FurloughedAgain
Cabin Heating & Air Tech.
- Joined
- Jun 5, 2002
- Posts
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From Aviationplanning.com
Hot Flash - September 15, 2003
It's Official, The RJ Glut Is Here.
It's The First Rumblings of An Entirely New Airline Model.
Here's a news flash for airport planners: There are major airline industry changes coming over the next three to five years - changes that will affect service levels, competitive strategies, and air service development needs.
Regional jets, for example, are just one early indication, and one that's still missed by most analysts. Take the following quote:
"...There will be more regional jets as a percentage of airline fleets going forward, and fewer mainline aircraft..." - A direct quote from one of the usual aviation analyst suspects, in a July 6, 2000 newspaper sunshine story on how airlines are "embracing" regional jets.
Do a search and comments like this are clearly the thinking of the day. Or lack of same, especially since it's becoming pretty obvious that most of the big orders for RJs are over, particularly 50-seaters. Let's move up a couple of weeks for another view - one from the airline side:
"... Our financial performance is enhanced by reducing RJ capacity... we currently have more regional jets (RJs) than we would ideally like.... (we) will immediately eliminate five CRJ-200s and five CRJ-700s... we will have 29 percent less RJ capacity next year (than we had planned)..." - Company message to America West employees, September 8, 2003. Emphasis added.
New Fleet Economics - Part of A New Airline Model. No, this isn't just an aberration particular to America West. Over the next five years, we'll be hearing sounds like this coming from other airlines. To be sure, RJs - the 50 seaters and their stretched and shrunk variants - will be around for many years to come, but after about 2005-2006, it will be in slowly declining numbers. RJs are great aircraft, but there is a finite number of any type of aircraft that the airline industry can use. That's number is going to be reached in the RJ market within the next three years, if not sooner. The next wave of orders will be in the 70- 110 seat E-jet category, which are not even vaguely close to "regional jets" in economics, fleet mission, or real-world operating envelope.
But the real message here is not just about RJs, but also about an emerging sea-change in the way airlines do business. Note that America West isn't eliminating its own RJ operations, but instead is adjusting the amount of services it is purchasing from a small jet provider (SJP.) It's an indication of a new trend far beyond eliminating 10 RJs.
Write this down: the airline industry is evolving into a modular, outsourced production model. The many parts of the production chain will eventually be interchangeable among a range of vendors and suppliers, and it will be the most efficient that will survive. RJ lift.is just one part.
Historically, airlines had tightly-interconnected production chains that were specific to the individual carrier. From CRS systems to reservations, to in-flight service, to maintenance, to accounting, all systems were typically proprietary and internal to the carrier. But the future will be a model consisting of a production chain that's made up of modules that can - and will - be easily pulled out and replaced as necessary to meet economic and market conditions. We've seen it with the retail channels, where airlines have closed their own reservations centers and replaced them seamlessly with outside vendors, including some that are overseas. Maintenance is going in the same direction. Every supplier had best get the message: you're expendable, and in the future, only the strongest and best will survive.
Battleground One: Manufacturer Fallout. Meanwhile, Back In Montreal... As our forecast conference attendees learned more than three years ago, the new trend isn't "regional" jets, but mid-size "E-jets" - specifically, the Embraer 170/190 platform.
Already jetBlue has ordered 100. US Airways has an order, too. Unlike RJs, these are not small jets with cramped cabins. They are direct competitors for the lower end of the market now dominated by the A-320 and B-737 series.
But - consistent with the modular concept - it's no longer just airlines that are ordering - it's consortiums of sometimes disparate carriers with varying mission applications and route systems. Manufacturers must be able to produce aircraft that can fit easily and inter-changeably within these systems. Take a look up north for the latest example. Air Canada recently held the airline equivalent of a Tupperware Party, inviting aircraft manufacturers to bring in their products to get the once-over from not only the airline, but some of its best frequent flyers and corporate accounts. Airbus buzzed in with the A-318. Boeing arrived with a shiny new 717. Bombardier displayed the 70-seat and 90-seat versions of its 50-seat RJ. Embraer arrived with an E-170. Air Canada asked some of its best corporate customers to give their opinions on the comfort of each airplane. At stake is a potential 200-unit order for the Star Alliance, which is specifically looking for 70 to 110 seat airliners. The indication is that this future fleet will be interchangeable between Star Alliance partners. It's another module in the production chain of an airline consortium, not just one carrier.
The Next Battleground - Small Jet Providers. Since there is an emerging excess of 50-seat jets, plan also on a shrinking market for the entities that operate them, i.e., Small Jet Providers, which some folks still call "regional airlines." These are also becoming a part of a modular production chain, and major carriers will increasingly be able to pick and choose the suppliers which they feel are best suited to provide RJ lift. The shakeout is starting, with Atlantic Coast planning to pull out of the SJP business and try to go it alone. There may well be more SJPs in the next few years with fleets of Canadair and Embraer RJs all dressed up with no place to go.
The survivor SJPs will be the ones that have not only the lowest costs, but also can provide the best, cleanest, and most customer-oriented service. Some, to be sure, are already mostly there. Others are in line for a rude and expensive awakening.
