Dwindling Variety – Domestic Fleet Choices Aren’t What They Used To Be

A quick nostalgic chart this week as we look back on the difference in fleet composition between 2017 and 2000.  The days of finding variety in fleets is quickly fading.  If you are traveling within the U.S., you have a 2 in 3 chance of being on a 737 or A320 family aircraft.  The writing has been on the wall for several years, however domestic wide-bodies are now largely a thing of the past. In 2000, there were 27 aircraft types that flew 95% of the domestic traffic, while last year that number was only 18.  This trend looks to  continue as the MD-80s and small RJs are retired, and replacement aircraft continue to be more of the same. As nostalgic as it is to look back on the many fleet types we had to choose from a few decades ago, of course there are reasons for the decline in […]

Visualizing the U.S. Fleet Over Time

The U.S. Fleet has changed significantly over the past 17 years. Using the free VisualApproach.io data explorer, we can watch the fleet change over the years with the help of animated charts. As the McDonnell Douglas fleet slowly goes away, the landscape has become dominated by four players: Bombardier and Embraer with regional aircraft, and Airbus and Boeing with larger jets. Average stage length has increased overall, with new large regional jets extending the smaller capacity ranges, and wide-bodies being used more exclusively on long range missions. In 2000, the 747-400 averaged the longest stage lengths, at 4,700 miles. By 2017, wide-body stage lengths have been extended to as far as 5,700 miles with the 787-9. Cessna makes an interesting appearance with the largest number of operators being for the oft-forgotten Cessna Caravan. With 17 airlines operating the type and an ultra-low stage length of only 108 miles, the Caravan […]

Finding the Market for the NMA/797 – Why Different Regions Need Different Aircraft

It is impossible to please everyone.  Boeing is certainly being reminded of this as they define the market for the upcoming Middle of the Market aircraft, widely anticipated to become the 797. Looking at the distributions in passenger demand across four key markets for the aircraft, the subtleties of each market become apparent.  North America, which is the largest market responsible for about 40% of the world’s air travel, needs a consistent trans-Atlantic aircraft.  This dynamic of the North American market becomes apparent when looking at the upper-left chart.  Most passengers travel either less than 3,000 miles (domestic) or greater than 4,000 miles (typically trans-Atlantic).  Since the current narrow-bodies can reliably fly to head-wind markets as far as 3,000 miles, it stands to reason the 797 will find its sweet spot with ranges beyond that.  The range of the aircraft is expected to be approximately 5,000 miles, as speculated in […]

Does Providing More Passenger Space Bring in Higher Revenues? – LCCs vs Legacy Airlines

The debate between passenger space and total revenues has been raging ever since the dawn of economy class.  The trade-off is simple:  can an airline find passengers willing to pay more for a larger seat, or is it better to carry more passengers at lower fares in the same space?  It becomes a matter of real estate.  Beyond just seat size, an airline may choose to outfit their available flying real estate with galleys, additional lavatories, wardrobes, or even piano bars.  This week’s question: what brings in more revenues, more space or more passengers? Interestingly enough, the answer is inconclusive.  Based on the airlines selected with available data, LCCs are both the best, and the worst at generating revenues per space.  Southwest again leads the pack with their all economy configurations, yet far from the tightest seat pitch.  At the opposite end, we find the ULCCs with as low as […]

Measuring the Effectiveness of Earnings Calls – United Comes out on Top

While listening to dozens of earnings calls, it becomes clear that some are better than others.  Some are precise and on point with strong candor during the Q&A period, while others seem to leave questions regarding the organization of the call… and the company. The question is whether the effectiveness of the management during these calls can be measured. Since the core objective of an earnings call is to deliver confidence to the shareholders on the direction of the company, it becomes possible to link the share price with confidence.  However, it’s not simply a matter of judging whether the stock rose or fell during the course of the earnings call since other macro factors in the market could have also been having an effect.  Yet, we can reasonably assume that the strongest factor in any company’s stock during the earnings call is that earnings call.  To isolate the effects […]

Gauging Confidence in Aircraft Programs by Percentage of Customers who Re-Order

With the news last week of Ethiopian Airlines placing their fifth order for new Q400s, we take a look at which aircraft types have customers who have placed multiple orders.  For an airline or lessor to place a follow-on order requires a high level of confidence in the aircraft.  This confidence can be subjectively measured by comparing the percentage of customers who have placed more than one order of an aircraft type. A lack of follow-on orders directly from a manufacturer could be a result of several factors:  availability of aircraft on the leased market, second-hand aircraft, or simply a young program which hasn’t delivered enough aircraft for airlines to choose to re-order.  The latter is clearly the case with the A350, which, by all accounts is seeing strong confidence in the platform from its operators, however simply hasn’t been in service long enough for airlines to re-order. Yet, the […]

Rise of the ULCCs – US Airline Rankings by Size

When it comes to ranking the largest airlines, the top four U.S. airlines have changed little in the past decade. However, one area of evolution has been the prominence of the ULCC. With Allegiant being the only true ULCC from birth, Spirit, Frontier, and now Sun Country have joined the ranks of ultra low fares, and extra charges for everything else. Yet it is this model of un-bundling that has seen strong growth in the U.S. market. With Spirit and Frontier both experiencing strong growth after switching to the ULCC model, Sun Country hopes to tap into the same growth with their recent transition. While no airlines in the top 10 were ULCCs a decade ago, today both Spirit and Frontier hold that distinction.  Allegiant continues to grow as the 12th largest airline in the U.S., and Sun Country begins it’s journey cracking the top 20 in 2016. This chart […]

Scoring the Financial Health of Airlines

#ChartoftheWeek – Scoring the Financial Health of the Airlines and the Challenges at Gol. There are many different ratios and indexes to measure company health, however this week we focus on the Pilarski P-Score.  Based on the same methodology as the better known Altman-Z score, Pilarski and team calibrated their model to the airline industry.  In a nutshell, the P-Score measures ratios from the income statement and balance sheet to determine a score, which can be loosely translated to the percentage risk of bankruptcy. Focusing on Latin America, the economy has been challenging the past three years, particularly so in Brazil.  While most airlines have leveraged their balance sheets during the difficult times, Gol appears worst on this list (aside from South African, who would be long insolvent if it weren’t for the government ownership).  Looking at how Gol’s financial health has evolved tells a bit of a different story.  […]

Which U.S. Airports are the Most Expensive Per Passenger?

Interesting #ChartoftheWeek – Which Airports are the most expensive per passenger, and which are able to offset those fees with other revenues? This week we dive into the publicly available airport financials to understand how the various U.S. airports cover their costs.  Airline cost per enplaned passenger represents the average fees charged to the airlines per passenger who boarded an aircraft at that airport.  This is an average and doesn’t mean every airline paid an identical amount.  Various agreements are reached between individual airports and airlines that include signatory and non-signatory carriers. This does not include any other costs an airline may pay, including parking, fuel tax, landing fees, etc. Further revenues from cargo handling, parking lots, concessions, and hotels can be used to help offset the passenger fees.  The average airline cost per enplaned passenger is shown along with the other revenues the airport is generating to help offset […]