversaturation. Typical isn’t it, there are so many airports the loco’s can choose (and in Ryanair’s case there are even more mud strips to choose from :D), and they all decide to fly to the same airports. Amsterdam, Luton, Stansted, Nice, Barcelona, Prague. They are all swamped with loco’s. The loco’s either spread out over Europe, or they will end up eating each others profits in price wars.
Its like with the middle-class cars. There are so many models with so many actions that hardly any profit is made on the middle class car even though most cars are middle class;
Loco’s depend on internet bookings. What would happen if the website got hacked? Say for one week. The airline would loose one weeks revenue, that has to hurt!
Even worse will be the loss of confidence that might pop up. Do you trust your credit card information to a website that has recently been hacked? I wouldn’t! Therefore any hack may have repercussions for weeks to come!

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By: Jay330 - 1st August 2003 at 20:08

Thats my chosen subject for my dissertation as well, however I am looking at the Uk Low-co market after sept 11,

however, I am also looking at some charter airlines as well, and I am also looking into how FlyBe has adapted to more of a low cost airline.

I am also trying to find out the demand these airlines are placing on airports as well i.e. landing charges/slots/gate allocation etc.

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By: tenthije - 1st August 2003 at 19:21

I don’t mind to help either, I studied logistics so I can hopefully help you out! How do you want to do this, over this thread or with e-mails?

just mail me at [email]petertenthije@yahoo.com[/email]

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By: Hand87_5 - 1st August 2003 at 16:50

No problem if I can help

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By: KabirT - 1st August 2003 at 16:42

i bet lots of people will help you here…welcome to the forums!:)