Hot Flash - September 15, 2003
It's Official, The RJ Glut Is Here.
It's The First Rumblings of An Entirely New Airline Model.
Here's a news flash for airport planners: There are major airline industry changes coming over the next three to five years - changes that will affect service levels, competitive strategies, and air service development needs.
Regional jets, for example, are just one early indication, and one that's still missed by most analysts. Take the following quote:
"...There will be more regional jets as a percentage of airline fleets going forward, and fewer mainline aircraft..." - A direct quote from one of the usual aviation analyst suspects, in a July 6, 2000 newspaper sunshine story on how airlines are "embracing" regional jets.
Do a search and comments like this are clearly the thinking of the day. Or lack of same, especially since it's becoming pretty obvious that most of the big orders for RJs are over, particularly 50-seaters. Let's move up a couple of weeks for another view - one from the airline side:
"... Our financial performance is enhanced by reducing RJ capacity... we currently have more regional jets (RJs) than we would ideally like.... (we) will immediately eliminate five CRJ-200s and five CRJ-700s... we will have 29 percent less RJ capacity next year (than we had planned)..." - Company message to America West employees, September 8, 2003. Emphasis added.
New Fleet Economics - Part of A New Airline Model. No, this isn't just an aberration particular to America West. Over the next five years, we'll be hearing sounds like this coming from other airlines. To be sure, RJs - the 50 seaters and their stretched and shrunk variants - will be around for many years to come, but after about 2005-2006, it will be in slowly declining numbers. RJs are great aircraft, but there is a finite number of any type of aircraft that the airline industry can use. That's number is going to be reached in the RJ market within the next three years, if not sooner. The next wave of orders will be in the 70- 110 seat E-jet category, which are not even vaguely close to "regional jets" in economics, fleet mission, or real-world operating envelope.
But the real message here is not just about RJs, but also about an emerging sea-change in the way airlines do business. Note that America West isn't eliminating its own RJ operations, but instead is adjusting the amount of services it is purchasing from a small jet provider (SJP.) It's an indication of a new trend far beyond eliminating 10 RJs.
Write this down: the airline industry is evolving into a modular, outsourced production model. The many parts of the production chain will eventually be interchangeable among a range of vendors and suppliers, and it will be the most efficient that will survive. RJ lift.is just one part.
Historically, airlines had tightly-interconnected production chains that were specific to the individual carrier. From CRS systems to reservations, to in-flight service, to maintenance, to accounting, all systems were typically proprietary and internal to the carrier. But the future will be a model consisting of a production chain that's made up of modules that can - and will - be easily pulled out and replaced as necessary to meet economic and market conditions. We've seen it with the retail channels, where airlines have closed their own reservations centers and replaced them seamlessly with outside vendors, including some that are overseas. Maintenance is going in the same direction. Every supplier had best get the message: you're expendable, and in the future, only the strongest and best will survive.
Battleground One: Manufacturer Fallout. Meanwhile, Back In Montreal... As our forecast conference attendees learned more than three years ago, the new trend isn't "regional" jets, but mid-size "E-jets" - specifically, the Embraer 170/190 platform.
Already jetBlue has ordered 100. US Airways has an order, too. Unlike RJs, these are not small jets with cramped cabins. They are direct competitors for the lower end of the market now dominated by the A-320 and B-737 series.
But - consistent with the modular concept - it's no longer just airlines that are ordering - it's consortiums of sometimes disparate carriers with varying mission applications and route systems. Manufacturers must be able to produce aircraft that can fit easily and inter-changeably within these systems. Take a look up north for the latest example. Air Canada recently held the airline equivalent of a Tupperware Party, inviting aircraft manufacturers to bring in their products to get the once-over from not only the airline, but some of its best frequent flyers and corporate accounts. Airbus buzzed in with the A-318. Boeing arrived with a shiny new 717. Bombardier displayed the 70-seat and 90-seat versions of its 50-seat RJ. Embraer arrived with an E-170. Air Canada asked some of its best corporate customers to give their opinions on the comfort of each airplane. At stake is a potential 200-unit order for the Star Alliance, which is specifically looking for 70 to 110 seat airliners. The indication is that this future fleet will be interchangeable between Star Alliance partners. It's another module in the production chain of an airline consortium, not just one carrier.
The Next Battleground - Small Jet Providers. Since there is an emerging excess of 50-seat jets, plan also on a shrinking market for the entities that operate them, i.e., Small Jet Providers, which some folks still call "regional airlines." These are also becoming a part of a modular production chain, and major carriers will increasingly be able to pick and choose the suppliers which they feel are best suited to provide RJ lift. The shakeout is starting, with Atlantic Coast planning to pull out of the SJP business and try to go it alone. There may well be more SJPs in the next few years with fleets of Canadair and Embraer RJs all dressed up with no place to go.
The survivor SJPs will be the ones that have not only the lowest costs, but also can provide the best, cleanest, and most customer-oriented service. Some, to be sure, are already mostly there. Others are in line for a rude and expensive awakening.
