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Saturday, 26 September 2009

What airlines go for an all wide-body fleet?


Photo: Japan Airlines Boeing 747 taking off, by Yamaguchi Yoshiaki from Japan under a Creative Commons Attribution ShareAlike 2.0 License.

The typical European or American network carrier has a mix of narrow and wide-body aircraft. The goal is to serve an heterogeneous mix of destinations, long and short haul, that have different densities of traffic. However, there are a few major airlines in the world that have opted for the all wide-body, long haul fleet. In what is their model different with respect to the mixed fleet carriers?

The only European one of the lot, Virgin Atlantic, is a rare bird, it is not a network carrier, but a long haul point to point carrier. It is remarkable that, although it has a network of partner airlines, Virgin Atlantic does not have feeder operations of its own. It is difficult to think of a city other than London that could currently generate enough international traffic to support such business model. Singapore? Dubai? Well, these are different stories...Singapore Airlines and Emirates are actually network carriers, we could call them global network carriers, because, whereas most European network carriers operate a short-haul to long-haul network, these two airlines operate primarily a long-haul to long-haul one, connecting people across continents. A wide-body fleet is a necessity for them, and although they also fly to some destinations that are close to their bases, the savings that arise from having a more homogeneous fleet probably more than compensate for having a long-range plane making short hops. This business model has got a tremendous impulse with the increase in global commerce and international traffic of the last decade, and other airlines, particularly in the Gulf have also gone this way (Etihad of Abu Dhabi, Qatar Airways,...). Building such an intercontinental network requires a huge capital investment (a brand new Airbus A380 can cost up to $275M)...and then you need to fill lots of seats! so it shouldn't come as a surprise that most of the airlines following this model have been set up by investors with deep pockets for whom building a hub is part of a grander economic and financial strategy for their respective territories.

And now we turn our attention to Japan, because to the European observer it is simply amazing to see an entire fleet of jumbos serving only the domestic market. Japan is not a huge country in terms of landmass and it is also well served by an efficient high speed rail network...high population density must have been the main reason behind the fact that some short domestic routes in Japan being served by Boeing 747s, that in other parts of the world would be reserved for the densest long-haul routes. If capacity (some Japanese jumbos can carry up to 550 passengers) is the main factor, why then this model has not been adopted elsewhere in high density routes, for example in China or India or in the busiest European and American routes (London-Amsterdam, Barcelona-Madrid, NY-LA)? Also, and surprisingly enough, no Japanese airline seems to have shown interest in the A380, maybe it has to do with the critical financial situation of Japan Airlines? or with Japanese airlines having a historical preference for Boeing?

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